You Have a Board of Directors, Now What?
The life and leadership of your business might go through phases… For my company, it’s pre-investment and post-investment.
In the middle of 2014, our bootstrapped sales intelligence company DiscoverOrg accepted a growth equity investment from TA Associates. Soon, we had a fully-fledged Board of Directors.
Our board consists of three members from TA Associates, three independent Board Members, my co-founder, and myself.
Before this, we were only accountable to ourselves. We set high goals for year-over-year growth, but if we didn’t meet objectives, we were only letting ourselves down. The introduction of a top private equity firm and a true board structure required more accountability and brought real sophistication to our processes.
Running a company is hard enough as a CEO… Bringing in a board structure requires you to gain consensus and build relationships with strategic, motivated people who also have skin in the game.
Here are some key points to consider if you have or are about to have a Board of Directors:
1) They’re not the enemy.
When negotiating the deal, it’s easy to paint your investors as adversaries. In fact, the entire construct of ‘getting a deal’ done naturally pits an entrepreneur against an investor; this is why having good counsel and advisors during the process is critical—let them duke it out while you sit in the background and can start a generally fresh relationship at the end of due diligence.
Wash that idea away the day the deal documents get signed.
You and your investors are now on the same team; they view it that way and so should you. They’re not out to get you or make your life more difficult, they want the same thing you want—to grow the business to something much larger—so give them the benefit of doubt when they’re asking questions or looking for more information.
In fact, you should be friends. You are going to be seeing each other frequently, talking a lot and working through the most difficult professional challenges together. It’s okay to be friendly.
I’ve met the spouses and children of all of my investors, I’ve gone to their weddings, visited their homes, we’ve even run marathons and worked out together. This builds a relationship and allows you to see each others’ perspectives better.
2) Their word is not gospel.
Board meetings are an opportunity to discuss issues, progress, and strategic goals. That means your board members should be adding their opinions around the table. That doesn’t mean that you run back and do whatever they say—even if you don’t agree.
One board member pulled me aside after a board meeting and said, “Look, Henry, you’re the CEO, you know more about what works and doesn’t work than anyone in that meeting. Listen and discuss, but your job isn’t to just run back and do whatever the board tells you to do, like some kind of soldier taking orders.” It’s great advice.
3) Do a self-evaluation.
At the end of my first year, our investors asked me to do a self-evaluation. It was incredibly valuable for many reasons.
First, it was an opportunity for me to talk SH*T about myself—and recognize all the places I stumbled, messed up and didn’t get it right—to get it all out on paper and out of hiding. And in a sense, put it behind me.
Second, it’s a chance to introspect beyond the day-to-day firefight that CEOs are under—to look back and to look forward.
4) Hire a skilled CFO.
Your board loves numbers and metrics on, well, everything. Have a bad month? Show us the data on why. Have a great month? Show us the data on why. Want to engineer a new feature? Show us the data on how often it’s requested, if there is upsell potential, and so forth.
My view of the finance department is that it should be providing data, dashboards and metrics to the business unit heads so that they can do their jobs more effectively. So for sales, that means weekly reports on Leads to Demos, Demos to Opportunities, Opportunities to Deals—broken down by sales rep, leadsource, age, etc. Make sure your CFO is aligned this way.
If you don’t have a good CFO who can pull these numbers together for you and the board, you’re in trouble.
5) They know a lot of people – tap into that
Your board should know a TON of people that it can be really beneficial for you to get to know. TA set up dozens of meetings for me almost immediately – with CEOs, CFOs, Venture Capitalists, all people who could help me in one way or another – many times to attract new business – other times to discuss business strategy. All 3 of our independent board members came out of these meetings.
6) Set expectations and agenda items at the start of each year.
It can be tricky to stay on task at board meetings. There is a tendency to go off the rails or fixate on one thing. For example, competition is an easy rabbit hole to go down.
At the beginning of the year, pick 5-to-10 initiatives—the fewer, the better—that you truly believe will move the needle at the company in the coming year. Create KPIs and metrics around those initiatives so both you and the board can measure progress and analyze results at each meeting.
Sub point here: This makes it possible to not fixate exclusively on reporting what happened last quarter. Instead, get your “Qx Update,” move on to strategic discussion, and focus on the future—not just the past.
When you have a Board of Directors, you have the chance to learn and grow in ways you may not have envisioned on your own. Not only have our Board Members contributed professionally, but also personally. Today, I am grateful for their input and leadership as we guide the growth of DiscoverOrg.