Your board is ‘meh’
Sammy is the Managing Director and Cofounder of Blossom Street Ventures. Email him directly at sammy@blossomstreetventures.com, especially seed to Series C founders.
One question I get from entrepreneurs frequently is “so what value are you going to add?” It’s a fair question that should be asked of every VC, and my answer every time is “none”. Don’t get me wrong, I sit on multiple boards and I think every one of the CEO’s of those companies would tell you they appreciate us and we’re accretive. But we’re good at the things every VC should be good at such as M&A, raising capital, modelling, and advising on financial matters. When it comes to the operations though, you know what’s best and I’m going to defer to you. Run your business.
Legendary venture investor Vinod Khosla was quoted as saying “nobody who comes in once every six weeks while you’re working 80 or 90 hours a week is qualified to make a decision,” and he is absolutely right. “I believe a board in a small startup company should never vote on anything.” Again, I agree and in every instance where one of my companies has had a vote, there has never been a disagreement with the CEO. We’re all rational, have the same goals, and at the end of the day everyone gets on the same page. Below are some of my personal findings of boards:
1. In a Tech Crunch article written in 2013, Khosla was quoted as saying “95 percent of VCs add zero value. I would bet that 70–80 percent add negative value to a startup in their advising.” I can personally attest to this: if you can just find VC that don’t distract you with bad intros and initiatives, asks good questions, and lets you run the business, you’re lucky.
2. The most valuable board member is the one who has the guts to call you out on your bullshit and provide candid feedback. You may not know it now, but believe me, you will come to love that board member and confide in him/her the most. There are plenty of smart board members, but very few are comfortable with confrontation: they are called “yes men” and will not help you.
3. You should not have to create a 60 page pitch deck for every board meeting explaining what’s going on. Current financials and key metrics ahead of the meeting should be enough. You shouldn’t have to re-pitch your business every time to VC who are already invested, so be sure and ask potential board members what they expect out of board meetings. When I see a massive deck for the first meeting, I always tell the founder there isn’t a need for it unless they get value out of building the deck. Every minute he/she spent making that deck is a minute that wasn’t being spend on the business.
4. The best board meetings take 45 minutes to 1.5 hours at most. Answer questions about the numbers, talk about your problems, and tell the board members how they can help you. Meeting done.
5. Khosla also went on to say most VCs “haven’t done shit” and are not in a position to opine when a Founder is going through difficulties, and he’s right. When you’re going through a tough time, the best board member is going to be the candid one described above who is going to tell you who to fire and what costs to cut. You’ll already know those things, but he/she is going to be affirming them and supporting you through the difficulties.
Maybe the question shouldn’t be “what value are you going to add,” it should be “are you going to distract me from running the business and will you be candid with me when I have a problem?” Hopefully the article gives you a sense of our answer.
