In 2011, shortly after Mike Sharkey took venture capital money for his San Francisco startup, one of the investors asked him an unexpected question: “So, when are we having our first board meeting?”
Brothers Mike, Chris and Peter Sharkey are among Australia’s most well-known startup veterans. A decade ago, while still in school, Mike joined Chris to help market his home-rental business Stayz, with the simple goal of hoping to impress girls. Chris sold Stayz for $17.5m in 2006. Since then, the brothers have begun several businesses and moved to San Francisco with their current venture, Autopilot.
“I was like, ‘Board meeting? Oh, right, I guess we have to have board meetings’,” Sharkey recalled.
Sharkey and his co-founders in Autopilot, (a business that automates marketing services), brothers Chris and Peter, weren’t new to creating companies. They came up with their first start-up as teenagers in Australia, a home-rental company called Stayz , later acquired by HomeAway. But their past ventures didn’t require them to have a board of directors.
At the first Autopilot board meetings, the brothers overloaded members with slides and statistics showing every facet of the company. “We were trying to tell the life story of the company every quarter, and it just wasn’t working,” Sharkey said.
Trying a different tactic, the brothers instituted ‘strategy beers,’ where they’d take board members out for a drink individually to fill them in on complicated issues and to ask for advice.
“The strategy beers really set the tone,” Mike Sharkey said. Now, their board meetings are full of advice from members, he said, exactly the thing the young company needs.
The mistakes the Sharkey brothers made early on are common for managers who work with a board for the first time. It’s especially true for those who have spent years in management roles that didn’t involve dealing with a board.
(For more on this topic, please see Above Board column on the biggest flub of tech founders.)
This lack of understanding of how to liaise with a board is a problem not just for CEOs and owners of start-ups who have taken seed money. Many vice presidents and upper-level execs in large corporations find themselves making presentations before a board of executives, often without any preparation for managing the relationship.
It’s crucial that managers quickly develop a good rapport with the board that can decide their fate, said Martin Coyne II, the former Kodak executive and author of the book, How to Manage Your Board While Your Board Manages You. “If you look at a board as a customer, it’s easy to ask yourself, ‘What does this customer want from me?’,” Coyne said.
That begins by getting an understanding of what information board members want from you and what decisions they expect to be included in before a decision is made.
Go in with the highlights
“The CEOs are living and breathing the business, probably 15 hours a day,” said Coyne, who is also chairman of the CEO Learning Network, an information resource for managers. “But the board doesn’t need to have that level of detail. Go in with the highlights.”
Rather than rehashing the day-to-day minutiae, the best way to approach board meetings is to share three or maybe four of the biggest issues of the company at the moment and ask members of the board to weigh in on major decisions and strategies. It’s likely the board is stacked with people who have faced the same kind of decision and have feedback to guide the company in the right direction, Coyne said.
The right dynamic
It’s also crucial for managers to understand the existing culture of the board, said Jörg Rocholl, president of the European School of Management and Technology in Berlin and member of the economic advisory board of the German Federal Ministry of Finance.
Some boards will have a jovial, mentor-like relationship with the CEO who reports to them, while others will see the role as one of fiscal governance. This relationship style isn’t something that’s necessarily decided by the country where the company is based, but instead it’s more about the culture set by the members.
The key is to learn how to work within the constraints of the board while also staying nimble, Rocholl said.
“The process of bringing decisions to a board instead of just making them yourself will seem slow at first. You need to respect the bureaucratic process while also holding on to the entrepreneurial spirit that made the company successful,” Rocholl said.
Above all, managers need to approach meetings the same way they would a sales call, Rocholl said. Go in with an elevator pitch that proves why the board should follow your direction. “This is when it’s necessary to be convincing, to argue well, and to show the board why they need to consider what’s in front of them,” Rocholl said.
They’re like opinion pieces that set the tone before the board needs to make a decision
Sharkey got to grips with it this year when he decided to shift his company a bit from the original idea. He honed his product to a smaller, more targeted segment of the audience. The Autopilot board included investors who had bought into the company based on that original pitch, so the Sharkey brothers needed to show them that this new direction could be more profitable.
Luckily, the brothers had gained the trust of the board by then with their personal meetings and “strategy beers”. They had figured out that boards don’t like to be surprised at a meeting by big news, so they made sure any major issues the company faced were discussed at length before a meeting began. They also began giving board members a one-page written summary of the major issue they’re facing at a meeting.
“They’re like opinion pieces that set the tone before the board needs to make a decision,” Sharkey said. In the end, the Sharkey brothers learned an important lesson for any executive: working with a board can turn from burden to an invaluable resource.
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