Sunil Nagaraj discusses the big mindset shift you need to make as you approach your first board meeting, as well as the role of a board, optimal frequency of meetings, and common mistakes and solutions.
Hello everyone. My name is Sunil Nagaraj with Ubiquity Ventures. In today's session we're gonna be talking about how to nail the mindset before your very first board meeting. Ubiquity Ventures is a seed stage, nerdy and early venture capital firm. We invest in software beyond the screen, specifically entrepreneurs solving real world physical problems by moving software off the screen of computers and phones into the real physical world. In today's session, we'll spend time on how to make sure that your mindset around your board meeting and your board is correct. In a future session, we'll talk a lot more about the actual materials you should prepare, but again, this is all part of Ubiquity University so let's dive in.
The agenda for today is that we'll talk about a very big mindset shift that needs to happen right now the minute you raise money, and then we'll go through the right way to think about a board, how often to have board meetings and then some common pitfalls. So when I talk about a big mindset shift, what I'm really referring to is this idea that you've been raising money for a while now and in a couple of dimensions things really need to change. And so while you've been pitching investors, your goal has been to get money, and it was appropriate for you to be very guarded, to be very careful with every word because everything was a test. Underneath that, every time you shared something you were supposed to spin it, you were supposed to have lots of packaging around it because these were people, maybe you pitched 50 VCs and you weren't aligned with any of them. In fact, most of those 50 VCs will never think about you again. So zero alignment, and so in many ways this was kind of like dating. You were dabbling, bouncing around, and it was appropriate to have this mindset. Now what's happened is now that in that period everything is a test, now what's happened is money is in the bank. So at this point, everything really does need to shift. This idea that now since you have money in the bank, now it's time to begin working with your investors. So the goal is no longer to get money, it's not a build a company, it's to lock arms, get to work, and that implies a couple of key changes. On the transparency side there, you want to remove all packaging, you wanna share stuff as soon as it happens, you want to have no spin in the process. Now, I've found the best CEOs are able to make this jump very quickly. It's a jarring change that you go from being very careful to being very open. And for most of this time period you're gonna be very aligned with your investors. You both just want this to succeed. There will be small misalignments here and there but it's nothing like when you are pitching. So you want to be open, and in many ways you're now locking arms and getting to work. You're married, and if you don't make this shift you miss out on getting a lot of great help from your board. So that's sort of the main shift that should happen immediately, and it's a big deal when you do that.
Now, as you think about the board, I've found that there's many misconceptions about what a board is, what it should do. So let me take you through sort of let's start with the formal, like the basics of what a board is by the letter of the law. So at some level, at the most basic level the board represents is elected by the investors and it selects a leader of the company, CEO, sets the CEO's compensation, does a couple other important governance roles around improving financing events and options. And then an important piece here is that every board member is actually not there to vote in their own interests. The board is elected by all the investors. So what that means is when I'm on your board as a investor, I'm actually not representing investors, I'm representing the benefit, I'm thinking about the benefit of all shareholders and that's an important piece this fiduciary duty of care. So now we have the basics out of the way, let's talk more about what a bad board looks like. And again, this is something that I hear about a lot. I try to make sure none of our Ubiquity companies have a board set up like this. But one way to look at a board the wrong way is to think of them as your boss, right? That you need to please your boss, that you need to do what they say. That dynamic, this couldn't be farther from the truth. Another way is if you adopt that mindset is I always got to impress the board. I really need to make sure I take care of the board. That's I think completely the wrong approach, definitely at the pre-seed and seed stage but I think even going on in the series A and beyond. On the flip side, you shouldn't have a easy board, a board that rubber stamps everything you do. Instead what I'd really push you to do is try to push for a great board. Now, the way to think about this is not as a board, I may not even use that word. It's your group of really smart people who are really incentivized to help you. You've carefully selected these folks and now they're on your side and they will get rich if you get rich. They will feel the impact when you feel the impact of your great work. Another way to look at this is as a group of two or three other people who have different networks and different experiences. And when you run into trouble, if you think you need to impress them you're not gonna tell them about the trouble. But instead, if you think about them as a utility belt and you can pull out one of your tools to help cut through an issue, that's a great way to think about a board. Maybe the last items here is actually around helping you to track your progress. There's a forcing function of having a board meeting every 30 days where you have to pull up out of the weeds. And as a seed stage CEO, you should be in the weeds deeply immersed. But every 30 days you're sort of jarringly pulled out and then are forced to say, okay, did I accomplish what I thought I would accomplish along the way? And I think that can be really valuable along the way and there's a role for your board around sharing best practices. I'm on several other boards, so when I talk to you I can share what I'm hearing other companies do along the way. So an important piece of the puzzle if you have a great board, you can hopefully see how different it is from a bad board.
Now, a quick word on board meeting frequency. I think there's a belief that if you can, let's see, there's a common set of blog posts that if you can raise money and not have a board you've won, nothing could be farther from the truth. In fact, if you have board meetings less frequently sometimes people would say that it is less distraction. But I actually think that's totally false. If you have let's say quarterly board meetings, what ends up happening is everyone in the boardroom doesn't remember hardly at all what happened a quarter ago, what happened three months ago. Everything's fuzzy, there's more room for surprises and a CEO surprises with your board are like one of the worst things you can do, it'll come back to haunt you. So this notion of infrequent I think instead if you have more frequent, that is to say in my view, monthly, you could believe that it's more work. I think that's completely false. In our next session we'll talk about how to prepare board meeting materials. But the goal is about 30 to 60 minutes of preparation work, and it actually builds on itself 'cause if you have the monthly, everyone will remember the last meeting. There's less room for surprises and you actually get more engagement. The way I think about it Ubiquity is I usually fund about 18 months of runway for a startup. We need to raise money for about three to six months. So we have 12 months of kind of work. Now, if we have quarterly meetings, I'm gonna be talking to you once every quarter, every three months. So you get four interactions of really deep interactions. But instead if we do monthly, we get 12 interactions, time for us to talk, us to weigh in on the strategy of the business, pull in my network and experience. So you get more. So again, my strong advice is find the right board members and then lock arms and work really hard together.
So one of the last things that I'll touch on here is some common pitfalls. Now, again, I'm bringing these up because they are very natural. None of them are naive or foolish. I understand why they occur but I think as an advanced CEO that you're growing into you can actually avoid some of these if you look ahead. So one of the most common mistakes is that you set up an hour board meeting once a month, you took Sunil's advice, and you set up slides for one hour. You finish your slides and you hang up or you leave the room, end the meeting in person or end the Zoom. Now, the key here is that what actually is the truth is the real board meeting happens once you finish the slides. I'm not saying you shouldn't have slides, they are critical for the update for the discussion, but I would aim for about 45 minutes, maybe three quarters of the time that you've allocated, and then take the rest of the time with no slides to have the open, honest discussions. You'll see everyone's shoulders kind of lower, you'll see them open up and really talk about what are the real issues, what can they really do that. That ending session, it's not the executive session by the way, it's just some time to think and talk at the end of a board meeting without having any specific materials. Hey, what did you think? What were the trickiest parts? What are you worried about? What am I worried about? That honest face-to-face conversation is what I call the real board meeting. Another common mistake, you're an evolving startup, I like this blank definition. You are a temporary organization hunting for a repeatable business model. Against that backdrop, things are changing for you. You might use a word this month and use a different word next month to describe a user or your metric for revenue. Now, changing terminology is a tricky one. I mean, what happens is your board members have been in many other board meetings. They've been meeting many other startups. And so as a result, if you can instead have extreme consistency, I mean, the format of your slides, the fonts, the metrics, the way you talk about progress, it allows your board members to more quickly dive into the meat of it. They're not spending time understanding. And actually many board members love this idea of, myself included, of this idea that I can just look at last month's slide and this month's slide so that way I don't have to understand everything anew and take up time. Instead I can just say what changed since the last meeting? I remember how I felt it then the last meeting, tell me what moved and we'll see some of that in our next module on board meeting slides. Very related to this is assuming people remember all the acronyms you're using, all the terminology, everything that happened last board meeting, instead I'm a fan of repeating yourself. There's no way you can repeat yourself enough with me. Remind me what happened last meeting, remind me how we think about what the definition of revenue is, remind me what this acronym is. Many people will say you don't need to do that but I think the chance of a misunderstanding or someone smiling and nodding, but not knowing what you're talking about is too great. So I'd overcommunicate time and time again. Probably the last item we'll talk about here is another natural inclination which is something bad happened in your startup. You might think about impressing your board. This is that trick at the beginning but if you do, like, oh shoot, I better fix this before I share this news with the board. And again, at the pre-seed seed stage if you have the right kind of board members, you wanna share bad news immediately, day or night. And you can say you're working on it but the key is you want to retain that level of trust. I've had this happen where I find out about something bad two weeks later. And then what it does is it erodes a trust and it's this downward spiral, it's hard to come back from.
So with all of this, my goal in creating this module and with a lot of Ubiquity University is to make you a series A ready CEO at the pre-seed and seed stage. So I hope this was helpful and I do hope you'll continue with our next module on preparing your board meeting materials for your very first board meeting. Thank you again, my name is Sunil Nagaraj, and I'm available at email@example.com. Thank you.