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Today’s Panel
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Session 2 of 3 – Today
Best Practices for Running a Board Meeting
Introduction to the “Board Best Practices” Series
What is the board’s role (from a legal perspective)?
Most common board conflicts and issues
Setting an effective board agenda structure
Content of presentation slides at board meeting
Time for team presentations
Time without team
Interaction with Directors outside of the Board Room
Managing transitional board meetings
Interactive discussion of venture board effectiveness metrics
Q&A
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Preview of Board Series Session 3
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What is the Board’s Role?
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Personality and Valuations Are Top Conflicts
Most Common Conflicts Between Board and CEO
Sales &
Mktg Mgt. Changes
Strategy 16% Valuations
Personality 24%
12%
27%
Valuations
Exit Strategy
18% 18%
Burn Rate
22%
Mgt. Changes Exit Strategy Sales & Mktg
21% 22% Strategy
20%
100%
75%
64.2%
57.6%
50%
0%
Timing of Mgt. Exit Strategies Roles of Early vs. Investor vs.
Transitions Later Stage Director Conflicts
Investors
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100%
75%
47.6% 47.0%
50%
25.1% 24.1%
25%
0%
Financing Strategy Exit Strategies Sales & Product Roles of Early vs.
Marketing Later Stage
Investors
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Board Composition– Best Practices
Typical Board Composition
Early-Stage Series B+
Board Board
Insiders
CEO 1 1
CTO, Founder 0 or 1 0
Investors 1 or 2 2 or 3
Independents 1 or 2 2 or 3
Total 3 to 5 5 to 7
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Typical Financial Reports to Board
Quick period-end Flash report
• Prepared and distributed within days of ending the period
• Demonstrates close management of key variables
Objectives
• Build and maintain credibility
• Inform but don’t overload
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Quick Period-End Flash Report
Headcount, cash balances, other easily measured
parameters in sales and operations, such as orders
received, installations made (subject to more complete
accounting in full report).
Brief status of key projects and initiatives
WHY?
• This is how the business should be managed every day, so
this report builds credibility.
• Note early warning signs
• Take timely repair actions
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Full Period Report with Variances to Budget
Full P&L, Balance Sheet, and Cash Flow for the Period
More details than needed or provided in “external” reports
to shareholders, including foreword projections and trends
Comparison to board-approved budget or annual
operating plan
Details of key events for the period: sales, marketing,
operations, R&D
• Sales info to includes actual bookings, forecast, and actual
revenue as well as variances to expectations
Discussion of key personnel adds and deletes
BALANCE: Not Operations Review detail, but meaningful
for board assessment of the business.
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Outside the Board Meeting
Interactions between Directors and Management
• Does everyone on the board know what the other directors
are thinking?
What happens when the board pushes the CEO too far?
• Testing the CEO’s mettle?
Strategic discussions versus operational details
• Optimize the utility of your directors, remember why they are
on the board and get as much out of them as possible
VC’s should open doors for the portfolio companies and help
them to close business
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Do’s and Don’ts for an Effective Board
Meeting
Do call your directors in advance of the meeting to discuss
important issues that will be covered at the meeting
Do send the material out at least 48 hours in advance–
one week may be wishful thinking, but 24 hours or less is
unfair to your directors
Do budget time appropriately across the entire meeting
• Stay on schedule!
Don’t squeeze the executive session– this is very
important time
Don’t bury your board with details and useless slides– this
raises more questions than it answers
Don’t save surprises for the board meetings
• Directors do not like surprises
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Metrics for Board Effectiveness are Absent in the
Venture Industry
No specific metrics
No specific metrics 87%
74%
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Director Self-Evaluations
• Blind and no attribution
• Include CEO evaluation of directors
• Why do VC’s have a problem with this?
Being honest about answering a host of questions
• How is the company operating?
• Is it truly on a success path?
• Are the CEO’s skills contributing to the company’s
success?
• Is the CEO largely operating from strength or
weakness?
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Closing Discussion on Board Effectiveness
What are some signs of an effective venture board?
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Handouts
“After the Term Sheet: How Venture Boards Influence the
Success or Failure of Technology Companies,” Pascal
Levensohn & Professor Dennis Jaffe, (November 2003)
“Rites of Passage: Managing CEO Transition in Venture-
Backed Technology Companies,” Pascal Levensohn,
(January 2006)
The Problem of Emotion in the Boardroom, Pascal N.
Levensohn, Directors & Boards, Directors & Boards
Magazine (Summer 1999).
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Handouts
A CEO Advisor handout - "Why you care about your board
package"
Sample Board Presentation Template
Sample Financial Statement format
Sample report of Equity plan (i.e. shares issued, available,
etc.)
Sample Corporate governance guidelines
Board Communication Checklist
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