How to Run a Board of Directors at a Growing SaaS Company

Boards are widely misunderstood by SaaS founders. Most of the time, boards are comprised of friendly people who are a mix of too unqualified to add strategic value, or are too close to the founder or company to be bold in delivering needed criticism. A board isn't a group to which management needs to 'sell' the vision of the company. Nor is it a venue for delivering a bland report of information better conveyed through written reports than in a meeting. Boards are for dialogue and concise debate. If your board meetings are bland and boring, then you are doing it wrong.

The role of a board is to represent the stakeholders of the business and assist management in maintaining equilibrium (see the Strategic Planning Play). Each member should be qualified and have a specific role. In the broader sense, a board member's legal role is settled, but the strategic role -- how they are adding value - can differ from person to person. Electing a board is important to get right.

When operating correctly, a board gives management the following benefits:

• Air cover for unpopular moves (customer contracting, employee communications, etc.)
• Strategic sounding board for difficult calls
• Accountability to do hard things (if you think it is possible to come back to the next board meeting without having done what you said you would do, then your board isn't value-added)
• Oversight to act right
• Focus on returns to shareholders as a primary metric

The goal: Create a value-added board.

How can Golden Section Assist? Golden Section's venture partner can assist here.

Steps

1. Design your board: If you have a board already, the first step is knowing who is on your board and who you need on the board. These can be two different things. Develop a strategy for what the board should ultimately look like.
   • Diversity: Diversity plays a major role, but not necessarily in the way traditionally conceived. When we say diversity, we mean diversity that leads to different thought patterns, not proxies for different lived experiences. When you get people that have scaled sales teams together with people who have implemented a multi stage capital strategy you are getting an interesting mix of diverse views.
   • Skeptics: Most of the time, management wants a board of enthusiastic and lenient yes-men. These are not the type of directors you want. A skeptic that requires in-depth analysis and introspection on every point can be very valuable for typically optimistic entrepreneurs.
   • Incentives: Every board member needs a reason to give the company their strengths. Sometimes well-meaning founders try to get major investors to join thinking that protecting their investment is the only incentive they need. This is a bad strategy and results in the investor - now board member - making decisions in light of their investment and not for the good of all stakeholders.
2. Setting expectations: Next, you should meet with each board member to walk through expectations. At this point, it is good to have a job description for board members already designed so that you are working off of a document. Board

members need as much (if not more) onboarding than an employee. This means product demos, customer tours, employee meetings, and the like.

1. Create the content plan: Effective board content updates the board members with all the data they need prior to the meeting so that the meeting can focus on the strategic issues and the most critical data elements that management wants to focus on. Here is a good general guideline of the report which should be sent to the board a minimum of 48 hours prior to a meeting:
   • Progress Update.
   • P&L vs Budget
   • Revenue vs Budget
   • Sales & marketing statistics
   • Operational statistics
   • Support metrics
   • Customer satisfaction scores
   • R&D roadmap, changes, and progress
   • Employee headcount and changes
   • Strategic initiatives status and progress
   • New Strategic Data
   • Closed-lost report with reasons
   • Churn report with reasons
   • Employee turnover report with exit interview content
   • Gross margin by customer
   • Support hours by customer
   • Fundraising conversations and progress
   • Risk Update
   • Existing risk overview and status
   • New risk overview and status
   • Resolutions and administration
   • Resolutions approved at the last meeting
   • Tabled resolutions from prior meetings
   • Proposed new resolutions
2. Set the Board meeting calendar & set roles: It is best to set the board meeting calendar at least one year out and add to every board meeting the task of creating the meeting for the 13th month out in that meeting. Sometimes it can work to set a xth day of the month as the permanent board date, but this can fall on a holiday or otherwise run into issues. Hence having each board member

actively vote on a day helps with attendance. In addition, the following roles are a must on every board:

• Chairman - responsible for setting the agenda and going over the resolutions with management prior to the meeting.
• Secretary - responsible for noting the minutes and facilitating the approval of the minutes.

1. Feedback and reviews: While the board does not necessarily 'work' for you, they can benefit from frequent one-on-ones with executive management. These venues are important to establish a rapport in addition to conveying feedback to the board member directly. Almost all of the time this feedback should be encouraging in nature - "I really would love for you to bring up this insight in our next board meeting." In addition to informal feedback, it is helpful to have a formal feedback session with each board member where you can solicit feedback directly from them in addition to express what you want from them.