Board of Directors – Good News + Bad News
“You’re screwed!” my Board member said over his shoulder as we accidentally ran past each other in an airport. “Wait! What? Why? That Board package was filled with great news!” I exclaimed. He paused long enough to give me a pearl of wisdom I have never forgotten.
This encounter happened in 2008 when I was still in my first venture-backed role as CEO navigating my way with a 7-person Board dominated by venture investors. We had just had a spectacular series of results, and the board package I sent out the day before I left on my trip was probably the most glowing story I had ever told. I was excited to share with my Board of Directors all the good things that had happened!
Silly me! My Board member was a profoundly experienced businessman with decades of experience across dozens of Boards. He stopped long enough in the airport terminal to explain that I was screwed because I had failed to include any problems in my Board package. He said that if I didn’t share what problems we were still working on solving, then my Board members – in their efforts to be helpful – “would make stuff up!”
I wish I could report that I was right, and all of my Board members spent the Board meeting celebrating our good news with the team. Unfortunately, my veteran Board member was 100% right! The following week at the Board meeting, we spent a ridiculous amount of time discussing random worries that my investor-board members had about topics irrelevant to our startup. We were so far out in left field as they questioned things that had gone wrong in some of their other portfolio companies. Of course, no one intended to make stuff up to worry about, and they probably did not even realize they were doing it, but worry they did. And, in the process, they got all the other investors in the room worrying as well. And, once the worries were raised, we had to keep dealing with these non-issues for the next few Board meetings! (In hindsight, none of those worries ever even became real issues.)
The takeaway was that, as the CEO of the startup and leader of communications with the Board of Directors, I always need to ensure that I provide both good and bad news in my Board packages. Of course, if you look hard enough, there is always some of both in the development of a startup – and it is essential to provide insights into what is challenging to guide the Board to focus their instincts to help on topics that are actual challenges so their help may be genuinely helpful.
Ever since that experience, I have always made sure to include something(s) in the Board package that would be good to work on a bit as a group. Later in my career, my CFO and I even gave this practice a name so that we could check ourselves to ensure we did not fail to include at least one “little white dog” in every Board package, even when the news was overwhelmingly great.
