Behind close doors of tech start-up Boards
The board is a powerful asset for tech start-ups. Yet, since the interaction takes place behind closed doors, there is a lot of uncertainty about how the CEO and director dynamics play out. How open is the communication between both sides? In this podcast, Dr Sabine Dembkowski, Founder and Managing Partner of Better Boards, discusses tech start-up boards with Yael Benjamin, Founder/CEO of research firm start-up Snapshot, and Tzahi (Zack) Weisfeld, Vice-President and General Manager of Intel Ignite, Intel's accelerator program. "One of the main conclusions of the research is the focus on communication, or we'll call it the lack of communication, and transparency between tech CEOs and their directors"Yael research finds one of the biggest issues is communication. Some 61% of the CEOs say they're not fully transparent with their board. "The lack of transparency is leading to a situation where CEOs do not utilise the value of the board" Yael's research finds the lack of transparency and trust leads to extra challenges and diminishes the value board members can bring."There's a difference between first-time founders and people trying to manage or work with a board for the first time versus the more experienced founders that have a better handle on the governance of their start-up"Zack feels the experience is a large and underappreciated factor here, both on the side of CEOs and founders and also on the side of board members. "CEOs that are young and inexperienced need to get the right kind of mentorship" Zack feels it is important for young and inexperienced CEOs and founders to find advisors who can be great sounding boards and resources for managing board situations. He feels consultants are not a good choice. "A great way to help first-time or younger founders is to have an independent board member"As founders seek advisors, Yael's research shows that 60% of start-ups do not have an independent board member. "Investors overestimated the value they're providing versus what those CEOs said they're receiving" As an additional consideration when looking at investors as board members, Yael's research finds there's a large imbalance in the perceptions of the value of advice and guidance. "The reality is that VC partners are often on too many boards" Considering Yael's data and his own experience, Zack feels an issue not often talked about is that VCs and investors are on too many boards. "When we talked about selecting your advisor, your mentor, you need to select a partner that's going to invest in you"At times, the only thing a VC has to offer is their cash. This means start-ups need to look for someone else to serve in that mentoring or advising capacity very intentionally.The top takeaways from our conversation are:1. Yael notes that a lack of transparency is going to prevent getting value from the board.2. Zack wants to remind everyone to choose your mentors, VCs, and board members as carefully as possible – with at least as much care as you would a co-founder or spouse. 3. Zack would also like to remind CEOs and founders that they are in control of their companies, not the boards. While boards play advisory roles, the ultimate responsibility for managing the firm lies with the CEO.4. Finally, Zack notes when it comes to boards, mentors, and advisors, adopt a "help them help you" approach. The more friction you can take out of the process, the more likely you are to get the help you need from busy people.