This document provides guidance on building an effective board of directors. It discusses the purpose of boards, which is to provide oversight, set strategy, and make critical decisions. It also covers topics like board structure, including typical roles; meeting frequency; selecting board members; and best practices for serving the board well through things like board decks, insurance, and compensation. The overall aim is to help startup founders understand how to set up and work effectively with their board of directors.

1. Building a Powerful Board of Directors
GILLIAN MUESSIG
MANAGING DIRECTOR, MASTERSFUND™
CO-FOUNDER OF MOZ, BRETTAPPROVED, AND OUTLINES VENTURE GROUP
@SEOMOM

2. Our Agenda Today
u Basics
u Purpose: BoD vs BoA
u Power
u Structure: Size & Roles
u Frequency of meetings
u Selecting Board Members
u Board Management
u What goes into a deck
u Checkup Questions
u Reading
u Serving Your Board Well
u D& O Insurance
u Compensation
u Term Limits

3. The
Basics
Purpose
Power
Structure
Frequency

4. A Board’s Purpose
The Board of Directors’ most important function is
to approve, or send back for amendment,
management’s recommendations about
the future direction of the corporation.
William Wommack, Vice chairman of the board, Mead Corporation

5. A Startup Board’s Purpose
The Board is the governing body that
provides company oversight and
helps set business policy and strategy.
Gregg Adkin, Dell Tech Captial

6. Boards Make Critical Decisions
u Should we raise capital?
u Should we be acquired? When?
u Should we make this strategic transaction?
u Should we pivot from our current roadmap?
u Who should we hire or fire in senior management?

7. Advisory Boards Support Tactical Projects
u Tech and products
u Marketing and sales
u Critiquing sales deck or capital raise pitch deck
u Warm connections to potential customers,
channel partners, and others

8. Advisory Boards vs Board of Directors
Directors
u Legal & financial
health of the
company
u Strategic
Advisors
u Vertical sector
knowledge
u Tactical

9. 1 BoD
Several
BoA’s

10. Structure: The First Board Roles
u Chair or president
u Oversees Board work and Senior Exec Work
u Makes sure Board Resolutions are carried out
u Assists the CEO or COO in preparing board meeting agendas
u May serve as an alternate spokesperson to the CEO for the Company
u Secretary
u Maintains the minutes
u Ensures that the Board complies with company bylaws

11. Structure: Later Stage Boards
u Board Chair
u Vice Chair
u Secretary
u Treasurer
u Committees w/committee leaders

12. How Often Will My Board Meet?
Racing Out of the Sandbox
u MONTLY
Market Launch and Expansion
u QUARTERLY
Later Stage
u QUARTERLY / ANNUALLY

13. Seating
Your
Board
Who?
Why?
How?

14. Ask the right questions

15. Who Will Sit on My Board?
uVC Investors (Preferred Stock) will want a seat
uCommon stock should be represented
uSenior Management (CEO, COO)
uIndependent Board Members

16. Board Composition
CEO
COO
Common Stock
Series A VC
Independents

17. Who Chooses Independent Directors?
CEO
COO
Common Stock
Series A VC
Independents

18. Let’s just let the VC pick the best
CEO
COO
Common Stock
Series A VC
Independents

19. Let’s just let the VC pick the best
CEO
COO
Common Stock
Series A VC
Independents

20. Cooperation and Careful Selection
CEO
COO
Common Stock
Series A VC
Independents

21. Keep it simple to begin
CEO
COO
Series A VC

22. A larger board can have advantages
CEO
COO
Common Stock
Series A VC
Independents

24. What Am I Trying to Accomplish?
u Strategic:
u I need to plot out global expansion plans
u I may need to pivot; should I?
u Tactical:
u I need to raise a Series A
u I need to make or increase sales

25. Top Level Questions
u If I could have anyone in the world on my Board of
Directors, who would it be and why?
u Ok, if I can’t have that person, who else will accomplish
the goal, even if to a lesser degree?

26. Make it Real
Foster School of Business
Athena Alliance
Ask your colleagues
Connect on LinkedIn
https://www.latinoleadersmagazine.com/summer-2018/2018/9/6/the-15-most-relevant-hispanic-directors

27. Connect With Power

28. Decision Time
u What questions will you ask your potential Board
Member(s)?
u What will you share about your company?
u How will you know if this person is going to move your
company forward, support you, challenge you when
you need it, and be good for the success of the
company?

29. Set Your Values / Mission / Vision
u Set your company’s Values, Mission & Vision
u Build Your Board with People You Trust
to Guide & Amplify Your Values, Mission & Vision
u Set your corporate strategy – the direction the
company will take in the coming months/years
u Submit it to the Board for discussion and counsel
u Adjust and repeat

30. Core Values
https://moz.com/blog/what-we-believe-why-seomozs-tagfee-
tenets#:~:text=The%20TAGFEE%20code%20reflects%20the,all%20work%20and%20c
ontent%20produced.
TAGFEE
Transparency
Authenticity
Generosity
Empathy
Exceptional Work

31. Holding a Hard Line on Values

32. Why? How? What?
https://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action?language=en

33. Board
Deck
Setting the Goals
Components
Timely Submission

34. Set the Objective for the Meeting
u Set the Objective
u CEO’s
State-of-the-Company
address

35. Detail and Excellent Visualization
Quarterly
Financial
Report
u Detail
u Visualization

36. Leadership Reports
Executive team
presentations
u Key metrics
u Current priorities
u Progress against
previous priorities

37. Review and Calibration
u Strategic
Review
u Feedback

38. Asks

39. Serving Your
Board Well
Back to the Basics

40. Questions to Ask
u Support
u Governance
u Fiduciary
u Planning & Documentation
u Implementation

41. Directors & Officers Insurance
u Protects a company’s Directors and Officers from
personal financial losses arising from business-related lawsuits
u Covers claims against Directors & Officers while they're sitting
on the board of directors or acting as officers of the company
u Leaders can be held responsible for business failures and
potentially implicated in claims against the company

42. Compensation
u For early-stage companies, between 0.5% and 2.0%
equity is usual and customary
u This percentage should drop as the company grows
u In some cases, cash compensation is included
u Plan to reimburse your directors
for out-of-pocket expenses, such as travel expenses

43. Term Limits
u Set 2 -year limits
u Assess and re-invite,
if things work well
for all parties
u Set term limits in
Company Bylaws
https://techcrunch.com/2016/11/05/what-you-need-to-know-about-startup-boards/#:~:text=For%20early%2Dstage%20companies%2C%20a,pocket%20expenses%2C%20like%20travel%20expenses.

44. Reading
u The Board’s Most Important Function Harvard Business Review
u Governance Fundamentals VEACO Group
u The Board’s Role in Early Stage Startup TechCrunch
u Seven Things to Include in a Board Deck Insight Partners
u Preparing Your Board Deck Sequoia Capital
u Carta’s Board Deck Template Outlines Venture Group
u Directors & Officers Insurance Explained NerdWallet
u Board Director Compensation TechCrunch

45. Mastersfund
GILLIAN MUESSIG | ANNE KENNEDY
MANAGING DIRECTORS
PARTNERS@MASTERS.VC