Over the past several months, I’ve published two series of posts on the Bolster blog about Boards. The first series is designed to help CEOs better understand how to build, diversify, and scale their boards of directors. I’ll write about the second one next week. Both series of posts will feature in the second edition of Startup Boards, a book originally published in 2014 by Brad Feld and Mahendra Ramsinghani. The second edition, which is also co-authored by me, will be out late this year or early next year.

As I’ve gone about building our business at Bolster, including leading several dozen board searches for companies of all sizes and stages from pre-revenue to public, I’ve noticed that there are still a lot of questions among company leaders about board-building best practices. Without a lot of documentation and analysis about private company boards, most startup CEOs learn about building and managing boards through trial and error. As a result, this critical component of corporate governance is often under-utilized. Directors’ skills and networks are under-leveraged, term lengths are rarely re-negotiated, and board diversity becomes an afterthought.

This is why I set out to publish a comprehensive look at building boards, written from one CEO to another. You can read the full series here:

• The New Way to Scale A Board of Directors
• The Purpose of a Board
• Size and Composition of Boards
• Board Evolution and Turnover
• Diversity in the Boardroom and The Importance of Appointing First-time Directors
• What to Look for in a Director
• How to Recruit and Interview Directors
• How to Onboard Directors, Especially First-time Directors
• How to Compensate Independent Directors
• How to Build a Director Bench or Advisory Board
• How to Evaluate Your Board

The team at Bolster also compiled all of these posts into an eBook you can download by clicking on this link, entitled How to Build Your Board. No matter where you are in your journey as a CEO or company leader, I hope this is a resource and reference for you to look back on over time.

By the way – if you’d like to get access to more content like this or start a search for an independent director for your own board, you can sign up as a Bolster client here.

It feels like it may be a bit premature to write a post with this title here in the summer of 2021. Even as vaccines are rolling out fairly quickly, the combination of the Delta mutation of the COVID-19 virus and a bizarrely large anti-vaccine movement in the US, plus slower vaccine roll-outs in other parts of the world, are causing yet another spike in infections. 

However, I read Michael Lewis’s The Premonition last week, a bit of a “mid-mortem” on the Pandemic, and it got me thinking about what lessons we as a society have learned in these past 18 months, and how they can be applied to entrepreneurs and startups. I am particularly drawing on the few weeks I was deeply engaged with the State of Colorado’s COVID response effort, which I blogged about here (this is the 7th post in the series, but it has links to all the prior posts in order).

Here are a few top of mind thoughts. 

First, entrepreneurial skills can be applied to a wide range of society’s challenges.  The core skills of founders and entrepreneurs are vision, leadership/inspiration/mobilization of teams, and a fearlessness about trying things and then seizing on the ones that work and rapidly discarding the ones that don’t, quickly absorbing learnings along the way. If you look broadly at the world’s response to the Pandemic, and at Colorado’s response as a microcosm, you can see that the jurisdictions and organizations that employed those types of skills were the ones that did the best job with their response. The ones that flailed around — unclear vision, lurching from plan to plan and message to message, pandering to people instead of following the science, sticking with things that didn’t make sense — those folks got it wrong and saw more infections, hospitalizations, and deaths. 

Second, parachuting in and out of leadership roles really works but is a little bit unsatisfying. I think that, even in a short period of time, I got a lot of good work done helping organize and stand up the IRT in Colorado. It was very much an “interim CEO” job, not unlike a lot of the roles we place at Bolster. Without a ton of context around the organization I was joining, I still had an impact. The unsatisfying part is more about me as the exec than it is about the organization, though. I’m so used to being around for the long haul to see the impact of my work that I found myself pinging Sarah, who took over the leadership of the group after I left, Brad, and Kacey and Kyle on the teamfor a few weeks just to find out what was going on and what had become of Plan X or Idea Y. 

Third, I came to appreciate something that I used to rail against in the business world, or at least came to appreciate an alternative to it. I frequently will say something like “don’t solve the same problem four different ways,” almost always in response to people facing a big hole in the organization and trying to hire four different people to fill the hole, when likely one hire will do (or at least one for starters). But what Michael Lewis calls the “Swiss cheese defense” or Targeted Layered Containment (TLC) that worked pretty well as defense and mitigation against the virus while there was no vaccine totally worked. He calls it the Swiss cheese defense because, like a slice of Swiss cheese, each layer of defense has holes in it, but if you line up several slices of Swiss cheese just right, you can’t see any of the holes. Some masking here, some quarantining there, couple closures over there, a lot of rapid testing, some working from home where possible, some therapeutics – and voila – you can blunt the impact of a pandemic without a vaccine. The same must be true for complex problems in business. I am going to amend my approach to consider that alternative next time I have a relevant situation. 

Fourth, blunt instruments and one size fits all solutions to complex problems (especially in this situation, with multiple population types in multiple geographies) — even those with good intentions — can’t work, drive all sorts of unintended consequences, with a lack of feedback loops can make situations worse or at least frustrating. Nationwide or even statewide rules, quite frankly even county-wide rules, don’t necessarily make sense in a world of hot spots and cool spots. Statewide regulations for schools when districts are hyper local and funded and physically structured completely differently, don’t always make sense. There are definitely some comparables in the business world here – you’d never want, for example, to compensate people across all geographies globally on the identical scale, since different markets have different standards, norms, and costs of living. 

Finally, I am left with the difficult question of why all the preparation and forethought put into pandemic response seemed to fail so miserably in the US, when several nations who were far worse equipped to handle it in theory did so much better in reality. I am struggling to come up with an answer other than the combination of the general American theme of personal choice and liberty meeting the insanely toxic and polarizing swirl of politics and media that has made everything in our country go haywire lately. Big government incompetence in general, and failures of national leadership on this issue, also factor in heavily.  I also gather from Michael Lewis that the transition from one administration to another frequently involves a massive loss of institutional knowledge which can’t help. Of all these, failure of strong leadership stands out in my mind. 

The lesson for startups from this last point is important. Leadership matters. Eisenhower once said something to the effect that “plans are nothing but planning is everything.”  The thoughtfulness, thorough planning, communication and inspiration, and institutional knowledge that come from effective leadership matter a lot in executing and growing a startup, because you literally never know what COVID-analog crisis is lurking quietly around the corner waiting to pounce on your startup and threaten its very existence.

This is a topic we write about obsessively in Startup CXO: A Field Guide to Scaling Up Your Company’s Critical Functions and Teams — in fact, it’s basically the whole point of the book! I’ll write some more specific posts here in the coming weeks that take some excerpts from the book, but Bolster is putting on three free and open webinars we’re calling our “Bolster-up Series” over the coming weeks that I want to share with everyone who reads StartupCEO.com.

In this series, I’ll be doing short interviews with CEOs who we work with at Bolster on the different aspects of scaling specific functions, how they diagnosed those problems, and how they leveraged on-demand executive talent to solve those problems. The three events are:

• 7/20 2:00-2:30pm EST: Signs your Finance function isn’t scaling and what to do about it with MediaWallah founder and CEO Nancy Marzouk.
• 8/12 2:00-2:30pm EST: Signs your Revenue function isn’t scaling and what to do about it with Ozcode CEO Shimon Hason.
• 9/15 2:00-2:30pm EST: Signs your Marketing function isn’t scaling and what to do about it with Drip CEO John Tedesco.

You can sign up for the first one on Finance by clicking here.

It’s good that my friend Brad Feld‘s new book (co-authored by Dave Jilk, who I’ve also known on and off over the years), is divided into 52 chapters and is designed as a bit of a devotional, to be read one chapter per week.

Each chapter of The Entrepreneur’s Weekly Nietzsche: A Book for Disruptors is, as the authors write in the Introduction, worth “chewing on a while.” The structure of the book is laid out as:

The book contains fifty-two individual chapters (one for each week) and is divided into five major sections (Strategy, Culture, Free Spirits, Leadership, and Tactics). Each chapter begins with a quote from one of Nietzsche’s works, using a public domain translation, followed by our own adaptation of the quote to 21st-century English. Next is a brief essay applying the quote to entrepreneurship. About two-thirds of the chapters include a narrative by or about an entrepreneur we know (or know of), telling a concrete story from their personal experience as it applies to the quote, the essay, or both.

That structure is perfect for me. I did ok in Philosophy classes, but I wouldn’t say it was my preferred subject. So the fact that Brad and Dave turned every Nietzsche quote into plain English before applying it to entrepreneurship and disruption was a welcome tactic to make the book as accessible as possible.

I wrote one of the essays in the book on creating a Company Operating System, which is in the chapter called “Doing is not Leading.” It’s an honor to be included as a contributor alongside a number of awesome CEOs, including Reid Hoffman, Ingrid Alongi, Daniel Benhammou, Sal Carcia, Ben Casnocha, Ralph Clark, David Cohen, Mat Ellis, Tim Enwall, Nicole Glaros, Will Herman, Mike Kail, Luke Kanies, Walter Knapp, Gary LaFever, Tracy Lawrence, Jenny Lawton, Seth Levine, Bart Lorang, David Mandell, Jason Mendelson, Tim Miller, Matt Munson, Ted Myerson, Bre Pettis, Laura Rich, Jacqueline Ros, and Jud Valeski.

In his Foreword, Reid Hoffman connects the dots perfectly:

Returning to Nietzsche, let’s examine why he in particular is such an apt patron philosopher for entrepreneurs. Nietzsche was rebelling against a stultifying philosophical practice that exalted the past—specifically the ideals and images of former thinkers and former leaders. He wanted to refocus on the now, on what humanity was and what it could become. As part of his rebellion, Nietzsche philosophized with a hammer: he wanted to destroy the old mindsets that locked people into the past, and thus better equip them to embrace the possibility of the new. Nietzsche’s desire to shift mindsets is also why he emphasized new styles of argument. Whereas most philosophers would typically open an argument in a classical form or by reviewing a historical great, Nietzsche would lead with an arresting aphorism or a completely new mythological narrative. He was, above all else, a disruptor of pieties and convention, always in search of new and original ways to be contrarian and right, never satisfied with the status quo. This is exactly the kind of mindset entrepreneurs should adopt. This is why a daily practice of philosophy can be the way that an entrepreneur moves from good to great. And, why a daily practice of Nietzsche is a great practice of philosophy for entrepreneurs.

What I love about the book is that you can read any given chapter at any time without having to read it front to back, and the combination of Nietzsche and entrepreneur essays makes the topics come to list. Pick one — they are organized into five sections, Strategy, Culture, Free Spirits, Leadership, and Tactics — and you’re sure to get both something chewy (e.g, thoughtful) and delicious (e.g., practical).

As I finished up my work on the Second Edition of Startup CEO:  A Field Guide to Scaling Up Your Business and started working on a new startup, my colleagues and I started envisioning a new book as a sequel or companion to Startup CEO that is going to be published on June 9 with our same publisher, Wiley & Sons.  The book is called Startup CXO:  A Field Guide to Scaling Up Your Company’s Critical Functions and Teams.

Simply put, the first book left me with the nagging feeling that it wasn’t enough to only help CEOs excel, because starting and scaling a business is a collective effort. What about the other critical leadership functions that are needed to grow a company?  If you’re leading HR, or Finance, or Marketing, or any key function inside a startup, what resources are available to you? What should you be thinking about?  What does ‘great’ look like?  What challenges lurk around the corner as you scale your function that you might not be focused on today?  If you’re a CEO who has never managed all these functions before, what should you be looking for when you hire and manage all these people?  If you’re an aspiring executive, from entry-level to manager to director, what do you need to think about as you grow your career and develop your skills?

Startup CXO is a “book of books,” with one section for each major function inside a company.  Each section is be composed of 15-20 discrete short chapters outlining the key “playbooks” for each functional role in the company – Chief People Officer, Chief Financial Officer, Chief Marketing Officer, Chief Revenue Officer, etc., hence the title Startup CXO – which is a generally accepted label in the startup ecosystem for “Chief ____ Officer.”

Here are the front and back covers of the book, with some great endorsements we’re so proud of on the back.

This is an important topic to write about at this particular time because America’s “startup revolution” continues to gather steam.  There are only increasing numbers of venture capital investors, seed funds, and accelerators supporting increasing numbers of entrepreneurial ventures.  While there are a number of books in the marketplace about CEOs and leadership, and some about individual functional disciplines (lots of books about the topic of Sales, the topic of Product Development), there are very few books that are practical how-to guides for any individual function, and NONE that wrap all these functions into a compendium that can be used by a whole startup executive team.  Very simply, each section of this book serves as a how-to guide for a given executive, and taken together, the book will be a good how-to guide for startup executive teams in general.

Startup CXO has my name on it as principal author, and I’m writing parts of it, but I can’t even pretend to write it on my own, so the book has a large number of contributors who have the experience, credibility, and expertise to share something of value with others in their specific functional disciplines — most of my Bolster co-founders are writing sections, and the others are being written by former Return Path executive colleagues — Jack Sinclair, Cathy Hawley, Ken Takahashi, Anita Absey, George Bilbrey, Dennis Dayman, Nick Badgett, Shawn Nussbaum, and Holly Enneking.

Startup CXO is also pretty closely related to Bolster’s business, since we are in the business of helping assess and place on-demand CXO talent, and as such, the final section of the book has a series of chapters written by Bolster members who are career Fractional Executives about their experience as a Fractional CXO.

The book is available for pre-order now at Amazon and Barnes & Noble.

Oh, and stay tuned for a third book in the series (kind of) due out late this year. More on that over the summer as the project takes shape!

(This is the third in a series of three posts on this topic.)

In previous posts (here, here) , I talked about the difference between Mentors and Coaches and also how to select the right ones for you. Once you’ve selected a Mentor or Coach, here are some tips to get the most out of your engagement.

Starting to work with a CEO Mentor is fairly easy. Give them some materials to help understand your business, and then come prepared to every session with a list of 1-2 topics that are keeping you up at night where you want to benefit from the person’s experience.

Kicking off a CEO Coach engagement is more in-depth. I always recommend starting to work with a CEO Coach by doing a DEEP 360.  Not one that’s a bland anonymous survey instrument, but one that involves the Coach doing 15-20 in-depth interviews with a wide range of people from team to Board to others in the organization to people you’ve worked with outside the organization, including some non-professional contacts.  Let the Coach really learn about you from others.  The reason for this is that, although you may have an area of development that you want to focus on (like I did when I met Marc), you may actually need help in other areas a lot more acutely.

In general,  I’d say these are a few good rules of thumb for getting the most out of your Coach or Mentor relationship and sessions of work together:

• Do your homework.  If you have an assignment to read an article, take a survey, or just write something up, either do it or cancel the next meeting or it will be a waste of everyone’s time
• Be present.  Step away from your desk. Turn off email.  Silence your phone.  These are some of the most valuable times for your own personal development and growth, and they are few and far between when you get to be a CEO.  Treasure them
• Bring your whole self.  Even if your coach is a full 5 on the Shrink-to-Management Consultant scale I mentioned above, people are people, and you’re no exception.  You have a bad day at home — it will show through at work and it will impact your Coach conversations (maybe less so your Mentor ones).  Don’t ignore it.  Mention it up front
• Don’t bullshit.  You know when you’re wrong about something or have made a mistake.  You may or may not be great about admitting it publicly, or even admitting it to yourself.  ADMIT IT TO YOUR COACH.  Otherwise, why bother having one?
• Encourage primary data collection.  The biggest place I’ve seen coaching relationships fail is when the Coach or Mentor only has access to a single point of information about what’s happening in the organization — you.  Even if you’re not in full-on 360 mode, encourage your Coach or Mentor to spend time with others in the organization or on your board here and there and have a direct line of communication with them.  If they don’t and all they’re working off is your perspective on situations, their output will be severely limited or subject to their own conjecture.  Especially if you can’t get the prior bullet point right (garbage in, garbage out!)
• Make it your agenda even if it means changing on the fly.  You may be working on an analysis of your team’s Myers-Briggs profile with your Coach – and that’s the topic of your next meeting – but right before the meeting, you learn that one of your CXOs is resigning.  Change the agenda.  It’s ok.  It’s your time, make it work for you
• Learn to fish.  At the end of the day, a good CEO Coach should offer you ways of thinking about things, ways of being, ways of learning in your organization, processes to give you the ability to do some elements of this by yourself – not just answering questions for you.  Sports trainers are useful for an athlete’s entire career to push them harder in workouts, but they also teach athletes how to work out on their own
• Reality check the advice.  Make sure to test the strategies that Coaches or Mentors are giving you against your organization.  All strategies won’t work in all organizations.  These conversations should offer a variety of strategies – you can pick one or pick none and do something totally different.  The value isn’t in being told what to do, it is in going through the process of deciding what to do for YOUR organization with some expert inputs and reflections on other experiences
• Close the loop.  I’ve written before about how to solicit feedback as a CEO.  To make sure your coaching work is effective, be sure to include feedback loops with your key stakeholders (team and board) on the things you’re working on with your CEO Coach

It’s worth the money.  CEO Coaches can be really expensive.  Like really, really expensive.  $500-1,500/hour expensive.  CEO Mentors can be free and informal, but sometimes they charge as well or ask for advisor equity grants.  Even if you have a thin balance sheet, don’t be shy about adding the expense, and you shouldn’t pay for this personally.  Adding 10-20% to the cost of your compensation will potentially make you twice as effective a CEO.  If your board doesn’t support the expense…well, then you may have a different problem.

There’s a lot written publicly about this topic.  Jason Lemkin at SaaStr has a particularly good post that really puts a fine point on it.  And the coaching team at Beyond CEO Coaching a new boutique coaching firm specializing in coaching black CEOs, writes in “Who are you not to be great?”, “You can play it safe and reduce your risks and likely the rewards, or you can go big.  We at Beyond CEO Coaching want to help you to go big.”

By the way, this entire framework applies to non-CEOs as well.  Every professional would benefit from having a Coach and a Mentor in their life, even if those aren’t paid consultants but more senior colleagues or members of the company’s People Team.  Sometimes a Mentor and a Coach are one and the same…sometimes they are not.

Thanks to a large number of Bolster members I know personally who are CEO Coaches and Mentors for reviewing these posts — Chad Dickerson, Bob Cramer, Tim Porthouse, Marc Maltz, Lynne Waldera, Dave Karnstedt, and Mariquita Blumberg.

Last week, I blogged about Bolster’s Board Benchmark survey results, which really laid bare the lack of diversity on startup boards.  There are signs that this is starting to change slowly — one big one is that of all the board searches we are running at Bolster, about ⅔ of them are open to taking on first-time directors; and almost all are committed to increasing diversity on their boards.  

This is also something that I would expect to take some time to change.  Boards are small.  Independent seats aren’t necessarily easy to open up.  Seats don’t turn over often.  And they take a while to fill, as CEOs are thorough in their recruitment and selection process.

My new mantra for Startup Boards is simple:  1-1-1.  

1 member of the management team.

Then 1 independent for every 1 investor.

Simply put, this means you should grow from having 1, to 2, to 3 independent directors as your board grows from 3, to 5, to 7 members.

Here are four tough conversations you may have to have along the way, with some suggestions on how to navigate them.  All of these conversations need to come with a point of view of why independence and diversity matters to your company, a lot of empathy, and appreciation for the value the person brings to the table. 

The conversation with your co-founder about only one founder/executive on the board.  This one will be the most personally difficult, since you likely have a strong personal bond.  Expect to hear things like “Aren’t we partners in this business?” and “How come my vote doesn’t count?”  Just let your co-founder know that while of course they’re a key partner, the company has a limited number of board seats to fill — each one is a golden opportunity to get an outside perspective on your business and get really good mindshare of an industry expert and create a new brand ambassador.  You already have 100% of the mindshare and ambassadorship your co-founder has to offer.  You can make that person a board observer, you can make sure they’re in all the key board conversations, and you can even give the person some special voting right in your charter or by-laws if you need to.  But do not put them on the board.  It’s obviously easier to do this from the beginning as opposed to removing them from the board down the road, but at least try to have the conversation up front that someday, it’s going to happen (note this could be a different dynamic if the person is a founder but no longer active in the business).

The conversation with an existing VC about leaving the board to make room for new investors or an independent.  This one will be less personally difficult but will require you to be very artful since the VC is likely contractually given a board seat – meaning you’ll have to get them to give it up voluntarily.  You may also want to align with another VC on your board to help the conversation or process along.  Depending on the circumstances at hand, your key points of logic could be one of the following:  (1) you don’t own as high a percentage of the company as you once did, and I’d like to make room for the new lead investor to join the board without compromising our independents or making the board too big; or (2) I’d like to replace you with an independent director who brings operator perspective and comes from an underrepresented group – it’s important to me that we build a diverse board, and it’s not great that we have don’t have gender or race/ethnic diversity on our board in this day and age.  As with a co-founder, you could change this person’s designation to a board observer so they’re still present for key conversations, you’re not changing their Information Rights, which are likely contractually given in your charter, and if required, you can give the person or firm some sort of special voting rights if there’s something they can no longer block (but which they have a contractual right to block) by losing their board vote.

The conversation with a new potential investor about not taking a board seat.  If you have a big new lead investor writing a $40mm check into a growth round, you may not have a leg to stand on.  But new investors who write smaller checks as you get larger, who might only be buying a 5-10% stake in the business…there, you might have some wiggle room to negotiate.  Your best bet is to do it early in the process before you have a term sheet, and do it as an exploratory conversation.  Otherwise, your talking points are the same as talking to an existing investor above. Investors are starting to realize the power of a diverse board, and may be open to this conversation. Some are making this a proactive practice, notably two of my long-time investors and directors Fred Wilson and Brad Feld (and some of their partners at Union Square Ventures and Foundry Group) — and those investors have also been willing to mentor the new, first time board members once they join.

The conversation with an existing independent director about leaving the board when their term is up.  Perhaps you have an existing independent director who is not adding to the diversity of the board, but you already have a full board.  Or perhaps your existing independent director isn’t doing a great job or has grown stale in the role.  Once a director is fully vested, you have an easy opportunity to thank them graciously and publicly for their service, extend their option exercise period multiple years, and affirm that they’ll still take your call if you need help on something.  You should set this expectation up front when you give the director their initial grant.  If they ask why you’re not renewing them, you can simply say something like “We’d like to add some fresh outside perspective to the team.”  One thing to think about, particularly for early stage companies, is only giving new directors a 1 or 2-year vest on their first option grant, so you can make sure they’re a high value director…and so you can have the option of an easy exit (or re-up) in a shorter period of time than a traditional 4-year vest.

The net of it is that as CEO of a venture-backed company, you wield an enormous amount of (mostly soft) power around the composition of your board – probably a lot more than you think.  You just have to wield that power gently and focus on the importance of building a diverse board in terms of both experience and demographics.

I love having independent directors on my Board.  They are a great third leg of the stool alongside a CEO/Founder and VCs.  They provide the same kind of pattern matching and outside point of view as VCs — but from a completely different perspective, that of an operator or industry expert.  The good ones are CEOs or CXOs who aren’t afraid to challenge you.  Equally important, they’re not afraid to challenge your VCs.  At Return Path, I always had 2 or 3 independent directors at any given time to balance out VCs, and some have become great long term friends like Scott Petry, Jeff Epstein, and Scott Weiss.  At Bolster, we’re already having a great experience with our first independent, Cristina Miller, and we’re about to add a second independent.  And I’ve served as an independent director multiple times.

So as you can imagine, I was shocked by one of the headlines coming out of the Board Benchmark study we ran at Bolster across 250+ clients (detailed blog post with a bunch of charts and graphs) that only ⅓ of companies in the study have any independent directors.  Even larger companies at the Series C and D levels only have independent directors 60% and 67% of the time.  What a missed opportunity for so many companies.

Less surprising, though still sobering, were the numbers on diversity that came out of the study.  79% of the directors in the sample are white.  86% are men.  43% of boards are completely racially homogenous (most all-white) while 80% are mostly racially homogeneous (meaning only one diverse member); 56% are gender homogenous (most all men), while 87% are mostly gender homogenous (only one female).  For an industry that is spending a lot of time talking about diversity in leadership teams and on boards, that’s disappointing.

Here’s the linkage of the two topics:  The solution to the board diversity problem lies in having more independent directors, since management and VC board seats are often both “fixed” and non-diverse.  Independent seats are the easiest to fill with diverse candidates.  Conveniently, more independent directors also leads to higher quality boards.  

In partnership with some DEI experts, our study also includes some suggested actionable tips for CEOs and board leaders, which I encourage you to read. There are really three simple (IMO) steps to having more diverse boards, and there is some good news in the Bolster study around these points:

1. Add independent director seats.  50% of the companies in the survey either have or expect to have an independent board seat open within 12 months.  That’s a good start, but honestly, I can’t imagine running any board without at least 1-2 independent directors (up to 3-4 for larger companies), starting on Day 1.  Given that only ⅓ of companies in the sample have any independent board members at all, the 50% number feels quite low.
   
2. Open the recruiting funnel to include first-time directors.  Historically, companies have mainly targeted current or former CEOs or people who have board experience to be independent directors.  That is a recipe to perpetuate having mostly white male board members.  But Bolster has done a few dozen board searches so far, and 66% of those clients have expressed a willingness to take on first-time directors, as long as they are “board ready,” which we define as having been on any kind of board, not just a corporate board; having reported to a founder or CEO and had regular interaction with and presentations to a board; or having significant experience as a formal or informal advisor.  Once you widen the funnel to include all candidates who meet those criteria, you can very easily have a diverse slate of highly qualified candidates.  Bolster is a great source of these candidates (this is a real focal point for our business), but there are plenty of other online or search firm sources as well.
   
3. Have the courage to limit the number of management/investor board members.  Whether or not you can add independent board members may be a function of how many seats you have to play with in your corporate charter.  Of course, you can add seats indefinitely, but there’s no reason to have a 7-person board for your Series A company.  My rule of thumbs on this are simple:  (a) Only one founder member of the management team on the Board – more than that is a waste of a valuable board slot; and (b) VCs should always be less than 50% of your board members, so as new ones roll on, old ones should roll off – or add a VC and an independent at the same time.  Both of these take serious effort and courage, both are worth it, and both probably merit a longer blog post someday.

The Board Benchmark study also had a wealth of information about compensation for independent directors — cash vs. stock, what kind of stock, how much stock, vesting and acceleration provisions. 

Here’s a Slideshare of the full survey results, in case this and/or the Bolster blog link isn’t detailed enough for you:

If you’re interested in learning more, the survey is free to take and all the granular results (including comp benchmarks) are available to benchmark against your company if you take it. Just email me if you’re interested at [email protected].

This question has been on my mind for years. In the wake of Georgia passing its new voting regulations, a many of America’s large company CEOs are taking some kind of vocal stance (Coca Cola) or even action (Major League Baseball) on the matter. Senate Majority Leader Mitch McConnell told CEOs to “stay the hell out of politics” and proceeded to walk that comment back a little bit the following day. The debate isn’t new, but it’s getting uglier, like so much of public discourse in America.

Former American Express CEO Harvey Golub wrote an op-ed earlier this week in The Wall Street Journal entitled Politics is Risky Business for CEOs (behind a paywall), the subhead of which sums up what my point of view has always been on this topic historically — “It’s imprudent to weigh in on issues that don’t directly affect the company.” His argument has a few main points:

• CEOs may have opinions, but when they speak, they speak for and represent their companies, and unless they’re speaking about an issue that effects their organization, they should have Board approval before opening their mouths
• Whatever CEOs say about something political will by definition upset many of their employees and customers in this polarized environment (I agree with this point a lot of the time and wrote about it in the second edition of Startup CEO)
• There’s a slippery slope – comment on one thing, you have to comment on all things, and everything descends from there

So if you’re with Harvey Golub on this point, you draw the boundaries around what “directly affects” the company — things like employment law, the regulatory regime in your industry, corporate tax rates, and the like.

The Economist weighed in on this today with an article entitled CEO activism in America is risky business (also behind a paywall, sorry) that has a similar perspective with some of the same concerns – it’s unclear who is speaking when a CEO delivers a political message, messages can backfire or alienate stakeholders, and it’s unclear that investors care.

The other side of the debate is probably best represented by Paul Polman, longtime Unilever CEO, who put climate change, inequality, and other ESG-oriented topics at the center of his corporate agenda and did so both because he believed they were morally right AND that they would make for good business. Unilever’s business results under Polman’s leadership were transformational, growing his stock price almost 300% in 10 years and outpaced their peers, all as a “slow growth” CPG company. Paul’s thinking on the subject is going to be well documented in his forthcoming book, Net Positive: How Courageous Companies Thrive by Giving More Than They Take, which he is co-authoring with my good friend Andrew Winston and which will come out later this year.

While I still believe that on a number of issues in current events, CEOs face a lose-lose proposition by wading into politics, I’m increasingly moving towards the Paul Polman side of the debate…but not in an absolute way. As I’ve been wrestling with this topic, at first, I thought the definition of what to weigh in on had to come down to a definition of what is morally right. And that felt like I was back in a lose-lose loop since many social wedge issues have people on both sides of them claiming to be morally right — so a CEO weighing in on that kind of issue would be doomed to alienate a big percentage of stakeholders no matter what point of view he or she espouses.

But I’m not sure Paul and Andrew are absolutists, and that’s the aha for me. I believe their point is that CEOs need to weigh in on the things that directly affect their companies AND ALSO weigh in on the things that indirectly affect their companies.

So if you eliminate morality from the framework, where do you draw the line between things that have indirect effects on companies and which ones do not? If I back up my scope just a little bit, I quickly get to a place where I have a different and broader definition of what matters to the functioning of my industry, or to the functioning of commerce in general without necessarily getting into social wedge issues. For want of another framework on this, I landed on the one written up by Tom Friedman and Michael Mandelbaum in That Used to be Us: How America Fell Behind in the World It Invented and How We Can Come Back, which I summarized in this post a bunch of years ago — that America has lost its way a bit in the last 20-40 years because we have strayed from the five-point formula that has made us competitive for the bulk of our history:

• Providing excellent public education for more and more Americans
• Building and continually modernizing our infrastructure
• Keeping America’s doors to immigration open
• Government support for basic research and development
• Implementation of necessary regulations on private economic activity

So those are some good things to keep in mind as indirectly impacting commercial interests and American competitiveness in an increasingly global world, and therefore are appropriate for CEOs to weigh in on. And yes, I realize immigration is a little more controversial than the other topics on the list, but even most of the anti-immigration people I know in business are still pro legal immigration, and even in favor of expanding it in some ways.

And that brings us back to Georgia and the different points of view about whether or not CEOs should weigh in on specific pieces of legislation like that. Do voting rights directly impact a company’s business? Not most companies. But what about indirect impact? I believe that having a high functioning democracy that values truth, trust, and as widespread legal voter participation as possible is central to the success of businesses in America, and that at the moment, we are dangerously close to not having a high functioning democracy with those values.

I have not, as Mitch McConnell said, “read the whole damn bill,” but it doesn’t take a con law scholar to note that some pieces of it which I have read — no giving food or water to people in voting lines, reduced voting hours, and giving the state legislature the unilateral ability to fire or supersede the secretary of state and local election officials if they don’t like an election’s results — aren’t measures designed to improve the health and functioning of our democracy. They are measures designed to change the rules of the game and make it harder to vote and harder for incumbents to lose. That is especially true when proponents of this bill and similar ones in other states keep nakedly exposing the truth when they say that Republicans will lose more elections if it’s easier for more people to vote, instead of thinking about what policies they should adopt in order to win a majority of all votes.

And for that reason, because of that bill, I am moving my position on the general topic of whether or not CEOs should wade into politics from the “direct impact” argument to the “indirect impact” one — and including in that list of indirect impacts improving the strength of our democracy by, among other things, making it as easy as possible for as many Americans to vote as possible and making the administration of elections as free as possible from politicians, without compromising on the principle of minimizing or eliminating actual fraud in elections, which by all accounts is incredibly rare anyway.

(This is the second in a series of three posts on this topic.)

In a previous post, I shared the difference between CEO Mentors and CEO Coaches. I’ll share with you here how to select the Mentors and Coach who are right for you.  First, you need to find candidates.  Whether you’re talking about CEO Coaches or CEO Mentors or both, getting referrals from trusted sources is the best way to go about this.  Those trusted sources could be your VC or independent board members, friends, fellow CEOs — or of course Bolster, where we have a significant number of Coaches and Mentors and have made it our business to vet and vouch for them.

Selecting a CEO Mentor is literally like selecting a teacher but at a vocational school, not at a research university.  You want to select someone who has done something several times or for several years; done it really well; documented it in some organized way (at least mentally); and can articulate what they did, why, what worked and what didn’t, and help you apply it to your situation.  Do you want to be taught how to be an electrician by someone with a PhD in Electrical Engineering, or by someone who has been a master electrician for 20 years?   Fit matters mostly around values.  It’s hard to get advice from someone whose values are quite different, as their experiences and their metrics for what did and didn’t work won’t apply well to yours.  Fit is a lot less around personality, although you have to be able to get along and communicate with the person at a basic level  Find someone with the right experience set that you can learn from RIGHT NOW.  Or at least this year.  Maybe the person is the right mentor next year, maybe not.  Depends on what you need.  For example, if you’re running a $10mm revenue DTC company, find someone who has scaled a company in the DTC or adjacent eCommerce space to at least $25-50mm. 

Although I’ve been very international in getting mentoring as a CEO over the years, I’ve never hired a formal CEO Mentor. Several people, from my dad to my independent directors to the members of my CEO Forum have played that role for me at different times over the years. Knowing what I know now, I’m working with CEO Mentors who have experience with talent marketplaces at different scale, since this is a new industry for me.

Selecting a CEO Coach is different.  I got lucky in my selection of a CEO Coach almost 20 years ago.  My board member Fred Wilson told me I needed to work with one, I naively rolled my eyes and said ok, he introduced me to Marc Maltz, I told Marc something like “I need a coach because clearly I need to learn how to manage my Board better,” and for some reason, he decided to take the assignment.  I got lucky because Marc ended up being exactly the right coach for me, going on 20 years now, but I didn’t know that at the time.  

Selecting a CEO Coach is all about who you “click with” personality wise, and what you need in order to be pushed to grow developmentally.  CEO Coaches come on a spectrum ranging from what I would call “Quasi-Psychiatrist” on one end, to “Quasi-Management Consultant” on the other end.  The former can be incredibly helpful — just note that you will find yourself talking about your thoughts, feelings, and family of origin a fair bit as a means of uncovering problems and solutions.  The latter can be helpful as well — just note that you will find yourself talking about business strategy and having someone hold up the proverbial mirror so you can see you the way other people see you as the CEO, quite a bit.  There is no right or wrong universal answer here to what makes someone the right choice for you.  For me, if one end of the spectrum is a 1 and the other is a 5, I prefer working with people who are in the 3-4 range.  

Therapy and coaching are different, though.  A good CEO Coach who is a 1 will refer clients to therapy if they see the need. While coaching can “feel” therapeutic, and actually may be therapeutic, it is not a replacement for therapy. The differences between the 1s and the 5s are not just style differences but also really what you want the content of the coaching to be.  A 1 is going to help you discover and drive to your leadership style.  A 5 is going to help you align those decisions to how you actually act, what approaches you bring to the organization and how you address challenges.  Some CEO Coaches can move back and forth between all of these, but knowing where you sit with your needs relative to the coach’s natural style when you pick a coach is critical.

I know CEOs who have shown tremendous growth as humans and leaders with Coaches who are 1s and Coaches who are 5s.  A good CEO Coach is someone you can work with literally forever.   

I always encourage CEOs to interview multiple Coaches and specifically ask them what their coaching process is like and what their coaching philosophy is.  How do they typically start engagements.  How structured or unstructured are they in their work?  Check references and ask some of their other CEO clients what it’s been like to work with them.  This is all true to a much lesser extent with Mentors.  In both cases, you should probably do a test session or two before signing up for a longer-term engagement.  You wouldn’t buy a car without taking it for a test drive.  This is an even more consequential decision.  

And in both cases, there should be no ego in the process.  You should never feel like you’re being sold by a CEO Coach or CEO Mentor.  And they shouldn’t feel hurt by you picking someone else, either.  Alignment and chemistry are so critical – there is no way to have that with every person, and the good professionals in this industry should know that.

The bottom line is that hiring a CEO Mentor is low risk. If it’s not working out, you stop engaging. Hiring a CEO Coach is a longer-term decision, and it’s worth having couple of sessions with a coach before making the commitment.

Next post in the series coming:  How to get the most out of working with a CEO Mentor or CEO Coach 

(This is the first in a series of three posts on this topic.)

Harry Potter was lucky.  He had, in Albus Dumbledore, the ultimate wise elder, in his corner.  Someone who could teach him how to be a better human being (er, wizard), how to be more proficient with his wand and spells, how to think strategically and defeat the bad guys.

All of us would benefit from having an Albus Dumbledore in our lives.  But most of us don’t — and most of the people we’d call on to be that wise elder in our corner aren’t capable of the full range of advice and counsel that Dumbledore is. 

Why work with a Coach or a Mentor?  I’ll start this post with a quick argument in favor of CEO Coaches and Mentors (sometimes called Advisors).  Even as a 20-something first-time CEO years ago, I was deeply skeptical of the value of a Coach, but that was in 1999 or 2000 when coaches weren’t so commonplace.  Now that their value seems much more obvious, and there are so many amazing Mentors and Coaches available, I’m surprised by how many CEOs I speak to still seem skeptical about their value.  Just think — the world’s greatest athletes, the ones who get paid zillions of dollars because they are the best in the world at something, use MULTIPLE coaches DAILY to perfect their craft and keep them focused.  Why should Rafael Nadal or Serena Williams have a trainer and a coach, but not you?

I’ve benefited over the years from the advice of more people than I can ever count or thank.  But when it comes to being a CEO, I have leveraged the counsel of a CEO Coach or Mentor principally in three different areas:

1. Functional topics on the craft of being a CEO from the lofty “how to run a board meeting” to the nitty gritty details of “how to do a layoff”
2. Developmental/behavioral topics like “how I show up as a leader in the organization,” or “how to be a better listener”
3. Team Effectiveness topics like “how do I get the most out of my leadership team,” or “why doesn’t Person X trust Person Y and how does that impact team performance?”

In some unusual circumstances, you can find a person who does all three of these things for you and can scale as you and your company grow.  But for the most part, getting all three of these things requires engaging two different people, and maybe even more mentors.  

What’s the difference between a CEO Mentor and a CEO Coach?  Counsel on Item 1 above — what I would call CEO Mentorship — almost certainly requires someone to have been a CEO — preferably multiple times, or for a long period of time, or through multiple stages of company growth, or two or three of those qualifiers.  This is the kind of person who can literally teach you how to do CEO things.  These people are super busy, they won’t have open ended amounts of time for you, but you should expect sage wisdom and answers when you need them.  And you can have more than one of them at a time, or change them out as your company evolves and your needs change.

Counsel on items 2 and 3 — what I would call CEO Coaching — frequently come together in a professional who is and has been for a while, a coach.  The person might have had a significant career in business before becoming a coach but wasn’t necessarily a CEO.  The person probably has some kind of academic grounding, like a Master’s degree in Organizational Development or Industrial Psychology, or a Certificate in Coaching.  This is the kind of person who can do things for you and your team like facilitate meetings, run assessments like Myers-Briggs or DISC, and coach other leaders on your team.  This person is dedicated to helping you be the best leader, professional, and CEO that you can be and must be both empathetic and comfortable pushing you hard.  

Sometimes you get mentorship and coaching in the same person, but almost only with CEO Coaches who are also CEO Mentors by my definition above.

Five signs you need a CEO Mentor and/or Coach:

• You are playing ‘whack-a-mole’ — running from crisis to crisis in your organization and are not able to make time to think, be current with email, or make time for important things like hiring senior executives
• Your board is getting frustrated with you, your team and/or the lack of progress in the business
• The company isn’t scaling as fast as it should
• Your leadership team is not a cohesive team and you are in the middle of all decisions
• The company has high employee turnover and/or poor reviews on Glassdoor 

Do yourself and your company a favor and invest in a CEO Coach and Mentor(s). It’s an investment in accelerating your own and your company’s success. In later posts, I’ll talk about how to hire and best leverage both Coaches and Mentors. 

Next post in the series coming:  How to Select a CEO Mentor or CEO Coach