How to Create Accountability Before You Give Away a Board Seat — This is going to be BIG

Investors typically don’t hold a board seat until you raise your first round of capital, which means it could be *years* before you have an actual board meeting:

• A year of nights/weekends working on research, prototyping and fundraising.

• Raise your pre-seed round and if you’re lucky and good, you can get to an equity round in 12-18 months. Many people prolong this round and don’t get there for two years.

Until then, how do you create the accountability necessary to stay on track and achieve your goals?

First, many founders don’t really feel the need to have external accountability. It makes sense: Being stronger in the first place means having a strong sense of agency and believing in your ability to manifest something out of nothing without much help.

Not only that, but founders get a lot of warnings from other founders about “losing control” and being careful about giving away too much power to investors.

I’ll let you in on a little secret. In reality, investors don’t like to do more work than necessary, and replacing a founding team does a lot of work In an ideal world, we check in from time to time and the founder is completely aware of everything they’re doing, shares enough reports to indicate this, and is completely self-sufficient.

This is the founder we want you to be so we can spend more time kitesurfing, microdosing, or tweeting our misguided libertarian leanings in the face of a crypto market losing billions in investment capital thanks to grossly inadequate regulation. 🙂

So trust me when I say that we only rise to your grill when we believe it’s in the best interest of the company, our investment, and yours as well.

Still, most founders wouldn’t take it upon themselves to involve investors and advisors in a regular “board-like” meeting if they didn’t have to, and even those who do may not know how to run it or what to prepare- yes there

I’ll make it simple. The objectives of this meeting are the following:

• Give others enough information to form a sufficient and objective picture of the company to check your blind spots and offer advice or other types of help (such as introductions to people who have been there before or have the right skills to present there).

• Lay the groundwork for accountability, where you say what your plans are and you can rally around your performance.

The structure of the meeting should follow some kind of document. When you first start your business, you won’t have much data or projections for everyone, so it might just be a bulleted agenda.

Very quickly, these bullets become a few things:

1. One or more hypotheses.

2. Objectives of first efforts to prove or disprove your hypotheses.

3. Metrics around these efforts.

For example, you might decide that a small business needs a widget like yours (hypothesis) so you go out to 100 of them (goals) with a vaporware platform to see if you can sell some pre-orders. Whether or not you’ve been successful can be measured not only by objective metrics about results, but also by input and effort. It’s very important that you not only get successful results, but find a way to scale the efforts and be able to make it profitable at some point, so you have to keep track of both ends of the equation.

Some efforts don’t have more complicated metrics than just “Did this work, yes, no, or is it still in progress?” It’s okay to just put traffic light circles next to a list of tasks you said you’d do last time.

Over time, you’ll start to create more and more sophisticated ways of tracking, and your reporting will start to break down into functional areas like marketing, product development, and finance (when you have money dedicated to investors or a limited fund from your own capital). I have decided to invest).

Many founders have struggled with the question of who should even be at these meetings if you don’t have an action board member? How many are too many, for example?

Here are the two institutional/pre-equity investment phases of the company and who I suggest you bring around your table on a regular basis:

• Nights/Weekends/Pre-Investment: When you don’t have outside capital, I recommend meeting with three advisors on a regular basis. You can pay them in dollars, sometimes in pizza, and if your company becomes a real thing, they may want small pieces of equity (think 0.10%). The three backgrounds I suggest are someone who knows your specific space, someone who generally understands various types of business models, and last but perhaps most importantly, a trusted friend who will call out your BS.

• When you start investing some angels or small funds in an angel or pre-seed round, you can choose the most helpful person from the above three to continue as an advisor or start over. Either way, adding a couple of full-time investment parties can be very helpful. For one thing, they have the bandwidth and network to be really useful. Second, doing this for a living means they’ve seen plenty of patterns of success and failure and can help guide you to the ones that are relevant to your business. Typically in a pre-seed round you will find that 1 or 2 of your investors enjoy being active with their portfolio companies and can add the most value. Don’t force an investor who isn’t used to playing this role to meet with you, because it won’t be a good use of your time.

I find the best meetings with my founders involve other investors. I’m not a fan of having separate meetings with each active investor, because a founder really needs a consensus and a strong signal to trust instead of conflicting comments. I find that when multiple active investors are in the same room, they can quickly coalesce around some unified feedback given particular parameters, which reduces founder confusion and founder time.

Whatever you do, I’ll say this. Investors are generally interested in your success, but I also understand how the stress of scrutiny and the fear of having all these new people to answer to can be really overwhelming. It’s completely natural for your gut to tell you to be protective. You may get advice from lawyers and others to do the same thing: create walls and distance. In my experience, this never works, because along the way, the inevitable missteps start to spiral out of control, or founders fall down rabbit holes they should never have gone down more than two steps in the first place place

Instead of shielding yourself from your investors, find a way to channel their knowledge and energy in a way that works for you, where you can have a productive and informed back-and-forth where you feel challenged but not attacked and feel like they have a space. to have an opinion and to be heard, but that you retain ultimate control over the direction. This is where both sides get the most out of the encounter.