Forget cocaine, heroin, ecstasy or any of the other mind-bending molecules out there. Nothing compares to the euphoria of attending your first private-company board meeting and explaining to the spellbound CEO, say, why her new corporate logo looks like crap.
How you handle the rush of confidence that comes with sitting on your first portfolio-company board will impact not just the success of your investment. It will also determine how swiftly you ascend the partnership ranks.
And so I, your self-appointed career guide, went out and talked to veteran board members John Kenney, founder and partner, JMK Consumer (backer of “cult consumer brands”) and David Acharya, partner, AGI Partners (whose portfolio company Impact XM “powers brand experiences”) and boiled their advice down to seven principles:
- Support the CEO: You’re not always going to see eye to eye with the CEO. “Founders think and behave differently from investors,” said Kenney. Nor do you have to turn a blind eye to their flaws. But as long has she/he is your choice of CEO, you’ve got to be supportive in private and public. Tell everyone who will listen that the CEO is doing a great job and that you’re happy to be partnered with her/him. Or, as Kenney put it, it’s got to be “all high tides and green grass.”
- Focus on strategy, not tactics: Your main job as a board member is to ensure the company has a sound strategy that everyone has agreed to; to ensure the company has the human and financial resources to execute on that strategy; and to ensure the company adheres to that strategy. Big picture stuff. You’re not there to suggest that the company puts up a bill board in Times Square (or that their new corporate logo sucks). Having the CEO’s attention during a board meeting can be a “heady moment,” said Kenney. “Don’t squander that with a bunch of stupid tactical ideas. Stay focused on strategic matters.”
- Be available to talk: If the CEO wants to square away some detail of an add-on acquisition, and asks you to talk it over, don’t suggest a phone call next Tuesday at 5PM. Be available to talk on any matters within 24 hours, even on weekends. The CEOs are your clients, said Kenney. “Treat them as such.”
- Know where you add value: It’s easy to feel outgunned on a board of directors that includes the CEO as well as more senior partners at your firm, possibly including your supervisor. Depending on your temperament, you might be tempted to clam up with your arms crossed in front of you. Or you might stand up, gesticulating wildly as you present a flurry of grandiose ideas for world domination. Better, said Acharya, would be to identify needs of the company where you can bring your unique set of skills and experiences to bear. For young professionals with an investment banking background, those needs can include identifying potential add-on acquisitions, wooing their owners, and finding sources of financing. “Figure out what’s missing in the room,” said Acharya.
- Prepare questions: Reading the board decks on the Uber ride to the quarterly meeting just won’t cut it. Read the deck at least two days beforehand, said Kenney, and send questions to the CEO at least a day before so she/he has time to prepare answers. If the CEO sends you some additional materials to read, study them. “You can’t just roll into a board meeting and wing it,” said Kenney.
- Follow up post-meeting: Reflect on what happened at the board meeting. What went well? What didn’t? Who was unprepared? Who ambushed who? Who let their tempers get the better of them? Follow up with fellow board members or the CEO. Ask questions to better understand why any contentiousness developed. Then provide the appropriate feedback, or take action, to cauterize any wounds that opened up.
- Put in the time needed: No hard and fast rules determine how much time you should spend on your board duties. In part it depends on how long you’ve held the company and the anticipated time to exit. But make sure you put in the time required—10 to 15 hours a week isn’t unusual—at the all-important outset of the holding period. No amount of time spent later can make up for an ill-advised strategy embarked upon or for an inferior management team that didn’t get buttressed during the critical early months of ownership.
Kenney: As an associate or principal at a private equity firm you’re no doubt young and bright. “But it doesn’t mean you come into a board meeting with guns blazing, saying ‘you need to do this, you need to do that.’” Kenney said to remember the old business chestnut: “First seek to understand, then to be understood.”
Acharya: “When you’re on a board, be humble. Don’t let the power go to your head. Focus on the collective vision that the board wants to achieve.”
The New York City chapter of the Private Directors Association is hosting its inaugural Private Director Symposium on Wednesday May 15 in Times Square.
For a good summary of the duties and obligations of a private company board member check out this guide from the Stanford Graduate School of Business.