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      Even though that wasn't a winning answer with the MovieFone board, it was a formative experience in my career. By the time I started my first company, Return Path, I felt like at least I had a running start on how to form, lead, and report to my board of directors.

I was CEO of Return Path and chaired its board for two decades. We scaled the business through multiple pivots, acquisitions, financings, divestitures, growth spurts, layoffs, two recessions, 9/11, and the dot-com bust. When Validity acquired Return Path in 2019, we were a vibrant, $100 million revenue, profitable industry leader.

      Our board started with two independent directors and me. It grew to a highly functioning board, including three great venture capitalists (Fred Wilson, Greg Sands, and Brad Feld, coauthor of this book) and two outstanding independent directors (Scott Petry and Jeff Epstein). Over two decades, we have had over 15 directors serve on the board. I learned how to build and run an effective board of directors from each of them.

      While I've made many mistakes, I've gotten a lot of things correct and have learned a lot. I realized the immense power of a strong board many times, but the most memorable was a board meeting when we were wrestling with several tough decisions since the business was going sideways. These decisions included whether to sell off two business units to focus on our most promising line of business, even though that meant shrinking the company by over 50%. We were also considering whether to expand internationally, and whether we should build an indirect sales channel. In a long and boisterous board meeting stretching from the boardroom to a dinner that included my senior management team, we charted a bold new course for the business that set us on a path we ended up following to a successful exit a dozen years later. A less functional board could have taken a more conservative approach. The business likely wouldn't have thrived and might not even have survived.

      Today, my new company, Bolster, helps startups, scaleups, and public companies find and recruit talented executive leaders, mentors, and coaches. We help CEOs build their boards and have helped dozens of CEOs think strategically about bringing in independent directors. We help CEOs determine the kind of executives they want to add to their boards. And, we help them find, hire, and compensate those directors.

I've taken a different approach to building Bolster's board. The Return Path board consisted of seven White males with prior board experience, similar to most companies throughout history. In contrast, the Bolster board has two White men, one Black man, and three women, one of whom is Asian-American, one of whom is Black, and one of whom is Latina. Four of them are first-time directors. Three of our investors, who are White men, chose to be board observers rather than take a board seat so we could fill board seats with diverse directors. It's early in Bolster's life, but I already feel that our board is more powerful and effective than the one we had at Return Path, especially at this stage. This approach is a new way to scale up a board: leveraging excellence through the observer roles while expanding the boardroom's diversity of experience and demographics.

      I've served on a dozen boards and chaired about half of them, including private companies, a public company, a non-profit board, university alumni boards, and a complex industry trade association board with over 40 members. I've spent a lot of time with venture capitalists and entrepreneurs understanding their views on boards. I've also observed my wife Mariquita's experience serving on and chairing several non-profit, civic, and community organization boards.

      After completing the second edition of Startup CEO: A Field Guide to Scaling Up Your Business and the first edition of Startup CXO: A Field Guide to Scaling Up Your Company's Critical Functions and Teams, I realized that I often wrote and blogged about boards publicly for Bolster and on my blog at startupceo.com. I approached Brad, whom I've worked with in different capacities for 20 years (including sitting on four other boards together), and Mahendra, whom I met when he and Brad wrote the first edition of Startup Boards: Getting the Most Out of Your Board of Directors, about collaborating on a second edition.

      Since the first edition was written in 2013, I thought an update could include more contemporary thinking about boards. For example, Delaware created Public Benefit Corporations (PBCs) in 2013, and the dialogue about stakeholder vs. shareholder capitalism has recently gained momentum.

      While the discussion around diversity in the boardroom was becoming more extensive, George Floyd's tragic murder in 2020 significantly changed the dialog and the urgency around boardroom diversity. Finally, the COVID-19 pandemic impacted all aspects of business, including the boardroom. After a brief discussion, Brad and Mahendra enthusiastically supported the idea. The second edition is the result of our collaboration.

I hope you enjoy Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors. If you are a CEO looking to build and lead an effective board, an investor thinking about how to improve some of the boards you are on, or an executive thinking about how to create a “board-ready” profile for yourself, as I did at MovieFone, we hope you find this book useful.

      Matt Blumberg

      Bolster, founder/CEO

      February 2022

Section 1 Board Fundamentals

Chapter 1 Introduction

      The word boardroom conjures up images of important people puffing on cigars or sipping Scotch while sitting in leather chairs in wood-paneled rooms. They talk about complex things that determine the company's future. Formality and seriousness fill the air. Big decisions are being made.

      While first-time CEOs and founders often have an elevated view of the boardroom, great startup boards aren't fancy, complex, or pretentious. Instead, a startup board is usually a small group of people trying to help build your company.

      We've served on hundreds of boards. A few were great, many were good, and some were terrible. When things were going smoothly, the board was congratulatory and supportive. When there were challenges, some board members helped, others panicked, and a few vanished. The tempo and interactions of these boards varied dramatically. In some cases, reality dominated the discussion, while often, it was ignored or denied.

      After a particularly tedious board meeting, Brad realized that a startup board's default structure, composition, and approach were an artifact of the past, dating to how early venture-backed company boards operated over 40 years ago. Things had changed and evolved, but the dramatic shift in communication patterns and technology hadn't been incorporated into how most boards worked. As a result, Brad ran a two-year experiment where he tried different things—some successful, some not. As with every experiment, he did more of what worked, modified and killed what didn't, tried new things, and measured a lot of stuff.

The idea for the first edition of this book emerged during this experiment. We decided that in addition to describing the new startup board approach that resulted from Brad's experiment, it was essential to lay the groundwork and clearly explain how startup boards worked and how they could be most effective. Brad's board approach builds upon the traditional board of directors, so rather than throw it out, we use a highly functioning one as the basis for a new and more effective approach to a board of directors.

      While the topic may feel dry, we've tried, as Brad and Jason Mendelson did in Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist (2019), to take a serious topic and cover it rigorously in plain English with our brand of humor. Our aim is to demystify how a board of directors works, discuss best and worst practices, and provide a set of tools for creating and managing an awesome board.

      Unless you've been a startup executive who regularly attended board meetings and interacted with board members, you probably don't know what a startup board looks like, how it functions, or how it impacts a company. Even if you're a founder, you may never have served on a board of directors before, let alone built and managed one. Early in their careers, even venture capitalists often have little board experience.

      You may envision a board as a collection of faceless notables, convening meetings around a large conference

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