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In this series, we address some of the thorniest challenges founders face over the course of the company-building journey.
Board dynamics are a perennially delicate topic for founders. Even in the best of times, your relationship with the board is worth nurturing with care and attention. Dynamics can shift unexpectedly, particularly when you’re facing headwinds that affect the business. You need an open and high-trust relationship that can adapt to change.
In 2023, times certainly changed. You may have faced a more intense climate in your board meetings as investors raised tough questions and strong opinions about the path forward. To help you navigate those changes, we’ve compiled a Q&A focused on scenarios that were prominent for founders this year.
“My board used to feel cohesive, but now that the company is facing headwinds, the dynamic is changing and I’m seeing differing opinions emerge. How do I manage this?”
We’ve seen this time and time again on company boards: when things are good, everyone is a cheerleader. But when there are bumps in the road, different perspectives come out. In the face of any headwind, those diverse viewpoints can be an asset—but they require that you put in extra effort to maintain a healthy dynamic and reach consensus. You need to manage differences of opinion to get to consensus, which often means talking to people 1:1, and then facilitating a broader conversation. Don’t shy away from those 1:1 touchpoints, but take steps to share information more-or-less consistently across the board.
Recap 1:1 discussions. “Pre-calls” and informal meetings are appropriate for workshopping strategy decisions, getting advice on specific topics, and understanding the mindsets and opinions of individual board members. Be transparent about these conversations by sharing a brief recap of what was covered with everyone else. You can keep those updates simple and straightforward: “I talked to folks before this meeting, and here are the main questions and takeaways.”
Accept different levels of engagement. You’ll naturally be closer with some board members than others, and that’s OK. Their relative engagement, in most cases, will reflect the cap table: an investor who owns 30% should talk to the founder more than someone who owns 5%. The risk is that you become close with one or two board members while others feel uninformed or unclear about the conversations they’re missing. Aim to share the same general level of information across the board, and fill people in if they’re lacking important context.
Define board members’ lanes. Talk to each board member about where they’re best positioned to help and where they aren’t. Ideally, you align on these “lanes” when you first start working together, but at no point is it too late. As the business evolves, you can check in with people and make tweaks.
When you tap a board member for their expertise, be intentional about why and explain your thinking. For example: “I’m going to ask Lisa for her perspective, given her experience as a social media marketing executive” or “I’m curious to get Jeff’s take since he’s backed other healthcare companies of our scale through multiple market cycles.”
Consider a rotating liaison. Some boards use a rotating liaison to gather and communicate feedback. The liaison syncs with the rest of the board on pre- and post-meeting feedback, and then shares that information with the founder. The rotating nature means there’s no single, dominant player; it also creates a structure for you to speak with every board member 1:1.
“My company’s growth has slowed significantly and my board members are starting to get antsy. How patient can I expect my board to be? What do I need to share with them?
The topic of deceleration came up frequently this year, and there are a couple of macro reasons why:
- Idiosyncratic growth. During the height of the COVID pandemic, tailwinds drove unusually rapid growth for many companies: growth skyrocketed, fundraising accelerated, teams expanded and valuations shot up. What we’re seeing now, in terms of slower growth and lower valuations, is actually a return to normalcy, but it feels shocking in comparison to the past several years.
- Slowdowns caused by scale. For larger-scale companies, you will naturally be confronted by the reality of the law of large numbers—it takes a lot more to grow 50%+ than it did when you were in the tens of millions in revenue. The past several years of frenzied growth masked this natural slowdown for many companies, but 2023 was a reality check for everyone.
We’re now back in a more normalized environment, and companies of all sizes have had to adapt. Approach your board from the perspective of building a company that will endure. Paint a picture of what that growth looks like over the long term, and make the immediate steps concrete by sharing which milestones you’re working toward.
Set clear milestones. Your board should understand that we’re living in a different environment than the past few years—but they also want to know that you’re on the right track and are asking yourself the right questions. Be clear about the metrics you think are most important, and when you’ll report on progress against those metrics. Say your goal is to retain customers and increase operational efficiency. You might agree with your board that by next quarter, you’ll target an X% improvement in gross revenue retention and a Y% reduction in the cost of servicing contracts. Or perhaps you want to explore a product adjacency to expand your cross-sell potential and customer LTV. Paint the vision and establish objective benchmarks on the journey that will give you and the board confidence to continue pursuing this new avenue of investment.
The milestones you choose don’t need to be comprehensive—and you may need to adjust them as you go—but setting stakes in the ground will help to structure your discussions.
Practice analytical rigor. When conditions are tougher, rigor and accountability become a lot more important. Get comfortable providing deeper information about your business. If you’re an early-stage founder, you may have skimped on sharing granular data in the past, especially if your board didn’t previously probe into your growth. But in tougher times, they’ll demand more rigorous updates. Aim to share that information proactively—get a solid grasp of key growth drivers so you can flag unexpected issues in advance.
Treat information-sharing like a muscle you need to build and maintain, now and forever. Choose a set of KPIs to share at a regular cadence. These will depend on your industry, but generally, your board will want to see your revenue, ARR, gross margin, burn, and 3-4 other KPIs that drive revenue or COGS. Help your investors understand how you’re tracking against your plan by showing metrics from the beginning of the year, year-to-date, and end-of-year targets.
At the end of the day, your board wants to understand what drives growth and the levers around profitability. Give them the information they need, but find the right altitude. Don't mire them in the weeds. If you’re not sure, ask for feedback about the level of detail you’re sharing and how it’s presented.
“Our business strategy isn’t working and we need to pivot. I’m anxious about bringing this to the board. How do I secure buy-in on that change in direction?”
To successfully manage your board through a pivot, you need to be clear about your role vs. their role. With that clarity, you can ask for the input you need and leverage individual board members’ expertise.
It’s your decision. Here’s the most important thing to remember: As founder and CEO, it’s your job to decide to pivot. Expect your board members to share their perspectives and ask questions to refine your strategy, but not to make the decision for you. Present your recommendation, along with a narrative and vision, and be open to hearing and considering their feedback.
Seek thought partnership. Lean on your board members for their unique expertise. Some of your board members will have deep industry knowledge, so you can look to them for perspective on market viability and the opportunity space. Other board members might be operators who can guide you through the best approach for communicating the pivot to your team. This is a scenario where 1:1 conversations are often productive and welcome.
Share your targets. Give your board members a clear idea of what you’re trying to achieve, how you’ll measure success, and when you’ll check in. For example: “We’ll cap R&D spending on this product at $X before we make a go/no-go decision on further investment.” Or: “We expect the margins on this new business line to be X as we ramp it in the first three months, then once we reach a scale of Y, we’ll improve margins by Z.” Those targets may need to be recalibrated as you progress; keep your board members updated on those changes and what’s driving them.
Invite senior leaders to relevant meetings. When you have detailed discussions with your board—for example, about the specifics of a new product strategy—consider bringing senior leaders into the conversation (in this case, likely the CPO or CTO). If you’re pivoting, your executive team should be intimately involved in shaping the strategy and incentivized to help navigate your next phase of growth. It’s often helpful for your board to hear those leaders’ perspectives and understand their roles.
Face your discomfort. Founders sometimes delay tactical pivots because they’re afraid of the board or broader leadership teams’ reactions. That’s the worst thing to do. The longer you wait, the more pushback you’ll face. The best way to drive alignment is by acknowledging when things aren’t working and having an open conversation about why. Don’t be defensive; if you’re struggling, be open about it rather than positioning your pivot as an opportunity or a blessing in disguise. Your board members will appreciate the candor and be in a position to give you better advice.
At General Catalyst, we help founders work through their toughest challenges and most uncomfortable topics. If you're looking for a thought partner as you build the enduring change you want to see in the world, please reach out.
