Table of Contents

Contents 2
Title 7
Copyright 8
Foreword 10
Acknowledgments 13
Part One: Overview 14
Chapter One: Introduction 15
Why Does a Startup Need a Board? 15
The Board Is an Extension of Your Team 17
Who This Book Is For 20
Magic Words, Phrases, and Abbreviations 21
Notes 22
Chapter Two: What Is a Board? 24
Value Creation, Accountability, and Transparency 24
Legal Duties of a Board Member 26
Chair or Lead Director 27
The Role of Board Committees 29
Other Functions of a Board 33
Note 34
Part Two: Building Your Board 36
Chapter Three: Creating Your Board 37
The Board’s Technical Priorities: Economics and
37
Control
The Board’s Emotional Priorities: Trust, Judgment,
40
and Transparency
Composition of the Board 43
Identifying Great Board Members 44
The VC Firm Matters as Much as the Person 47
Independent Board Members 49
The Role of an Executive Chairman 51
Board Observers 55

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 Your Lawyer 58
Should Gender Diversity Matter? 60
Being Rich and King 64
Notes 66
Chapter Four: Recruiting Board Members 69
The Value of Good Board Members 69
Helping You Think Big or Killing Your Company 70
Characteristics and Skills of a Board Member 72
Recruiting Board Members 75
Checking References 79
Preparing for an Expansion-Stage Board 82
Notes 86
Chapter Five: The Formal Structure of the Board 88
Certificate of Incorporation 88
The Impact of a Financing on the Certificate of Incorporation 89
Why VCs Want Board Seats 91
Notes 95
Chapter Six: Aligning Your Board 97
Motivation and Communication 97
Compensation 98
Orienting Your New Board Members 99
Lessons from Experience 100
Note 102
Chapter Seven: Is an Advisory Board Useful? 103
Should You Have an Advisory Board? 103
Attributes of a Useful Advisory Board Member 107
Selecting Advisory Board Members 107
Challenges of Advisory Boards 110
Notes 110
Part Three: The Business of the Board Meeting 112
Chapter Eight: The Actual Board Meeting 113
Creating an Annual Calendar 113
The Meeting Agenda 113
Focus on Critical Items 115

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 Sending Out the Board Package 116
Meeting Length 117
A Board Call Instead of a Meeting 119
Remote Attendees 119
Meeting Hygiene 120
Managing Interpersonal Dynamics 121
Including Your Team in the Board Meeting 124
The Executive Session 124
After the Meeting 124
Notes 129
Chapter Nine: Motions and Votes 131
Robert’s Rules of Order 131
The Agenda 131
Have Your Lawyer at the Meeting 131
The Mechanics of Voting on Motions 131
What If You Do Not Agree to a Motion? 131
Dealing with Formal Items 131
Minutes 131
Unanimous Written Consent 131
Notes 131
Chapter Ten: Legal Challenges 139
When the Going Gets Tough 139
Minimizing Legal Challenges 139
Pragmatic or Idealistic? 140
Notes 141
Part Four: Communications 143
Chapter Eleven: Managing Ongoing Expectations 144
What the Board Expects from a CEO 144
Communicate Both Good News and Bad News 146
Things CEOs Can Do to Get in Trouble with Their Board 146
What CEOs Should Expect from the Board 150
Using Your Board’s Social Capital 153
Board Member as Psychologist 153
Note 157

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 Chapter Twelve: Trying New Things 159
Continuous Information 159
Learning by Doing: Serving on Other Boards 159
Chapter Thirteen: Communication Conflicts 161
Emotion Versus Logic 161
Reciprocation 161
Groupthink 161
Your VC Firm Invested in a Competitor 161
What Happens If Your Board Member Ends Up on the Board
162
of Your Competition?
Walking Dead VC Partner 163
Walking Dead VC Firms 164
Interpersonal Conflict between Board Members and
166
Management
It All Comes Down to Trust 167
Chapter Fourteen: CEO Transitions 168
Situations That Lead to a CEO Change 168
Scale Up with Growth, or You Will Get Scaled Out 168
Why Boards Fire CEOs 168
Planning for Healthy Transitions 171
Board Transitions 172
Getting Rid of the Entire Board 172
Notes 172
Part Five: Transactions 175
Chapter Fifteen: Financings 176
New Investor-Led Round 176
Inside-Led Round 176
The Down Round and a Rights Offering 176
How Involved Should VCs Be in Financings? 176
Chapter Sixteen: Selling a Company 180
Confidentiality 180
Fiduciary Responsibility 180
Your Lawyer’s Role 180
Acquihire 183

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 Carve-Outs and 280G 183
Shareholder Representative 183
Chapter Seventeen: Going Public 197
Process 197
Committees 197
Confidentiality 197
Insider Status 197
VCs on Public-Company Boards 197
Chapter Eighteen: Going Out of Business 200
The Zone of Insolvency 200
Responsibility to Creditors 200
Responsibility to Shareholders 200
Liability 200
Chapter 11 200
Chapter 7 200
Assignment for the Benefit of Creditors 201
Chapter Ninteen: Conclusion 203
Appendix 205
Checklist 1: Preparing Your Board Package 206
Checklist 2: Conducting Your Board’s Annual
210
Assessment
Checklist 3: Question for Your Legal Counsel 211
Checklist 4: Should You Get Directors and Officers Insurance? 212
Checklist 5: Stock Option Grants and 409A Valuation 213
Interviews 215
Bibliography 217
About the Authors 218
Excerpt from Startup CEO 219
Index 227

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