Your Board Doesn’t Know What They’re Doing
Here we go again. Every 3 months it’s the same thing - it’s time for our board meeting.
This is when our biggest investors fly in from around the country to sit in a poorly ventilated room for 4 hours. It’s as great as it sounds.
We always start by picking at some pastries on the table and making small talk about the Warriors. Then we try to solve technical issues with the conference call. And then finally, it’s go time.
You see this was always a very stressful meeting for me. I was a founding member and Director on the board of a quickly scaling startup that had raised lots of cash. This was also the first company I helped start with any real traction. Meanwhile, the other board members were successful by any measure. Ivy league grads, billion dollar exits, you name it. Expectations were high and I was under the assumption I was the only one who didn’t belong.
On this day, the CEO and I came with a list of strategic decisions to decide upon. We had aggressive projections to hit for the year and didn't want to mess it up. After we gave the presentation, we posed several questions to the group. And the response was....underwhelming.
We went around the room. Some shifted uncomfortably in their chairs. Some provided nonanswers. Some provided enthusiastic recommendations. While others provided thoughtful counterpoints. No real direction. No answers.
Unfortunately, this was typical of our board meetings. But then something different happened after the meeting. One of the Directors came over to me to give a piece of advice I still take with me today. He told me not to ask open-ended, broad strategic questions like we did today. I asked why and he looked me dead in the eyes and told me, “Because no one has the answers.”
This was shocking to me! How could it be that these successful venture capitalists didn’t know the keys to success? This was frustrating to hear but also enlightening. At this point, I realized that there were no real adults in the room, just a group of real people all trying their best.
People are inadvertently stupid
Like many people, I thought that the older you get the wiser you became. People with more experience knew what to do since they've seen it all before. Right? Wrong.
It's clear that when it comes to making decisions, there are countless ways people can make mistakes and be inadvertently stupid.
One common way is being tired or distracted at any given moment. A recent study has found that shortening your sleep by 120 minutes can impair higher brain function while increasing impulsivity. A situation that’s more common than not when flying in for a day to attend a board meeting.
Sleep deprivation aside, we also have our egos to contend against. One way this shows is called consistency bias - the desire to not change your mind from what you have previously stated publically. This can be powerful in small groups of decision-makers that come together regularly. To avoid signaling weakness or indecisiveness, we tend to defend what we've said in the past despite new data. A dangerous reality to consider if you are trying to outsource your decision making to a board of directors.
Egos aside, one of the most common mistakes I’ve seen is when a founder asks their investor to explain what made another portfolio company successful. The founder dutifully listens and tries to apply this insight to their own company. The problem is this never works. Why? Because of survivorship bias.
Survivorship bias is the assumption that previous successes tell the whole story. They don't. It's always more complicated. Timing and luck always play a role in any success story. When I made this mistake I didn't know I was setting up this investor to gloss over the many failures the company had. To frame the response that their playbook would equate to similar success for our company. It doesn't work this way. But it will lead to some well-packaged startup lore from well-intentioned investors.
Don’t be stupid, be bold
No one knows what they’re doing. No matter their credentials, their successes, or the stories the world has told about them. There is no magic answer another person has. The problems you face with your company are unique and you are the best qualified to figure it out.
Keep this in mind when you feel the doubt creeping in. Move forward with confidence that when it comes to making hard decisions. Know that we all screw it up from time to time and use this to your advantage! Go out and explore new opportunities. Put yourself out there in a meaningful way. Shirk your fears and live comfortably with the knowledge that no one, not even your board, has any idea of what they’re doing.
