This discussion was part of a podcast by Startup for Startup, a monday.com initiative to help startups, featuring Roy Mann, CEO and co-founder of monday.com and Avi Eyal, Managing Partner at Entrée Capital, board member and the first investor at monday.com.
🤔 The role of the Board
Avi: “I see the board as a role of responsibility. Investors who accompany a startup in its journey need to take responsibility for the investment. In most cases, the invested funds are from funds and other angels/investors, and they need to ensure it’s used in the right way. This is what we call the governance of the company. On the other hand, it’s about creating a group of responsible individuals who know how to support the company, bring value that will help the entrepreneurs, and help overcome challenges along the way by providing an additional perspective. It’s about exposing management to opinions beyond what they see within the business and occasionally solving issues that arise in the company by finding others who can help address these problems.”
Roy: “From Avi’s perspective, we as founders manage the company, and as a board member, he’s here to supervise, participate, and support. Ultimately, the board is a group of people coming together, and what they make of it depends a lot on them. But it’s also what we turn it into. For us, board meetings have always been quite simple, lasting a maximum of 3 hours (it’s very individual). For us, the board challenged us and helped us understand better the business. When we wanted to do something but it wasn’t so clear, we had to explain it to the board- and by doing, it helped clarify it to us.”
💼 Board Meetings
Avi: “When structuring the board meetings, the first part, which is the financial and governance aspects, should be updated ahead of time and resolved in the board.”
Roy: “What’s worked for us well is putting numbers into context. It was very important for us to maintain consistency, so we always compared to the previous board showing quarter over quarter so that the board remembers what we are talking about.”
Avi: “As someone sitting on 12+ boards today, it’s challenging to remember every detail. I need to know how the company operated, what happened in the past, and what is happening now. Sometimes the management provides too much information which is not well organized, or not the core information required. Then, you reach the last part of the meeting, and suddenly, you are presented with 2-3 key decisions the company wants to make, and those are the most important things to discuss. TI recommend sending the board deck at least a week to 10 days before, so the board members can delve into it. Many simple questions that take a lot of time during the board meeting can be solved with a short phone call with the CFO or founders. This way, when you come to the meeting, there is much more time to talk about important things and things you want to discuss in more depth.”
Roy: “Another important point is decision-making in the board. I don’t think we’ve ever made a decision in a board meeting itself. If there’s such a point, we always prefer to handle it separately, talk with each member individually, and arrive the board when everyone roughly knows what we want, and we understand what their concerns and expectations are. We present all the corrections and changes, and everyone feels that we listened to them – generally the decision becomes far easier.”
Avi: “Let me give you an example. Almost two years before the IPO, Roy and Eran sent the board pack, and I looked at the numbers and said, ‘Wow, this is heading in the wrong direction, the numbers don’t look good.’ I started to worry, and they said, ‘Let’s meet.’ They did an amazing job because within half an hour, they showed me that they understood what was happening, shared the plan to solve the issue, and when the board meeting occurred this was a non-issue. If I had waited for the board meeting to bring up the issue, there would have been other investors excited about the topic, turning the whole meeting into a negative discussion. So, the maturity of Roy and Eran was crucial; they knew how to address it, solved the challenge, and alleviated the concern I had before the meeting.”
Roy: “If you talk about our maturity, it’s about defensiveness and seeking challenges. Initially, everyone wants everything to be good, and everyone happy. At first, it was harder for me to actively seek challenges, to ask, ‘What are you not satisfied with?’ What often happens in dynamics is that someone raises a remark, and in the eagerness to keep everything in order, you either become defensive or try to move on from the comment. If you have a mindset that in every board, you need to reassure people about the direction and get feedback, the best way, in my opinion, is to address the smallest thing that bothers them or is unclear. These are your partners, people who, if they don’t understand something, it’s an asset for me, not a problem to deal with, and I can learn from it. These are gifts we receive all the time from the board.”
🤝 Trust and Transparency
Avi: “There are two points to close the loop here. One is trust and the second is transparency. They go hand in hand. You have to think about the position of the investor who comes to the board. They probably think, ‘I just invested in the company, I probably made a good deal. I have a lot of pressure to show my investors that the company is succeeding, and I made a good decision.’ The last thing this person wants in the first meeting is a surprise, especially if it’s not good. It’s crucial always to show transparency, manage things, and not hide. Things don’t have to go smoothly, and before the board meeting, communicate them.”
Roy: “I’ll tell you the trick here. Even when things didn’t go well, from my perspective, I was always in the mode of recruiting the board to be with us in this challenge. So, I never came and said, ‘Just so you know, it’s not good, don’t say I didn’t tell you.’ I think that’s the worst kind of transparency because in this context, the investor is not actively involved in the company. It’s crucial always to show transparency, manage things, and not hide. Things don’t have to go smoothly – before the board meeting, just communicate them. Explain why.”
Avi: “It’s important to state that the board is not separate from the company. Roy and Eran always brought managers into the board meetings to represent their department and explain what they do. Firstly, it was amazing transparency in front of the board because you are less likely to hide things. You also get much more comfort knowing that competence rests not just with the two founders; it’s a team, and you feel that the board decisions are integrated into the business. The last board we had even had one chap who is a programmer and another person who is in sales – employees that were on a leadership track. It’s so important because it shows the depth of the company’s capabilities, and there is nothing to hide.”
Roy: “We’re circling around the theme of assurance and confidence – providing assurance that everything is going well, that we know what we are doing, and why we see things the way we do and where we are heading. Ultimately, that’s what I want to create because if there is no trust in the board, it eventually burdens the company. You can’t move forward when you don’t know that you are trusted. Throughout the life of the company, we took things seriously and fundamentally.
📢 Communicate what happens at the board to the company
Roy: “If every quarter we work hard to get the board members involved and align them, the effort is wasted if we don’t communicate it and align the entire company with it. For us, it’s another important element of transparency. Many times, even if the board is dealing with something less interesting to the company employees, we’ve thought about how we create the explanation to the team that directs everyone to where we want to go.”
Avi: “I like to come to the company at least once or twice a month, just walk around the office, floor by floor, say hello to people, and get to know them because I think it’s crucial that as a board member you remain connected to employees. Boards are not folks who come in and out once a quarter.”
Roy: “It’s exactly the same thing, also for employees, the issue of symmetric transparency here. The synchronization in both directions create what Avi describes – this connection for everyone. Share 100% of the board presentation with employees.”
Avi: “Entrepreneurs should not look at the board as someone sitting above them; they should see it as the people they are on this journey with. I think if you can create this relationship from the beginning, these people will be with you along the way, even in not-so-good times.”
Roy: “It has become clear to us that our approach to the board is like a funding round where we try to take someone who doesn’t have all the context, someone who is not with you day-to-day, and align them to where you want to go, and everything needs to be that thing. In other words, every aspect we choose needs to be taken seriously. Over time, we understood how much it contributes to us. It becomes very enjoyable; it becomes something meaningful, and we expect to get something out of it. Each fundraising round gave us a deeper understanding of what we want to do and where we want to go, and the value and guidance of the board, which is amazing.”
