Top 3 Ways to Add Value to the Board with Jeff Epstein

Intro: Welcome to the Daily Bolster. Each day we welcome transformational executives to share their real- world experiences and practical advice about scaling yourself, your team, and your business.

Matt Blumberg: Hi, I'm Matt Blumberg, co- founder and CEO of Bolster, and welcome to the Daily Bolster. Today is the view from the boardroom. I want to introduce my guest, Jeff Epstein. Jeff is an operating partner at Bessemer Venture Partners. He's the former Chief Financial Officer at Oracle. He's been on many boards, including... I think, Jeff, it's eight years as an independent director and chair of the audit committee of my last company's board at Return Path. So Jeff, welcome to the Daily Bolster.

Jeff Epstein: Hi, Matt. It's always wonderful to see you.

Matt Blumberg: Good to see you. I don't know if you have a running tally. How many boards have you been on?

Jeff Epstein: 25.

Matt Blumberg: 25. You have been in hundreds and hundreds and hundreds of board meetings.

Jeff Epstein: Right.

Matt Blumberg: The question I have for you today is what are your top three things that you try to do to add value in board meetings as an independent director?

Jeff Epstein: Well, the way I think about the content of a board meeting is there's typically three elements. There's the compliance element, approving compensation, things like that, which is usually pretty quick. Then, there's what I call the show and tell element, which is the company telling the board this is what we've been doing, which helps the board get up to speed but doesn't help management very much. The third part, which I think is the most important, is decisions the CEO is thinking about but has not yet made. Many boards spend a lot of time on the show- and- tell and only a little bit about the decisions. That's not a good structure. It's much better to spend maybe two- thirds of the time on decisions I have not yet made because then you get the board to the extent that you've hired great board members. They have a perspective. They can help with strategy. The CEO will make the decision, but the board probably has a perspective that can be helpful. Perhaps the CEO will change his or her mind after listening to the board conversation.

Matt Blumberg: I totally agree with the balance of time. As an independent director, you try to steer toward more time on discussion.

Jeff Epstein: Exactly. Discussion about decisions that have not yet been made.

Matt Blumberg: Okay. That's a good first one. What's second?

Jeff Epstein: Second Is leadership. Certainly, at least once a year, but often during other board meetings, we're talking to the CEO about each of their senior leaders and sometimes a level down. The questionnaire is, where are we today? If the company's growing quickly and if you're growing from a hundred employees to 500 employees over the next couple of years, are the people who are currently in seat the kind of people who have the experience and capability to take it to the next size? Sometimes they are. Sometimes they're not. Often, the CEO who hired these people and is very loyal to them stays with them longer than he or she should. The board is less emotionally attached. It's typically more objective. We ask questions. We say, " Well, maybe you should meet this candidate." For instance, if you've got a VP finance and, at some point, you want to hire a CFO, why don't I introduce you to some CFO candidates of companies of the scale you are going to be? Then, you can compare the one you have and the one that you might have. If you actually meet two different people, you say, " Oh, yeah. This person actually knows a lot more, has a lot more experience, and much more capable." Now, the more junior person may grow into it. Then, the question is, well, how do we train them? How do we give them that experience? But sometimes you just have to get that experience by years in service and working at different companies. We are able, as board, to bring that outside perspective on the leadership team.

Matt Blumberg: That's great. It's outside. But also, I love what you said, which is you're less emotionally attached. That's great. All right. Number three?

Jeff Epstein: Number three is balancing short- term and long- term priorities. Every organization has both. The question is, which do you do when? If there's a crisis, you're focused only on the short term putting out the fires. If you have plenty of capital and plenty of runway and businesses, great. You can focus more on the long term. That shifts from company to company and month to month and year to year. That balance is something, again, where an outside perspective is often helpful to help the CEO think about the alternatives.

Matt Blumberg: Those are three great things. I'm going to give our audience a fourth, which is the favorite thing of mine that you consistently did on my board, which was not one of your top three, but which I valued quite a bit. I thought you were particularly good at summarizing the back- and- forths of a very long board conversation. I don't know if you intentionally played that role or not. But our board, as all boards, when you're discussing one of those decisions the CEO has to make, would sometimes spend 20 minutes on something, 30 minutes on something. Lots of different points of view; people changing their points of view. I always found, Jeff, you were very helpful at coming to the end of the discussion or driving the end of the discussion and saying, " So what I'm hearing is..." and framing something up for us to move forward.

Jeff Epstein: As I've gotten older, I've played that role more often. I think of it as the moderator role as opposed to the participant role.

Matt Blumberg: That's right.

Jeff Epstein: It's actually difficult to do that if you've just made a five- minute speech about why we should choose option A. If you really feel strongly about something, you're going to be a participant. If you're saying, " This isn't the most important decision in the world, but let's move on," then I generally wouldn't participate in the conversation. I would come in as the moderator to try to wrap it up and move on to something else and make sure that each point of view is heard and that the CEO typically feels that the... It's the CEO's authority to make the decision as opposed to feel that they should be pressured to do something that the board member wants that the CEO doesn't want.

Matt Blumberg: Yeah. Well, that's great. Jeff, thank you for being on the Daily Bolster. A lot of our audience are founders who don't have a lot of experience running a board and using high- octane independent board members. A lot of our audience is independent board members. Thank you for sharing your wisdom today.

Jeff Epstein: My pleasure.