Early vs. Late Stage Boards with Joe Hurd

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: Welcome to The Daily Bolster. I'm Matt Blumberg, co- founder and CEO of Bolster. I'm here today with Joe Herd. Joe is an operating partner at SOSD, an early stage venture fund. He is a multiple time, I think four- time board member of larger public companies, including his most recent appointment is Lloyd's of London, which is so cool. Such a venerable inaudible in the world. Joe was one of Bolsters first hundred members. He's a bolster ambassador. Joe, thrilled to have you here today.

Joe Herd: Hey, it's great to be here, man. Love the work that you and the team are doing at Bolster.

Matt Blumberg: Well, thank you. The question I have for you, for our audience today is you have seen everything from raw startup through Lloyd's of London. I don't know if that's your biggest cap company, but it's certainly up there. When you think about the view from the boardroom and you kind of compare early stage boards with these larger later stage public boards, what are two or three of the things that you think kind of separate the two? How does a board mature as the company matures?

Joe Herd: Yeah, that's a really good question. I think one of the biggest differences I see with early stage boards is, look, starting a company is hard work, right? The majority of startups, as you know, fail. And as CEOs look to build their board for an early stage company, I think one of the... I'll be controversial. I think one of the mistakes CEOs sometimes make is they really look for harmony and symmetry between the CEO, the management team, and the investors. Some may say that insiders are often preferred as board members of early stage companies as opposed to true independent directors. So, that's one big difference. CEOs are looking for board members that are going to be supportive of the team, of the mission. Investors are looking for people that are going to be sort of harmonious in the boardroom, but you have to watch out for the group think. You have to watch out for not getting the constructive challenge that you actually need from a director in order to help the company scale. That's one big difference.

Matt Blumberg: And so contrast that with the later stage public company. What are they looking for? If your job is not to be harmonious, is it to be the fly in the ointment?

Joe Herd: A really good director at any stage recognizes that the first thing that she needs to be is independent. And that a valuable director brings everything they've done outside the boardroom, into the boardroom, but knows where the line is between being an activist... Sorry, being an active, involved, operationally focused director versus being a more detached, a more cerebral director that's willing to share their advice and really help guide the company. It's the difference between being a player and a coach, right?

Matt Blumberg: That's right.

Joe Herd: Being a manager and the coach. You have to really, really be mindful of that line.

Matt Blumberg: All right. That's one great distinction. What's number two?

Joe Herd: Another distinction is, again, because these companies are earlier, you often find directors are more working directors. And that work can come from not actually getting there and negotiating deals or drawing up the marketing plans, but you might find directors spending 2, 3, 4 hours a week with an operating exec that they shadow, or with the CEO themselves. Directors will bring they're extensive operating experience and really bring it to bear to help that management team. You roll up your sleeves and help coach and guide the management to become better in their roles. And that compares with on the public company side, where you're not often involved in the everyday baking the bread at the company. That input stays in the boardroom and maybe it goes from the CEO and the management team in the boardroom to their operating staff as opposed to actually being in the office, spending time on the ground that you would in an early stage company.

Matt Blumberg: That makes sense to me. Sleeves up, sleeves down.

Joe Herd: Exactly. I love it. Sleeves up, sleeves down.

Matt Blumberg: What's number three?

Joe Herd: Number three is, oh gosh. I think when you are early in and you are first putting the board together, and this is somewhat related to the first one, right? It is a very rare CEO that will look for someone who is truly independent, outside the space, no relationship, and be willing to bring them into an early stage board. That's very rare. Part of the challenge is, I think if that happened earlier and more often, not only would you have better corporate governance of companies all across the board, but you'd also provide more entry points for people to get board service. Where you're not looking for the tried and true sector expert, multiple time director to come on your board at series A, series B, but you're willing to take someone that either hasn't had board service before, or may come from an adjacent industry, but not your industry and be known to you. So, finding the CEO that can counter that and really bring that true independence in, I think is a virtue, not a vice and something that should be happening more often.

Matt Blumberg: I love it. And you find that on larger public boards, they're just getting great corporate athletes. They may not know much about their space at all, but they know governance. They know executive accountability.

Joe Herd: That's exactly right. Or even where you have, on a larger board, you have a bunch of industry insiders. You have some that's not an insider, but is certainly willing to roll up their sleeves and learn and lean in and give them a shot. And that's, for example, that's my example on Lloyd's, right? I'm not an insurance industry insider, but I've got digital skills. I know how to talk and help companies scale, help upwards scale, and that's what Lloyd's was looking for at this particular point of the Lloyd's journey in the boardroom.

Matt Blumberg: Right. Excellent. Three great contrasting points between early stage boards and later stage boards. Joe Herd, thank you very much for being here.

Joe Herd: Thanks, Matt. Pleasure to be here.