Boardroom Governance with Evan Epstein

Matt Blumberg: Startup Boards.

Feb 22, 2022

48:40

Creator website

Intro.
(1:40) - Start of interview.
(2:00) - Matt's "origin story". He grew up in San Diego, CA. He's lived in and around New York City for the last 30 years. After college he worked as a consultant (Mercer Consulting) and VC (General Atlantic). In 1995 he joined the executive team of MovieFone, a small cap public company. He helped the company "figure out what the internet was all about." They sold the company to AOL in 1999 (for $388M in stock). Then he started a company called Return Path in 1999. It was a 20-year run where they scaled the company to about $100m in revenue and 500 employees worldwide. They sold the business in 2019 to Validity. In 2020, he founded a new company called Bolster, a marketplace for on-demand executive and board talent. Along the way he wrote a couple of books (Startup CEO in 2013, and Startup CXO in 2021), and he's sat on several boards (such as those of Oblong, Authentic Response, Moz and Feedburner), one major trade association (DMA), some community/academic (local Little League, and a couple of different Princeton fundraising boards). He has been "increasingly spending time on board matters as his career has gone on."
(5:50) - On the first edition of the book Startup Boards (2013), by Brad Feld and Mahendra Ramsinghani. Brad and Matt will publish the second edition of the book this June. It takes a fresh look at the topic, with more diverse voices. They added a section for aspiring board members (interested in becoming independent directors).
(8:51) - On why he started his new company Bolster, a marketplace for executive and board talent. "About a quarter of our business is focused on running board searches for private venture-backed and public companies (in their first year they did about 30-40 board searches)." They want to "help startup CEOs rethink the way they use and find senior talent."
(11:41) - On his focus on increasing the number and diversity of independent directors in venture-backed companies. Bolster's benchmarking study on independent directors in startup boards (based on a study of 250 private company boards):
1. Only 32% of private company boards have independent directors. Half of boards have open independent director seats they expect to fill in the next 12 months.
2. Compared with investor or management directors, independent director seats are 3 times as likely to be held by women. 86% of director seats overall are held by men, and 56% of early stage private company boards have no gender diversity at all.
3. Four out of five seats on private company boards are held by individuals who are White, and 43% of boards are completely homogenous with regard to the race/ethnicity of their directors.
4. CEOs are broadening their searches to diversify their boards. Two-thirds of CEOs are open to bringing on first-time directors, and 41% of independent directors have either some college or an under-graduate degree only (vs. a post-grad degree).
5. Board composition tends to over-index on investors and management directors. 59% of boards have more than one management or founder director and 59% of boards have 2 or more investor directors.
6. Men seem to have a slightly higher average earning potential (measured in basis points per year and grant value) compared to women directors at like companies.
(12:40) - "Our Mantra is the 'Rule of Ones' : you should be putting independent directors from day one, private company boards should only have one founder on the board, and for every one investor you should have one independent."
(13:59) - On Fred Wilson's Board Diversity Proposal. "Fred walks the walk on that one, as does Brad Feld and Greg Sands." (all 3 VCs are board observers on Bolster's board). "At the end of the day, they all have very meaningful voices in and outside the boardroom, but they have made room for us to bring very good and diverse candidates." [Bolster's board has 4 first-time independent directors.]
(18:50) - On the impact of record-breaking VC financings, SPACs, IPOs and M&A on startups. "It's put a lot more money and valuation into startups."
(19:52) - On his advice to CEOs on how to manage their boards: "The CEO should think of it as having two teams: one team is the executive team, the other is the board." "Start by making sure board composition is right". Scott Weiss: "boards eat whatever you put in front of them." Matt's rule: "No slides in board meetings, it's not a dog and pony show."
(23:41) - On virtual board meetings via Zoom or otherwise post-pandemic. "It used to be that boards would have four in-person meetings per year." "In the private company world, VCs are constrained by the number of boards they sit on, but with virtual board meetings their ability to sit on boards has gone up 40-50% [since they don't have to get on planes so much anymore]." Matt's best practice approach: "Once or twice a year the board should meet in-person, and the rest is OK to meet virtually."
(26:23) - On ESG in private companies. "This is an area where private companies are ahead." On growth of public benefit corporations (PBCs).
(30:03) - On diversity in startup boards. "There is a lot more awareness on the need and benefits for more diversity on boards." "It has to start with the commitment to add one or two independents."
(35:43) - On the difference between CEO coaches and mentors: "A coach is someone who helps you be the best version of you. A mentor is someone who has done your job before, knows how to do it cold, has probably done it at your stage and the stage beyond. He/she can help you teach the craft of the job." "Executives need both a coach and mentor, sometimes it's the same person."
(37:07) - What makes Bolster different for board searches? "It's faster and cheaper [because we have a curated and qualified marketplace.]"
(39:08) - On how the pandemic has changed the geographic distribution of talent. "People can live anywhere now." "NY has become a crypto talent pool." "I think there is a role for DAOs, but I don't think there will be a mass movement away from traditional corporate structures." "I think leadership matters, and companies would be hard pressed to make hard calls by vote [if you don't think that's true, look at Washington DC]."
(41:30) - Matt's favorite books:
1. The Fountainhead, by Ayn Rand (1943)
2. The Goal, by Eli Goldratt (1984) [in business books]
3. The Advantage, by Patrick Lencioni (2012) ["my CEO bible"]
(42:32) - Who were your mentors, and what did you learn from them?
1. His grandmother "I really learned resilience and grace from her."
2. His dad "I learned perseverance and the importance of having a strong moral compass."
(43:33) - Quotes that she thinks of often, or lives her life by: Theodore's Roosevelt "Man in the Arena" speech (1910): ("for me that's the entrepreneurs' quote").
(45:05) - An unusual habit or an absurd thing that he loves: Mexican food! "I also love reading American and Presidential history."
(46:21) - The living person he most admires? Oprah Winfrey is super interesting and inspiring. Jeff Bezos (innovation gene and perseverance). Jeremy Bloom, CEO of Integrate (the only athlete in history to ski in the Olympics and also be drafted into the NFL).