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Startup Boards 101

December 8, 2022
Written By
December 8, 2022
Episode 26
39:28
Written By

Tom and Vivek have come full circle: in this episode they’re talking about closed session board meetings in The {Closed} Session. They discuss their experience in board meetings - even some tense ones - as serial founders and how they approach board meetings today as both co-founders and seed investors of the companies coming out of the super{set} startup studio.

What does a startup’s board do? Who is on the board? What happens at a quarterly board meeting? What should the board meeting deck look like? How does the conversation change as a company grows from the seed stage to the later stage? How do you get the most out of your board? What is a “closed session” anyways?

As serial founders, we’ve seen a lot of board meetings.Tom has even been in board meetings where the board has referred to him in the third person, in reference to how great his replacement was going to be! Not a great time (side note: Tom narrowly avoided dismissal - nobody else was crazy enough to take the job of CEO).

A board isn’t a thing to be managed, but it also isn’t an opportunity to be “your authentic self.” Founders must thread the needle and effuse optimism while also seeing things as they truly are. Speak plainly - don’t treat your board like mushrooms and only feed them in the dark.

At super{set}, we build trust with our CEOs and co-founders to a degree not typically seen on company boards. We’re intentional about when we put on our hats as fiduciaries, and when we take them off to put on our hats as friends.  We aim to show up with the context and calm that only comes from being operators and founders who have been in the same shoes as our leadership teams.

Transcript

Speaker 1: Welcome to the Closed Session, How to Get Paid in Silicon Valley, with your host, Tom Chavez and Vivek Vaidya.

Vivek Vaidya: Well hello and welcome to Episode 8 of the Closed Session. I’m Vivek Vaidya, and with me is Tom Chavez.

Tom Chavez: Hello, everybody. It's good to be back.

Vivek Vaidya: All right, so last episode we talked about investors, VCs, seed stage investing, series A investing, et cetera.

Tom Chavez: And we played a clip from Spinal Tap. Which for me was that was the high point, for me.

Vivek Vaidya: Was that the high point?

Tom Chavez: Yeah. That's the best bit.

Vivek Vaidya: I thought the high point was you restraining yourself and not doing your author voice when you were talking about articles.

Tom Chavez: That's true. That's true. I did self-regulate there as well. I am really just a paragon of self regulation, if you think about it.

Vivek Vaidya: Mm-hm, I know. What's changed, Tom?

Tom Chavez: I don't know. I mean, I'm just older, wiser now.

Vivek Vaidya: Okay. One of those two things is true.

Tom Chavez: Well, that's just mean, you're just being mean now.

Vivek Vaidya: I know, I know. All right, so in this episode, I thought... Tom, we haven't done this in a while, but I thought I could interview you. Because you have quite a lot of experience dealing with boards, both as a CEO as well as being a board member too. So building on our episode about the investors, let's talk about boards. And before we get into that-

Tom Chavez: I'm a little nervous though that you're going to interview me now.

Vivek Vaidya: Why?

Tom Chavez: Because I want you to just ask super easy questions.

Vivek Vaidya: I will ask you very easy questions. I'll start with the easiest one of all, which is why is the title of our podcast The Closed Session?

Tom Chavez: Yes, there's a karmic circularity to it, the question and you ask it. The closed session is the part where you kick all of the management team members out of the board meeting, and it's just typically the CEO, the co-founders and just the board members talking about all the serious insight stuff.

So we thought it would be cool to actually call the podcast, you see because we're talking about all the inside stuff, call the podcast The Closed Session. But now we're actually going to be talking about closed sessions, it all makes sense.

Vivek Vaidya: We're talking about the closed session in The Closed Session. What a meta thing, Tom.

Tom Chavez: This is so meta. Mind blown.

Vivek Vaidya: So you've told a story to me many times, but do you play golf, Tom?

Tom Chavez: I do not play golf. I do not play golf.

Vivek Vaidya: I think you should be, no?

Tom Chavez: You would think.

Vivek Vaidya: Given that you spend so much time with people who play golf and give money to entrepreneurs, no?

Tom Chavez: So I know the one that you're harking back to was... And we were actually in a closed session at Rapt.

Vivek Vaidya: There you go.

Tom Chavez: And we were struggling with why sales weren't ka-chunking along the way they should have, which is like 80% of the topic that's taken up in any board meeting and closed session.

And so I was just getting the shit kicked out of me by all of the board members, because we're doing enterprise sales and it's a high level sales, we're selling to executives. And I was getting beaten up because somebody said, "Well do you play golf?" And they said, "Well, because that's where all the deals get done. You got to be on the golf course." And I don't, I said, "Well, I don't play golf."

And it was just like a gauntlet, I'm just kidding, everybody's taking a turn whomping on me. And God bless Howard Charney, like a little bright ray shown from the heavens. And Howard came down and in his perfect Long Island drawl says, "Don't listen to them. I hate golf. I hate golf, Tom, don't listen to them. Screw that. If you don't want to play golf, you don't have to play golf." And it was such a beautiful moment and, boy, I sure needed it. It was a beautiful moment. Thank you Howard for the allyship in that moment.

It was also one of those moments where I had to sort of start to learn how to manage my board, because I should not have been in that position in the first place. And we're going to talk about that here as we go, is how do you set the table? How do you show up with some level of presence and deliberation? If you're the CEO it's your board meeting, it's not their board meeting it's your board meeting.

And so for me at that moment, it was the beginning of this transition I knew I needed to make to being il capitano. I needed to show up with a sense of agency and ownership in my body language, in my words. I couldn't be so cowed. And so let's talk about that more as we go.

What does the Board Do?

Vivek Vaidya: So actually that's a great segue to this question of, what does the board do? And to your point about you're the il capitano, is the board the boss of you as the CEO? Or the board works for you? How does that relationship work, Tom?

Tom Chavez: Yeah. And it is a paradox wrapped in an enigma, wrapped in a piece of bacon. Because if you're running a company and you 're the CEO, you have to have that sense of agency and ownership I mentioned, but you also have to subscribe to board governance.

I remember when my kids were little, and they're at that point in school when they're talking about, "What does your dad do?" And, "Oh, my dad's a fireman," or, "My dad's a policeman." I remember Julian being so, "Well, my dad's a CEO," and the other kid's like, "What is that?" And then they get right into, "Well, who's your dad's boss?" So it's a natural question to proceed to from there.

And so I remember telling my kids at the dinner table like, "Oh no, no, no. It's way worse than my boss, I got four bosses and they're really mean." So the point is, board governance, you have to think of them as very consequential. Are they your bosses? I don't know, maybe that's a device I was.

And so the paradox here is that you have to be very attentive to their priorities, you have to learn how to work with them. We see a lot of CEOs who think, "Yeah, screw, screw it. I don't want to talk to you anymore. I don't like that board member anymore." 

You don't get the choice to opt out of a particular board member or boards in general. If you're of that mind, you shouldn't be on the job.

So boards, and I remember Howard Charney said this many years ago and of course he's right, one of the central functions, maybe the two central functions of the board, is to ensure good governance. And then beyond that really to just hire or fire the CEO. I remember Howard said that.

And here we are many years later and in similar spots, you and I, like, "He's right." Because good boards, they have to be activist, they have to... In our last episode we talked about what good investors do in terms of asking good questions at just the right moment. But they're not il capitano, they don't have the wheel, nor should they. And they overreach if they do, so.

Who is On the Board?

Vivek Vaidya: So who is on the board then? Investors, obviously. Are all investors on the board?

Tom Chavez: No, is the short answer. So as these rounds come to fruition, typically there's a lead investor who puts the term sheet on the table, that fund that investor. It's common for them to have a board seat. Now, in the last several years you've had the co-2's and tigers of the world just phoning in money and actually not taking a board seat and not wanting a board seat. Which has been an interesting kind of distortion, in my view, that we're probably getting past now.

But let's also just note, there are many other investors who will participate in the financing who whose slots or allocations are kind of suggested in that term sheet. They don't necessarily get board seats. And in many cases they'll have what's called a board observer right, so they don't have the fiduciary responsibilities and control of a board vote in a formal way, but they're allowed to participate in all of the board member in all of the board meetings.

That's good for them and the funds that they represent, basically just in terms of keeping an eye on their investment. And it's frequently not noted, but it's hugely valuable for them just to have the learning benefits of sitting in in these board meetings and seeing how different companies are unfolding. That arms them with a lot of precious context to inform their other kinds of investment decisions.

Vivek Vaidya: Yeah. And sometimes the founders can use that observer seat strategically to their advantage as well. Because if they want another perspective, which yeah, they're an investor for sure, but if they don't have a voting right, if they have a trusted relationship with this observer then they could use that to their advantage too.

Tom Chavez: And we're seeing that in a couple places in super{set}, right? Where the board observer in at least one or two companies I'm thinking of, they add a useful perspective, they're trusted by the management team. And so that's a very, very good thing. But no, not every person who writes a check and participates in the financing has a God-given right to a board seat.

Vivek Vaidya: Correct. And then sometimes there are board members who are not investors as well.

Tom Chavez: Yeah, let's talk about that. So you want a diversity of opinion as you're growing your company. And also just as a matter of good governance, you want to have non-institutional board members. What we mean is people, luminaries, savvy operators who have context and domain experience, they can add a useful point of view to the board members but they're not representing one of the funds.

So that's a very common and, in our view, necessary device. Because it sometimes happens that entrepreneurs can be overtaken by just the concerns and priorities of financial investors. To your earlier point about adding balance and a diversity of opinion, in sticky moments an operator representing the, quote, common equity of the company can take a very useful position that isn't...

Because venture capitalists almost never will stand on one against the other, they flock together. And I'm not pointing to anything necessarily nefarious, it's predictable and fairly obvious in fact that they do that. But entrepreneurs need balance.

And to your other point about therapy sessions, and from the last episode, and conversations that you have with the operators, it's useful to have an operator who's not just a money guy.

Vivek Vaidya: Yeah. Checks and balances are useful in all parts of life.

Tom Chavez: That's right.

Vivek Vaidya: So at what stage do you establish a board? At Krux we had a board right after our seeding, it was very useful to us having Mike and Howard on our board, right?

Tom Chavez: Absolutely.

Vivek Vaidya: So is that always the case? When should entrepreneurs think about establishing a board?

Tom Chavez: I mean, I think you and I both subscribe to the school of thought that if you have somebody who's smart, who you trust, who can be really useful as soon as possible.

And it's fascinating to me because we've had a situation, as you know, in the case where entrepreneur just doesn't subscribe to the concept of board governance, doesn't actually care, isn't really convinced that anybody's going to teach or tell him anything that he doesn't already know. Well, you're on the path to perdition, right? So it's not about control, it's just about the lack of perspective that grounds the entrepreneur and the management team and points them in a more useful direction.

So no, I think as early as possible, and we were lucky to do that at Krux. We want to be those kinds of partners in arms at super{set}. We want to show up the, quote, board meetings we tell our teams, "Don't over prepare. Don't spend hours and hours crunching through PowerPoint. Let this be dialogue." And this isn't an adversarial thing where you show up and try to zing them with a gotcha question, we're actually just talking about the guts of the business and what are the issues and what are the problems and how we're going to solve them.

Vivek Vaidya: Yeah. Because what we're doing at super{set} is different from what we did at Krux, right?

Tom Chavez: That's right. You want to speak to that a little bit?

Vivek Vaidya: Yeah. So super{set} is the only investor in the seed round in the companies that we start, and there is no official board of directors at that point. What there is, to your point, is regular dialogue amongst us co-founders. Where super{set} we show up with two hats. One is the super{set} as your investor board hat and the second is the co-founder hat.

And the way we kind of straddle both those lines is just using this non-adversarial, non-gotcha question asking approach, where we are we identifying issues, and charting out the roadmap for what needs to be done, and working with our co-founders in doing all those things.

Tom Chavez: That's right. And you and I, I would hope, are getting better at that, right? There has to be that base level of trust, that we've talked about in the prior episode and here again.

Now, it's easy to critique. Criticism is cheap, craftsmanship is forever. So when we're engaged in those kinds of conversations, you and I, we want to make sure that the people we're talking to are at ease and that they understand that we're in it to win it, we're not just taking pot shots for the sake of taking pot shots.

We also like to say, you and I, that, "Hey, listen man, we're no good to you if we're just honey coating and telling you things that you want to hear." By the way, some entrepreneurs want that. "Enough about me, how do you think I look?" No, no, no, if you're in the hot seat authentically you need to get hard advice that maybe doesn't cohere with your own sense of what's going on on the ground or what you're doing or...

It's a humbling, hard job. And with love, we hope, or some level of compassion and been there done that we'll share this perspective but we also find you can't honey coat it, you got to speak plainly.

What Happens at a Board Meeting?

Vivek Vaidya: Yes, absolutely. Absolutely. So moving on, so you have the board, what happens at a board meeting?

Tom Chavez: Yeah. Let's talk about this, because... And I know that there are lots of different schools of thought. One of our investors loves to tease me incessantly about what a crazy person I am about starting board meetings on time and sticking to an agenda. I guess there are other approaches out there where people just sort of have loosey goosey board meetings and they take up different topics. And if it's working for you, great, but we have defined a board method over time that really just works.

So let's talk about the dos and don'ts here for a little bit. So the first thing is have an agenda with a tick tock, not a social media an actual... like, "From 3:15 to 3:30 we're going to talk about X. And then..." Now, of course you'll veer off that a little bit, but the point is to give the count and give the board a sense of, "Here's what we're going to talk about."

Back to my earlier vignette, once you have an agenda it's your meeting. You're il capitano, the comandante, you're calling what's going to be discussed at the board meeting.

Now, people might not like it, and you might get feedback, "Well, I feel like we're talking too much about product and we're not really engaging in revenue conversations." You tell them, "Okay, great." That's good feedback, you need to act on that for the next board meeting. But first thing is have an agenda, show up on time, deputize your management team.

Oh this is another thing, I think there are some CEOs, I've actually talked to a couple, who like to have board meetings just them with the board. I think that's nuts. First, what's the point of having this board of very important people if not to also help you motivate your team and remind them that very important people wrote very large checks and have a right to their expectation that something good come of it, right? It's also great training ground for executives, you have to learn how to show up at these big meetings with the big moves.

Vivek Vaidya: Yeah. Actually to your point about enrolling the exec team, that's one of the things that I really appreciated, even going back all the way to Rapt. I didn't attend a lot of board meetings at Rapt, but the few that I did, and then all the ones that I attended at Krux, almost every one of them I came out... Even when the meetings were tough, I came out of those meetings feeling energized about the business.

And there are times when you get berated for missing quarters and not shipping product, or some customer churns, those things do happen. But as long as you have trust with your board and you are able to have the dialogue that we were able to have with our board, you almost always come out of those meetings energized.

So there's really, in our mind, there is no substitute for not having your exec team at these board meetings. In fact, we've also encouraged sometimes people who are not on the executive management team to attend these board meetings and give presentations and whatnot, because it makes them feel a lot better and have more conviction.

Tom Chavez: Enrolled and accountable.

Vivek Vaidya: Exactly, exactly.

Tom Chavez: Yeah. No, I mean, it's... We talk a lot about the stress performance parabola in our shop, so on the X axis you have stress, on the y axis you have performance, it's an upside down parabola. A little more stress gets you to the top of your performance curve. And board meetings are, I think, a good way to create that focus, that kind of intensity.

I'm glad to hear you say that at Rapt and Krux, because it's good training for executives to understand, "No, no, no, these board members don't spend 18 hours a day wallowing in your little patch." So how do you distill the essence of what's going on into simple, actionable terms that convey the state of the business and what you're doing to fix it?

That is a great skill and a lot of people spend a lot of time... I mean, hey man, I sucked at that 25 years ago when I started, you've gotten insanely better. I mean, it's not something you just show up... I mean, some people I guess are innately good at it, but I've never seen it. You got to just practice it.

The Board Deck

Vivek Vaidya: You do. And then on a related point to that is, along with the agenda, you need to have a very organized board presentation that you send in advance, at least 24 hours if not more, to your board. And creating that, to your point about the board doesn't spend 24 hours a day, seven days a week, wallowing in your business, creating that board deck... And it's funny, we have a board meeting on Thursday.

Tom Chavez: Yeah. Don't screw it up.

Vivek Vaidya: So just going through that process also is great learning actually.

Tom Chavez: And that's the other... Let's not lose that. Because sometimes people say, "Oh, I got to go and pull out this idiotic board deck for these dummies." It's great for you. One of those board decks forces you now to be specific in concrete about what's really going on with this? What is the state of this thing? And have we made any progress? Or have we just chased butterflies and gotten in our pickup truck and driven around in tiny little circles for the last six weeks?

So the board meeting with the executive team enrolled... By the way, not every executive team member has to come to every single board meeting. That also happens sometimes, people start to feel marginalized. "And why am I not...?" I'm like, "It depends on the topic." Sometimes you and I, we're going to go deep, deep, deep on product. Sometimes we're just going deep, deep, deep on customers and revenue.

And so board attendance will shift a little bit depending on the topics at hand. And there are many more other topics that we take up. So executive team members needn't to be too nerved up if there are certain meetings where we ask them to lay back. Because you also don't want to have 25 hangers on in a board meeting. That gets weird. We're also just trying to tackle key questions.

Now, let's talk about dos and don'ts. Early on, and I think we've talked about this in other contexts, as a puppy I felt like, "Okay, you have all these brainiacs and wealthy VCs in a room. Let me bear my soul and ask them for help." Big mistake. Big mistake, in my view. And that's when a prominent VC took me aside and said, "Listen, you seem to have this wrong. We don't craft, you're the craftsman, you're the doer. We're critiquers."

And so when you're framing one of these board decks, yes, frame a key strategic topic. And I'm not saying you need to just be silly about it and already know the answer. Like, "I'm asking the board rhetorical question, but I already have the answer in my head and I just want to get a harumph out of you, and you, and you," that's silly. But you can't have Mondo Beyondo, "Who invented liquid soap and why?" kinds of questions with board members. You got to focus it down in an actionable way.

And it's the job of the CEO and the founders to frame those questions tightly. Because if you don't have tethers and hooks and constraints, you are chasing butterflies. You know what I mean? So you could ask those questions, but don't do what I did in that several meetings, we were like, "Hey, I'm just thinking about this thing. And wouldn't it be cool...?" Don't do that ever with a board. Huge mistake.

Vivek Vaidya: Yeah. The, "Wouldn't it be cool," questions where you're exploring and evaluating options and exploring alternatives, that doesn't work well at all in board meetings.

Tom Chavez: That's right.

Vivek Vaidya: It's more like, "We need to make this decision, here are the possible things we can do. Here are the pros and cons, we're going to talk about these things. Please come with your thoughts organized so we can have productive dialogue."

Tom Chavez: That's right. And if you already made the decision, don't carry on a pageant where you pretend to elicit input for a decision you've already made. Just show your work and your reasoning. I think that really enrages boards, I think you and I have been in a couple conversations where like...

Okay, I have this friend Dave, who every time you talk to him he's mostly made up his mind on one thing and then he talks to you for 25 minutes and pretends to get your input. "Well, I'm wondering about the Ford 150 versus the..." And then, well, it turns out he already bought a Ford 150, so why are we talking about this?

So another don't. Look, building a company is hard. And I know sometimes, especially in 2022, and this is one of those moments where I'm going to sound really old AF, we're all supposed to show our authentic selves and our vulnerabilities. I think showing up at a board meeting and mashing your teeth and ringing your hands about everything that's going wrong and, "Oh my God, I don't know if we're going to make it," that is the worst thing ever. And I've gotten some vignettes lately secondhand.

Vivek Vaidya: Me too.

Tom Chavez: From, I guess, younger CEOs, maybe it's a generational thing where it's all under the banner of authenticity showing how nerved up they are. I just think it's a terrible idea.

Vivek Vaidya: Yeah. I mean, it goes along with that whole thing about treating your board. And, in these few cases where people were sharing anecdotes with me, it was on the heels of our earlier episode where we talked about VC's critique and we craft. Because going to board members for advice on, "Oh yeah, I'm struggling with this, and we didn't hit our revenue numbers, and what do you think we should do?" That just doesn't work well. Or it didn't work well in these one or two cases-

Tom Chavez: It never does. I mean, I guess maybe there are some cases, but in our experience you should avoid that like a plague.

Vivek Vaidya: Yeah.

Tom Chavez: Now, some of this stuff we're talking about sounds like managing up or... Oh, that's also one key thing, and there are different schools of thought here too. Where it happened in a recent board meeting where the management team is evincing a lot of optimism about their prospects. And in the closed session another board member said, "It just feels like people are a little too shiny. And it's okay to speak plainly about the things that aren't perfect."

It flashed me back to a moment in one of the closed sessions years ago when I was getting jammed up and somebody's really getting heated with me and saying, Chavez, you're just too optimistic. You're too optimistic, you're not seeing things as they are." I was so proud of myself, because I had the presence of mind to say in that moment, "Guys, without my optimism I'd be merely just 162 pounds of hype." So thank God for optimism.

And so the challenge here is that if you're in it to win it, you got to stay optimistic, but you also have to see things as they really are. And so we talk about not showing weakness and mashing your teeth and being nervous at a board meeting. It's still really important, and this is a piece of what we're going to be talking about at our Thursday board meeting, "Here's going on that ain't right. This thing is just not perfect, it is not what it needs to be. And here's what we're doing to..." Say it.

Vivek Vaidya: Fix it.

Tom Chavez: There you go. So you got to fix it. And so that's the balance, is to speak plainly. Because I do know a lot of people... One person I spoke to many years ago, I know this is a terrible thing to say about him, this was his frame for managing his board, "Boards are like mushrooms. Keep him in the dark and feed him shit."

Vivek Vaidya: Oh boy.

Tom Chavez: Terrible, right?

Vivek Vaidya: Oh boy.

Tom Chavez: Really terrible. We're not of that. And there are a lot of people, I think, who play hide the ball with their boards. We're big proponents of, "If it's not perfect stay optimistic and show how you're fixing it. But speak plainly also about what you're doing."

Vivek Vaidya: Because ultimately it goes back to building trust, isn't it? How do you build trust if you are treating your board members like mushrooms.

Tom Chavez: That's right.

Vivek Vaidya: You'll never speak plainly with them, you'll never be able to discuss the business in a way that you need to to get the most value out of your board.

Tom Chavez: Right. By the way, it's also just a bad strategy because VCs are not stupid, they've been doing it for a while. They can smell BS.

Vivek Vaidya: Yeah. So you've been through a lot of board meetings. What were some of board meetings which were tough?

Tom Chavez: Oh my goodness, so many. So many slow motion train wrecks, how to choose? One immediately comes to mind, this is many years ago when the company was wobbling, I was missing my marks. And I do like to point out just if there's anything more humiliating than being at the table when you're being discussed in the third person, and everybody is carrying on about how magnificent and smart and good looking your successor is going to be, dude, that's pretty rough. I had one of those board meetings.

And look, as we've said, pain is instructive. It was motivational. I don't think the board needed to do that and get as sort of ad hominem and mean as they did in that moment. But again, it helped me develop some thick skin and teach me more about the things that I needed to start to get right.

You and I have missed quarters. If you're in this game, you're going to miss a quarter, you're going to miss several quarters. You take your comeuppance, you take the feedback. When you got a turd on the table, don't try to persuade anybody that it's actually a beautiful golden nugget when it's a turd. As we've been saying, "Just call it, say it like it is." There've been many of those kinds of board meetings.

I think the higher stakes board meetings, when we've talked about, for example in the last project, I guess there were, what, four inbounds where at various moments people wanted to come and buy the company. Having those kinds of high stakes strategic discussions with smart people around the board, those were noteworthy. We learned a lot.

And so, look, I mean, every board meeting has its own little rough and tumble. There's not a pattern to it necessarily. I think now that we know what we're doing, and because we're sticking to the kind of structures and habits that we're talking about here in this podcast, it's working better. You don't get bush whacked, because you're actually running your board meeting.

How Does the Conversation Change from the Early Stage to the Later Stage?

Vivek Vaidya: Yeah. So speaking of the journey and the evolution of the company, I'm assuming the board meetings evolve as the company grows and evolves too. So what's the difference between a board meeting at a seed stage company versus when that seed stage company becomes a series A or series B? How does that change?

Tom Chavez: Well, the early stage conversations are heavily existential. Like is the company actually going to exist once it gets through this zero to one phase? So they're higher stakes, very suspenseful. Can we get just these products, these customers to combine and generate this amount of revenue such that we don't die?

The later stage conversations are candidly a lot easier, because if you have something that's kind of sort of working... And, I mean, there will always be wobbles and there will always be problems. But once you're sort of in the air those kinds of next stage decisions at board meetings center much more on how much resourcing, how much capital are you going to need to go and take which beaches and storm which countries and expand and grow? If you're in a crouch and weight and you're just hanging on, those are obviously depleting. But if you're grow...

I mean, look, it's been said and it's true, revenue cures all evils. At the last project when, boy, whatever those last two years... Remember last two or three years our CRO would show up at every board meeting and he had a perfect trailing graph of ACV month over month. And it was just up into the right, up into the right, up into the right. Well, you could almost just close the board meeting at that point. Just show the [inaudible 00:32:11], "Bye, everybody. We're good." And again, we still had problems there, you were there. But they weren't so white knuckle, you know what I mean? They weren't so daunting.

Vivek Vaidya: Yeah. Because revenue doesn't fix all ills, but it sure serves as panacea for a lot of them.

Tom Chavez: That's right. That's right.

How We Do Board Meetings at super{set}?

Vivek Vaidya: So how has our prior experience with boards informed what we do at super{set}?

Tom Chavez: Yeah. Look, I think, as we've said, we want to ally with the management teams and the CEOs very closely. I think it's safe to say that because of that trust and because of the connection we have, especially in the zero to one phase but even beyond, that those teams are depending on us for more detailed kinds of input than they're probably seeking from other board members. I hope that that's the case. I think that's mostly the case as we think about all the companies we have in motion now. Wouldn't you agree?

Vivek Vaidya: Yeah, I completely agree. I think it's amazing that we've been able to build this trust with our co-founders and CEOs in that they treat us as board members, but they also treat us as operators. And because of the trust that we've built, we kind of just depend on each other to take our respective hats off at the right moments to really help them solve problems.

Tom Chavez: Right. And that's something you and I do a lot, with each other but also with these other management team members. We'll say, "Hey, listen, I'm taking off my fiduciary board hat and I'm putting on my friend hat. Can we talk like that now?" And we're very intentional about taking on and off different hats.

Vivek Vaidya: Yeah. And I think it's worked reasonably well so far for us at super{set}. And, your point about enrolling all sorts of leaders and founders in this journey, it's helped us a lot.

Tom Chavez: And I think, look, we have some scar tissue. We've blown millions of dollars stupidly, we've made bad decisions, we've had botched product launches, we've missed quarters, it's all the things that we've been talking about. And so I think what that arms us with is a certain amount of context and calm that we can bring.

There was a recent board me meeting you were at, "Okay, the company's wobbling a little bit this way." It's okay. When we meted out, you and I talked it out, we were like, "My God, there's a lot of good facts here."

And it strikes me that many times venture investors... I was perplexed like, "Really, is this proportionate?" Some of the dog piling and the [inaudible 00:34:55] that was going on, "Is this really proportionate to the circumstances on the ground?" Maybe that's me being an optimist again, but I think any rational informed observer would say, "No, this is pretty good. I mean, there's a lot of good things going on here."

And so unlike other VCs, I do think that we can show up, again with that context and calm, which actually gets us more of what we want. Because if the management teams don't lose conviction, if you don't clip their wings and bonk them in the head too many times, but keep them moving like a courageous race horse who believes that he's going to win the race, that's the psychology of it. That's what we're trying to cultivate at every turn.

Vivek Vaidya: Yeah. And I think that's where the benefits of our model kind of come to light, where because we are in the middle of it being operators ourselves and we've helped build these companies from the ground up, we're much closer and much more aware of possibilities as operators than investor board members are.

Tom Chavez: That's right.

Vivek Vaidya: So we can be optimists and we can see the potential, the long-term potential of the businesses we are helping build ourselves.

Tom Chavez: Right. Now, look, the asterisk in seven point font that we should include here just for completeness is we're talking about the cases where you and I have been enrolled.

Vivek Vaidya: Yes, true. True.

Tom Chavez: And there are places where we're not enrolled for whatever reasons, people want to do their own thing or go their own course. That's okay too. We're referencing all of the cases here where we're allowed to...

And again, as we've said in other places about the investors who drive us crazy by saying that they did it, we're helpers. We're boosters, helpers, cheerleaders, advisors, father confessors, whatever. The teams are doing the job.

Vivek Vaidya: Are doing all the work.

Tom Chavez: But hopefully we're showing up in the places where we need to and being helpful when they need us.

Vivek Vaidya: Yeah. And to your point about places where it didn't work, I think we've learned a lot of lessons from that and that has informed our model of building companies at super{set} now.

Tom Chavez: That's right.

Vivek Vaidya: Wow. We covered a lot of ground there, Tom.

Tom Chavez: We sure did. Time for a beer.

Vivek Vaidya: And thank you for sharing your stories. Even though I've heard them so many times, it's always fun to hear them again.

Tom Chavez: It was a quasi interview.

Vivek Vaidya: It was a quasi interview. Okay, sure. Sure.

Tom Chavez: You asked all sorts of questions, but then you jumped in. And that's what usually happens, you and I.

Totally Unpaid Promotion

Vivek Vaidya: Yeah. But you know what we didn't do? We didn't do a totally unpaid promotion in this episode.

Tom Chavez: Okay. Well, one of our prior podcasts, I think with Dane, we did it at the end, so let's do a quick one here. We're going to close out with a word for our sponsor who's not paying us a nickel, he's getting all of this boosting for free.

Vivek Vaidya: That's right. So Tom, we've gone back to the office now, we're in the office two, three days a week. And we rely on this company to feed us every day, right? Winnie uses this company's services to order lunch, and lunch gets delivered. Delicious lunches get delivered from a lot of different types of places all over San Francisco.

Tom Chavez: With great variety.

Vivek Vaidya: With great variety. Great variety.

Tom Chavez: And custom, you get to choose exactly-

Vivek Vaidya: Correct.

Tom Chavez: You get to choose your own adventure.

Vivek Vaidya: Correct. Correct.

Tom Chavez: Who are you talking about?

Vivek Vaidya: I'm talking about DoorDash.

Tom Chavez: Yeah, big ups to DoorDash.

Vivek Vaidya: Yeah. So good.

Tom Chavez: Actually, I got to tell you, they've gotten the [inaudible 00:38:23], the web experience when we all order, that's kind of like, "Okay." It's where you have a bulk order, you get your vegetable thingmajig.

Vivek Vaidya: Sometimes chicken,

Tom Chavez: Occasionally on chicken, depending on your crazy mood. I get whatever I need, everybody gets what they want and it shows up on time. Big props to DoorDash. Keep getting it done, yo.

Vivek Vaidya: Yep. Keep getting it done. And with that, we'll call a wrap for this episode. We'll see you in the next one shortly.

Tom Chavez: Thanks everybody.

Vivek Vaidya: Thank you.

Tom Chavez: Bye-bye.

Music: (Upbeat electronic music.)

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