Being on a Board
I recently left my job at Honeycomb. They’re a fantastic company, and I think they will be wildly successful. Still, life circumstances are such that I wanted to explore an opportunity at a much larger technology organization. More on that in another post, perhaps. In this post, I want to reflect on a unique aspect of my employment at Honeycomb: I was the first employee to sit on their Board of Directors as a full voting member. While this is a common practice in some countries, as far as I know, I am the first non-founder/executive person at a venture-backed software company in North America to have had this opportunity (since first publishing, people have pointed out some other companies that have also done this, which is great to see!). Because I left my term early, I only got to participate in two meetings, so these reflections come from that partial sample.
Nominations and Voting
When Honeycomb decided to add an employee board member, our founders, Charity and Christine, outlined a process in a wiki document and circulated it to everyone in the company. Employees who had been employed full-time at Honeycomb for two years would be eligible for board membership and could be nominated. Anyone who had been working for six months could vote. After the nomination period, each candidate wrote a 500-word pitch explaining why they wanted to be on the Board and how they would approach their responsibilities. Employees then voted using ranked-choice ballots. There were four nominees, three from engineering and one from the sales team. Voting continued for a fixed period, after which Charity announced that I would be Honeycomb’s first employee board member!
What is a board
A part of this role involved demystifying what a board is and isn’t, so I want to cover that before going into more detail.
Every corporation has a board, and many other types of organizations do too. A board of directors is a group of people who jointly supervise the activities of an organization. For a venture-backed startup, the Board usually consists of the founders and representatives from venture capital firms that have led or participated in significant funding rounds.
Board members have a fiduciary responsibility, which means they are required to serve the interests of shareholders in the organizations. That is open to interpretation, of course. Still, usually, it means they’re out to maintain the financial health of the company and maximize the value of the company in the long term. In other words, boards want measured bets and continued growth.
Boards often have independent members who are there to either provide some outside perspective or to bring some specific experience to the group. These people have often worked in similar markets or have knowledge or skills that the company needs.
The board meetings I attended had a pretty standard format. At Honeycomb, the executive team spends a few weeks in advance preparing the board deck. The deck outlines the meeting agenda, which usually includes a recap of various company health indicators for the last quarter and topics that might be of interest — strategy outlines or a deep dive into a particular area of the company.
We go through the deck in the first part of each meeting. The Honeycomb executive team is present, and each member reviews updates relevant to their specific areas (e.g., Chad, the VP of Sales, will give an overview of the sales pipeline). The Board, legal counsel, board observers, additional representatives of investor firms, and people who have participated in angel and other investment rounds are welcome to join this part of the meeting. The deck is sent out ahead of time as pre-read for the meeting. People tend to ask clarifying questions and might ask to dive deeper into a specific area on one or two slides.
The next part of the meeting is administrative. The board members discuss and vote on administrative issues such as certifying the minutes of the previous meeting and financial matters like compensation changes, stock grants, etc. Non-voting participants, except for the legal counsel, are asked to leave before this part of the meeting.
Summarizing Board Meetings to the Company
A big part of my responsibility as an employee board member was to summarize board meetings to the rest of the company during an all-hands meeting. I had a 15 - 20 minute slot, during which I would recap what the Board’s role is and who are the other board members. Especially at a growing company, repetition never hurts the message, as many people would be hearing this for the first time. I’d then go through a recap of what I thought the highlights were. Everyone in the company has access to the board deck, so I don’t have to recap everything, and I usually kept it to what I thought were the big topics of discussion. I’d also try to give everyone a sense of the mood and how receptive investors were to our strategy. As an employee, I might pick up on different things in the meeting, and execs who were also present would often tell me that they were delightfully surprised at what I would choose to highlight.
Funnels, Funnels, and more Funnels
One personal takeaway from my participation on the Board is that, at a certain level, every organization has to get good at looking at and interpreting marketing and sales pipelines. A pipeline is just a value delivery chain, so looking at the shape and properties of the funnel can hopefully project roughly how successful an organization will be in the short and medium term. You can break a funnel into different pieces, commonly referred to as Top of the Funnel, or Tofu, Middle of the Funnel, or Mofu, and Bottom of the Funnel, or Bofu. So if you hear people talking about Tofu, Mofu, and Bofu, they’re talking about funnels.
A marketing funnel feeds into the sales funnel. By looking at the percentage of movement from one part of a funnel to the other and the amount of time it takes to travel through a funnel, you can make educated guesses about how things will go for the next little while. Investors especially spend a lot of time looking at the health of various funnels; if these look healthy, everybody will be much more relaxed.
Honeycomb is doing well as a company. Everything an investor or executive would measure is going in the right direction for them. As a result, I didn’t witness any tense discussions. The Board acted as an experienced audience to guide Honeycomb’s strategy. I understood that the effort to prepare and present the board deck was worthwhile for everyone, even if there were no significant disagreements. As the quote goes, “plans are useless, but planning is indispensable.”
Of course, this level of trust isn’t going to be present on every Board or at all times. If a company is having significant difficulties, I’m sure the discussions in these meetings can be much more consequential.
My original term was for a year, but I chose to leave Honeycomb and resign my board membership after six months (My family and I moved to NYC and I needed to bring home a higher salary than can be reasonably obtained at a startup). The process outlined specified that I would pick a successor if I resigned before my term was complete. I chose one of the original nominees who I thought would approach the responsibility similarly to me, providing as much consistency as possible to the Board.
Admittedly, it was a bummer to leave early. I didn’t want it to harm the experiment. I thought about delaying my family’s move to NYC, but with a school-aged child, I didn’t want them to have to change schools mid-year. On the bright side, the Board gets to experience another employee perspective!
Being a Representative
As an employee on the Board, people would sometimes approach me with concerns. These fell into two categories: 1) things that could be relevant to the Board and informed how I interpreted parts of the Board deck, and 2) things that the person should bring up with their manager. In the latter case, I tried to give that feedback directly to the person.
I tried to solicit feedback frequently, especially after my presentations to the company during our All-Hands meetings. It’s hard to know what people want to hear or what information is worth conveying since you’re mostly demystifying something for many people. I received positive feedback, both from execs who were at the meeting and employees who weren’t.
I appreciated the opportunity to serve on Honeycomb’s Board of Directors. My term was short, but the experience was valuable and changed how I see startups — I now have a behind-the-scenes perspective typically reserved for executives and founders. I’ll probably understand the motivations of executive teams a lot better from now on.
I am aware that I served on the Board when Honeycomb was doing well as a company. Consequently, I didn’t participate in any discussions or decisions that had the potential for a profound impact on Honeycomb employees. I am also aware that this is precisely the time when a company has the opportunity to experiment with having an employee sit on the Board – when trust is high. When things are going well, the Board trusts the founders to steer the ship.
When Honeycomb first announced that I was joining the Board, some people outside the company compared having an employee serve on the Board with having a union. I want to be clear that these two things are nothing alike. Unions exist to provide workers leverage in negotiations on issues that concern them. The structure accepts divergent interests between groups and provides countering influence to even the playing field. Having an employee on the Board of Directors provides that employee an opportunity to represent a point of view that could be helpful to the rest of the Board. Still, if interests are not aligned, they will not be very impactful.
Having an employee Board member provides an extremely high level of transparency to the rest of the company’s employees. There’s an implicit trust that an employee can build that an executive would struggle to obtain. The Board benefits from an additional perspective- particularly one close to the knives- that can help it make more informed decisions.
I hope to see more companies perform experiments like this, and I hope that Honeycomb, both the company and the Board, benefited as much as I did.