In the summer of 2015, we discussed the commitment to good governance that we uphold at Bee Partners. Our philosophy is essentially that there’s so much uncertainty in a startup, that reducing any governance risk early in a company’s lifecycle only pays dividends moving forward. And while this practice is often found on the “important, not urgent” list, we’ve chosen to make it urgent, having seen the negative outcomes of procrastination and delay.
That first good-governance blog post was published when Bee was just two partners. Tim was still an advisor at SkyDeck, Kira wasn’t even our summer intern yet, and I had just joined Michael as a partner and taken my first board seat. We were looking to get smart on how to affect positive outcomes for our young companies, while always learning from those around us. A few years later, we began our quarterly series, “Becoming a Better Board Member,” a roundtable mindshare-and-learning session for the next generation of VCs, where we hear from experienced board participants on a particular topic. We just held our seventh meeting in mid-May.
This brings us to our current moment and the pressure the COVID-19 pandemic has put on … well, everything, and VC and early-stage startups have certainly not escaped that. A couple of things are becoming clearer: Responsible stewardship from VCs is more important than ever, and Founders have the hardest jobs. Our role as good stewards is to knowledge-share with Founders, uncover uncertainties, and develop paths to minimize those uncertainties. We provide frameworks, including in governance, for them to use as their own. Not surprisingly, this spring has been a steep learning curve for everyone but we have noticed that our reliance on governance is paying off, and in consistent ways.
Less Friction. By establishing a good cadence with investors ahead of important moments, Founders and board members can significantly reduce the friction of getting an investor group (re) engaged--whether for capital or connections. Establishing this cadence makes it easy for all to know when we need to get to something today and when a week+ is OK.
Harvesting Trust. Good governance sets strong boundaries, and boundaries are necessary to reinforce the built trust between Founders and investors. When that trust is in place, we can better align the interests of the company, the Founders/employees, and the investors, to move the ball down the field. We can have candid discussions about the effects of a strategic decision on everyone. For our part, we supply timely resources in an efficient manner and trust Founders will tell us ‘no’ quickly.
Stewardship. Founders are stewards of our capital. We are stewards of our LPs' capital. We both need to establish trust and prudence with capital early on in our relationships with respective funders. Having this in place prevents us from wasting cycles second-guessing a capital spend or hand-holding a burn cut. Governance aligns financial incentives up and down the stack and helps prevent any short-sightedness in financial decision making. Yes, we want to maximize the value of all shareholders in the long run, but sometimes to do that we must be mindful of cash now.
Go Slow to Go Fast. Speed is everything for companies looking to become the market leader. Good governance means going deep with investors on learnings week after week, and sharing the results of various experiments. That sets the stage for the Founder to assess their velocity relative to other Founders in the portfolio and learn from those prior experiences. It also enables the investor to reflect on what other resources may be needed to maintain that momentum.
Managing Into Crisis. There's always another fire to put out as a Founder. In order to affect positive outcomes in these most uncertain times, a leader must manage into, during, and after the crisis. This means transparency and two-way accountability with the stakeholders, especially employees. Good governance rallies all the stakeholders together to resolve the intractable. Without the history of transparency and accountability, these moments become increasingly difficult.
As we’ve grown our team and joined additional boards in the last five years, we’ve been exposed to fantastic leaders and board members, each with their own angles, principles, and thought patterns. We’ve seen more unique scenarios where experience is the only ‘playbook’ to pull from. We aim to pay this knowledge forward, learning along the way, while receiving our own dividends from good governance. If you are interested to attend one of our sessions, reach out and share why you’d like to participate and how you can meaningfully contribute.