It’s been a three month long quest, but we’re almost there replacing the vacant seat on our board. While we’re sad to lose dear Anake, this has been a great process for us to find new talent, mix up our board, and get really clear on where we’re going and who we need in the mix to get there.
Having appointed (and tried to appoint) a few board members over the years, we’ve realised that finding good governance beyond your founding team is hard. Like capital raising — something we know a bit about — it’s often seen as a ‘nice to have’ not a necessary. So I thought it might be useful to document the process PledgeMe took finding our new board member, so other startups (and stay-ups) could see it’s not so hard and it is so necessary to set your companies strategy and manage your risk.
Step 1: Deciding we needed a new board member
We sort of got pushed on this. Anake gave us six months notice of his resignation and he offered to help us find a replacement.
We liked the idea of getting some new blood on the team. Board members are a bit like friends, they are either there for a reason, a season, or (sometimes) life.
You don’t always need a director though. Sometimes you just need advice from people who have been there, done that. If that’s the case, you could set up an advisory panel to soundboard ideas and gather information. The key difference is that these advisors do not make decisions for the company, and have no power or legal duty to the company.
For the first two years, we only had founders as directors and ran bi-monthly advisory meetings with eight Wellingtonians who were smarter than us. It was only when we decided to offer equity crowdfunding that we set up a board with external directors.
Tip: make sure you’re ready for a new board member (and actually need one).
Step 2: Deciding the skills they need
We had already prepared a matrix of the skills / experiences we wanted on the board. They included: Legal, Finance, Marketing / Sales, Tech, HR, Regulatory, Product, Strategy & Communication.
We did a round of (anonymously) rating each current board member 1–4 (4 being high) on these skills/experience and provided personalised feedback on what we each did well / didn’t do well.
Through this process we saw we could beef up our board by adding legal and marketing/branding/sales skills to the mix. We also noted diversity was an issue with most our board identifying as men, with only one woman, me.
Tip: assess the skills you currently have, and the skills you need. Think wider than just legal / finance, and prioritise diversity.
Step 3: Writing up role description
We knew we needed someone, and we had a good idea of th the skills / experiences they needed to have so, we wrote up a role description. This included:
- What skills / experience we wanted the director to bring (mapped against the skills we already had).
- Note about the importance of diversity, but pro-tip: turns out just asking for women is illegal.
- The terms (eg. how long the role will be)
- How much we’d pay (we offered $1,100 a month with a mix of shares and cash, but we’ve seen everything from nothing to $2,000 per meeting)
- A bit on how our board currently operates, who’s the chair? How often we meet / how long for?
- Who is currently on our board? We broke out our trusty board bios and photos (of us looking semi professional, and us having fun)
- What is important to us around the board table (being constructive, asking questions, caring).
- The risks of being on the board / any board. Being a startup is risky, especially in the financial markets.
- The process — what are the next steps? When do applications close?
Tip: there’s a bit to cover in the role description, so make sure you tick off the list above.
Step 4: Getting our comms plan ready
We knew our main channel was going to be through our crowd. So the plan was simple: what content did we need and what channels would we use to push it.
- PledgeMe Facebook
- PledgeMe Twitter
- Personal social media accounts (Anna, team, board)
- Appoint Better Boards
- Shoulder tapping individuals to share / apply.
- Talking about our process IRL to everyone we knew
We also planned to post updates on our personal and company social media during while applications were open.
Tip: have a bit of plan around your content and your channels.
Step 5: Finding the right tool to take your applications
We used Weirdly for our applications, which was great. We had applicants tell us how fun the process was and we got a lot of indepth information as well.
We asked why they wanted to work with us and a mix of questions about how they operate (fast or slow, planners or doers, who would win in a fight: a tiger or a bear).
We also had our applicants put in a photo. We were told through the process that this might make us biased, and in hindsight I totally agree. In the future we won’t ask for them based on this feedback. In saying that, some people totally rocked out the photos. We had colanders on heads, photos of people at our birthday parties, and pets).
We also asked people for recommendations of their favourite business books. The whole list is here if you’d like some business related reading.
Tip: Use Weirdly.
Step 6: Launch it into the world
This is the scary part. Hit publish on the blog, push your Weirdly live, and start getting the word out there.
We had our first application in 5 minutes! Over the three weeks we had the Weirdly application form open, 107 amazing people applied. Yes, you read that right. One hundred and seven applications!
I was amazed. People we knew were applying and that was cool. But — even cooler — a whole raft (perhaps even a medium-sized cruise ship) of people we had never met before applied and told us how much they loved what we do.
We had applications from Waiheke to Dunedin and everywhere in between!
Some key stats about our applicants:
- 25% came from the regions
- 15% were from people who don’t identify as Pakeha, and
- 52% were from people who identify as women
It was the number of women which blew my socks off.
You know the studies that show men will apply if they have 60% of the required skills and women will only apply if they have 100%? Well, the women who applied for our role had 110% of the required skills, across the board. Three dames applied. DAMES!
Step 7: Communicate
We tried to say thank you to people applying as they applied. I wrote a personal note referencing something from their application so they knew we saw them as people not just another application. I did get a little overwhelmed in the final three days, so apologies to those final folk that only heard from us during the shortlisting process!.
We also updated our channels about how the hunt was going — in the hopes they’d recommend the role to their networks as well.
We talked about our experience. The excitement of all the amazing people applying, the number of applications, the number of women applying.
We had a bit of online banter with Weirdly, asking if the number of applications was normal.
Tip: Communicate with your applicants and with your crowd. People like things that are personalised.
Step 8: Shortlist
This step was the hardest. It involved me and Nick (the Chair of the Board) wading through the applications for fours hours on a Saturday. We had originally booked 90 minutes!
Eventually we whittled it down to 10 people to chat to from our long list.
Then we emailed each person individually that didn’t make the shortlist to thank them for their application. We also offered them some next step options and made a personal comment about what we really loved in their application. I was told by one applicant that they forwarded it on to someone who had rejected them poorly to show them what a good rejection email looked like.
Tip: Try to get down to 5-10 people to chat to.
Step 9: Phone calls
The next thing we did was get Nick to call everyone on the shortlist and ask them some pre-set questions.
- Why do you want to become a director of PledgeMe?
- Do you understand the inherent risks of being a director of a start-up, that you may end up with a ‘failed’ company on your professional CV (not that we believe that for one second for PM)?
- How do you think you can best contribute to board meetings?
- Tell me about your previous governance roles – what went well and what did not?
- How do you think we should differentiate PledgeMe?
- What do you think our biggest strategic hurdle is?
- Where do you see PledgeMe in 5 years?
- [+ Any specific questions that relate to each candidate’s’ personal backgrounds]
Our chair reported back on each call and then recommended a short list.
Step 10: Shorter list & Due diligence
We invited the top 5 to meet our board so we could interview them and they could interview us. We also invited the applicants to send through any due diligence questions they had under a FrieNDA. We were incredibly open with our strategies, numbers, plans, and fears.
We store all of our board related docs in a Board file on Google Drive, so we shared that file with all our short-listed applicants, and shared other documents as requested.
It was really insightful for us to see the questions that they asked, and we got some great recommendations from the applicants as well on ideas we should implement (Webinars!) and areas we should focus on.
For the folk that didn’t make it to the next stage, Nick sent out an email. In hindsight, we probably should have provided more specific feedback in that email (the things we loved!) and it possibly should have been a phone call. That’s a learning for next time.
Tip: Be ready for the due diligence storm! Have your files tidy, and be ready for some hard (but useful) questions.
Step 11: Interviews
This was the chance for our applicants to see how we as a board interacted, for us to ask them questions, and for them to interview us right back. They had our numbers and strategies on hand, and they grilled us. They didn’t make our job easy at all.
Step 12: Reference checks
For all that’s good and holy, do this step. Take the chance to chat to references so you can figure out if someone else thinks they’d be a good fit. We’ve skipped this step in the past and it got us in trouble.
The phone calls don’t have to be long (10min) and you can make your Chair do it (I did!) but a phone call will give you the nuance that an email might not.
Tip: make the calls
Step 13: Decision time
This was the hardest. We had to chose who from our short shortlist best matched the skills we needed (and in some cases, hadn’t realised we needed but the applicant pointed it out!), as well as providing the best variety of perspective (while still being constructive).
We had such amazing people apply for our role. The board and staff wished we could have all of them. None of them made our job easy, and that’s a testament to the amazing breadth of skills and experience in New Zealand, as well as the willingness to roll your sleeves up and help a company going from starting up to staying up.
To everyone who applied for our board role, who shared our board role, and who supported us through this process: thank you, thank you, thank you.
Tip: Go back to the skills / experiences that you outlined at the start, but also be open to adding new factors to your decision making as you go
Step 14: Resolution time
Unless your constitution says differently, you need to pass a special resolution to appoint your new director. This means 75% of your voting shareholders need to confirm that you can appoint your new director.
Our directors are all shareholders of PledgeMe, and between us hold almost 75% of the company. That said, we still want to go out to our shareholders first — so we plan to go to our shareholders before we pass the resolution, to get their questions before we make the final appointment.
You need 75% of the voting ownership and owners to approve a special resolution. Make sure to check your Constitution and Shareholders agreement first.
Step 15: Share the news (first with your shareholders, then your crowd).
We’re still on Step 14, so we haven’t gotten here yet but our plan is to introduce our new director (who will it be? OoOooOoOooooOoHhhHHHhhhH) to our shareholders first via our Shareholders portal so they can ask questions / say hi before the new director is appointed.
Once that is done, we’ll share the news with the world. As per the comms plan there’ll be a blog, some social media, and maybe even a news story or two.
So, watch this space. Announcements coming soon!