Summary of Episode
#40: Matt Blumberg joins Annaka and Ethan to discuss the role of startup CEOs and how to build a strong executive team. Matt also dives into the process of creating a board for your company and the importance of building company culture during the early stages.
Matt Blumberg is the Founder and CEO of Bolster, a company working to help startups scale by pairing them with executive talent and board members. In addition to running Bolster, Matt is the author of Startup CEO: A field guide to scaling up your business, and he runs a popular entrepreneurship blog, Startupceo.com. Matt has worked with many companies throughout the years, and he has continued to write books dedicated to entrepreneurship.
Podcast Episode Notes
How Matt got his start [1:08]
A marketplace that helps startups find senior executives [4:01]
Nobody trains you on how to be an entrepreneur [9:00]
One of the biggest errors a founder makes — falling in love with your vision rather than listening to the market [12:55]
How should a CEO be spending their time? [14:32]
How Matt and his team got the idea for Bolster [19:48]
Scaling yourself as a CEO [23:11]
Coaching and mentoring are key to growing as a CEO [24:46]
Finding a CEO coach [27:54]
At what stage of growth should a CEO begin looking for an executive staff? [30:32]
All startups need boards, and you need to form your board early. Here are some strategies for building a board that will help you succeed [33:18]
How to compensate board members [38:02]
Matt’s biggest piece of advice — be intentional about building your company’s culture from an early stage [41:36]
Full Interview Transcript
Annaka: Hey, everyone, and welcome to Startup Savants. I'm Annaka.
Ethan: And I'm Ethan.
Annaka: If you're a returning listener, welcome back. And if you're new, this podcast is about the stories behind startups, the founders who run them, and the problems they're solving. Today our guest is Matt Blumberg. Hey, Matt. Welcome to the show. How's your Friday?
Matt Blumberg: My Friday is just great. It's good scheduling to do these toward the end of the week. The ball is rolling down the hill. It's all good.
Annaka: Exactly. We're looking forward to the Friday evening plans. But let's get started. Tell us a little bit about yourself. You're a founder and an author. How did you get your start and then how did you end up where you are now?
Matt Blumberg: Yeah. So I'll give you the arc of the career first. After college, I was a management consultant for a couple of years. Then I worked in venture capital for a couple of years, and those two things taught me a ton about business, all different angles. Well, one of the things they taught me is that I wanted to be an operator, not someone on the outside. Advisor, investor were both really interesting, but I wanted to build something. And I went to work in 1995 for a company called Moviefone, which at the time was a small cap public company in New York that I always describe as they were the internet before the internet. So the company was started in the late '80s. It was an interactive telephone service, and they created these branded phone numbers in major metropolitan areas like 777 film or 222 film.
And it was kind of an internet business model through the phone. So you heard an ad. It was an ad-supported service. It was a movie listing guide that you navigated with touch tones and you could actually buy tickets ahead of time, a bunch of things that don't even make sense anymore that the internet exists. But that's how you find movie times and buy tickets, but at the time was very revolutionary. So I was there as the business builder or general manager of the internet business for that company, '95, '96, '97, '98, '99. So internet 1.0, and was really fortunate to be in the right place at the right time.
Those were really formative years for the commercial internet as we know it today. And it was great. I woke up one day at age 24 or 25 or whatever it was, and I was running a top 25 internet property, which I kind of had no business doing. But it was a great experience. And we sold. So I was on the executive team of the company, ran the internet business for them. We sold the company to AOL in 1999. And a few months after that, I started a company on my own called Return Path. Not on my own. I had a co-founder. The company was called Return Path. It was in the email marketing business. We ran that and scaled it for 20 years to about 100 million in revenue, really nice global footprint, about 500 employees, and sold the business in 2019.
And then in 2020, a group of eight of us who had worked together for many years at Return Path started a new company called Bolster. So I am one of eight founders and the CEO of Bolster, and we are building, I think a really interesting and very impactful and hopefully somewhat disruptive business in the talent space. So we're a marketplace that connects founders and startup CEOs with senior executives because we believe that there's got to be a better way to access executive talent than the way it works today, which is either very ad hoc, like you know someone or you know someone who knows someone, or it's very expensive and very slow. You hire a search firm, it costs a lot of money, it takes a long time. You end up with a very expensive person.
The needs of startups are really, really different than the needs of larger companies or even middle market companies. And being able to get good executive talent on demand if you need someone for an hour for a project, for a day a week or a day a month, this is a better way of doing that. And if you need someone full-time or you need someone to be on your board, it's a much lighter weight process that we go through. So that is what we're doing now at Bolster. We're two years into the journey, and so far so good.
Annaka: Yeah. Well, I-
Matt Blumberg: As it relates to your mission, what's interesting is that we are business builders and founders and entrepreneurs, but we also serve founders and entrepreneurs, and that's our world that we live in.
Annaka: And so I do remember Moviefone because it's Moviefone with an F.
Matt Blumberg: With an F. Very cool.
Annaka: And I was like, do I remember this? Yes, I do. And you called the number, and they would give you what listings were on that night. I don't know. I was like, what a memory from 1996 or when I would've been using that as an eight-year-old. So where in your career arc did writing books and sharing your knowledge come into play?
Matt Blumberg: So I started a blog, which is startupceo.com, and I started writing it in early 2004, which was kind of the beginning of blogging. I think blogging started in 2003. So it was fairly early on in the scheme of CEO blogs. And I did it mostly because that was the point at which I started mentoring other founders. And in particular, a lot of my VCs kept asking me, "Hey. Can you go talk to this founder in the portfolio or that founder in the portfolio? He's going through something he's never done before, but you have." So I started just writing that stuff down as I was doing it and then blogging came into existence and I was like, "Oh. This is a good way to share the entrepreneur's journey with other founders." So I did that for many years.
And then in about 2012 or so, one of my VCs and friends and mentors, a guy named Brad Feld from the Foundry Group, had written a couple of books. He's now written many books. Great writer. But he was working on a book called Venture Deals, which has kind of become the standard now for teaching founders and entrepreneurs about finance. It's used in business schools all over the place. It's sold hundreds of thousands of copies. It's a great book. And he sent me a draft manuscript in Word. So this is before Google Docs. And he asked me if I would just read it and give him my take on it. And so I loaded it onto my laptop and I had a cross-country flight going out to California, and I ended up taking the entire flight, and I read it. It was a great book. And I kept doing these comments in the margin, and each one of them started with something like, "Well, my take on this is..." Whatever.
So I landed, I emailed it to him and he said, "Hey. Can I publish all of these as sidebars?" And so if you read Venture Deals today, there's a blurb in every chapter called The Entrepreneur's Perspective, which is me. And so I enjoyed it, and I was talking to him about it afterwards and I said, "What do you think about turning my blog into a book and calling it Startup CEO?" His books have startup something as the name of all of them, Startup Communities, Startup Life, Startup Metrics. Venture Deals is the one that's a little bit of an outlier.
And so he thought it was a good idea. He introduced me to his publisher at Wiley, and Wiley was pretty excited about doing it. From my perspective at the time, I thought I had written most of a book just in one blog post at a time, and that it was going to be a really easy process of assembling those and maybe writing a couple of things here and there and turning them into a book. But the idea was really that no one ever trains you how to be an entrepreneur. You can take a class in entrepreneurship, but it's not like you grow up in corporate America and you're in the running to be the CEO of a big company, and you're being groomed for it for your whole career. You found a business when you're 20 or 25 or 30, and just you got no idea what you're doing most of the time.
Annaka: Yeah. It's very fight or flight.
Matt Blumberg: It is. Yeah.
Annaka: But for people that aren't familiar with your... Well, we're talking Startup CEO specifically for us right now. For listeners who aren't aware of it or haven't read it, just real brief, what do you talk about in that book?
Matt Blumberg: Yeah. So the book is designed to be the instruction manual for the first-time CEO. And there are six sections. It's now on its second edition and there are six sections. Each section has about 10 chapters in it. So it's a lot of really short chapters that are how to. You can read it front to back, but you can also put it on your desk and if you're coming up against something tough, find the chapter that deals with it and just go read that chapter. So there's a section about strategy and vision. There's a section about execution. There's a section about people and talent. There's a section about boards. There's a section about managing yourself, and then there's a section about exits.
Annaka: So it's very segmented.
Matt Blumberg: It is super practical, tactical, literally-
Annaka: If you're launching, you don't necessarily need to be looking at... I don't want to say boards because we do want to look at boards, but it's not relevant all the time, but it is relevant to literally everything you'll see.
Matt Blumberg: Exactly. Yeah. So anyway, I thought I had written a book already in the form of a blog, and I got an advance from the publisher, and I hired this great editor ghostwriter and I said, "Hey. Here's my blog. Here are the credentials to log in. Just turn it into a book," because I probably never would've signed up to write a book while I was running a company. That's a terrible, terrible idea. And he said, "Okay. Well, thanks. That's a nice idea. Here's my process. Why don't we make an outline of the book that you want to write and then I'll go try to populate it out of the blog?" And I said, "Okay. That makes sense." So I wrote an outline and I put it on my blog and I crowdsourced a bunch of feedback.
So we refined this outline of whatever, 50 or 60 chapters, and this writer went through my blog and he called me up and he said, "Well, I've got good news and I've got bad news. The good news is you're a really good writer, so I don't have to do very much with the things you've written. The bad news is you've only written about 20% of a book." So I basically took a couple of weeks off over Christmas that year and just did nothing but write, and filled in the other 80%. And then we turned it into a book, and had a lot of help on it from a very talented writer named Hannie Hindi. We had a lot of fun doing it. And that was in 2013. And then we did a second edition of it in 2020 where I cleaned up and made contemporary some of the stuff that was there. And then I wrote a sixth section about exits because that was after we had sold Return Pass, added five or six chapters about exits, and one about authenticity and ethics as well.
Annaka: Gotcha. Yes. It's always evolving. And so when founders do step into that CEO role, there's a lot associated with that CEO role. What is a common mistake that you see them making?
Matt Blumberg: Well, there are about an infinite number. I feel like I've made every single one of them at one point. If I have to get to the most common mistake, I think it's falling in love with your own vision. And the reality is that product-market fit is a tricky and delicate thing, and it is one part listening to the market and one part leading the market. And it's really easy for a founder to actually over-index on either end of it. So you can listen to the market all day long and build something that 20 people want, but that the entire world doesn't want. You can also be really stubborn and say, "No. I know better than they do. I've got a vision of how to be so disruptive that customers are never going to understand it until it's built." An over-index on either one of those can be a colossal mistake.
Annaka: We literally just had Shellye Archambeau talk about literally the same thing, falling in love with your product and being either unwilling to let the market guide your innovation here or people-pleasing literally everyone except for your market. So I love just getting that reiterated a second time. As a first-time CEO, let's just put on my magical CEO hat because that's terrifying. What should I be doing every day? Where should my focus and my priorities be as a daily routine? I don't know.
Matt Blumberg: Well, it doesn't matter if you're a first-time CEO or a or multi-time CEO. There are an infinite number of frameworks for what you should be spending your time doing, and it's almost impossible to be prescriptive about it. Every company is different. Every season is different within every company. But I think the breakdown of the job of a CEO, I'll give you two different frameworks that I use for it. One comes from one of my longtime friends and VCs and mentors, Fred Wilson, who basically says the CEO does three things. They set vision and strategy, they hire and manage a team, and they make sure there's enough cash in the bank. So that's good. I think there's a little more to it than that, execution in particular. But that's one framework. Another framework that I like to use because I think one of the things that happens with founders is they try to do everything. And sometimes they can do everything. Sometimes they can't. Sometimes they have to because they're the only one doing it. But as business scales, that doesn't scale.
So I like to say that CEOs need to start by doing things that enable other people to do their work. Once you have people working for you, the machine has to move. It just can't be you. But then in terms of your own work, you have to start with the things that are in your job description and no one else's. So CEOs are the ones that raise money. CEOs are the ones that run boards. There are some things that literally you do and no one else does.
The second class of things are things that only you can do even if they're not necessarily in your job description. So I mean, the example I always give, no one can motivate someone in the organization the way a founder can. And you walk around or you see people on Zoom or whatever, and you can tell if someone, their head's not in the game, and just no one can do that but the founder. No one can put their arm around someone who's just lost a parent or going through a divorce and comfort them the way a founder can. So there's this class of soft things that founders have to do even if they're not technically in a job description.
And then I think the third class of things are things that you are better than anyone else at doing. And the trick with that, of course, is you're going to be better than a bunch of people in the company at a bunch of things. That doesn't mean you should be doing their job for them. So you have to pick and choose those and you have to use those as teaching opportunities so that you can help train people how to do the things that you do.
Annaka: So in going back to the CEO mindset of do everything because that's so, so, so, so common, for those types that love to do it themselves, how do you get over that and what are some actionable things you can do to start delegating and trust your team to do it? I know. It's like, these are the million-dollar questions, really.
Matt Blumberg: Break that down a little bit [inaudible] that.
Annaka: As far as, are there any tips and tricks to pass tasks off to people that... I mean, you hired them. Let's say you hired a designer. I'm a designer. You hired a designer to design something. How do you then pass a task off and let them do it?
Matt Blumberg: The best thing you can do is... and again it's a balance... is give enough guidance upfront. Empty the contents of your head up front and tell them like, "Hey. I'm just going to riff on this for a few minutes. You're working on the design of our new logo or design of the website. Let me just tell you some things that are top-of-mind for me." And then you literally just have to go away. And then can come back and roll up your sleeves and work and give feedback once you see how something turns out. I think it's easy to go too much in either direction. It's easy to go too micro up front, sketch something out. "Here's the wireframe I want." That doesn't give anyone the freedom to be creative, and knowledge workers love to be creative. And it's easy to go too much the other way as well where a founder says, "Well, I don't want to be accused of micromanaging, so go for it."
Annaka: Have fun.
Matt Blumberg: And then you get something back and you're like, "Well, this doesn't work. This is totally not what I was thinking." So it's making sure you're, like I said, emptying the contents of your brain, doing it in a way that gives people a sense of what you're thinking about, but is not prescriptive. If you feel the need to be really prescriptive about something, you can do that. But then either you should do the task or you have to approach it differently. Then it's not a handoff. Then it's a collaboration.
Annaka: The verbiage comes into... You got to change the delivery. Yeah. That's good.
Ethan: All right. So I'm going to go back. We're not going to waste any more time. So let's get into your current business, Bolster. So you mentioned that there are quite a few people involved in this project. How did you all come together and decide that this was the problem that you were going to solve?
Matt Blumberg: So there were eight of us who started the company and we had worked together at Return Path, our previous company, for many years. The rookie on the team had been working with us for five years. Most of the team had been working together for 10, 15 years. The other one was my co-founder from Return Path. So we'd been working together for 20 years at the time. And we were really interested in doing something in the startup ecosystem, the business really for founders to make founders more successful, to make startups more successful. And we as a team were really energized and motivated around the topic of talent and of scaling and of leadership development. And a lot of the things that we had used on ourselves as we were scaling Return Path over the course of a couple of decades and also things that we found we were using or doing when we were mentoring earlier stage or first-time founders ourselves.
And if you think about the successful ingredients of a startup, it's money, product and talent. There's plenty of money out there, although part of Bolster actually is a venture fund called Bolster Ventures, but that's a different topic. And I think there are some tools out there around helping founders find product-market fit. But the talent area was the one that really had us the most excited about ways to have an impact on the startup ecosystem. And as we were looking around and thinking about what founders need, we realized that first of all, most founders in the tech world just need engineers. That's a different problem and we didn't want to tackle that one. But we realized that there's a real gap when it comes to leadership teams. And the thing that founders struggle with the most is how to scale a leadership team, quite frankly, how to scale themselves as a leader, as a CEO, and how to scale their board.
And the common ingredient in all of those things, leadership team, mentoring and coaching and board, is experience and experienced senior executives. And we realized that the model was just kind of broken. The way that people access senior talent, there's had to be a better way. So we got very excited about that and started putting the pieces together of Bolster in partnership with our investors. We have a great cap table that includes the syndicate that backed our previous company, which are some top tier venture firms like Foundry Group and Union Square Ventures and Costanoa Venture Capital, but we also partnered with High Alpha, which is a B2B studio, and we partnered with Silicon Valley Bank, which is the market leader in banking startups and VCs. And those two organizations have been very additive as well in terms of helping us think about the ecosystem and how to approach it. And at the end of the day, we want tens of thousands of founders using Bolster and hundreds of thousands of executives in it. We're well on our way, but it takes a village.
Ethan: All right. So let's get tactical. You mentioned scaling yourself as a CEO. Tell us how. How do we do that?
Matt Blumberg: So this is actually one of the sections in Startup CEO on self-management. I think there are a bunch of tools in the tool belt there. You don't necessarily need all of them, although you certainly can use all of them. I think the first thing around scaling yourself as a CEO though, is coming to the recognition that you need help scaling yourself. And back to the point of there's not really much of an instruction manual for the job, the best CEOs, the ones that have really figured out how to scale, are the ones that are students of the game. They're students of the craft. They want to get better at being a CEO, and they're compulsive about it. They spend a ton of time at it. They read everything they can get their hands on. They go network with other CEOs all the time. They're asking questions.
They're looking, they're listening, they're learning. They sit with another CEO and they'll say, "How do you do X, Y, Z? What time do you get up in the morning? What's your exercise routine? What do you read?" They're just trying to absorb and get better. So that spark has to be there. And that is one of the things that separates the kinds of entrepreneurs that are great at starting businesses from the kind that are great at starting them and running them.
But once you have that, once you're committed to scaling yourself, there are a handful of tools. It starts with coaching and it starts with mentoring. And those two things are a little bit different. You can have a coach and a mentor, and occasionally, they can be the same person. But more likely, they're two different people. And think about it. I'll give you a sports analogy, although I try to stay away from them, but this one should be pretty accessible.
Ethan: No. They work well.
Matt Blumberg: If you're an aspiring quarterback, let's say you can go hire Bill Belichick to be your coach, but Tom Brady's going to be your mentor. I realize Tom Brady doesn't work for Bill Belichick anymore. But one of them is going to teach you how to do your job and one of them is going to teach you how to be an athlete. One of them is going to help you be the best version of you, and one of them is going to teach you how to scramble and work in the pocket and whatever else.
And so being a CEO is the same. There are wonderful coaches out there that help you think about how you show up as a leader and how you communicate and how you listen, and you've got to do those things really well. But a good CEO mentor is the one that you're going to go to and say, "Okay. How do I run a board meeting again? And how do I do layoffs? And how do I think about stock options?" So those are two sides of it. So coaching and mentoring are really important tools in the tool belt for scaling yourself.
I think knowing how to use your board is a really important part of scaling yourself. Some CEOs view a board as a tax. I view a board as a secret weapon. Some of it has to do with who's on it, but a lot of it has to do with how you manage it. There's a whole podcast we could do about that. We wrote a whole book about that. The third book is called Startup Boards.
The two other things for me in terms of scaling myself have been knowing how to work with and use a great executive assistant. And if my PA or anyone who knows her is listening, Andrea, we've been working together for 17 years, and I cannot imagine a day at work without her. She doubles my time. She doubles my productivity.
And then the last tool in the tool belt around scaling is a peer group, a CEO forum. It is, as they say, a lonely job. Even if you have co-founders, even if you have a board you're close with, there's a lot of stuff that just kind of sits on your shoulders. And I've always found that a CEO forum, a group of fellow CEOs that can come together a handful of times a year to vent, to problem-solve together, to laugh a little bit, to cry a little bit, it's just incredibly helpful.
Ethan: All right. So you mentioned a coach. We've talked quite a bit about mentorship on this show, but we've talked a little bit less about coaching. So I want to get into that and I want to stay on that tactical side. So tell me how I go about finding the best coach that I can afford because there's a lot of charlatans out there.
Matt Blumberg: There are, and the interesting thing about it is people use that word a lot. That's not a contemporary tech word, but it comes up a lot when people talk about coaches. Well, there are other ways to find a coach, but you can find a coach on Bolster. So Bolster has 500 or so CEO coaches. And honestly, the best two ways to figure out if a coach is not a charlatan and a good fit for you, one is spending some time with them, which is not just interviewing. It's even doing a couple of coaching sessions. You're not signing a 10-year contract. So it's sort of trying them on for size to see what kind of fit there is because the coaching relationship is one that's really about personal rapport quite a bit.
And then it's checking references. Someone who says they're a CEO coach and has never coached a CEO or never advised a CEO is not going to have a reference to give you. And like hiring anyone, you get references and you can check up on them. But at the end of the day, I think there's a wide range of types of coach, and it's also pretty important to know what you're looking for in a coach, what you're trying to get out of a coach. And the scale that we use at Bolster when someone's looking for a coach or when a coach is joining the platform is we ask them where they are on the spectrum between therapist and management consultant. Those are the two bookends. There are coaches who will put you on the couch. And there's one coach I know well who says, "It's not a good session with the CEO if they don't cry."
Ethan: Oh, boy.
Matt Blumberg: There are some people that need that, that crave that, that that's important to them to dig into, "Why am I who I am and why do I do what I am?" And there are some people for whom that just goes right over their head. Not impactful at all. The other end of the extreme, you can get someone who's a great strategist, a management consultant who digs into the business with you and is helping you think through business problems as well as your connection to the problem and your response to the problem as a leader. And there are a lot of coaches that are in between. So you have to think through what it is you need and are looking for.
Ethan: Cool. All right. Let's move back to senior staff. What is the stage when a startup should be beginning to look for that senior staff? Is that pre-seed? Is that post-B? I'm assuming it's somewhere in between there. Tell us what the best stage is.
Matt Blumberg: Yeah. So the second book, Startup CXO, is all about this. We can talk about that in great length, and each function is a little bit different. It depends on the business. But it starts with you as the CEO and what your skillset is, and more important, what your skillset isn't. So when you look at yourself and if you have co-founder or co-founders, what are you all good at, and then what's missing? And whenever what's missing becomes important to the success of the business six months out is when you need to hire what's missing. So for some companies, that could pre-seed needing four senior executives, and for some companies, that could be wait until the A or the B.
It's actually one of the things that drives the business at Bolster is this concept of the fractional executive, because the fractional executive lets pre-seed companies access the talent of a Series B company without all the cost because you have someone part-time. So I don't know that there's a crisp answer to your question, but the test that I always use, and we talk about this a lot in Startup CXO, is when you wake up in the middle of the night worried about blah, that's probably when it's time to bring someone in who knows something about blah.
Ethan: All right. Well, I need people now. I'm heading to Bolster. I'm getting a team because I'm waking up and I'm worried about blah.
Matt Blumberg: And may even be a second degree. It's like you're worried about blah and you actually don't even know how to think about it anymore. You're worried about cash. Entrepreneurs are worried about cash all the time. Fine. But it's when you worry about cash and then you realize like, "God, I don't even have a handle on that. I don't know how much we're burning. I don't know what's going on with collections." Then there's a trigger around that, which is like, "Oh. I think someone needs to know that."
Ethan: For sure. It's like people have a hard time seeing the forest for the trees. Well, some people have a hard time seeing the trees for the bark. So that sounds like the point to me when you need to run off and figure out somebody who can help you out.
Matt Blumberg: That's right.
Ethan: All right. So I'm going to ask you the same question for boards. Do all startups need boards? When should I start to form my board?
Matt Blumberg: All startups need boards and you should start forming it when you form your company.
Matt Blumberg: I think this is one thing that founders get wrong quite a bit. You have a board on paper because you have to when you incorporate somewhere and you say, "Okay. The board is me." As I said a few minutes ago, they view a board as a tax and overhead and, "I don't need that. And I'm going to lose control. And what if they fire me?" And the reality is a good board does so many important things for a company, for a CEO, that you have to put effort into it to build it and to manage it. Garbage in, garbage out. So if you want good stuff out of it, you have to put some energy into it. But I'm a big proponent of having a board from day one, of having independent directors from day one. If the board is three founders, it's not a board. That's a management team. But bringing in independent directors early, obviously, if you take venture capital, you're going to end up with VCs on your board, but you want a balance between independents and directors. And I think it's just useful from day one.
Ethan: Should we be limiting our number of board seats or do we need to bring on as many people as possible to offset those VCs?
Matt Blumberg: So the customary progression, and it doesn't mean it's mandatory, is three, five, seven. So you have a three-person board really early on. Once you've taken some VC, it pops up to five. It stays at five for a long time. When you get to be late stage, you go to seven. If you're going public, it's seven to nine. By the way, you can have an even number of board members. It doesn't have to be an odd number. Excuse me.
So my rule of thumb is what I call the rule of ones, which is add independent directors from day one, one member of the founding team or management team on the board. And then for every VC, every one VC or one investor, add one independent. So a great early stage board is a founder, an investor and an independent. A great mid stage board is a founder, two VCs and two independents. A great late stage board is a founder, three VCs and three independents. And then when you take company public, it's almost all independent.
Ethan: So when I'm getting that first VC check and they're like, "Okay. We're going to take a board seat," so that's two. And you say, "Okay. Cool, I'm going to go look for someone to fill that board seat." And that VC says, "I know somebody who can do that for you." Is that a lead I should follow or do I need to go find somebody that doesn't know my VC, or are they trying to put somebody who's in their pocket on my board?
Matt Blumberg: They might be and they might not be. It depends who they are. Depends how well them and how much you trust them. No reason not to talk to the person that they're putting forward unless you really don't trust them. And if you really don't trust your lead investor, you got all kinds of problems.
Ethan: Yeah. That's bigger issues.
Annaka: Problems. Yeah.
Matt Blumberg: But VCs tend to have great networks of executives, so no reason not to meet people that they want you to meet. But I would always advise founders to set their governance up so that independent directors, they have to be able to either have the full say over them, or at least they have to be mutually agreeable. I mean, it's the name, independent director. You want someone who is independent and you want someone that can be a good balance to a VC. So some VCs will put tremendous people in front of you that act very independently, and some won't, and you got to make a judgment call there. But like any hiring process, if you're hiring an independent director, it's the same thing. Think of it as hiring a senior executive. You want to talk to a lot of people.
You want to have a diverse funnel. So you see lots of different backgrounds and lots of different points of view, and you want to spend a lot of time thinking about the construction of your board as a team the same way you think of the construction of your management team as a team and think about what skills are missing. We have a whole methodology at Bolster when we take a CEO through a board search and helping them really narrow down the persona that they're looking for, and then we'll have them go talk to 10 people.
Ethan: So one more question on boards, and this may be really basic, but how are board members, I'm assuming that aren't a part of that leadership team, how are board members incentivized? How are they compensated for being on the board?
Matt Blumberg: So in private companies, it's just with stock options. It might be RSUs or restricted stock or something, but it's a stock grant that there's a whole methodology around how much and whatnot. But the rule of thumb is it's about half of what an executive would get. So they have some skin in the game, but they're not on your payroll.
Annaka: Gotcha. And I had just learned the term fractional yesterday, which is such a fun word to say, but I didn't even know that it was a thing that you could get someone in a pinch.
Matt Blumberg: It's a thing.
Annaka: I was like, "All right. Sweet. I need a fractional house cleaner." And in doing research on Bolster and everything, you have your competitive edge is a matching algorithm. How does that work and how does that help fit the right executives in with your team?
Matt Blumberg: Yeah. I mean, our construct is three different things put together. It's the marketplace, which is the matching algorithm and the data and the taxonomy and all of that, it's the network itself, the tens of thousands of executives, and then it's tools. It's workflow SaaS tools on top of it. So the three things are enmeshed. And I don't know if the competitive edge is any one of them or the combination of all three. But fundamentally, sometimes as a CEO, you know exactly what you want. You're a Series C company, your CFO quit, you need a new CFO. The person has to be full-time and you know what the job is. More often, and I hear this from founders all the time, you actually don't really know what you need. You might know the area in which you need help, but founders tell me the hardest thing they do around team is writing a job description because they've never done it before. They've never hired a head of marketing before.
All they know is there aren't enough leads coming in. So what we tried to do with Bolster was set up a underlying data structure and taxonomy of skills and competencies for each role and for each stage to make it really easy when someone joins Bolster as a member to build their profile quickly. So a CFO is not a CFO is not a CFO. Someone who is great at early stage FP&A work might not be the same person who's good to take you public and focus on operational accounting even though they both have the same job, and 20 other things like that. So we have our members profile themselves that way, and then when a client comes in, we can help them identify what problems they're trying to solve as well as what role they're trying to hire for. And that actually makes the matching much easier.
Annaka: Yeah. Well, I mean, we've asked the question before. How do you find X, Y, and Z? And it's like, stand out on the highway with a cardboard sign doesn't really work these days. So you're really filling a market hole. And I'm sure that it's useful to most every entrepreneur out there. But as we're getting close to our time, we want to get the really good nuggets out of you. What is your number one piece of advice for early stage entrepreneurs?
Matt Blumberg: Be intentional about the culture you're building. Your company will have values and culture whether or not you steer them. The only time to get it right is at the beginning, and there's just nothing more important than people and the environment that they work in and how they get motivated and how they get engaged.
Ethan: So is that just the number of foosball tables that I buy or how do I do that?
Matt Blumberg: It starts by articulating what's important to you. What is your operating philosophy? What are your values? And if you have co-founders, obviously it's worth working on that together, or you can establish it with your early team, your first 5, 10 people, but it's never too early to think about what kind of company you want to build. And then you and everyone else in the company have to hold everyone to account on that.
Ethan: Awesome. Matt, this has been a lot of fun. Thank you for coming on and sharing your advice, your stories. We just have one more question for you, and that is where can people connect with you online and how can our listeners support Bolster?
Matt Blumberg: My blog is startupceo.com. You can subscribe to get... I post about once a week, not too much, but you can subscribe by email or RSS. My email is firstname.lastname@example.org and you can join Bolster as either a member or as a founder or client for free. You only have to pay if you're a founder and you hire someone.
Ethan: Awesome. Well, we're going to put all those links and email addresses and everything else in the show notes. But that is going to be it for today's episode of the Startup Savant podcast. Thanks for joining us today on the pod.
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