Finance Discussion: Board Presentations

No matter your company stage, working with your board to align on business direction and strategy is a crucial component of the CFO role. Here are the takeaways from the Finance Community Board Discussion session led by Growth Partner, Shaurya Aggarwal and CFO of Carta, Charly Kevers on best practices for working with the board and having productive board meetings.

Your Role with the Board

Q: Can you give an overview of how you work with your board? How has this evolved from the time when Carta was a series C company to today?

My primary responsibility is monitoring and maintaining the financial health of the business. I aim to provide the board as much transparency as possible and preempt any questions they may have on how the company is performing. As the business has expanded and we’ve introduced more products, the challenge is ensuring I can provide the same level of detail and transparency so they can assess how we're performing accurately. 

And so, I spend much of my time in the boardroom and separately with the board members. I communicate through quarterly and monthly board meetings, as well as quick updates as soon as the quarter ends. I also handle any requests they have on deeper dives and coordinate with putting the right folks in front of them to get their questions answered. 

As we've added more investors and funding rounds, our board has become more extensive with different personalities and ways of looking at the business, which is valuable to us. As the CFO, my goal is to bring together a picture that answers 90% of everybody's questions.

Q: What brought about the monthly board meeting cadence? Are they formalized, and generally, what topics do you cover? 

The goal of the monthly meetings was to avoid surprising people. 

There was so much change in our business, it became difficult to update board members or receive feedback before the quarterly meeting. But, we don't have a standing agenda here. The CEO and I determine the strategic topics and focus areas based on what we're working and need feedback on. We believe it's made a difference in making us feel connected to them and achieving our overarching goal to avoid surprises.

Q: How have you thought about who to include in board meetings? And how to prepare those functional leaders or executives to speak in front of the board when they're either less experienced or perhaps experienced in board meetings but working with a very different type of board?

We’ve always taken the approach of including the whole executive team in board meetings, so they hear all the questions directly. 

Our Chief Product Officer, for example, is a bit newer presenting to the board, so we make sure to spend time reviewing their portions beforehand and ask any questions we think they'll get to help them anticipate and plan their responses.

Q: What's your role and your expectations from your board, and how do you leverage them? 

Our main goal is to receive input on how they evaluate the business, and we adjust our metrics based on how they evaluate. 

We brought them on board because of their specific expertise or network. So we're looking for our board members to expose us to those new opportunities or strategies as well as put relevant people in front of us to get feedback. 

We also created Audit and Compensation committees, and this helps us provide more constructive oversight. As we get bigger, we manage more sensitive data, and having board members who know how to think about risk has been an excellent resource.

Q: How have you thought about the Compensation Committee composition and evolution?

Generally, it's a discussion with the members on what we think, based on their background, they would be most helpful in providing feedback on our compensation framework. 

For example, Marc Andreessen is one of our board members. He sits on the Comp Committee because he has visibility across a variety of businesses, has a ton of experience on these topics, and has very strong views on how to think about compensation, which we want. There's no right answer, but we want to be challenged in the way we're thinking about scaling. 

Overtime, you also have to consider the performance management aspect, and how we tie performance to compensation. Early on you generally have a lot of exceptions, so having a committee to help transition us from exceptions to a consistent structure has been helpful.

We look at it on an annual basis to see who should be on those committees, and for each, we pick two board members to participate in those.

Presentations

Q: Carta has been complimented on many of their board presentations. How do you go about preparing your board presentations internally? Who takes the lead on setting the agenda? How long does the preparation take?

Starting three years ago, we’ve presented a structure that’s very similar quarter to quarter. This structure consists mostly of reporting slides that everyone on our team is familiar with, so we can present monthly meetings effectively. While we do use individualized deep dive slides and adjust metrics depending on investors and board members, it mostly stays the same. 

The standardized reporting allows us to evaluate true trends and get ahead of any proactive questions that may arise.

Today’s Environment

Q: What’s changed with your board reporting in this environment? What key metrics have been prioritized given this new economic environment?  Eg. Cash burn vs Revenue growth? What advice do you have to newer CFOs on which metrics to focus on?

Generally, the metrics have stayed the same. CAC, net retention, gross margin, etc., our founder had already set up the business in such a way that we always thought about the relationship between growth and cash burn for each area of our business from the early days. 

One aspect that's changed in the last 6 months is we have better infrastructure, and I'm providing a P&L for each product area of our business. We have 5 product areas and a P&L that goes from revenue to EBIT for each with allocations. And that's gotten great feedback. 

Also, I'm getting more questions on the level of confidence for each business area. So we're now providing ranges and confidence intervals.

Q: Are you seeing an increase or decrease in Carta X transactions? (Secondaries) I imagine pricing companies is difficult right now.

On the secondary transactions, it's pretty soft right now. It's no surprise to any of you. The bid ask spread is wide. Companies are not really in a situation where everybody wants to take a massive discount to their valuation, and investors right now are in no rush to go pay prices that they think are at a premium to what they see in the public markets. 

This year, however, we see more of our customers think through liquidity for their employees, and accelerate a bit or effectively block trades of investor to investor transactions where people need some liquidity and are willing to take a bit more of a discount. So it's slow, but we're starting to see more activity than we saw in Q4.

Lessons Learned

Q: Looking back 6 years to the day you started at Carta, what advice do you wish you were given that would help you succeed in this role?

It's critical to build a relationship with each board member. It seems obvious, but it takes time to do this and get to know them. They all have slightly different perspectives, and as the business evolves, it helps anticipate how they see your growth and evolution. Preempting what board members will ask and preparing the teams to get ahead of those  questions help make the board meetings more productive. 

One way I did this is every time we added a new investor, I spent time with them on our board deck. We went through it page by page, and I made sure it covered all the sections and metrics they’d typically see.

The other is never to surprise them. Talk about the bad news way faster than you do about the good news. From a culture standpoint, we force all our teams to shift their mindset that bad news is something we want to know about and bring up as fast as possible so we can solve it. We certainly want to reflect the same thing with the board.