Founders of early stage startups are often deluded into believing that there is a dream partnership that will send their company into the stratosphere. It will be a silver bullet and cheat code that enables them to skip steps and grow faster than ever anticipated. This sentiment is pervasive, particularly in consumer startups. I've fallen victim to it many times. It's dangerous and seldom works. It's wishful thinking that comes at a real opportunity cost, wasting time and draining emotional energy.

At GroupMe we had a hypothesis that we'd be able to embed our group chats in third-party applications and that would help us monopolize the market and acquire new users through other established brands' properties. Since we were a "hot startup," other corporate companies wanted to work with us. We ended up spending a lot of time building custom things for AmEx and ESPN and ultimately launched embeddable group chat in two of their experimental applications. It was a ton of effort that yielded practically zero incremental user growth. I'm sure we got a couple PR pieces out of it, but relative to focusing on and improving our core product it was a total waste of time. We were less than one year old.

During our first year at Fundera we spent an inordinate amount of time chasing down a deal with Staples. They reached out as part of an RFP process to create a co-branded loan center for all of their SMB customers. They said they had millions of SMBs that were "members." It felt too good to be true. If we could work with one single partner to open up a channel directly to millions of SMBs in a trusted environment, we would overnight become the dominant player. We wasted days modeling out scenarios in spreadsheets to win the deal and put together an elaborate performance-based deal structure loaded with warrants and clauses where they could invest in the company to ultimately get to double digit ownership. We would quickly go from originating millions of dollars in loans a month to billions. This was utterly delusional. We lost the RFP process to one of our biggest competitors. I saw a press clip of their CEO and the leader from Staples in charge of the initiative ringing the NASDAQ bell together to celebrate the partnership launch. I must have rewatched it 100 times like a psychopath. I was fucking livid. The partnership produced approximately jack shit for both parties and was shut down within months.

One lesson learned from this experience and others is that partnering with someone who has an orthogonal value proposition almost always doesn't work. Just because Staples sells office supplies to companies does not mean that they will be good at helping their customers secure loans. We partnered with FTD which works with most every florist in the country. Helping florists fulfill customer orders does not mean you can help them fulfill their credit needs. The partners that ultimately worked best were the ones that offered nearly identical products (e.g. a bank that declined customers for a loan or credit card and referred them to us to meet their demand) or ones who offered an adjacent product (e.g. Nerdwallet who had an identical value proposition for consumer credit and wanted to enter SMB credit).

Another lesson that I've learned repeatedly from both building companies and helping other entrepreneurs is that there is absolutely zero substitute for developing your own audience/network/user base. If you're early, do not fall into the trap of being starry eyed by doing some BD deal with your dream partner. It likely either won't happen, or even worse, if it does happen it won't move the needle. You will waste your time and energy getting your hopes up only to have them completely crushed. That will happen enough times on your entrepreneurial journey, you don't need to self-inflict it by fantasizing about the magical partner. Would you rather focus on making your product the best it can be and honing your unique strategy within customer acquisition channels? Or do you want to endlessly compile make believe data, presentations, and impossible scenario planning for partners for whom you're an insignificant -rounding-error-fifth-tier-pet-project? Control your own destiny and don't be someone else's bitch.

It's worth understanding the incentives of these potential partners. A lot of people at these companies search for startups to partner with as part of their "innovation" efforts, but nobody really expects these things to move the needle for them in any meaningful way. There are people whose job it is to hunt down cool new companies and figure out what they're doing and how they could potentially use them to improve their business. Be wary. While they seem like the golden ticket, their incentive is to just learn as much as they can about you so they can present upwards and look good doing their job. There are plenty of horror stories about corp dev people fishing for information and then going completely radio silent, only to resurface months later announcing a competitive product or feature of their own. You are a source of free information for them that can potentially be used against you down the road. It's like a VC doing diligence on you when in reality they're trying to get information about you to decide whether or not they should invest in your competitor. A healthy dose of paranoia doesn't hurt.

There are times when chasing down partners makes sense. If your GTM motion is primarily going to be driven through channel partners, collecting logos helps. Each partnership makes the next one easier to land. Herd mentality is everywhere, and a corporate sponsor probably won't get fired if you've already partnered with other familiar companies - it's social validation. Also, most partnerships don't work, so you'll need to do a lot of them in order to see the fruits of your labor. And sometimes there are partnerships that can create a new exponential curve. We pursued one at Fundera later on once we knew what actually drove customer demand, but our counterpart wanted a board observer seat, first right of refusal on a sale, the ability to invest at our last-round price, and economics that would have made every transaction unprofitable for us. These were their sticking points which were totally irrational given that they'd be bad for any shareholder of the company, including them. That one was worth chasing down, it just didn't end well.

Early stage, don't get distracted by this fool's errand. Stay focused on how you will help customers and defining what will differentiate you. No partnership will make up for deficiencies here, and it surely will not be a substitute for doing the hard work yourself.

I was extremely lucky to have had an excellent Board of Directors at Fundera. I generally believe that most boards are relatively useless, which is at least better than boards that are harmful. So when I found myself surrounded by people who genuinely cared about our business and its people, even while knowing that the company was not a power-law-fund-returner, I knew I was one of the lucky entrepreneurs. Here are some things that our board did (and some other examples that I've seen other boards do) that I'll always be grateful for and have helped me learn what being a supportive and excellent director looks like:

Good board members are truth-tellers. They are not trying to win popularity contests or pander to a founder/CEO/exec team's emotions. They aren't trying to impress other board members either. They tell it how they see it. A good example of this was when Scott Feldman embarked on a difficult journey to teach me how to properly manage the finances of a company. I came from the world of the consumer internet where I was trained to grow a service, burn cash, raise more money, and defer figuring out how to monetize and build something profitable. Scott came from Susquehanna group which primarily invests in software businesses based on their fundamentals. He and Frank Rotman (another Fundera director) were also on the board of Credit Karma, so they knew exactly how businesses like Fundera would ultimately be valued. I was being a poor steward of capital, ramping burn faster than revenue thinking we would always be able to raise capital to stay afloat. Scott told me during a board meeting that I was going to run the business into the ground and bankrupt it, and that it's value was approximately jack shit. I hated him for it, but he was just providing honesty and tough love. I learned a lot from that experience, and finally familiarized myself with terms like trailing twelve months revenue and ebitda margins. He had the courage to tell the truth and that changed the trajectory of the business.

Good board members understand how to incentivize a team (especially during a crisis and even if it comes at their own short-term expense). When the pandemic began in March 2020, Fundera lost roughly 80% of its revenue overnight. We had to do a 25% RIF and immediately ensure we took care of the remaining team, helping them feel secure and motivated. One of the first things our board recommended was to conduct a new 409a and reprice every grant we had made to employees that was above our new 409a. Nobody would be underwater. Then we topped off everyone with a new and meaningful grant. Every single person. Incentives drive behavior, and if people were going to make it to the other side we needed to make sure the team was rewarded for doing so. Every step of the way, our board optimized for the Fundera team. While it may seem obvious that this was the right thing to do, most professional investors are not this friendly and greed gets the best of them. Most would view repricing options as a sign of weakness and bad optics, and many would oppose being unnecessarily diluted by tapping almost the entirety of an option pool in a time of crisis.

Good board members play the long game and derive joy from everyone winning. When Fundera was acquired by Nerdwallet a piece of the deal consideration was tied to achieving specific performance metrics. We had been through a lot getting the company to solid footing after weathering the pandemic-induced SMB credit meltdown, and Frank Rotman and Scott Feldman mutually proposed something that to this day I still find bafflingly kind. They suggested to the board and our investor base that a meaningful piece of the performance-based earn out go directly to common shareholders at the expense of preferred shareholders. Their logic was that since we were the ones doing the work to produce the results, we should be compensated for it. Every single preferred investors agreed to it and for that I remain forever grateful. In the grand scheme of things, that component of the payout would have been somewhat of a rounding error to our investors' respective funds, but to common shareholders it meaningfully increased the size of the transaction. It was an unnecessary gesture that made a massive difference and energized the team to buckle down and keep going.

Good board members support founders and companies without needing peer-validation. More often than not things go wrong at startups. At the very least things never go as planned. Oftentimes teams don't make the progress they need to make and require bridge financing or some type of internal round to come together. On many occasions I've seen an investor board member offer to put a round together, but only if others around the table contribute. Or they'll make it contingent on finding an external investor to come in and match them as a validation point. I understand the logic here, but what really stands out is when someone stands up and offers to do it unconditionally. It's an action that lacks external validation, but one that enables the company to stay focused in tough times. It's also always nice when a board member doesn't drag their feet when it comes to doing pro-rata. Compare and contrast these two scenarios: 1) I had to pull the teeth of one board member/investor to do just a small portion of their pro-rata as a show of support when we were raising an external round after receiving a lecture about how proud they were that they had a history of being able to avoid doing their pro-rata, versus 2) an investor I know proudly proclaimed that they were always there for portfolio companies and always did their pro-rata when an external firm or founder requested it to get the deal done - no questions asked. Scenario 1 is the norm. Scenario 2 is a truly special abnormality and welcome glitch in the system. I am always surprised and appreciative when I see someone behave this way, and I know other founders are, too.

Good board members are hands-on during inflection points. They shine when it comes to fundraising and M&A. Every round we raised after our seed at Fundera happened because Frank Rotman introduced us to someone who trusted him and he knew would be interested in what we were building. Ron Conway and SV Angel were instrumental in helping groupme raise our Series B from Khosla (he practically dragged David Weiden by the earlobe onto our board) and made the introduction to Skype that ultimately led to our acquisition. They were engaged every step of the way through these processes, pushing the ball forward alongside us.

Good board members, particularly independents, spend time with your team regularly. This may seem obvious, but a lot of board members don't do this. The good ones form personal relationships with the people that are integral to your company's success. They actively help recruit them, and they advise them on their biggest issues. They also know that not everyone stays at a company forever, and that helping them with your company may very well help them land a position as an advisor or executive at another one of their companies down the road. They're not just there for the CEO, they're there for the leadership team. I loved when people on our team would meet with our board members independently without my knowledge. Phillip Riese and Molly Graham were invaluable resources for so many people at Fundera, not just myself, and they always made themselves available to people at their beck and call.

Good board members teach you how to manage a board and run a good board meeting. When we started doing board meetings at Fundera they were useless. We ran through long decks that directors with very little context would ask questions about. It took hours and by the time we got to meaty issues the time was done. Phillip and Frank helped me and Cody Forrester learn how to conduct an effective board meeting which was almost identical to what Tom Loverro explains in this post (bonus accompanying video here). Board meetings are for discussion and debate, not presenting and updating. On a dime, board meetings flipped from something that felt like a tedious chore to a constructive and important time everyone looked forward to.

Good board members listen first, then talk. At tumblr there was a board member who would say virtually nothing for a majority of the meeting. They'd sit there and diligently listen. Then they would speak and the whole room would turn completely silent. They'd say approximately 3-4 sentences and it would be the most profound and impactful statement of the entire meeting. This doesn't mean that everyone should do this. Most people can't. Sometimes the conversation and debate helps you get to the root of an issue and you want everyone participating. But it does illustrate that loud and frequent voices (which are usually characteristic of the most junior board members who feel like they have to prove themselves) are not necessarily the most helpful ones.

This is a small sample of some of the characteristics of helpful boards. There are many more, and infinitely more examples of what makes for a bad director. But these are some of the ones that stand out most to me. Good boards can seldom make a company, but bad ones can definitely break a company. Helpful boards are a blessing and can truly help a leadership team level up to do their best work.

Founders of early stage startups are often deluded into believing that there is a dream partnership that will send their company into the stratosphere. It will be a silver bullet and cheat code that enables them to skip steps and grow faster than ever anticipated. This sentiment is pervasive, particularly in consumer startups. I've fallen victim to it many times. It's dangerous and seldom works. It's wishful thinking that comes at a real opportunity cost, wasting time and draining emotional energy.

At GroupMe we had a hypothesis that we'd be able to embed our group chats in third-party applications and that would help us monopolize the market and acquire new users through other established brands' properties. Since we were a "hot startup," other corporate companies wanted to work with us. We ended up spending a lot of time building custom things for AmEx and ESPN and ultimately launched embeddable group chat in two of their experimental applications. It was a ton of effort that yielded practically zero incremental user growth. I'm sure we got a couple PR pieces out of it, but relative to focusing on and improving our core product it was a total waste of time. We were less than one year old.

During our first year at Fundera we spent an inordinate amount of time chasing down a deal with Staples. They reached out as part of an RFP process to create a co-branded loan center for all of their SMB customers. They said they had millions of SMBs that were "members." It felt too good to be true. If we could work with one single partner to open up a channel directly to millions of SMBs in a trusted environment, we would overnight become the dominant player. We wasted days modeling out scenarios in spreadsheets to win the deal and put together an elaborate performance-based deal structure loaded with warrants and clauses where they could invest in the company to ultimately get to double digit ownership. We would quickly go from originating millions of dollars in loans a month to billions. This was utterly delusional. We lost the RFP process to one of our biggest competitors. I saw a press clip of their CEO and the leader from Staples in charge of the initiative ringing the NASDAQ bell together to celebrate the partnership launch. I must have rewatched it 100 times like a psychopath. I was fucking livid. The partnership produced approximately jack shit for both parties and was shut down within months.

One lesson learned from this experience and others is that partnering with someone who has an orthogonal value proposition almost always doesn't work. Just because Staples sells office supplies to companies does not mean that they will be good at helping their customers secure loans. We partnered with FTD which works with most every florist in the country. Helping florists fulfill customer orders does not mean you can help them fulfill their credit needs. The partners that ultimately worked best were the ones that offered nearly identical products (e.g. a bank that declined customers for a loan or credit card and referred them to us to meet their demand) or ones who offered an adjacent product (e.g. Nerdwallet who had an identical value proposition for consumer credit and wanted to enter SMB credit).

Another lesson that I've learned repeatedly from both building companies and helping other entrepreneurs is that there is absolutely zero substitute for developing your own audience/network/user base. If you're early, do not fall into the trap of being starry eyed by doing some BD deal with your dream partner. It likely either won't happen, or even worse, if it does happen it won't move the needle. You will waste your time and energy getting your hopes up only to have them completely crushed. That will happen enough times on your entrepreneurial journey, you don't need to self-inflict it by fantasizing about the magical partner. Would you rather focus on making your product the best it can be and honing your unique strategy within customer acquisition channels? Or do you want to endlessly compile make believe data, presentations, and impossible scenario planning for partners for whom you're an insignificant -rounding-error-fifth-tier-pet-project? Control your own destiny and don't be someone else's bitch.

It's worth understanding the incentives of these potential partners. A lot of people at these companies search for startups to partner with as part of their "innovation" efforts, but nobody really expects these things to move the needle for them in any meaningful way. There are people whose job it is to hunt down cool new companies and figure out what they're doing and how they could potentially use them to improve their business. Be wary. While they seem like the golden ticket, their incentive is to just learn as much as they can about you so they can present upwards and look good doing their job. There are plenty of horror stories about corp dev people fishing for information and then going completely radio silent, only to resurface months later announcing a competitive product or feature of their own. You are a source of free information for them that can potentially be used against you down the road. It's like a VC doing diligence on you when in reality they're trying to get information about you to decide whether or not they should invest in your competitor. A healthy dose of paranoia doesn't hurt.

There are times when chasing down partners makes sense. If your GTM motion is primarily going to be driven through channel partners, collecting logos helps. Each partnership makes the next one easier to land. Herd mentality is everywhere, and a corporate sponsor probably won't get fired if you've already partnered with other familiar companies - it's social validation. Also, most partnerships don't work, so you'll need to do a lot of them in order to see the fruits of your labor. And sometimes there are partnerships that can create a new exponential curve. We pursued one at Fundera later on once we knew what actually drove customer demand, but our counterpart wanted a board observer seat, first right of refusal on a sale, the ability to invest at our last-round price, and economics that would have made every transaction unprofitable for us. These were their sticking points which were totally irrational given that they'd be bad for any shareholder of the company, including them. That one was worth chasing down, it just didn't end well.

Early stage, don't get distracted by this fool's errand. Stay focused on how you will help customers and defining what will differentiate you. No partnership will make up for deficiencies here, and it surely will not be a substitute for doing the hard work yourself.

I was extremely lucky to have had an excellent Board of Directors at Fundera. I generally believe that most boards are relatively useless, which is at least better than boards that are harmful. So when I found myself surrounded by people who genuinely cared about our business and its people, even while knowing that the company was not a power-law-fund-returner, I knew I was one of the lucky entrepreneurs. Here are some things that our board did (and some other examples that I've seen other boards do) that I'll always be grateful for and have helped me learn what being a supportive and excellent director looks like:

Good board members are truth-tellers. They are not trying to win popularity contests or pander to a founder/CEO/exec team's emotions. They aren't trying to impress other board members either. They tell it how they see it. A good example of this was when Scott Feldman embarked on a difficult journey to teach me how to properly manage the finances of a company. I came from the world of the consumer internet where I was trained to grow a service, burn cash, raise more money, and defer figuring out how to monetize and build something profitable. Scott came from Susquehanna group which primarily invests in software businesses based on their fundamentals. He and Frank Rotman (another Fundera director) were also on the board of Credit Karma, so they knew exactly how businesses like Fundera would ultimately be valued. I was being a poor steward of capital, ramping burn faster than revenue thinking we would always be able to raise capital to stay afloat. Scott told me during a board meeting that I was going to run the business into the ground and bankrupt it, and that it's value was approximately jack shit. I hated him for it, but he was just providing honesty and tough love. I learned a lot from that experience, and finally familiarized myself with terms like trailing twelve months revenue and ebitda margins. He had the courage to tell the truth and that changed the trajectory of the business.

Good board members understand how to incentivize a team (especially during a crisis and even if it comes at their own short-term expense). When the pandemic began in March 2020, Fundera lost roughly 80% of its revenue overnight. We had to do a 25% RIF and immediately ensure we took care of the remaining team, helping them feel secure and motivated. One of the first things our board recommended was to conduct a new 409a and reprice every grant we had made to employees that was above our new 409a. Nobody would be underwater. Then we topped off everyone with a new and meaningful grant. Every single person. Incentives drive behavior, and if people were going to make it to the other side we needed to make sure the team was rewarded for doing so. Every step of the way, our board optimized for the Fundera team. While it may seem obvious that this was the right thing to do, most professional investors are not this friendly and greed gets the best of them. Most would view repricing options as a sign of weakness and bad optics, and many would oppose being unnecessarily diluted by tapping almost the entirety of an option pool in a time of crisis.

Good board members play the long game and derive joy from everyone winning. When Fundera was acquired by Nerdwallet a piece of the deal consideration was tied to achieving specific performance metrics. We had been through a lot getting the company to solid footing after weathering the pandemic-induced SMB credit meltdown, and Frank Rotman and Scott Feldman mutually proposed something that to this day I still find bafflingly kind. They suggested to the board and our investor base that a meaningful piece of the performance-based earn out go directly to common shareholders at the expense of preferred shareholders. Their logic was that since we were the ones doing the work to produce the results, we should be compensated for it. Every single preferred investors agreed to it and for that I remain forever grateful. In the grand scheme of things, that component of the payout would have been somewhat of a rounding error to our investors' respective funds, but to common shareholders it meaningfully increased the size of the transaction. It was an unnecessary gesture that made a massive difference and energized the team to buckle down and keep going.

Good board members support founders and companies without needing peer-validation. More often than not things go wrong at startups. At the very least things never go as planned. Oftentimes teams don't make the progress they need to make and require bridge financing or some type of internal round to come together. On many occasions I've seen an investor board member offer to put a round together, but only if others around the table contribute. Or they'll make it contingent on finding an external investor to come in and match them as a validation point. I understand the logic here, but what really stands out is when someone stands up and offers to do it unconditionally. It's an action that lacks external validation, but one that enables the company to stay focused in tough times. It's also always nice when a board member doesn't drag their feet when it comes to doing pro-rata. Compare and contrast these two scenarios: 1) I had to pull the teeth of one board member/investor to do just a small portion of their pro-rata as a show of support when we were raising an external round after receiving a lecture about how proud they were that they had a history of being able to avoid doing their pro-rata, versus 2) an investor I know proudly proclaimed that they were always there for portfolio companies and always did their pro-rata when an external firm or founder requested it to get the deal done - no questions asked. Scenario 1 is the norm. Scenario 2 is a truly special abnormality and welcome glitch in the system. I am always surprised and appreciative when I see someone behave this way, and I know other founders are, too.

Good board members are hands-on during inflection points. They shine when it comes to fundraising and M&A. Every round we raised after our seed at Fundera happened because Frank Rotman introduced us to someone who trusted him and he knew would be interested in what we were building. Ron Conway and SV Angel were instrumental in helping groupme raise our Series B from Khosla (he practically dragged David Weiden by the earlobe onto our board) and made the introduction to Skype that ultimately led to our acquisition. They were engaged every step of the way through these processes, pushing the ball forward alongside us.

Good board members, particularly independents, spend time with your team regularly. This may seem obvious, but a lot of board members don't do this. The good ones form personal relationships with the people that are integral to your company's success. They actively help recruit them, and they advise them on their biggest issues. They also know that not everyone stays at a company forever, and that helping them with your company may very well help them land a position as an advisor or executive at another one of their companies down the road. They're not just there for the CEO, they're there for the leadership team. I loved when people on our team would meet with our board members independently without my knowledge. Phillip Riese and Molly Graham were invaluable resources for so many people at Fundera, not just myself, and they always made themselves available to people at their beck and call.

Good board members teach you how to manage a board and run a good board meeting. When we started doing board meetings at Fundera they were useless. We ran through long decks that directors with very little context would ask questions about. It took hours and by the time we got to meaty issues the time was done. Phillip and Frank helped me and Cody Forrester learn how to conduct an effective board meeting which was almost identical to what Tom Loverro explains in this post (bonus accompanying video here). Board meetings are for discussion and debate, not presenting and updating. On a dime, board meetings flipped from something that felt like a tedious chore to a constructive and important time everyone looked forward to.

Good board members listen first, then talk. At tumblr there was a board member who would say virtually nothing for a majority of the meeting. They'd sit there and diligently listen. Then they would speak and the whole room would turn completely silent. They'd say approximately 3-4 sentences and it would be the most profound and impactful statement of the entire meeting. This doesn't mean that everyone should do this. Most people can't. Sometimes the conversation and debate helps you get to the root of an issue and you want everyone participating. But it does illustrate that loud and frequent voices (which are usually characteristic of the most junior board members who feel like they have to prove themselves) are not necessarily the most helpful ones.

This is a small sample of some of the characteristics of helpful boards. There are many more, and infinitely more examples of what makes for a bad director. But these are some of the ones that stand out most to me. Good boards can seldom make a company, but bad ones can definitely break a company. Helpful boards are a blessing and can truly help a leadership team level up to do their best work.