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.

I’m a fan of trusting your gut. It has served me well over the years. I sometimes have a tendency to overthink things, and the way I overcome decision paralysis is by following my instincts. One of the most challenging times I've done this has been when deciding to sell GroupMe and Fundera.

Selling a company is an incredibly emotional process. The thing you’ve spent years dedicating your life to is going to end up in someone else's hands, and the team you’ve grown to love and build things with has an impending timeline to disband. It's hard for things to feel perfectly right.

With GroupMe, the decision to sell was a relatively easy and organic one. Steve and I never had a successful exit under our belt. The NYC tech ecosystem was just beginning to emerge and $50-100m acquisitions were far and few between and a Big Deal. We were also hemorrhaging money as we covered the cost of every text message sent (not all messaging was done in app) and our growth was bankrupting us. We were also young, the price was life changing, and we knew we had enough energy to build more companies. Skype made a compelling offer and we jumped on it.

People ask me all the time if I regret selling. GroupMe is exponentially more valuable today than it was when we sold. It’s arguably Microsoft’s most compelling mobile asset. But when we were acquired we had something like 1m total users (we had been around for roughly one year) and we weren’t growing as fast as we wanted. I don’t regret it. Of course it would have been nice to have sold for more money, but it was the right thing for all of our constituents: investors, the team, and us individually as founders.

In my experience building and selling companies, the time between signing an LOI and closing the deal were some of the most emotionally turbulent moments of my life. It's an extraordinarily stressful period. One of the things Emil Michael taught me early in my career is that time kills all deals, and that you need to diligently compress the time between signing a term sheet and closing as much as humanly possible. One of the reasons is that as more time elapses you increase the likelihood that things can fall apart. In my opinion an equally important reason is that you need to minimize the mental anguish the process imposes on yourself and the team.

Pre-LOI you experience a honeymoon period. You fall in absolute love with your counterpart. Your shared vision is going to take over the world. You'll manifest your mission in a way you never dreamed of before. Teammates you care about deeply are going to make life-changing amounts of money (including yourself and your family). And all of the hard work everyone has put in over the previous years is going to be rewarded.

Then you sign a term sheet and everything changes on a dime. As they always do, incentives explain part of the story. As a seller, you want to make sure you quickly realize the terms in the LOI you happily signed. But as a buyer, you need to make sure you know precisely what you are getting and that you're mitigating any unnecessary risk. Even though both parties want to close, their respective priorities are inherently in conflict with one another. This creates a tremendous amount of emotional volatility. In many instances, things that seem impossibly small and insignificant in retrospect come dangerously close to blowing up a deal. Esoteric indemnity clauses that protect against .001% catastrophic scenarios feel completely insurmountable.

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.

I’m a fan of trusting your gut. It has served me well over the years. I sometimes have a tendency to overthink things, and the way I overcome decision paralysis is by following my instincts. One of the most challenging times I've done this has been when deciding to sell GroupMe and Fundera.

Selling a company is an incredibly emotional process. The thing you’ve spent years dedicating your life to is going to end up in someone else's hands, and the team you’ve grown to love and build things with has an impending timeline to disband. It's hard for things to feel perfectly right.

With GroupMe, the decision to sell was a relatively easy and organic one. Steve and I never had a successful exit under our belt. The NYC tech ecosystem was just beginning to emerge and $50-100m acquisitions were far and few between and a Big Deal. We were also hemorrhaging money as we covered the cost of every text message sent (not all messaging was done in app) and our growth was bankrupting us. We were also young, the price was life changing, and we knew we had enough energy to build more companies. Skype made a compelling offer and we jumped on it.

People ask me all the time if I regret selling. GroupMe is exponentially more valuable today than it was when we sold. It’s arguably Microsoft’s most compelling mobile asset. But when we were acquired we had something like 1m total users (we had been around for roughly one year) and we weren’t growing as fast as we wanted. I don’t regret it. Of course it would have been nice to have sold for more money, but it was the right thing for all of our constituents: investors, the team, and us individually as founders.

In my experience building and selling companies, the time between signing an LOI and closing the deal were some of the most emotionally turbulent moments of my life. It's an extraordinarily stressful period. One of the things Emil Michael taught me early in my career is that time kills all deals, and that you need to diligently compress the time between signing a term sheet and closing as much as humanly possible. One of the reasons is that as more time elapses you increase the likelihood that things can fall apart. In my opinion an equally important reason is that you need to minimize the mental anguish the process imposes on yourself and the team.

Pre-LOI you experience a honeymoon period. You fall in absolute love with your counterpart. Your shared vision is going to take over the world. You'll manifest your mission in a way you never dreamed of before. Teammates you care about deeply are going to make life-changing amounts of money (including yourself and your family). And all of the hard work everyone has put in over the previous years is going to be rewarded.

Then you sign a term sheet and everything changes on a dime. As they always do, incentives explain part of the story. As a seller, you want to make sure you quickly realize the terms in the LOI you happily signed. But as a buyer, you need to make sure you know precisely what you are getting and that you're mitigating any unnecessary risk. Even though both parties want to close, their respective priorities are inherently in conflict with one another. This creates a tremendous amount of emotional volatility. In many instances, things that seem impossibly small and insignificant in retrospect come dangerously close to blowing up a deal. Esoteric indemnity clauses that protect against .001% catastrophic scenarios feel completely insurmountable.