Don’t Make Them Ask…

There was a lot of recent hubbub about Sir Philip Hampton’s remarks on the gender pay gap, specifically that women at the BBC “let it happen” and that he had “never, ever had a woman ask for a pay rise.”  (Article here)   I’ll confess that my jaw dropped when I read that (I myself regularly have women execs ask for compensation increases, and good for them!). Nonetheless it was a great reminder that highly effective boards should not be reactive – who asked for a salary increase – but instead proactive – who deserves extra remuneration and why. “They never asked” is not a sufficient excuse for not paying someone what they deserve, regardless of whether they are a man or a woman.  

A recent board meeting of mine included reference to the risk of one of the executives leaving for another company. The CEO said, “I would be willing to pay XXX to keep that exec.” To which the chair asked,

“Then why aren’t you paying that now?  Why insist that they come threaten you with leaving?  Plus if you do then increase the salary and keep the exec, what message are you sending to other employees about reward in looking for other jobs?”

The meeting concluded with the CEO deciding to review the salaries of the critical employees across the team and to make sure they were being well remunerated to know their worth. It doesn’t have to be salary – which can be hard for cash-strapped startups – but there are a variety of compensation forms, including equity, vesting accelerations, extra holiday, performance bonus, etc. 

While Sir Philip Hampton’s remarks indicate that salary negotiation is less common for women (and research agrees), this is not just a women’s issue. One of my most valued execs is an understated (and extremely technically sound) man who has never ever asked for a remuneration increase of any kind. At first we failed to notice his compensation difference until the new CEO began an annual program of reviewing strong performers and ensuring that their compensation reflected their contributions regardless of their requests for increases. Sir Philip Hampton is right that women ask less, but highly effective boards and board leaders need to be proactive on issues like employee engagement and remuneration, not reactive with a policy of “we pay more to those who ask.”  I don’t have this balance right on all my boards but is something I’m working to improve. In companies and startups where the people capital is the leading driver of the value, boards cannot afford to be negligent and reactive on this issue.

Funding Strategy & Cash Management


Startups fail because they run out of cash. There are lots of articles and books written on the different failure mechanisms for startups, such as the Top 10 Startup Mistakes infographic! However, one of the most important things for a startup board is to manage the cash runway effectively. I have two specific recommendations for this:

(1)    Report cash-out date in every board meeting. If the company is not generating cash, monitor where the cash runs out on the current burn-rate. This is particularly easy for pre-revenue companies and such date should always be top of mind. It’s more complicated for revenue-generating companies, especially if the revenue is risky… I myself and other startup directors have learned the hard way if the riskiness of revenue is underestimated. Therefore, in my revenue-generating companies, I request two dates: (1) cash-out date with expected revenue; (2) cash-out date if all non-committed revenue goes away. These two dates provide the boundary conditions for necessary fundraising. A team needs a solid finance function and a good understanding of the variables / drivers / levers on the finances (both on revenue and cash) to monitor this appropriately.

(2)    Regularly review and update the funding strategy.  A funding strategy consists of the near-term funding needs (next capital raise) and the longer-term picture. When raising a round of capital it’s important to size the round to accomplish key milestones that will facilitate the next round of capital raising. This interplay between the rounds is nicely depicted graphically in the image below. An entrepreneur / CEO who is thoughtful about their funding strategy is one of the most noticeable aspects of a pitch and often reflective of thoughtfulness overall. Of course, a given strategy rarely (if ever) unfolds as planned, creating the need both to have a working hypothesis and to continually review and evolve it.

Please note that the funding strategy is crucially different to the financial review. Especially in early stage startups, the finance function may be outsourced or served primarily by an accountant. This is appropriate for the finance function of the company (accounts, cash-out projections, etc.), but not for the funding strategy. The funding strategy is a board-level topic created and evolved by those of the board with experience in raising venture capital or other finance. A solid startup board has multiple people (often investor directors) who can input and help evolve the funding strategy alongside the CEO, who needs to understand it well to represent the strategy in fundraising presentations. A funding strategy usually incorporates a long-term strategy around shareholder value creation and the different stages and milestones for the company to achieve that progress, and then smaller steps and funding rounds needed along the journey paired with capital sources and investors appropriate for each stage. The image below depicts the stage nature of the funding strategy.


The Triumvirate Test

The Triumvirate Test for Quick Board Diagnosis

A few years ago, I was struggling with one of my boards regarding effectiveness. I felt the board dynamic was off, but I couldn’t quite put my finger on why. I discussed it with a mentor and he gave me a great piece of advice that I have applied to most of my boards and evaluations since.

The Triumvirate Test boils down complex board dynamics to three critical members and relationships: the CEO, the chair, and the investor director (or senior independent director, depending on the board structure). The test is whether those three people are effectively communicating, balanced in power, empowering each other, respecting each other, etc. By focusing on those key people and relationships, it’s easier to boil down board complexity and identify underlying issues. Is one of those three people hoarding information or being overly controlling? Perhaps more subtle, (and therefore harder to identify, in my experience,) is one of those key people not bought into the role of another?  I’ve seen chairs who don’t fully believe in and empower the CEO (problematic) but I’ve also seen even more complex dynamics where a CEO or investor director (yes, I’ve been guilty of this!!) isn’t fully behind the chairman – thereby making the chair’s job unusually difficult. In diagnosing these problems, I’m sometimes distracted by wider board dynamics – perhaps other investors, perhaps challenging independent directors or often broader business dynamics – and therefore have found that this simple test effectively indicates core issues.

As a helpful first step in diagnosis, this “test” can be followed by either remedies to fix the core triumvirate (ranging from improved dynamics and empowerment to a necessary replacement) or by the assessment and faith that the core triumvirate is working effectively and therefore a refocus on broader issues, either with other board members or broader business dynamics. (See our upcoming article on “Common Board Problems and Health Check.”) 

Many thanks to my experienced mentor for the steer - following his own dozens of startup boards, I think he’d seen a few patterns! After all, the First Triumvirate of Caesar, Crassus and Pompey in ancient Rome brought the three effectively together and lasted for 7 years (until Crassus’s death) – a significant period when ruling an empire and/or in the life of a startup.

Chris Reichhelm on GREAT execs

Decades of Exec Evaluation boiled to Five Key Points

As startup directors, we are often responsible for very key hires, ranging from chief exec to board chair to contributing insight on senior management team selection and more. My venture firm Touchstone Innovations has worked closely for years with Peloton’s Chris Reichhelm, an executive search consultant who, in my own portfolio of five companies, has conducted 6 searches over the past four years including 3 CEOs and 2 additional board directors. We enjoy working with Chris because he has decades of experience, both in international firms (Heidrick & Struggles) as well as focused boutiques but mostly because he provides exceptional insight on the likely effectiveness of an executive, well beyond their paper track record and history. In his own words:

“For the first 10 years of my career, I focused on the CV and background as the lead indicator of capability at executive levels. But as I tracked the success of my placements, I found a few characteristics that were more indicative of success than the person’s background.  These led me to re-evaluate my approach and I now prioritise the search for these qualities during my assessments."

Here are those key five qualities, why they matter and how to assess in an interview.

Growth Mindset

Ability to deal effectively with failure. It’s about not taking things personally, learning and moving on; remaining galvanized and failing forward. Lots of great thought leadership on this topic from Stanford Professor Carol Dweck (her book Mindset is my all-time favourite book).

How do you test for it?: “When was the last time you failed to meet a sales target?  A product release date?  A technology milestone? Talk about it.  How did people react?  What did your investors say? What about the rest of the Board? Whose fault was it? What did you do to rectify it?”  Being specific and closed with the questions helps to prevent hyperbole.

Really engaging storyteller

This ability to create and tell stories is critical to motivating a team, engaging colleagues and “selling” the company to investors and the broader community.  Great storytellers become that way by drafting and rehearsing their stories hundreds and hundreds of times.  What’s more, they have different versions depending on their audience.  Company leaders need to be great storytellers, regardless of audience.

How to test for it?:  “Pretend I’m a potential client.  Present and sell your solution to me.”  Alternatively, you could try the very simple “Tell me about your company”.

Egoless (or self-less) leadership

This is about prioritising the needs of the company over and above personal needs.  This doesn’t mean that these leaders aren’t interested in generating wealth for themselves – far from it!  It means that they know the route to generating serious wealth comes from prioritising the needs of the business over their own personal gain.  Strange as it may seem, when executives do this they stand a better chance to generating wealth for themselves and for the company. It is a rare quality, described as a Level 5 leader in Jim Collins book Good to Great

How to test for it?:  Listen to their approach to team development.  Who do they award the plaudits to?  What about the blame?  What is their view on mentoring or development?  Are they in service to the company or is the company in service to them?   

Architect of Culture and Motivation

51% of US employees are not engaged in their work, according to a Gallup poll.  There may be a ‘War for Talent’ but there’s also a ‘Crisis in Leadership’.  Executives must get better at motivating and engaging their teams.  To succeed, they must become ‘Cultural Architects’, individuals who create environments where people want to do great work.

Intrinsic motivation is the level of motivation forged at a much deeper level than stock options and benefits. This happens when there an environment where employees feel safe to be themselves, where they feel really connected with their colleagues, where they feel they’re able to be masters of their domain without being micromanaged, and where they feel they’re contributing to a programme that benefits the wider community.

How to test for it?: Don’t ask them. Talk to 5 – 7 individuals who have worked for them.  ‘What was it like working for X?’ How productive did you feel?’ ‘How motivated were you to come in every day?’  How motivated do you feel your colleagues were?’ ‘What was the environment like?’ 

Thought Diversity and Challenge

There has been a lot of talk about the benefits of diversity.  In young companies, this is important.  Entrepreneurs can wrap themselves in a bubble if they’re not careful.  Having individuals who think differently and aren’t afraid to speak up, in an environment that encourages them to speak up, strengthens the company.  It makes it more robust.  It questions assumptions and occasionally threatens sacred cows.  These are good things.

How to test for it?: “When was the last time you were wrong?  Who questions you in your team?  On your Board?  When was the last time you went with what someone else wanted to do, rather than what you wanted to do?” “ “In your company (so far / last company), who have you selected to advise you and why?”


While Chris still measures experience carefully, he believes that these qualities represent better indicators for likely success.  Of course, much also depends on the organisations into which executives are being recruited.  Just because someone was successful in their last organisation, doesn’t mean they’re going to be successful in their new company.  Other environmental factors, like culture, matter just as much, maybe even more. 

I find his assessment extremely helpful and now apply it not only to executive and director interviewing assessments but also in entrepreneur evaluation for potential investments. As such I have created one addition based on my own experiences for successful and scalable startup executives:

Sharp Focus: Prioritize then Delegate and/or Get it Done

Startup executives are pulled in so many directions that focus and prioritization, or lack thereof, is cited as one of the top three reasons that startups succeed and fail. Great executives set the priorities and then hire well – often better than themselves – and empower through effective delegation. They also drive items to completion and make sure things get done.

How to test for it?:  “Who did you hire around you in your last role and how did you use them?” “As an executive how do you decide which business opportunities to pursue or not?  Have you ever ‘fired’ a customer or partner and how did you make the decision?”  “How do you handle it when you have too many things pulling at your time?”


These combine to form a strong litmus test for effective leadership and especially leadership potential in younger executives and directors. Helpfully they can be remembered with the acronym: G-R-E-A-T for the core five, with the sixth leading to the GREATS!  We hope this list is helpful and feel free to provide feedback by filing the form here, with any additional useful interview questions and/or key qualities from your experiences!