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The most important number at TeamSnap isn’t actually the one million worldwide users, 50,000 teams or 110 sports using its software to manage league play.
It’s the seven people guiding the Boulder-based startup’s rapid growth as board members and advisers.
For all the hoopla lavished on agile development, innovative products and clear market channels, one of the most under-appreciated factors of startup success is smart board governance of a fledgling company.
TeamSnap CEO Dave DuPont can comfortably check the “all of the above” box.
DuPont, a Cornell-trained engineer and Harvard MBA, was as systematic in his approach to building the company’s board of directors and advisers as he was in leading TeamSnap’s execution. It’s paid off well for the two-year-old company which completed two investment rounds totalling $1.6 million in combined angel and venture capital financing led by Boulder’s eonBusiness in just 16 months.
The most recent $910,000 investment round, which closed in October, will build out a mobile device product line and launch a global marketing campaign. That’s not small potatoes—especially when it was the board that pushed for a larger second round than DuPont initially positioned the company for since it’s already nearing break-even on cash flow.
“I wanted to put us in the position of not having to come back [for another round],” says DuPont.
Rushing into the corporate red zone
The board counseled that setting his sights higher would enable the company to become self-sustaining faster by taking advantage of TeamSnap’s lightspeed 100 percent year-over-year growth. They went for the larger amount with all of the original investors signing on to the new round plus new support from Silicon Valley-based Trinity Ventures.
Alls well that ends well, right? Sure, but there’s more to it than a celebratory press release lets on.
Strategy disagreements between staff and the board can be prickly matters and they can quickly be the undoing of what should be a carefully crafted set of roles.
DuPont made some decisions early in his tenure as CEO that sealed a healthier future for TeamSnap’s governance once it launched its first commercial product after a lengthy two-year bootstrapped beta phase.
The staff focused on execution: Develop a group management tool that solved a clear problem for an enormous market of sports teams, youth groups and non-sports social club enthusiasts.
Meanwhile, DuPont shaped the board through a series of try-outs as informal, non-voting members—call it the corporate governance version of the college athletics redshirt system.
“We wanted to see how everyone would gel with one another,” explains DuPont on his novel approach to assembling the board.
True, team spirit is important but so is observing how well investors, consultants and entrepreneurs embrace their role as strategists far removed from familiar, and frankly more straightforward operational duties.
Double play: Startup board team dynamics.
Donna Novitsky made the cut from walk-on marketing expert to TeamSnap board member.
The serial web entrepreneur and former Mohr, Davidow Ventures partner formally joined the board in March 2011 after attending meetings two months prior.
“Dave was extremely resourceful at pulling all that together,” recalls Novitsky on how Dupont tapped his business school and decades-long professional networks to recruit potential board members and advisers before seeking venture capital.
“What Dave did differently is that he created the structure of the board and then brought in Trinity Ventures. A lot of startups don’t think to do it that way.”
By leading from a position of strength early on and demonstrating serious business savvy, governance issues around the company’s vision and staff compensation packages with newly flush bank accounts are more likely to better sync with the CEO’s day-to-day tactical decisions.
Breaching those strategic and operational roles can put the entire venture at risk.
“It’s kind of a fatal move if the VCs start doing that,” warns Novitsky. “They’ll end up doing both poorly and they won’t take responsibility.”
As talented and experienced as they may be the advisers can’t and shouldn’t run the company. Handing them that power also seals the executive’s fate—with a pink slip.
Game over.
For CEOs, failing to devote the time to carefully guide the company’s governance structure can come off like a “Who’s on first” comedy routine.
“If you’re confident,” says DuPont, “you’re not lorded over by the board and investors to control everything,”
“And that confidence produces humility.”
A humble executive is a long-lasting executive. Ask Tony LaRussa.
