[00:00:05] Melissa Traverse: Hello, and thank you for joining. I am Melissa Traverse, Director of Community here at BevNET CPG Media, and I am excited to welcome you to the Nonbase Podcast, a podcast built to help CPG owners and operators navigate growth challenges and grow more profitable businesses. Be sure to check out nonbase.com, BevNET's platform made for the CPG community, where you can find this episode and so much more. Most boards get built around familiar patterns, a recognizable name, a credential that looks good in a deck, an investor who earned a seat, but there's a better way to think about it. Today, we are getting tactical about how to build a board that actually moves your business forward, how to figure out what you need, how to find it, what to pay for it, and how to get real value out of it once it's in place. We are using Aloha. The very successful plant-based protein bar brand is a live case study with their CEO, Brad Sharon, walking us through exactly how he rebuilt his board and why. Alongside Brad, we have Kirsten Riley from the Women on Boards Project, the organization that helped Brad find his newest board member. And we will add some great texture to this conversation with Kirsten. Kirsten and Brad, thank you so much for joining this conversation. This is certainly a topic that all brands as they scale will benefit from. So very much appreciate having you here and sharing your story. So thanks for joining us. We are going to start off with a couple of introductions so that the audience can get to know you a little bit better. Brad, let's start with you. You came into Aloha as a first time CEO. Can you tell us a little bit about the brand and where it was when you took over?
[00:01:51] Kirsten Riley: Sure. And happy to be here with you, Melissa and Kirsten. The Women on Boards Project was really helpful in not only providing a point of view about how the board should be constructed, but also listening to me in terms of what I was trying to build, right? And what I was trying to build was a successful, profitable, sustainable enterprise. There was a company named Aloha. I'm not the founder, I'm the refounder, fake term. And the reason I'm a refounder is because the company was defunct. It was going under, it was going to be bankrupt. It was a company with all kinds of potential that wasn't able to execute. Because at the end of the day, the products weren't good enough, the business model wasn't sustainable, the commercial engine wasn't impressive. And the investors weren't clearly aligned with what the goals were of company. Oh, by the way, there wasn't a real board. There was a board, it wasn't a real board. I'm sure we'll discuss the difference between that today. But yeah, so 2017, I've been at it nine years now, and we're now one of the largest and most successful protein bar companies in the country, thanks to a really great macronutrient profile, great certifications, a taste and texture that consumers love, and an employee-owned enterprise, 29 strong employees that put the focus on protein. building a better company. And so the board plays a role in that, investors play a role in that, employees play a role in that. It's an entire ecosystem around how do you build a successful, sustainable company.
[00:03:28] Melissa Traverse: Well, certainly the board is an important part of that ecosystem and what we are here to talk about today. Kirsten, tell us about the Women on Boards Project. What do you do? Who do you work with? And what problem are you solving for the industry?
[00:03:44] Boards Project: Thanks, Melissa. It's great to be here. Thanks for having us. Women on Boards Project, we work with investors and brands directly to place women on for-profit private consumer brand boards. So we work explicitly within the consumer industry. As we worked directly with Aloha, so we have a density within CPG. So I imagine a lot of the listeners here today will be CPG founders, CEOs. So we work with founders and investors directly to place women on their boards. We have a density of revenue in about 10 to 100 million. We work with brands smaller than that, and we work with brands larger than that. Most of the brands are investor-backed in some way. Some are family-owned, some are co-ops, some are bootstrapped with no intention of selling. But like I said, that's the general profile of brands that we work with. We have placed 77 women on for-profit consumer brand boards. By the time people are listening to this, I hope we have placed more than that. Within our database, we have about 8,000 women ready to serve. So we always say there is no supply problem. There are plenty of women who are incredible at what they do and they are ready to serve.
[00:05:00] Melissa Traverse: And can you talk a little bit about why diversity is so important to have within your board?
[00:05:08] Boards Project: So diverse boards just make better business decisions. There have been countless, countless studies that have proven this over and over. A stat that we always go back to is that women drive about 80% of all consumer decisions. So think about Target, think about Costco, think about like so many where people are buying CPG products. Your customer is a woman, 80% of the time. What does your board look like? At the, you know, at your highest level of leadership, making decisions on behalf of your company is your customer in your room.
[00:05:43] Melissa Traverse: And can you talk a little bit about what board governance actually looks like at different stages of growth? And, you know, maybe even clarifying what those stages of growth are would be helpful. So is it, you know, sub-10 million versus post-institutional? How do you think about the different stages and how does board governance work at those different stages?
[00:06:06] Boards Project: So a lot of founders and CEOs inherit their board. And what I mean by that is oftentimes term sheets dictate the board makeup rather than talent. So that's something that we are really trying to drive. Do you need a board of all investors? Like, no, you need your board to represent the various functional areas of your business who have different viewpoints, different expertise than just looking at your P&L. So our role is to really come in typically at the institutional funding stage. Again, there's some general in here. So typically around series A, kind of on the up and up, that's typically when the formal board is established. The most common board that we see is of five people, and it's either that the founder has two seats and the investor has three or vice versa. The founder has three and the investor has two. In that, the investor has one seat, the founder has one seat, and then typically there are three independent board seats. And again, the founder can fill the two and the investor can fill the one or vice versa. And so then that's really where we come into play. So then when we can run a full search process to fill the independent board seats, depending on what the company is looking for, we really value ourselves to be a thought partner in this intake call, in this kickoff call. Can't tell you how many times we've been on a kickoff call with a founder, investor, CEO, and they're like, we need skill set XYZ in the room. No doubt. Like that is what we're set on. We keep talking, we keep talking, we keep talking. And they're like, you know what, our biggest pain point is actually ABC. We're like, well, do you think you want ABC skillset as the board member? And so then it's just really this like kind of back and forth. And so typically, then we can deliver, I call it like an ombre slate. So you know, here's skillset ABC, and then here's skillset XYZ. And then, as the founders and CEOs are going through the interview process with these board members, it really comes clear who they need, the type of expertise that they need. And so we really try to be a thought partner alongside, especially at the earliest stage when you're building a board. The other thing we see is typically before institutional capital comes in is CEOs and founders rely heavily on paid advisors. And I say the word paid advisors because you should pay your advisors. You can pay them in equity only at earlier stages. cash is king. You're going to get a better relationship if you're paying your advisors in cash. Board members should absolutely be paid in cash and equity. I think there are some circumstances where it can be equity only again, but typically we see advisors earlier stage pre-series A and then at the series A, board is established, becomes a formal board of directors, you can still have your advisors in the board meeting. Some advisors are invaluable and they can still be an active part of the board conversations.
[00:09:19] Melissa Traverse: Brad, Kirsten just mentioned that term sheets can sometimes dictate how the board is structured. How was Aloha's board structured when you came on board and what made you decide that it needed to change?
[00:09:33] Kirsten Riley: It was honestly very loosely structured. I don't even think the board members themselves knew how it was structured at the time, other than they wanted to have a voice in the company, which I think is very valid for investors. They're putting money in. They should be heard. Not all voices should be heard at the same volume or the same duration. And so this is honestly good management skills should dictate how is a board going to be used? Is it just a supervisory body for the investor to make sure their money's not being poorly spent? I would argue that that's maybe a management question for the investors as opposed to board governance. But it was a board that was meant to magnify the former founder, or it was investors that just wanted a seat at the table. Here's a newsflash. If you're an investor and you have a good relationship with a CEO, you don't need an official board seat to have a voice in the company. Good transparency, good communication from both sides is important as a company scales, as the priorities get set, as the results get shown, and as the company's strategies evolve, as the consumer evolves with your brand. So look, if I wouldn't have changed the board at the beginning, it would have created misalignment and noise. And one of the things you can't afford as a startup CEO is noise. There's enough barriers, enough scale issues, there's enough challenges in the 24 hours that you actually have to work a day. Why create noise for yourself? I agreed with my investors early on who were not CPG people. This is somewhat different if the term sheet is really CPG people who are established, very well known. We know a bunch of them. There's a bunch listening who have been in the world before, have seen and done things because a CEO needs a board that has seen and done things and can provide actionable, thoughtful, practical advice. A board does not need illusions of grandeur. Sorry, a management does not need illusions of grandeur. A CEO does not need distractions, does not need someone to ask them to build 15 reports so they could then push those back to their shareholders. A board is not symbolic. A board should materially improve leadership thinking, decision-making, company performance. So I have investors represented on my board. They are a minority. They can choose to hire and fire the CEO. If I do a bad job, they should fire me. If we do a good job, we can keep on marching. And then I have independents like Kirsten talked about, independents that have a specific value set that have been there and done that. And honestly, their job is to make sure I don't make stupid mistakes. And I think that's a really helpful board governance, not just about protecting investors from bad spending, that's management. It's about how do you provide a more thoughtful, strategic, transparent dialogue on the inevitable decision points that a startup has to consider because you can't do everything. You have to say no many more times than you say yes. That's one of the hallmarks of Aloha, patient, sustainable, surgical, thoughtful growth. It's not a race. It's slow and steady, patient over time as the consumer finds, adopts, evangelizes, loves your brand. And so that outside perspective, and from a management CEO standpoint, that willingness to listen to divergent points of view, the days of companies being one man bands or one woman shows, world's too tough. It's too complicated. There's too many things going on. One person, not even with Claude's help, can manage everything. And that's where a structured, thoughtful, empowered board with an active voice in the company is an asset and is not about babysitting.
[00:13:30] Melissa Traverse: So you're really explaining what a board is for and what they're supposed to do. Can you get into a point that we all discussed as we were preparing for this call? And it's not to rubber stamp decisions, it's to provide an alternate view to help make really hard decisions with a diversity of opinion.
[00:13:55] Kirsten Riley: We have three product categories, bars, drinks, and powders. And the board and I have debated, why do we have three things versus just one? The bars are killing it. You said that in your intro. Thank you so much. It's tribute to the consumers, the retailers, the people that have found it, loved it, adored it, and kept on going. And they pay my salary. My family's happy. It's a nice thing to do. Thank you so much. But there's a conversation, there's two other things out there. Are they a distraction? Are they an asset? We still debate that every board meeting. What's the role of drinks? If you haven't tried them, they're fantastic. They're just not scaled to the degree that this is, intentionally. That's a point we still debate today. A go-to-market model on channels. For those listening, what's the role of grocery or club or Amazon? What's my willingness and profitability? What's the role of scale and how do I look at volume scaling as a means to pay for the investments I have to do to get break-even or positive? There are enormous challenges. There are myriad challenges that the board needs to debate because at the end of the day, the CEO needs to lay out options. The board needs to ratify decisions so that management can go single-mindedly towards an objective. It's when you get all these scattershot approaches that the noise becomes unbearable and the company loses focus.
[00:15:18] Melissa Traverse: Kirsten, the Women on Boards Project really does help businesses source board members that are going to help add to the discussion and make hard decisions. How do you find board members that are just right for a brand so that they are providing that diversity of opinion and they're not just saying yes to everything, but they're also a functioning member of a cohesive brand?
[00:15:46] Boards Project: Melissa, that is a great question. So like I said, we have about 8,000 women in the database. We work exclusively in consumer, so we know all 8,000 women. The people on our search committee are talent partners, independent recruiters. They're doing this all day, every day. They are very, very good at this. Something that we pride ourselves on is the majority of those 8,000 are current operators at other adjacent businesses. So, for example, another shelf-stable CPG product company, They're navigating tariffs, they're navigating these current challenges that Aloha is currently navigating, but they're doing it through a slightly different lens, which adds so much value back and forth. They're not direct competitors. We are very clear that we don't place, there's so many conflicts of interest and direct competitors and all that. So they're always category adjacent, but they're navigating it and they're actively living it, doing it today. So when those board members come in to the Aloha board, for example, they have a viewpoint of what's actually going on, like operating today. What's realistic that we can do? What's realistic that we can't do? What can we do today? What can we do tomorrow, five years from now? And I think it just becomes this really valuable conversation within the boardroom to have those operators. The other thing that we really push forth is first-time board members. Trying to get first-time board members in the boardroom. Everybody wants seasoned board members. And we really push back on that. Like, why? Boards operate so differently from one another, even within the same investor. The portfolio companies that one investor has, the boards operate so differently from another. So why is it so valuable that somebody's sat on a board before? The majority of women that we're putting forth on the slate have all been in boardrooms multiple times they've been giving presentations they've been giving their opinions they've, they're not new to the boardroom, they've just never had the, the official board title. One of the great things about putting them forth is they're so motivated and they're so excited and they're so encouraged to be there. They're going to come prepared. They're going to come with questions. They're going to come early. They are like, I'm here. I'm in it. Whereas if you have a board member who maybe is relatively retired, sits on six or seven boards, Like, they're not going to be able to give your company that same level of detail as these women are because, first of all, they're excited, but second of all, because they're actively operating in a similar environment and they know what's going on in the day-to-day of their company that can translate to an aloha.
[00:18:31] Kirsten Riley: Just to jump in on that point, I think the watch out, Kirsten, on professional board members, I'm gonna call them professional board members, people that are doing this as a hobby, they're doing it to stay in the game. I don't want retired athletes. I want people in their prime who are living it, breathing it, saying the same things, different categories, different moments, whatever, but they're living it the same moment I am with a different lens or a different point of view. And that's how we can triangulate A board is not about polished reporting. It's about transparency and honest dialogue that pushes the business forward. If you want polish and you want acclimation and so forth, board members that just show up for board meetings and that's all they do are worthless to companies. They're worthless. Better not to have them or have a board than that. I expect my board members to be curious, to be informed. I don't expect them to duplicate management, it's not their job. But I expect them to know our business and our priorities, just like it's the job of management to keep them informed, to not keep them in the dark, to have proper reporting, to give them the proper time before a board meeting to digest the materials. It's crazy to me that people send board meetings the night before. Oh, read this. Read this 97-page deck. Oh, sure. I'll get right on it. That's not the way great boards operate. Kirsten and the Women on Boards Project helped me find one of the most impactful board members I think I could ever have in Mora Modeles. We don't know more. She doesn't like the attention or the spotlight. And that means that helps you figure out how good she is. People that want the spotlight on them too much, they try too hard. I kind of get a little worried. She's a multiple time CEO, multiple successful exits. But her first interaction with me in 2020 was, are you sure you really want me on your board? And I was, why? Why wouldn't I? You're all this, this, this, praise and bowing and all the normal stuff that you would do of someone of her status. She wants none of it. She's like, I'm going to give you honest answers. And you may not like what I have to say. It's the job of good management and CEO to welcome that feedback. It only makes you better. People that are worried about feedback should not have a great board. They won't be a great company. They won't have the kind of people in Kiersten's Rolodex that can roll out and immediately bring in a new angle with real problems that you're facing today. So I just wanted to amplify what she said. I'm really skeptical of X officers, X people who think that serving on boards is a way to supplement income or to stay in the game. I think there is so many really talented women who are running really impressive either companies or verticals or parts of companies that can be so accretive to a board structure. Or if you wanted to do what I did and remake the board, If you're doing it from the right place, what investor isn't open to that conversation? Because in some cases, the investor doesn't need three seats on the board, doesn't need two seats on the board. Maybe they don't even need to be on the board at all, and they need to be an observer. There's something called major investor rights. They can actually ask me anything, and I have to give it to them. Fiduciary. It's like a get out of jail free card. Sure. Having a board that supplements management expertise If I made another story, I'm figuring out what to do on a product channel in club. I'm not in the club business today. Could I be in the club business? Sure. Would I like to be? Yep. Should I do it the wrong way? No, no. So another board member, Paul Kenny, who was the Chief Sales Officer at Kind and Yasso. He's going to forget more things than I'm going to learn about how do you launch in the club channel. He's providing us excellent advice. It supplements management. Again, not his job to set the strategy. Part of his job to inform us to make sure we're building on strengths, we're avoiding weaknesses. Two good examples of how do you actually use a board.
[00:22:35] Boards Project: And then to echo what Brad said there, we really pride ourselves on being able to put specialists within these board roles. You know, so Brad just mentioned like a club, like somebody who knows the ins and outs of club. Like, do you need that as a full-time employee? No. But like, do you need it on your speed dial? Yeah. Another density that we're seeing right now is region ag. Who are the specialists in region ag and where can we plug them in? So if you think about the specialists on your board, they really drive so much value. And again, you likely don't need that expertise as a full-time employee, but you need that expertise continuously.
[00:23:15] Melissa Traverse: Brad, you just talked a little bit about Maura and certainly she is no stranger to the boardroom, multiple CEO seats. You mentioned Cholula, Tate's. Can you talk a little bit about how you worked with the Women on Boards Project to place Maura and what your working relationship looks like today?
[00:23:34] Kirsten Riley: Well, I mean, I think we were one of the pioneering, weren't we the first cohorts of companies on Women on Boards Project, Kirsten, back with Cassie and everyone else. Look, I was interested in building a best-in-class company. And I was interested in getting inputs and advice from people that were much smarter than me and could help me avoid the pitfalls of really an already very dangerous business. I mean, I've said this on other podcasts, it's the job of any startup is to stay in business. If you believe in your product and you believe in your brand, you still need time, money, resources, energy, intelligence. on how to get the consumer to actually choose you versus alternative ABC. And I play in one of the most competitive parts of the store. And we love that. We love that. Because there's something to fight for. What doesn't, what employee ownership company doesn't like that? I mean, that's awesome. But a board helped me with that. So yeah, so I came to the Women on Boards Project. They came to me, it was a mutual thing. They're like, hey, we're starting this incredible thing to empower women CEOs and executives and department heads and so forth to get on more boards because there's a diversity issue in the vast majority of corporations, big and small, and also in the food business. And as a father of three daughters, as someone who, again, we talked about it earlier, the women purchasing power in this country ain't diminishing. the food IQ of younger consumers, especially young women is being influenced across the ecosystem. Like I wanted to get out ahead of it. And I was open to feedback. And I think that's where management, you have to be open to it. If this is just something you're doing to check a box, don't waste your time. It's not gonna work. Because even if you bring in the right board member, she's gonna suss you out real quick that you're not serious about feedback. And that's not what you want. This is a dialogue. My role, my relationship with Maura, or any of my board members, it's not specific to her, is about curiosity and transparency. I mean, they know our business. They come to me with ideas. I get pictures on my phone from them in stores. I love that. I love that it shows they're thinking about me. I have random thoughts, need 10 minutes. Boom, I get a call back the day or the next day. It's quick hits and so forth outside of the formal board meeting reporting structure, which should be more formal and fiduciarily based if you're running a good company. So no, it's honest, it's transparent, it's fun. And again, you have people that are in the trenches with you. They're not in your company. I like a really empowered and thoughtful board much better than the paid advisor model. or the consultant model. I was a consultant right out of college. I'm not knocking consultants, by the way. The consultants that are listening in are much smarter than me. So just take that from me. I'm just a dumb hockey goalie. But what I couldn't get my arms around when I was just kind of getting started is that the consultants weren't in the weeds with me. They weren't in the fight. It's just the model. And so a board member somewhat needs to have their feet in the mud with me. For pulling taro out in Hawaii, they need to know how I pull it out. They may not have to pull every bit out, but they need to know how it's done. And I think that's where a good board process, with Mauro, with Paul, with Bart, whoever it is, that interaction with the CEO needs to be, there's a Hawaiian concept called kuleana. It means reciprocity. So why wouldn't management and board have reciprocity? you're supposed to be on the same team. So that's where if you get out of alignment with each other, it creates noise. And again, I'm a big focus, I'm a pretty simple guy. Anything that's a distraction takes away my energy and my passion for the consumer and for the company. And we don't have time for that. No small company has time for noise. The Women on Boards Project really helped me decipher what I wanted at an early stage. We were probably, Kirsten, $10 million in sales when we started working with you. Now we're a little bit bigger than that. But it really started from the beginning about what was the role of the board, and how do I surround myself with voices who are going to tell me when I'm doing something wrong and echo when we're doing something right?
[00:27:53] Boards Project: Can I add a little color behind the scenes of how Women on Boards Project works? So in Brad's example, Brad comes to us and says, hey, we're looking for XYZ skill set. As I mentioned earlier, we say, OK, great. That's truly where our fun part begins. We go, and I said, we have this incredible database of 8,000 women. And then we say, okay, who are the top 10 candidates who mesh with this XYZ skill set that you're looking for? And then again, we pride ourselves on being thought leaders. So sometimes we'll throw somebody else in there who doesn't match exactly XYZ, but based on our conversation, they're going to add a lot of value. So from there, and then we deliver the slate of 10 candidates or call it or so. And then we meet again with Brad and we say, okay, here are all the candidates. And Brad says, okay, and then we talk through each of them. You know, this person has this strong skill set, this person has this strong skill set. We threw this one on here as kind of like a out of left field, but we think you would have a really good conversation with them. And then Brad says, okay, we want to meet with with these six from there We go out and we reach out to those six and we typically provide Information from the brand like to ask the women if they're interested in this Again in that example, we're gonna get five out of six. Yeses Everybody wants the board seat in the case where we don't get the yes It's that they had a conflict of interest that we don't know about they have bandwidth issues that they just can't take on a board wall right now and all of those things. And then from there, it just becomes a cotton dry hiring interview process. The brand can put the candidates through rounds of interviews with CEO, founder, investor, leadership team. It's just really on there. And then narrow it down to a final candidate. Frequently, not frequently, it happens where they get narrowed down to two candidates and they're like, we can't choose. We actually need them both. So we, that's like such a best case scenario for everybody. They both get hired. One gets hired as a board director, one gets, they both get hired as directors, one's a director, one's an advisor, whatever. Like they're paid, they're in the room, they have a voice. It's just, it's a win-win across the board.
[00:30:00] Melissa Traverse: And, you know, I'd like to point out that organizations like the Women on Boards Project, they're incredibly helpful for people who may not have a network of people that they can pull from for their boards. But also, even if you do have an expansive network, you're probably, again, looking for diversity. You're probably looking for people who you don't already know, who you're not already talking to, to weigh in on decisions.
[00:30:27] Boards Project: You already know the people in your network. Like you're already, if they could help you, you're already likely calling them. So we hear frequently, Oh, we can't find qualified women. Oh, there's no women who fit this, but we hear that all the time. Widen your aperture. Come work with organizations like us. Like we can find the women. We know them deeply. Like we know them well, we can put them in front of you. We can give you interviews with them. Like why that's, that's another like ism that we have within the organization. Widen the aperture of who you're looking for. and you're gonna be really surprised at what you see and pleasantly surprised.
[00:31:00] Melissa Traverse: Brad, you were talking a little bit about how Maura, when you were in those initial discussions, warned you that she was going to push back. Can you give us an example of when she did push back on something and what?
[00:31:15] Kirsten Riley: Everything. Everything. She pushes back on everything. No, no, I don't mean that. No, look, I mean, We have real conversations with our board. Like this is not, this is not like everyone asking for gold stars. If you want your board to give you gold stars as management, then I think you as a CEO need to look in the mirror. We've chosen to be in tough businesses. Like the consumer is the ultimate arbitrator. There are great businesses that don't make it. And it's got nothing to do with the management or the product. It just doesn't happen. We've just chosen tough industries. So embrace it. Kirsten's point, why not call the woman on board'Boards Project? What do you got to lose? Oh, no, you lost 30 minutes of your time to interview a really smart person that now you're going to build a network with? Oh, boo hoo. Seriously, what do you got to lose? Widen your aperture, great line, agree with it 3,000%. If you're curious and you're open, you will learn something that you didn't know before. If nothing else, you made a friend. So like there's opportunities here to engage, but from a management standpoint, you gotta be open. Look, Maura and I have very candid conversations. Sometimes it's around people. Sometimes it's around strategy. Sometimes she's wrong. I don't tell her that because I'm afraid of her. But sometimes she's wrong. But that's the dialogue. Again, she needs to know our business. She can't be talking into 3,000-foot level or 30,000-foot level stuff. And I need to be open to the feedback because I don't have all the answers. If I did, we'd all be independent consultants and so forth. Products we've argued about. We've argued about channels. We've argued about timing. We haven't argued as much about fundraising because at the time when I was coming in there, that's a big point where boards and investors I didn't face that at the time because my board was really formed after I was largely done raising. I raised a little bit more for working capital, but not really much. My refounding was done by then. I also didn't want to bring in a board member that I respected and wanted to spend time with on a company that I didn't think was going to make it. So I didn't want to waste their time as well. We talked about compensation structure. Equity matters. This is time spent. I want to make sure my board is equity owners of the company. I want them to be treated like an employee owner, even if they're not an employee. That's important. That's skin in the game. That means we're all on the same team, rowing in the same direction. So no, we've argued about various things and it's not just her, investors, other board members, and so forth. There's no one owns the universal right to have the truth. There's no one that is singularly right That's the way it goes. Great boards create dialogue. Dialogue that benefits the consumer and benefits the enterprise value of where you're trying to go. Mora is a critical component who commands the respect of the investors, of other board members, of my management team. No one's an apparatchik on our board. If they were, they'd be found out. We don't have any tolerance for that. Everyone is respected. And that creates the kind of team where everyone can win together. But yeah, I echo everything Kirsten said about the Women on Boards Project. Again, my line is, what do you got to lose?
[00:34:40] Boards Project: Brad, to that point, I think that's just a great life board and life principle. There's no one source of truth. Like this is just, there's no one source of truth across the board. I haven't found it yet. Conversation. No. Yeah.
[00:34:52] Kirsten Riley: I'm waiting for AI. I heard it's a thing.
[00:34:55] Melissa Traverse: Claudette. It's right around the corner. Kirsten Riley's get into compensation. This is something that, you know, is sometimes sort of like a closed door topic, but let's get into what a brand should expect to offer a board member and what should a candidate expect to ask for.
[00:35:14] Boards Project: We have a whole white paper about this. If anybody wants access to it, shoot me an email and can send it over. One of the pillars of Women on Boards Project, we really want to democratize this information. For so long, it's just been circulated behind closed doors. And that's what we're trying to just like blow this open. So the white paper is great. It's very much meant to be negotiation jumping off point. So for brands, when they're hiring formal board of directors, we like the brand to pay the woman in both cash and equity. Equity is typically about a quarter percent. like 0.25, quarter percent. And then cash is anywhere between 20 and 40,000 for the year. We see it go up, we see it go down a little bit. But those two starting points are the good negotiations. So again, quarter percent and then 20 to 40K a year paid quarterly. And it's typically paid around the board meetings. Again, if you're earlier stage, maybe an equity only compensation package makes sense. I would also encourage the woman to Have the open door conversations about getting cash later as as companies growing Larger stage companies bump that cash up As I mentioned we work with co-ops. We work with family-owned businesses. We work with companies who have no intention of selling So they don't give any equity, but the cash is higher, you know, so it's it's just it's It's meant to be a negotiation. But again, this information is is not widely spread. Um, we have Detailed white paper, I'm happy to send it around.
[00:36:50] Kirsten Riley: Well, and negotiate. I think you used that word multiple times intentionally. It's a negotiation. Your time as a board member is valuable. By the way, and the company should expect you to dedicate time to this. This is not a ceremonial position. Sometimes it's treated like that. And those are not great boards, in my opinion. So no, you should be compensated for it. And I love models that put you very much into the same criteria as other employees. I think that's same vesting schedule, same preferences, which we don't have at Aloha, but like, you know, same scoreboard. I think that really engenders the right kind of behavior. And the outcome's that if the company's successful, the board member is successful. And if the company fails, the board member wasn't successful. It's life.
[00:37:48] Boards Project: And then if I could speak to the time commitment of what that entails, again, typically what we see, so quarterly board meetings, no doubt. Quarterly board meetings, we see anywhere from like an hour and a half to a four hour Zoom to like full in-person three day summit, call it. So really quarterly board meetings are non-negotiable The other thing that we hear from the women that we place is I wish they used me more I wish that I wish you know, if I'm if I'm a CMO at another company, I wish the CMO called me like so just Having that sort of like like what Brad said the reciprocity like this level of transparency going back and forth, like the board members want more of that. So then another best practice that we see is like a one-on-one meeting, like in that CMO example, like the CMO board member meets with the CMO of the company once a month for an hour, and they just talk and they banter. So that's, and then of course coming prepared to the meeting, So having all of the meeting materials sent out 72 hours in advance, it's a 100-page deck, you need time to read it, you need time to come with questions, and just come prepared for that meeting. So that's typically what you're giving in return for being a board member.
[00:39:12] Melissa Traverse: So we just finished talking a little bit about compensation. Equity is almost always part of that conversation. Brad, when we were preparing for this call, we were talking a little bit about cap tables and you mentioned the cap table waterfall. Can you talk about why a candidate needs to ask about it before saying yes to an equity offer and what it is?
[00:39:32] Kirsten Riley: I think any employee should try to ask for it as well if they have enough clout or judgment, or certainly executives should understand if we are successful and I own X, what should be a reasonable outcome, Y, over what time period, Z, and who gets paid first, second, third? So this is one of the lessons learned as people go about their careers and you don't know much about it. when you're younger you either glory in the equity and not understand it or you don't understand the value of the equity and what are strike prices and so forth. Things I only learned in my 40s so I'm a late bloomer. You need to understand if you're with an investment company if there's a private equity company and what their model usually is is they get making this up a 3x preference. It's not a made up They're going to get paid, if they put in $100, they're going to get paid $300 before you see a dime. Are you okay with that? In some cases, you're like, yeah, I'm okay with that. I get it. In other cases, you're like, no, I'm not okay with that. So understanding, I don't think you do board work to get rich. I wouldn't suggest that as a strategy. I think it's a really interesting, thoughtful way to give back and to participate in more than just your day job allows you to. If there's a company that you like, if there's a product that you love, if there's a category that fascinates you, if it's people that you can tolerate or even like, I think those are really good reasons to join a board. If you're doing it for an ego so that someone on LinkedIn thinks you're a big deal, Not my cup of tea. Works for some people, not for others. But I think if you really wanna be in the world of board service. then you need to understand if we do all the things we're supposed to do together, and if I contribute to the way that I hope to contribute and you expect me to contribute back, then X should mean Y. Very valid question and you shouldn't be shy about asking it. If they don't answer your question, if they give you the runaround, or if the CEO doesn't know the answer, those might be things I'd be concerned about.
[00:41:49] Melissa Traverse: Kirsten Riley wanted to dig into a comment that you made earlier a little bit. Why are unpaid advisory roles and nonprofit boards sort of dead ends for operators who are looking for a real board seat?
[00:42:04] Boards Project: So there's so much advice out there about how to get this first board seat on a private paid board seat. One of the advice that we hear so often is start with a non-profit board. And Women on Board'Boards Project is a non-profit. I love them. They're great. But that's not a means to the end. That's the end in itself. If you love the non-profit mission and you're all in it on your local food bank or whatever that is, great, go for it. But don't join your local food bank board to get on the board of Aloha. That doesn't translate the way that people say it does or that I think it does. We've been on so many kickoff calls with founders, CEOs. We call them the seat openers, the people who are opening the board seat. Not once have we heard, oh, nonprofit board experience would be really great to have. Not once. Again, if you feel passionately about it, go for it, but don't do it as a stepping stone that way. The unpaid advisor role is much murkier because that is sometimes a path to the boardroom and it's sometimes not. When you're in this unpaid advisor role, you know, the company's likely sub 10 million. They probably don't have proof of concept, product market fit. You know, and so but then you could also be on a rocket ship. You just you just don't know. And so I think if you if you love the founder, if you love the product, if you have the time and you want to do it, again, in that same vein of serving on the nonprofit board, go for it. Like we're not going to tell you don't do it. you know, that will likely be an equity only package or a zero package, just like phone calls here and there. Again, there's just a lot of bad advice out there on how to get that board seat. The best piece of advice on how to get that board seat is to find a mentor who has done it before, who has maybe done it two or three times. I have been on so many calls with people, women specifically, who have had multiple board seats. The path to the boardroom is never the same. Even working with an organization like Women on Boards Project, sometimes the paths aren't exactly the same 77 times in a row. They vary. So find a mentor who has done it, who has done it a few times, likely. And then the other part is, we say this, just talk about it. If you really want to be on the board of Aloha, talk about it, like figure out like how more got there, how Paul got there. And just it's that knowledge is power sort of a concept as opposed to like the nonprofit or the unpaid advisor role.
[00:44:56] Kirsten Riley: And as founders and CEOs, we all talk, it's a pretty tight, it's a close community. And so if you're expressing interest in one, and I may not have a board seat, I may know three or three people who are considering it themselves. I mean, I think vocalizing is important. And I think for the CEOs or management or investors listening out there, there's also, Kirsten said it earlier in the podcast, like you don't need someone who's necessarily done it before. You don't need someone who's sitting on four or five boards. In fact, you'd probably prefer someone who can have their own job and maybe the time for one adjacency or two adjacencies. Because that means they're going to actually have the bandwidth to learn about your business and contribute to their business. No one wants this functional head, this totem pole. It makes no sense whatsoever. It does not push the person forward from a board standpoint. It doesn't push the company forward. We're all just wasting each other's time looking. It's a beauty contest. And that's not interesting in very competitive, thoughtful categories, where the biggest behemoths are the big CPGs. And what's really cool about our industry is there's so much dynamic ability to shape consumer perception and modern brands. That's cool. Boards can help that. Boards can shape that. And the right board members can make a huge impact in a founder, in a CEO, in a young company. when done correctly. And so I agree with everything Kirsten said on comp, but I want to just echo the fact that leaning into this and asking the questions is important for advocacy as well as going to groups like the Women on Boards Project who have the, I wouldn't say the tried and true method, but they have a great philosophy on the pitfalls, on the opportunities when it comes to board service.
[00:46:45] Melissa Traverse: Well, I would like to thank you both so much for such a thoughtful conversation. I think there are probably a lot of founders and CEOs out there who may be taking another look at their boards after this conversation. Brad Sharon of Aloha and Kirsten Riley from the Women on Boards Project. Thank you so much for joining me in this conversation today. For everybody else, thank you for tuning into the Non-Based Podcast and we'll see you next time. That concludes another episode of the Nambase podcast. If you enjoyed the show, please leave us a review and follow us on your listening platform of choice. You can also watch and listen to past episodes on nambase.com and don't forget to join our Nambase Slack at slack.BevNET.com for company updates, industry networking and community discussions. See you next time.
