Find episode transcript below.
JENNY COLAPIETRO:
00:00:04:05 Welcome to the Next in Health podcast. I'm Jenny Colapietro, PwC’s Consulting Commercial Leader, and today we're diving into a hot topic, securing a seat on an emerging company board. Joining me today are Holly Reeves, PwC Partner and Emerging Company Solutions Market Leader, and Carin Robinson, Director in PwC’s Governance Insight Center. Welcome, Holly and Carin.
HOLLY REEVES:
00:00:27:05 Hi, Jenny. Happy to be here.
CARIN ROBINSON:
00:00:29:00 Hi, Jenny. Thanks for having us.
JENNY COLAPIETRO:
00:00:31:07 Great. Well, let's get right into it. Holly, before we dive into the best practices for securing the seat on an emerging company board, how would you define an emerging company in context of today's conversation?
HOLLY REEVES:
00:00:46:10 Sure, Jenny, that's a great place to start. The best way I can describe emerging companies are, they're companies that are not public, so private companies, and they're often on the forefront of innovation and ground-breaking ideas. And if I break it into two buckets, you have your typical biotechnology company.
00:01:04:07 So that's a company that's in early-stage discovery or preclinical phases, and they're trying to take an idea or a disease target all the way from preclinical through the clinic and ultimately getting an approved product. And then there's also your technology company.
00:01:20:02 So think of a software company that on the other hand usually are more mature, they're actually selling product, they're generating revenue, and they're more focused on how do you take the revenue they have and scale and significantly grow the revenue to become a profitable entity.
00:01:37:07 So biotechnology company earlier stage, usually not product revenue generating, whereas a technology company likely is product revenue generating and really looking to scale. Regardless, they're high-growth companies that do need additional capital to get to the point of profitability.
JENNY COLAPIETRO:
00:01:56:06 Okay. That makes it clear. Thank you. And as a director on an emerging company board, I imagine you face unique challenges and responsibilities compared to other board roles. Carin, in your experience meeting with directors from various companies, what stands out about serving on an emerging company board?
CARIN ROBINSON:
00:02:15:10 I would say a lot stands out. I work with boards across the spectrum, so public and private, different sizes and sectors, different stages in their development and different structures. And what I've found is emerging company boards are normally smaller but much more versatile.
00:02:34:08 And they're also typically composed of founders, investors, and then independent board members, which I think can be a really interesting dynamic. I would say overall, governance tends to be more informal compared to public companies that obviously have certain corporate governance requirements.
00:02:55:00 And with regards to the director role, I would say that directors tend to be more hands-on. As Holly just mentioned, there's a focus on rapid growth, scaling the company, innovation, often resource management. And I think it's important to point out, as an independent director, you may be the only one on the board without a financial interest.
00:03:16:10 So while the founder, the investors on the board may be more focused on managing relationships, making sure there's adequate funding, you as an independent director are probably going to wear multiple hats, whether that's providing mentorship, strategic advice, even operational support. And maybe one last thing to think about is that the focus of the board may be on planning for an exit strategy such as an IPO or M and A.
00:03:41:04 So as an independent director, particularly for pre-IPO, your focus could be more on governance and reporting and getting the necessary risk and controls infrastructure in place for that transition.
JENNY COLAPIETRO:
00:03:54:05 Perfect. That's helpful to have a great baseline understanding. Now, let's dive into what our listeners really want to know. The best practices for securing a seat on an emerging company board. Carin, you often meet with c-suite professionals seeking board positions. What are your thoughts on what's essential?
CARIN ROBINSON:
00:04:12:00 Yeah, and Jenny, this is one of the most sought-out topics from our C-suite network, how to land a board seat. And you're right, we meet with executives looking for board seats, but we also meet with boards on what they want as well as search firms. And so, I am going to walk through our, what we think is our five-step process, right, for seeking a board seat, and we have some of these materials online. So, I'm going to give you the cliff notes.
00:04:39:05 So first off, understand what you as a director are seeking. And what I mean by this is think about the different board opportunities out there and what you are most interested in. What do you have passion for? And a part of this process is considering, do you want a fiduciary versus advisory board role? What type of company do you want to serve on a public board versus a private board?
00:05:04:05 The ownership structure, I work a lot with family-owned, family-controlled companies, founder-led, private-equity owned, and then think about size as well as sector and whether your skills might be transferable to another industry and is this something that you're interested in exploring? Now, the second thing you need to do is understand what boards are seeking. So, know what skills or experience are being sought after.
00:05:30:07 And then you want to align your skills with what boards are looking for. And when we ask boards versus executives what skills or experience they need on their boards; so this year, executives prioritized industry, regulatory, and environmental expertise as the top three most important. Now, boards on the other hand, prioritize more of the traditional board oversight areas like finance, risk management, and operations.
00:06:00:07 So you need to consider what's important for emerging company boards, and that often depends really on the company and the board's needs at that time. Third step, build up your experience in brand. And the first step here is figuring out what is your value proposition? Meaning, what value can I bring to the board?
00:06:20:02 Taking off that executive hat and looking at it through a board lens and then sitting down and writing a board bio, which is, what is a board bio? It's essentially a one-page CV where you highlight key areas of expertise and then your boardroom experience,
00:06:36:10 whether that's serving on a board or reporting to a board or committee. And finally, odd here, make sure you update your LinkedIn, including your headshot. That is still the top tool used by recruiters and boards. And then after that, they're going to go Google you. So I also encourage you to Google yourself, look at your digital footprint. It really is about building your brand. Number four, conduct your search. So this is where the key is networking.
00:07:02:10 And I say network, network, network. Personal recommendations are still the top way of getting a board seat. So tell everyone you know you're looking and don't be afraid to ask for introductions either. And I think it's important to consider different director, industry or affinity groups out there that put focus on connecting directors and perspective directors.
00:07:23:02 I know there's a lot out there, but there are sector-specific ones you can look at and leverage search terms, get your bio into every director database you can. And then finally, the last one, prepare for the interview. So you have to do your homework just like you would for an executive position.
00:07:41:05 You need to conduct your research, make sure you know everything about the company, particularly recent events, make sure you know about independence requirements to just confirm there are no conflicts because you don't want to go all the way down the path interviewing with a company and then you discover there's a conflict.
00:07:58:10 And then finally do your own Googling. So, look at the people on the board and make sure are they people you want to be on the board with? Because that's one thing that we really focus on in working with boards is cultural fit. So you want to make sure that it's the right cultural fit for you.
JENNY COLAPIETRO:
00:08:15:02 Love it. I love the five essential tips and that approach. Holly, any additional thoughts on how to stand out from an industry perspective?
HOLLY REEVES:
00:08:26:05 Yeah, sure. So I think everything that Carin just emphasized was really important. I think if I bring it back to emerging companies in biotechs, right? I think the first thing where individuals seeking director positions can stand out is by demonstrating their deep understanding of the industry in the regulatory landscape as obviously a biotech company. And understanding the clinical development process is unique.
00:08:52:03 And I would put it in a couple different categories, especially as I think about getting on to a board and thinking through what committees would I want to be on. So, I'll start near and dear to my heart, right? I'm an accountant, so financial, right? Do you want to be on the audit or the finance committee and thinking about if you do, do you have the right skill sets? And oftentimes biotech companies are raising money as they go, right?
00:09:19:10 And so do you understand how to look at forecasts and do the whole budget process? And can you assist whether it's the chief financial officer or chief operation officer at the company, and thinking through how do they pull together a budget and line that up with whatever the, either preclinical or clinical goals are, and making sure you have enough cash or the right plan to kind of get the cash in place.
00:09:43:08 And do you understand balance sheet, income statement, and reporting and how do you articulate all of your skill set such that you would be good on that type of committee? And then as I think more broadly about committees of emerging companies, right? Especially for biotech company, the compensation committee where you're setting amounts that you're going to pay executives and even bonus plans for the rest of the company are often tied to clinical development timelines and different inflection points such as initiating a phase one or good data.
00:10:15:10 And so thinking through how to set what are the right goals and comp plans for executives is generally tied to understanding the industry and understanding what are different inflection points or milestones and how to incentivize your executive team. And then even with the rest of the company, oftentimes annual bonus plans are more tied to how the company does from a performance perspective of clinical trials and or getting into the clinic as well as individual performance.
00:10:45:10 And then I think if you take it to like a nominating and corporate governance committee and finding the right executives in this industry, having a chief manufacturing officer, a chief scientific officer, those skill sets are oftentimes different than what you would maybe have on a financial services type company.
00:11:01:05 And so making sure that you could help and articulate the right skillset you need to lead those types of groups like a manufacturing group or leading the research and development is certainly unique in being able to articulate your skillset to do that is important in this space.
00:11:18:10 And then lastly, I think everybody's talking about artificial intelligence, right? And now, how do you use artificial intelligence across the board at the organization, whether that's in general and administration functions, or if that's within your research and development, if you have experience in that area, that usually is often something that is highly regarded as companies are looking for the right individuals to join their board.
00:11:40:08 But I would end with, and I know Carin emphasized this, it's really, really important that you can bring your personal passion for the mission of the company, especially where a lot of these biotechs have an idea and they're proving out their idea and taking their idea through the clinic and through humans to ultimately get a product that cures diseases, which is really exciting.
00:12:04:05 And being able to articulate that as you work through the process and showing that you really care about the company's mission and what they're out to do, I think is critical in securing a board seat.
JENNY COLAPIETRO:
00:12:14:02 Thanks Holly. All great points about emphasizing your industry, functional, regulatory, and AI skill sets as well as your passion for the mission. Carin, any other best practices that our listeners should consider?
CARIN ROBINSON:
00:12:29:10 Well, I think one thing, and to piggyback on some of Holly's comments; particularly around, you used Gen AI as an example, is that even though you may be a perspective director, you're looking for a board seat, you should always try to be continuously looking to upskill in certain areas. Like GenAI is a great example.
00:12:48:09 And so looking out there on what kind of director education opportunities are out there, what kind of certifications. So that you can go ahead and be thinking about that before you even land your first board seat. Five questions I always say that you need to ask upfront.
00:13:06:02 So that's in addition to sort of the process we talked through, but really understanding personally, why do I want to be a director? What value can I bring to a board? Three, can I commit the amount of time needed? This is really important because if you're a sitting executive, do you have the time and will your current employer support you in taking a board role as well?
00:13:28:10 Lots of companies have board service policies, in fact, on being able to take external directorships. Also, what is my timeframe and when can I start? So are you going ahead and looking a year out, six months out? I will say that most folks that I work with, it could take a year or two. So go ahead and start earlier than you think in your board journey.
00:13:50:10 And then finally, do my relationships, whether that's previous or current business relationships pose any independence issues? Like I said, go ahead and be thinking about that now if you're really starting to target certain company boards.
JENNY COLAPIETRO:
00:14:05:10 This has been fantastic, and I know I've personally have learned a few things as we've gone through this. Holly, before we wrap up, any final thoughts?
HOLLY REEVES:
00:14:14:10 I certainly also learned a lot about how people should be thinking about what they need to do and how to best position themselves to be on a board regardless of whether or not that's an emerging company or a public company board. I will bring it back though, to emerging companies and just end with this. I would be thinking if I were an emerging company, right?
00:14:33:03 How do you think about making your robust governance framework early and how do you define clear roles of what is the board going to do, what's management going to do, and how do you have all the right communication channels set up? And then you've got all the right regulatory compliance, especially is, if you think about an exit strategy that's an IPO.
00:14:52:01 And then how do you balance all of the exciting innovation that a lot of our biotech companies have with risk management and compliance factors, and how are you able to build sustainable growth and then attract top-tier board talent?
JENNY COLAPIETRO:
00:15:07:10 Great. Well, Holly and Carin, I want to thank you both for joining us today. I found the discussion extremely insightful, and I think there are a lot of great nuggets in there for our listeners as well.
HOLLY REEVES:
00:15:17:08 Thanks, Jenny.
CARIN ROBINSON:
00:15:17:09 Thanks for having us, Jenny.
JENNY COLAPIETRO:
00:15:21:10 For more on these topics and other health industry insights driven by policy, innovation, and care delivery changes, please subscribe to our podcast and visit us at pwc.com/us/nextinhealthpodcast. Until next time, this has been Next in Health.
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