Building Your Board | Glenn Kelman

I'm Glenn, um, and I'm here to talk about building the board. I was surprised that James Slavit, the Greylock partner, asked me to discuss this topic because I've actually had sort of a fraught relationship with our board. In fact, I really didn't have much experience about what a board should be like, just because my only experience had been watching movies. Originally, I tried to style my hair like Richard Gere because the only board meeting I'd ever seen was in Pretty Woman, but then later I found myself acting more like William Dafoe in Spider-Man, who is fired despite inventing this amazing crazy suit.

So, I wanted to talk to you a little bit about how we came to have such a great board and how it's become such a great partnership. But first, James wanted me to explain Redfin. I don't know if any of you noticed, but there was a Redfin yard sign for a house for sale across the street and then a giant red SUV parked in front of it, and we've had it towed. So, you should be able to see that sign when you walk outside.

But we're a technology-powered real estate brokerage. So, we built a real estate website, we invented MT-based real estate search, and then we decided to hire our own real estate agents, which was very controversial at the time. They're about three times more productive than a traditional agent, they charge half the fee, and we have a net promoter score, which is a measure of customer satisfaction, that's about 50% higher than the traditional industry. The business has a few hundred million dollars in revenue, um, and it's just been an absolute passion project for me.

I think one reason the board originally found me so ungovernable is that I cared so much about the business. I was just crazy about it, and I still am. But I found a board that is equally crazy about it, and it has been my partner. I think I would be lost without that board.

So, I wanted to talk to you about how I came to that state with our board and how lucky it has been for the company and for me. The board consists of some venture capitalists, and the hard part about the venture capitalists, especially if you're desperate for money, is you don't always get to choose who's going to be on your board. You get to choose the people who are willing to give you money.

In the early days, there was exactly one firm willing to give us money, and so they got a board seat. Now, when I meet young founders, I try to tell them that while you're tap dancing for money, you should evaluate the partner and decide if it's someone you want to spend the next three, five, ten, maybe fifteen years with, because it's very hard to fire board members. It's easy for them to fire you; it is almost impossible for you to fire them.

So, I would really spend some time getting to know the people you're raising money from, and I would not necessarily choose the firm that has the biggest name, although I've heard Greylock has a good name. I would choose the firm that employs a partner where you really feel a soulful connection, and if you evaluate people for that, they will feel flattered by it until, of course, you decide that he's not right for you or she's not right for you.

But I would not be focused on the brand of the firm; I would be focused on the quality of the partner. What's great about the venture firms is they sit on other technology company boards; either that partner or his partners do, and it just gives you access to all sorts of companies that you can learn from. But the other important thing is that when you're raising money, they have been on the other side of that game for 100 deals.

I think venture capitalists on boards, when you have to raise money from venture capitalists, are amazing. James has written this email that I am not allowed to forward to anyone, but you need to ask him, "How should I conduct myself when meeting board members?" He will send you the email because he said this friendly, goofy, Jewish mensch thing, that's got to stop; that is just dreadful.

We need to try a different persona, and I'm going to lay out a very specific spec for you on what that person is, and it was so helpful to me. Like, it changed me, not just in money raising but in all things I try to be more like that. So, ask James for that email because I'm not allowed to send it to you.

But then we actually recruited a bunch of operators onto the board, and the great thing about these folks is they have a lot of different experiences. Our initial impulse was really to get people from the biggest possible companies. We weren't that cool, so we wanted to get someone who was cool from Google, from Facebook, from any number of big-name brands.

But those folks have no idea what we're going through. They spend money like there's no tomorrow; they have a brand that everyone recognizes. They haven't been singing for their supper for a decade, and they are not the right fit for you. In fact, we actually recruited Selena as one operator, and I've never told you this, Selena, but several employees were hung up on the idea that Selena worked for a company with monkey in its name. They said it just doesn't seem that cool, like Facebook or SurveyMonkey.

I like, they make a lot of money, and Selena is amazing. So, we hired Selena, and it turned out to be the best thing because that company was at about the same scale as we were, but a little bit ahead. Selena was a peer, not just to me but to other people. By that, I mean not that we don't have anything to learn from her, but that she was a similar age with someone who had kids that were my kids' age.

I just found that I was having dinner with her or calling her or getting a drink with her or grabbing a croissant and really explaining to her exactly what was going on in the business and feeling like she immediately understood it because I wasn't talking to someone with a polo pony or a stable of polo ponies; I was talking to someone who was working on the exact same problem that I was.

So we were really deliberate about what we wanted, and I would encourage you to write job descriptions for the board members that you're seeking because at first, the only job description I ever wrote was "big shot." Then I called Jeff Marwitz, and he said, "You're going to have to do better than that."

So we thought about the kinds of expertise we wanted from different companies, and what Greylock brought to us was this absolute swagger. James said that I couldn't say this, but I did get the feeling that if I wanted to meet President Obama and recruit him, I could—that Greylock would make that introduction; that they would find a way.

So they work backwards from what the ideal company would be on the presumption that if there's a perfect fit between what you're doing and what a board candidate has done in the past, that person will consider you, even though he or she might otherwise not. For us, that was actually CarMax. CarMax is the Costco of used cars, or it is the Redfin of used cars.

When we called Austin Lian, the founding CEO of CarMax, he started chuckling and he said, "I've been waiting for this call. I've heard about Redfin. I'm surprised you haven't called me before." I thought that when we called, he would say, "Who's Redfin? I'm not interested." In fact, by the way, he does; we'll get to that later.

So, we went out and got different types of experience that we were very focused on for what we needed to build the company and what we needed to help the team. Sometimes, I felt like we needed someone to help our head of product, not just me, but our head of product. Sometimes, I felt like we needed someone to help our CFO, and we would go out and get that person.

In fact, the line executive who needed a mentor, who needed someone from a peer organization would often participate in the process, which I found really helpful. But this skips over the problematic part of our board history. It's just a fact that phase one of our history was my rage.

I did quote Colonel Jessup in A Few Good Men, saying, "You want me on that wall; you need me on that wall," and only then did a small voice inside my head say, "Why do you sound crazy?" And it was because I had gone crazy. I think many of us are the same way; if you start companies or run early-stage companies, you have a problem with authority.

The whole reason you do this is you don't like having someone tell you what to do, and you may deeply resent it that these people you needed money from are not able to tell you what to do—that you didn't get to choose your own team. But mostly, it's just stressful starting a company. You don't have any money; you don't have any way to make money, and you can develop this siege mentality where it's you against the world, and you does not include your board, and it prevents them from being really helpful to you.

What really surprised me is I once told the board that something was going to take a little longer than I thought, and we were going to need more money. I really expected them to pull the plug, to just say, "It's over," and that is not actually what they said. Emily Melton said, "Actually, I know we're not supposed to tell you this, but we've heard this before. In fact, we hear it all the time that some took a little longer and took a little more money, so why don't we try to help you out?"

I had my dukes up, and then I said, "Oh." I don't think I actually started crying, but it's how I felt. What I want to tell you is that often I go on walks with CEOs where they start complaining about their boards, and they're doing this even though they have a product that doesn't work, no customers who actually want to buy it, um, employees who aren't that happy. The board is almost never the problem.

Like, if that is your main problem, something is wrong with you. You have gotten wrapped around the axle about the wrong issue. What helped me get through phase one rage was when Mark Singer told me, "You should just think about the board as the radio in your car as you're driving down the road. Maybe it's playing an annoying country western song, but you are still the one driving the car."

And that song, you can't turn it off, but just keep driving the direction that you're going to go. I started to realize that I was responsible for the success of the company because once, actually, I did something that the board had been on my case to do, and of course, I made sure that it failed because I hadn't seen Jason's presentation; I disagreed and didn't commit, and we executed in this half-assed way.

Then, I came back to them and said, "See, it didn't work," and nobody on the board remembered that it was their idea in the first place. They just looked at me like, "So, why did you do it?" Then, I realized that I was accountable either way. So, we were going to do it my way on most things.

We'll get to some areas where it doesn't get to be your way. But if you're in a situation where your board is driving you crazy, just remember that you're still the one in charge. If your product isn't selling, if your product isn't working, it's not their fault; it's your fault most of the time. If you have a board problem, that's not the real problem.

That is actually a picture of Mark Singer, and those are his kids. My kids were just halfway up Mount Rainier, um, where I got to a place where I could actually tell the board what was going on, what was really bothering me, and that's when the board stopped becoming an annoying song on the radio.

Because this job is hard as hell, and it's incredibly lonely, and half the time you're not doing a very good job of it, and you need someone to talk to. If you don't have someone you can tell the real truth to, um, it's just not going to work. I used to try to construct problems through the board almost the way you'd create a game for a child where it would be just hard enough to interest the child but not so hard that the child would become frustrated.

Then the board would help me solve these fake problems and as soon as the meeting was over, I'd go back to my real problems. But what you need to do is present it in all of its ugly, bizarre detail to them and include all the ways that you've been a jackass or weird or unfair so that they can actually address the real problem.

If you have enough faith in yourself and in them, you can get something amazing out of the board, and that's what I got with Mark. Before every board meeting, we went on a run, and he just said, "So, how's it going?" For the next 10 miles, I would just say, "Well, there's this, and there's this, and I screwed this up, and I don't know how to handle this, and I don't want anyone to know," but he would just listen.

Then he would say, "Well, what about this, and what about this, and what about that?" And it just really, really helped me. So, he had an interest that was similar to mine; we both enjoy running, um, and we just found a way to spend time with each other where we could really build enough rapport to talk about what was really going on.

That's a picture of a lodge at Mount Rainier. It's Paradise Inn—if you ever get a chance to visit Washington State, I recommend it. It's run by the forest service; it has these tiny little single beds, your cell phones don't work.

Our board went there with me; we drove a van, we busted out the sunflower seeds, we ate sandwiches in the back, and shooting the sh*t. I just felt like it was one of the best days of my life at Redfin because I got help on so many different things.

When I made this slide, I remembered that we had to come back to it. So, I want to talk to you quickly about recruiting a board. You've got to find people who really love your mission. The first requirement is not that they're a big deal; it's that they love what you're doing because the original challenge that I had with the board is that actually we weren't aligned on what the mission of the company was.

Some folks wanted us to just be a real estate website instead of a brokerage. If folks just aren't immediately connecting with that, there are so many people who are professional board members who are looking for easy money, who are trying to gauge whether you're successful so they can jump on the bandwagon.

But you want the people who just really believe that real estate is deeply messed up and that the mission of trying to reinvent it in consumers' favor is a totally good one. Because when the hits the fan, they're still excited about the business and you can talk to them about it because, like, if you have this weird like foot fetish, you want to find someone else with a foot fetish, right?

They're the only people who will understand you. In the same way, you need to find someone with a Redfin fetish or whatever your company name is fetish so that you have that thing in common. The other thing that you have to worry about is they have to listen more than they talk because most people have been in charge for a while; they haven't listened to anybody in ages.

I still remember we were interviewing this board member, and he just wouldn't stop talking. Afterwards, I was saying to James that I'm not sure this person is going to be able to hear me, is going to understand how our problems are different. James said, "He's a king without a kingdom; he's a king without a kingdom." And it's so true about half the people you meet when you're recruiting boards are folks who used to be in charge, who are used to having the world kneel at their feet and listen to their wisdom.

They aren't going to understand what's different about your problem; they're just going to apply everything that was relevant from their world, and the world just keeps changing. You need someone who's smart enough and who listens well enough to do that. Jeff Marwitz, by the way. What’s so funny? Oh yeah, Jeff Marwitz—that's even on the slide.

He is this incredible mensch. He is so good. If you are a Jewish person, it is like better than being Superman to be a mensch, and I am, and he is a mensch. He is wise and deep and soulful, and he will help you and he's opinionated. Like, you've got someone who's got this incredible resume. He's like, "Don't do it; bad user interface. All right, next guy."

I wonder what he says about me, but that's why I'm saying good things about him now. We've already talked about the first two items. The only other thing that I would say is just about diversity.

You know, we hired Selena as a board member; we had a female board member early in the history of the company, and she left because she went to another venture firm. But for years, we didn't have anyone but white males on the board, and I just didn't think the employees even knew who the board was.

They kind of come up in a special elevator, quickly get into a little conference room, yell at you, and then leave. But in this case, it seemed like the management team and really the employees deeply cared about it. When we brought on someone who was just damn good but also happened to be a woman, a lot of women came forward and said, "It really meant something to me; it meant a lot to me."

I know you've got a million problems to go solve, and diversity on your board might be the last one that you're thinking about, but I really, really wish I had done it sooner. You will get a better board; it will have a deeper perspective. Your employees will feel better about the company when you make that investment.

If I had to go back in time, I would have addressed that much earlier. One thing that Reid really helped us with, he gave a talk to the employees, excuse me, to some of the senior managers, and he was actually talking about the process he went through to hire his successor at LinkedIn.

I think he spent about 40 hours with Jeff Weiner, and that just seemed completely unreasonable, but it really gave me the leeway, the latitude to spend more time with board members. I used to think that they were so cool and I wasn't cool enough that I had to just hurry through it and make the best use of their time, but if they're not willing to spend hours and hours with you, potentially auditing a board meeting, which was really successful on our recruitment of Julie Bornstein from Stitchfix, they're not going to be there for you later on.

So, I would just make time yourself and make sure that the other candidate, that the candidate makes time to really get to know you and your business and hopefully some folks on your team. Because if you don't find yourself calling that person a lot, you're not getting your money's worth.

I call our board a lot because they actually really help me, and the only way I found people who could really help me was by slowing the process down and really spending time with those board members before we brought them on. I was always surprised that they were willing to do it. The ones who are not willing to do it, you shouldn't have them on your board anyway.

So, the thing that was hard for me in interviewing board candidates was that I had two impulses. One was to be impressed—just say, "Holy cow, you started E-Trade! I can't believe I actually didn't talk to the person who started E-Trade," just fake example, you know?

I was so busy looking ecstatic as they talked to me that when I debriefed with James or with Jeff and they said, "What'd they say?" - I'd be like, "I don't know, but it was really impressive." The other part of the conversation was me being impressive instead of saying what I want out of a board member, the problems that we're trying to solve.

I was just tap dancing my fanny off, and at the end of it, we'd exchanged no real information. During that interview, I really try to ask myself, "Am I listening, and am I explaining what I really want? Have I thought precisely about what we need?" Then listen to that question, then ask another question and another question.

So, I would just really try to be thoughtful about it. One thing that Jeff will offer to do for you that you should never accept from him—well, actually two things. I'm not going to tell you the first; no, that's a joke.

The one thing that Jeff will offer to do is reject board candidates for you. It's unpleasant, and he wants to make sure to close the loop. It is shocking how often you run into people you've rejected. You should do it yourself; you should take the time to do it yourself. I would put it on my to-do list, so just do it, um, because you're going to run into these people later on.

Actually, a lot of times when you're recruiting a board member later, they'll say, "Oh, well I know someone," and the hard thing about rejecting someone is most of these people are extremely successful. The moment you start talking to them, they assume they've got the job; they just start, some of them especially just assume that, you know, it would be such an honor—the distance between me and you is so vast that of course you want to work with me, and it's just a question of whether I want to work with you.

You sort of have to level set—this is going to be a process; several board members are going to interview you. Then you can blame other board members when, uh, you don't hire them. One thing that has really changed, this is Bob Milod from Priceline, and I do think there was a CA change in our board mentality when he came on board.

He was the CFO at Priceline, um, but also worked for a private equity firm. He is not a venture investor; he's not interested in having a good relationship with you so that he can get the next deal, and he is not as focused on growth at any cost.

So, let's talk about the board meeting very quickly. I said that you're mostly in charge and it's your fault if the company doesn't work out; you get all the glory if it does. There are some areas where the board has really focused governance responsibilities. They need to see the budget; they need to approve it; they need to go over any financial transactions where if you buy a company or do a financing.

They get to decide whether you keep your job. The things that I wanted to talk to you about—I used to feel because I wanted to be like that guy in Pretty Woman, Richard Gere, you know, in the movies they never say, "I'll think about it." They decide on the spot; you want to see him cool; you want to seem in charge; you want to seem decisive.

We've been talking about this for 45 minutes, and now, Glenn, what do you want to do? You say, "Do it," because it sounds good, but then you walk out of the board meeting, and you're like, "I don't know; I don't know." So now I say, "Thank you; that was really helpful; this has deepened my perspective. I'm going to send you a note in a couple of days and tell you what I've decided."

That's really important because, first of all, you reminded them that—what did George Bush say?—"You're the decider." Second, you've given yourself some space. If they've actually given you a new perspective, you need to account for that properly, and so just in general, I try to avoid making decisions on the spot. You want to favor speed and everything you do, but you should make the right decision, especially if you're talking about the board; it's a major issue.

The other thing that I've really, really gone to town on at Redfin—sometimes people say, "Well, we're doing this because the board wants it." You know, you want your management team to see the inner workings of the board. So, we actually have the whole management team at the board, and, you know, I want to do something, and the board wants to do something, and we all do it.

Then, it's just easier to say, "Look, I know this is a hard decision; we're going through some austerity measures here. We're doing it because the board wants it; don't blame me; the board wants it." Well, at that point, everybody knows who's really in charge. You know, you've disempowered yourself on an unpopular decision, so you could blame somebody else.

But now, the employees know that, you know, Glenn isn't the decider; Jamie isn't the decider; Scott isn't the decider—that they're citing the board a lot in their conversation. So I guess if I want to get my project approved, I need to get into a board meeting. That is toxic. The board is an adviser to the CEO and the management team. They are the ones who make the decisions on everything except the stuff on the left.

So Jeff—excuse me, Jason—talked a little bit about the values that he got from Amazon. I wanted to talk to you about what I've gotten from Amazon, which is documents, not slides. Documents are what we use for our board meeting; we have a business update that we present as slides, where there are the same 20 slides about the funnel, finance, you know, a slide on product traffic.

Um, but mostly, when we have an issue that we really want to dive deep on—and we choose two for each board meeting—we write a document because it forces you to think slower, it forces you to be more explicit in your thinking, um, and it forces you to tell sort of the whole story.

I really work hard with the executive team not to treat the board meeting like a tap dancing show because every executive wants to do well; we want to look good. But when you're trying to look good, you can't say what's really going on in this business, and that is the only proper subject of a board meeting.

One reason that I think we've been able to punch above our weight in recruiting board members is because we're so candid, because we actually engage on the issues that are affecting the business. It's a more rewarding job, I think, to be a board member when you're not treated like a rubber stamp.

So I use this documentation process as a way to tell the whole story of what's going on in the company because what happens at Redfin is really just one damn thing after another. You make a bunch of decisions, and then you look back on it when you have to account for all of it as one story that's supposed to be coherent and organic and holistic and say that doesn't make any sense.

Half the value that you get out of a board meeting occurs before the board meeting even starts because you've gotten everyone in a room; you focused on a really gnarly problem, and everyone has to agree on one version of the truth. When you do it in PowerPoint slides or Google Slides or whatever format you use, that's not a document; there is so much imprecision there.

There are so many different ways to narrate that, but when you lay it out line by line—this is what's really happening; this is what went wrong; this is what we're doing about it—you, as a CEO, first of all, have to understand it all, and so does everyone on your team. You get to that one very crisp version of the truth.

And often, by the way, we publish these documents out to the rest of the company afterwards, um, just because people want to know, "How do you think about that problem?" When we do that, it surfaces more dissonance where people are like, "I don't think of it that way; that's not the right statement," and then that helps us get even better at truth-telling and problem-solving.

One sports analogy: have you ever seen a soccer player come into a game in the middle of the game? Everybody else is all warmed up, but sometimes that soccer player, they just pass the ball to him like three times right in a row. They just kick it to him, he kicks it back, kick it to him, he kicks it back, and they're just trying to get him into the flow of the game.

So now, when I bring an executive in, I actually tell them—I used to just call on them randomly with the most bizarre, difficult questions and say, "What do you think?" and then they would stare. What am I doing? Now I say, "You know, when we get to this subject, the first person I'm going to ask is you, and this is the question that I'm going to ask."

I know we don't want too much stagecraft in a board meeting, but I've just found that that person is better able to concentrate and engage on the real issue if that first touch on the ball has been a successful one. So that's sort of the first order of business.

Then, the other thing that everybody knows in a Redfin board meeting is that when you're asked a question, there are only four possible ways to start an answer: "Yes," "No," "I don't know," or "Number." A lot of times, people want a very direct and crisp answer, and the way to sound direct and crisp is to stand and deliver.

"Yes, this is a customer satisfaction problem. No, we are not going to solve it right now because it costs too much money. How much is it affecting our business? We think it'll cost us $12 million. Why did you do it this way? I don't know."

"I don't know" is liberating. I used to want to be a know-it-all; I wanted to seem in charge, and I do have an amazing facility with a wide range of numbers about Redfin because I've been thinking about it for a long time. But what really convinces board members that I know what I'm talking about is when I admit that I don't.

Just so often, when I've said something stupid in a board meeting, it was to cover the fact that I don't know. It's really important to model that behavior in front of your team and just say, "That is a really good question; I don't know, but I'll find out; it can wait. If you don't know, don't speak."

Another thing that really helps our executives is, um, they bring in backup. This is coaching that I've given them. So, if you're the head of brand, and there's a brand survey we've done, does anyone in California really know how much they can save if they use Redfin? The right answer for me as the CEO is, "I don't know," but then I hear someone else rifling through the brand survey and saying, "The answer is actually 8% brand awareness in California, thank you."

So bringing those materials in gives people a way to be relevant in the conversation and to be very precise. It is not a memory test; nobody cares how you got the right answer; they only care if you got the right answer.

Actually, there's this one guy, Chris Rosy, our controller. Whenever I made a statement and I heard him rifling through papers, I had this massive panic attack because somebody would say, "What were our gross margins in Virginia?" I would say, "22%," and we'd move on. Then he'd say, "Excuse me, actually it's 24%, thank you Chris." And I'm glad he does that.

So just have people bring in what they need. On the follow-up, one of the things that you shouldn't forget to do is you shouldn't forget, if it was a good board meeting, to say so. You should tell your board members like they're managing you, but you're managing them too. If you're getting what you want out of them, you should tell them that because they flew all the way out there to meet you, and they're wondering, "How'd I do?"

That's all you're wondering too, but it's actually a really productive board meeting. You want to reinforce that. One of the things I really love about the board meeting—I don't know if you typed it on your phone, James; it feels that way because the cases are so weird—but James sends this massive email of bullet points and thoughts that I then share with the management team.

There is a premium in TV board meetings on saying the right thing at the right time; in real board meetings, there's a premium on getting the right answer. Sometimes board members will come back at you a day later or three days later and say, "I thought more about your traffic acquisition problem, and this is what I think you ought to do."

It's so much more helpful than what you come up with off the cuff. So especially if you think someone can be helpful on a particular topic, you can say, "I want to hear more from you on that topic." The other side of that is—and I'm almost done, by the way—the other side of that is just you should tell board members what you want to get out of a meeting.

You know, we had this one board meeting where the team had just killed itself, and we killed ourselves because we were eating it; we were not doing well, and the board let us know it. Then, at the end, I said, "You know, that really wasn't helpful." Then James said, "You need to tell us where you're coming from and what you want to get out of the meeting."

So now I spend a lot of time thinking about what do I want to get out of the meeting, and then coming back and saying, "Did we get that?" So, um, that's my [Applause] advice for.