Acrew Capital's Lauren Kolodny: why board members should lean into what differentiates them

Welcome back! We are thrilled to welcome renowned Midas List venture investor Lauren Kolodny to Above Board. Lauren is cofounder and Managing Partner at Acrew Capital where she leads the fintech investing practice. Lauren has been an investor and/or board director at organizations such as Chime, Gusto, Alumni Ventures and Brown University.

AB: Welcome to Above Board, Lauren. We’re honored to have you join us. You co-founded Acrew Capital. What were the principles on which you built the firm and how do these inform the perspective you bring as a board member?

LK: Our founding team at Acrew Capital spun out of a prior firm where we had all worked together. We recognized then that the five us were very values aligned and that operating in a firm without values alignment was near impossible.

Looking back, one of the things I found to be really special about that time was that here were five people with experience working together in the industry, who knew each other's strengths and weaknesses, and who deliberately chose to work together for a second time. I think it created a unique opportunity for us to restart and be really reflective about what we wanted to build.

So, our crew spent several days working with a coach to really build on our interpersonal relationships and to clearly articulate the values of our organization. This was really important to us because we shared a collective belief that the venture industry needs to be more mindful of values and culture. There’s this irony in the fact that VCs spend so much of their time thinking about the future, but as an industry, we are still quite culturally stuck in the past. We wanted Acrew to be firm that not only “funds the future but also lives the future.” We had a lot of data to suggest that a culturally oriented and values driven firm resonated with the types of founders we wanted to back.

And this was important to us because, for better or worse, venture has an outsized cultural impact. The number of professionals in the industry may not be that significant but our role in determining who gets funded and our influence in tech company leadership through our presence on boards, means the way we show up has reverberations.

So we try to be mindful of the power that we have as investors at Acrew. As one example, we hold the belief that diversity of perspectives drives the best outcomes. And so when we sit on boards, we try to make sure that there are unique perspectives represented in those rooms and that are heard. Sometimes we do this by representing our own unique perspective, other times we tee up potential independent directors to bring on board through our executive network (called the Crew of Leaders), and sometimes we do it by pushing for more representative data.

AB: How do you and Acrew think about taking board seats?

LK: We generally lead or co-lead seed and Series A rounds out of our early stage fund – and often take board seats. Occasionally, we’ll take board seats in inflection growth stage rounds out of our growth fund but, most often, we participate in those rounds and rely on the board leadership of strong co-investors.

AB: You previously worked at Google in the realm of product marketing. How did your time as an operator at a big tech company, but not in a founding role, inform the viewpoint you bring to the boardroom?

LK: My time at Google was very important to my foundation as a VC in a number of different ways. I worked very cross functionally, which gave me a lot of visibility into the purpose of different functional areas within a well run company and when they are needed.

One of my specific learnings - which I draw on frequently when supporting my companies - was the power of product led growth. I had the opportunity to lead B2B product marketing for the Google Drive launch. This was the early days of PLG but Google’s emphasis on collaboration really helped me see the power for how useful multi-user functionality in a product can create a real flywheel. This is still one of the areas I spend most time on with my companies.

FWIW, I still believe collaboration and product-led growth are under-tapped opportunities in fintech, which is why I often invest in companies that think creatively about this approach - exemplified by companies like Klar, Clara, Divvy Pay, Nala.

AB: Can you share about the first board you sat on and who taught you how to handle that responsibility?

LK: I was quite fortunate when at 23 years old I was asked to join the Board of Trustees at Brown University as a young alum. I found myself surrounded by people at the top of their fields - from Fortune 500 CEOs, to some of the world's most prominent investors, to prolific academics. I had crazy imposter syndrome at first - and it was a struggle to figure out what was my role and where I could add value. But I quickly realized that I could really lean on the fact that most of the other board members hadn't been at Brown as a student for at least 20 years. My unique perspective among that group meant that, not only did I have a lot to say proactively, but also that other board members would constantly ask me for my perspective.

What became clear was that as opposed to attempting to emulate the contributions of other board members, I had to focus on my unique value. Doing that made me more impactful.

I was also fortunate to have a lot of mentorship from so many amazing people on the board with me. For example, it was there that I met Theresia Gouw, who is now my co-managing partner and co-founder here at Acrew. We worked together on a number of projects and Theresia became a friend and mentor.

AB: You received an MBA from Stanford GSB. For the MBA’s (across schools) reading this newsletter who may want to sit on boards in the future, what do you recommend they think about as it relates to building relevant skill sets in this realm?

LK: As I think about the independent board members that sit on boards with me, there are some commonalities. All of them have been leaders in their respective functional areas or fields. The consistent thread when selecting board members to join companies is we are trying to bring in some deep expertise that is missing around the table. Smart generalists generally don’t fit the bill. That said, there are a very wide range of relevant areas of expertise that can lead to successful board placements.

Of course, board members may have founded and led their own companies, gaining valuable experience in early-stage growth. Others bring deep functional expertise, such as serving as a CMO or CFO in a relevant company. In other instances, independent board members have deep domain expertise with relevant networks in the ecosystem and deep knowledge of how stakeholders in industry interplay.

In essence, when we look for new independent board members in my companies, we look for leaders who have operated at the highest functional level within their organizations or domains. It’s not uncommon that they aren’t already on another board but nearly all of them have engaged with boards - at least as an executive or as an advisor.

Apart from one’s primary career, there are other things folks can do to build their “board resume.” First, for those aspiring to become board members of a venture backed startup, one of the most common early steps is to become an advisor to a startup. These roles are frequently a precursor to board roles and many mid-level and even, occasionally, early-career professionals serve in advisory roles for companies. Second, it’s not uncommon for recent MBA graduates to successfully position themselves for nonprofit boards - this can also be a good place to start.

Therefore, MBAs who know they want to eventually sit on boards should consider: 1. Becoming an expert in a function and/or domain; 2. Found a company; 3. Build up a board resume through advisor or nonprofit board roles; or 4. Join an industry like venture capital or private equity where board roles are common.

AB: How do you teach those on your team with less venture experience how to best contribute to a board?

LK: When new associates or early investors attend board meetings for the first time, I encourage them to focus on leveraging their expertise and unique perspective. Even if they have limited work experience – whatever domain knowledge, functional skills or unique lived experiences they have that are relevant to the company are always the first place to start providing value. Just as I discovered during my time at Brown.

For instance, individuals from a product background should prioritize deeply understanding the product roadmap of the company and strategically use their experience to share insight during discussions. Likewise, team members with a finance background can enhance their impact by thoroughly analyzing the company's P&L model before a board meeting and come prepared with thoughtful questions to actively engage in the CFO's presentation.

More seasoned board members and CEOs tend to appreciate when earlier career professionals have spent time to go deep on something and are self aware as to where they can be valuable.

I also encourage team members to stay abreast of industry competitors and related companies, providing important market context and research during board meetings. This proactive approach not only showcases their dedication but also enriches the board's discussions with relevant insights.

Beyond meetings, I advise team members to cultivate relationships with executives beyond the CEO, offering valuable support with analysis and research. This proactive involvement not only fosters rapport but also deepens their understanding of the company's operations, thereby enhancing their credibility within the boardroom.

AB: In your opinion, what is the biggest problem with the current state of boards and what can be done to solve it?

LK: I believe one of the most significant challenges with the current state of startup boards is that many of them wait too long to bring in independent directors.

Unfortunately, many companies wait until the pre-IPO stage to add independent board members, which can be problematic. Like any team, it's crucial to start building the board early and scale it alongside the company. Bringing new members on board just before going public can disrupt the cohesion of the “board team” at a critical juncture.

Independent directors bring invaluable perspectives and expertise, often gained from hands-on experience in managing or building companies. This unique perspective allows them to empathize with founders while providing an impartial viewpoint that aids in benchmarking the company's progress.

Adding board members earlier also widens the pool of potential candidates, including those with less prior board experience, fostering diversity in board composition and enabling the board to evolve alongside the company, with members growing in their roles and contributions over time. This approach not only enhances board effectiveness but also more seamlessly enables diverse perspectives.

AB: Thank you so much to Lauren for sharing such insightful perspectives. We’re excited for her to join us again next week to talk about how you approach boards specifically in the fintech domain. Until then, please share this newsletter with someone who you think may find it to be of interest.