The one thing that needs to be on every board agenda right now

A look at the economy, state of the startup industry, and what board directors should be thinking about AI

What you probably already know: BoardReady, an organization that works to diversify boards by preparing and connecting women and diverse candidates to search firms, hosted a discussion Tuesday at the World Trade Center Seattle that I was fortunate enough to attend. Speakers were Deanna Oppenheimer (BoardReady co-founder and chair of IHG Hotels & Resorts, director at Thomson Reuters and Slalom), Laura MacNeil (regional president, PNC Bank, director at Seattle Aquarium and Seattle Chamber) and Lisa Nelson (board director at Destiny, Astra, Seattle Bank, and Brooks Running). The conversation was wide-ranging but here are some key takeaways:

On the economy: MacNeil: “The consumer has been keeping us going. Margin pressure is happening in companies just a little bit. But the consumer is choosing experiences over products,” she said. Just look at the Taylor Swift effect. Middle and high-end consumers are in a good place. “Now the lower end consumer is kind of in trouble,” she said. “Rates are really scary for them. It’s hard to buy a house.” When it comes to the Fed cutting rates, “one rate cut isn’t going to do anyone any good. It will take three,” she said. And the Fed isn’t like to do a massive reduction right before the election.

On startups: Nelson: While the economic environment has been challenging, it’s actually been healthy for some industries, particularly startups. “It’s sort of brought us back to this discipline and focus that you need a sustainable business model,” she said. For a while there, it was just “growth at all costs,” she said, “and you can just create a company that’s, say, reimagining salad delivery and getting users but doesn’t have a sustainable business model, that’s over.”

On AI: Nelson: “I will say that AI and cyber (security) need to be on every agenda at every board meeting. You can’t afford to be in denial or be silent on this topic anymore,” she said. Where the tech industry in general was once disrupting other industries, now AI is disrupting tech companies. “You can’t afford to bury your head in the sand. You have to be proactive,” she said. Companies are starting to hire Chief AI Officers. These need to be people who are decision-makers with real power, she added.

On nonprofit board work leading to for-profit boards: Oppenheimer: “We’ve all been on these boards, the ones where you’re picking out the napkin colors for the school fundraiser. Those aren’t going to lead to a for-profit board,” she said. But if the nonprofit is a multi-million dollar business in a complex or risky space, that can become a bridge.

On the power of three: Some studies have suggested it takes three women on a board before they stop being a token and start just being board members. Oppenheimer: “That’s why in Europe and the UK, they have this guideline that says you need a third or more diverse candidates on boards. Nelson: “I would probably agree with that but I would also say it takes someone to be the first. If you’re always waiting for a board with at least two other women, you’re going to be waiting a long time,” Nelson said.