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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Monthly Financials, Quarterly Board Meetings, Continuous Communications

Comments (22)

I’ve been writing about boards of directors some lately – both changing my behavior as well as thinking out loud as I explore reinventing how boards work for the book “Startup Boards” that I’m working on with Mahendra Ramsinghani. All fit in the context of continuous communications as I believe three things about early stage companies and their boards.

1. Board members should be actively engaged with the company on a continuous / real time basis.

2. Existing board meeting dynamics are often an artifact of how they’ve been done for the past 30 years.

3. The way most board meetings are currently conducted is a waste of time for management, significantly inefficient, and generally ineffective.

One of the very simple tactical things I’m shifting to is a totally different board rhythm. Historically, many of the companies I’m involved in have been on a board rhythm of meetings every four to six weeks. As they become more mature, these board meetings shift to quarterly, although many of them have mid-quarter update calls. The board meetings themselves are long affairs (even the monthly ones) – often lasting three or more hours.

At some point I’ll dissect one of these board meetings and explain all the things that are artifacts of the past. These artifacts are a result of the communication methods that existed 30+ years ago that required paper and face to face meetings and resulted in very structured communications. But for now, I’ll give you three specific things to change.

1. Separate the monthly financials from the board meeting. Send out monthly financials (Income Statement, Balance Sheet, Cash Flow) with a written analysis of them. This written analysis should be done by the CEO (or president / COO), not the CFO, and should be in English, not accounting-ese.

2. Have quarterly board meetings. These should be in person meetings with no laptops, smartphones, or iPads in the room. Give the people pads of paper to write on if they don’t bring their own (I don’t carry paper). 100% attention for the meeting. Arrange the meeting so you can have a dinner the night before or after the meeting. The meeting shouldn’t last more than four hours but should be fully engaged.

3. Provide regular weekly CEO updates, to all board members. The best entrepreneurs I know communicate regularly with everyone in the company and have a structured update process of some sort. The best CEOs send out short but focused weekly updates to their boards. These are not “templated updates” – they don’t necessarily fill in a set of things that they update each week. Often they are just a “sit in front of the computer and send out an email update” type of update full of substance, whatever is on the CEO’s mind, and requests for help. My favorites have typos and look like a blog post of mine (e.g. it looks like someone just wrote it rather than struggled over it for hours to get it just right.)

While my 2012 board meeting schedule is locked in, I plan to shift to quarterly meetings in 2013 for every board I’m on. I’m sure some of my co-investors will still want monthly meetings, but that’ll be up to the CEO to ultimately decide and I’ll commit to being in person for one a quarter, but fully engaged on a continuous basis (like I try to always be.)

  • James Mitchell

    The Board should decide how often Board meetings are held, not the CEO or any one person.

    “While my 2012 board meeting schedule is locked in, I plan to shift to
    quarterly meetings in 2013 for every board I’m on. I’m sure some of my
    co-investors will still want monthly meetings, but that’ll be up to the
    CEO to ultimately decide and I’ll commit to being in person for one a
    quarter, but fully engaged on a continuous basis (like I try to always
    be.)”

    In other words, my (Feld) way or the highway. If the Board decides to meet once a month, I will miss two of the three meetings and just show up four times a year.

    • http://www.feld.com bfeld

      James – read the paragraph again. I said it’s up to the CEO to decide how often he wants board meetings. I don’t think “a board” can effectively decide this in an early stage company nor is it practical to think there’s a consensus process around this at the early stage. If some board members want to meet monthly and that’s what the CEO wants to do, that’s fine – I’m just only going to show up IN PERSON once a quarter.

      Your interpretation of what I said is wrong.

      • James Mitchell

        I agree, you said it’s up to the CEO to decide how often he wants Board meetings. I think that approach is wrong, this decision should not be made by any one person, it should be made by the Board. If the CEO says, “I really don’t need a Board, let’s have the Board meet once a year,” would that be OK with you?

        Virtual attendance and physical attendance are very different. If the Board has decided to meet once a month and you’re unwilling to do that, then don’t be on the Board.

        A generic rule about how often a Board should meet in person is silly. Take a startup founded by two 19 years. Assume that everyone involved believes they need some adult supervision. Assume we are talking the first year of operations. Under those circumstances, meeting once a quarter in person is way too infrequent. On the other extreme, take a company in a mature industry run by a very seasoned and experience management team. Absent unusual circumstances, there is no way the Board needs to meet once a month.

        What’s driving this is that you don’t want to meet once a month in person, in part because you are so busy. But that is not necessarily what is best for the company.

        As for the no Blackberry/iPad rule — Steve Rattner was the auto czar
        for Obama, in charge of the GM and Chrysler restructurings. In his
        book “Overhaul,” he says that for meetings in the situation room in the
        White House, there is a guard who takes everyone’s mobile devices as
        they enter the room. There are no exceptions. (Except I suspect the
        POTUS can do what he wants.) The guard even puts Post-its on each device
        so he knows who the owner is.

        I certainly agree with you that communication should be continuous and current practices are based to a large extent on historic communication methods. One thing that has always puzzled me — Someone sends an email to ten people, and people respond by replying all. There could be 20 or 30 emails that go back and forth. Why don’t people use bulletin board software so that you can easily see the initial post and all responses in one place. Do many Boards use this? Do you have an opinion as to the best software/SaaS application for this?

        • http://www.feld.com bfeld

          If a CEO said “I only want to meet once a year”, I’d suggest that there is a reason to meet more often. I expect we’d have a constructive conversation about it. And ultimately, if he only wanted to meet once a year, I’d accept that as long as I supported him as CEO.

          I agree that virtual attendance and physical attendance are different. Re: if the board meets once a month and I don’t want to attend physically once per month, I still think it’s up to the CEO if he wants me on the board. And, if he doesn’t, I’ll happily get off the board.

          Re: “adult supervision” – I have a very different viewpoint on this and personally find the phrase “adult supervision” demeaning to entrepreneurs. More importantly, recognize that I didn’t say “only meet once a quarter” – I said only have a board meeting once a quarter. Continuous communication means that I – and every other board member – should have a continuous communication rhythm with the CEO, the founders, the leadership team, and optimally the whole company.

          This has nothing to do with how busy I am. It has to do with making sure that I’m spending my time, and the time of the people I’m working with, on high impact activities.

          Finally, if you use Gmail, then it basically looks the same way a BBS would (assuming the BBS was any good) as the conversations thread. It’s totally
          trivial to deal with the Reply-all threads on Gmail. There are numerous
          social entreprise software products now (I’m on the board of NewsGator,
          other examples of Jive and Yammer) – all are powerful approaches to broad
          communications across the company.

        • http://dombrovsky.me/ Valentin Dombrovsky

          You’re going to invest in a company that needs “adult supervision”? Oh, please, don’t say.

    • http://blogmutt.com Scott Yates

      Jeesh, James. Relax. Have a cup of coffee. Take a walk with the dog. It’s awfully early on a Friday spring morning to be filled with such animus. 

  • jusben1369

    This is interesting. I think you allude to this in your post. Traditionally, the value of quarterly BOD meetings for me was that it was a good “report card” moment. You looked at what you said you’d do and what you actually achieved and why. Then of course where you were going in the next 90 to 100 days. The BOD, removed from the day to day, doesn’t allow for “Well, we had more travel this quarter” or “the datacenter move took a lot more cycles than we thought”. Those things might be true, but the reality is now you’re not where you said you’d be. Even good management teams can fall victim to not holding other folks accountable as they should in case it’s their side of the house that stumbles next. 

    For an early stage startup though 90 days is a long time between report cards. Also, the management team is smaller so the BOD insights are more valuable than ever. Moving to a shorter cycle though risks falling into a trap of making them expanded “management” meetings – ie once a month. Once you do that though you find you’re losing that great report card process that should happen every 90 – 100 days or so. 

    I think that’s where you’re heading with “yes let’s tap the value of using the BOD as an expanded management team at this critical early stage” while not losing site of the value of very focused quarterly sessions to keep our eyes on the larger prize. 

    Side note: Enjoyed your talk at Square 1 in Durham two or so weeks back. I was the one guy in the audience who also had mad knitters in the family. 

    Justin

  • Sburwell

    At Alliance Health, we have been doing monthly 1 hour financial updates with key business highlights approximately the middle of the month—this seems to help keep the board updated on financial and business metrics….allowing us to make sure our quarterly in person board meetings become more strategic.

    We have been pushing hard to make the Quarterly more and more strategic and less about business unit updates.  This is working a lot better for me as CEO, the team, and the board.

    I like your idea of a less structured weekly update.  With some encouragement from the Board, I tried a more “structured” weekly format but felt very constrained in the formatting AND the feeling that I needed to really make the information well-organized.  I think the idea for a more open weekly communication with various thoughts…typos included…would be really helpful for me and the Board while not being too burdensome to me in terms of feeling like it needed to be very well written.

  • http://www.rentabilities.com/ Alex Cook

    We’re (http://rentabilities.com) angel/seed funded so we don’t have a formal board, yet. 

    In addition to meeting w/ advisers every 7-10 days I made the decision a few months ago to send out monthly investor updates.  Our updates have some structure to them with several headings: update, good news, bad news, product… “how you can help”.  Many of our angels are impressed with the data-driven, organized updates and have asked me to send those more often.The investor updates go out to everyone, bcc’d, so the feedback I get from each person is neutral.Sitting down and writing email updates is time consuming, but enormously helpful.  In addition to keeping your stakeholders updated on the struggles and triumphs of your startup, it also helps clear your head.More recently during a sprint I started sending out more free-form updates to close advisers on a weekly basis.  There’s nothing like having an awesome adviser or board member by your side when things get crazy (good or bad) – even if it’s just you typing out blog-post style updates there’s something magical about the clarity it can bring.

  • http://www.justanentrepreneur.com Philip Sugar

    I think quarterly financials as well.

    Weekly unstructured notes and monthly structured notes I agree with.

  • http://twitter.com/scottporad Scott Porad

    Brad,

    First, I love it all!

    Second, regarding, “2. Have quarterly board meetings. These should be in person meetings with no laptops, smartphones, or iPads in the room.”…I would add the following to achieve complete engagement: do not have them at the company office.  Get out of the normal space and minimize employee and workday distractions.

    Third, pushing distraction avoidance further, I would propose, though I could be talked out of this, to not have them during the workday…that they should either be in the evening or on the weekend.  This, for two reasons: a) again, less opportunity for distraction from other workday operations, b) get everyone out of their normal routine, thus get people out of thinking their normal thinking.  

    Going back to that second point, where out of the office to have them?  A restaurant would be bad, IMHO.  Maybe simply the conference room of another company might be good, although personally I would prefer something more comfortable and casual.  Several years ago, at Cheezburger, we had a number of executive meetings in a private “lounge” at the CEO’s condo…that was pretty nice…it was private and comfortable with a kitchen and bathroom.

    Oh snap…naturally, the best place to have it is the golf course!  (Just kidding.)

    Scott

  • DaleDavidson149

    It seems like a lot of the stuff that takes place at board meetings could be replaced by a private blog which is updated by the CEO on a regular basis. Board members could read it at their leisure and comment on issues they find important. 

    In person board meetings could be used to address questions that are difficult to address in writing.

    Brad, do see you any reasons why this wouldn’t work? 

  • iggyfanlo

    What I am reading between the lines:

    1. Board should get updates on financial and business concerns on a real-time basis. As experienced investors, they are owed this and can help spot important trends in cash flow like working capital increases or credit issues in AR
    2. CEOs are looking for help from their Boards not close supervision. The Boards presumably have chosen these CEOs rigorously and need to spend most of their energy helping the company with key BD or customer or other issues. If the CEO needs day to day supervision, you’ve got the wrong CEO.
    3. If you have a weekly email or similar communication like a private blog, Boards can spot issues very easily real time and Board meetings aren’t about problems, but about solutions.
    4. No blackberries, iPhones, iPads, etc. I’d agree if you had a real note taker or secretary present to send around digital notes. I think we all want more attention and presence from our Board members. We are all far worse at multi-tasking than we think we are. When Board members are thinking about something else, they aren’t thinking about the company issues and that’s a disservice to that company. I find that Board members are generally most attentive when things are going very well, and distant and disinterested when the company is struggling; exactlly the opposite of what’s needed.

  • http://www.stonebridgepartnerships.com/ Tim MacDonald

    Good point about current structures being relics of an earlier time, when technologies for information and communication were not what they are now.

    McKenzie seems to be struggling with this same reality in the context of organizational management.  See their Management Innovation Exchange.  www.managementexchange.com.  I especially recommend the video talk by Gary Hamel on Reinventing the Technology of Human Accomplishment.

    I think this realization that new technologies for information and communication create equally new possibilities for driving value creation will have radically re-constructing impacts on all aspects of Enterprise and Investment.

    Adaptive innovation in the optimal ways to structure positive interaction at the Board level in the context of high-growth start-ups seems like a good place to get some real traction.

    I see you constructing a new paradigm and a truly disruptive organizational technology.

    Good stuff!

    Tim

  • Grant Carlile

    : ) Heard you speak on multiple occasions about the communications between investors and founders, yuck. Localstake.com just revapmed and pivoted a bit to include communication. Think you’d like to know.

    • http://www.feld.com bfeld

      Yuck what? Not sure what you are yucking.

  • http://startupcfo.ca/ Mark MacLeod

    I technically sit on a bunch of boards, but as seed stage investors, I am fond of telling our teams when we back them that we don’t even have a company yet. We have a project will become a product and eventually a company once we prove the market. So, dispense with the fancy “company” stuff.

    But every founder I have backed is on skype and we ping each other/ talk to each other most every week.

    I have started to add a board structure for investments that are a bit further along. The structure and accountability (on both sides) works. 

    Agreed though, that traditional board meetings are time sucks. look forward to reading your suggestions for changing that when the book comes out.

    • http://www.feld.com bfeld

      Mark – right on.

  • Scott Cohen

    Thanks for this post.  I am going to send off to all the CEOs of companies I’m on the Board Of Directors. 

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