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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.)
tl;dr – Yes.
I’m on the email@example.com list for a number of the companies I’m on the board of. CEOs and entrepreneurs who practice TAGFEE welcome this. I haven’t universally asked for inclusion on this list mostly because I hadn’t really thought hard about it until recently. But I will now and going forward, although I’ll leave it up to the CEO as to whether or not to include me.
In an effort to better figure out the startup board dynamic, I’ve been thinking a lot about the concept of continual communication with board members. The companies I feel most involved in are ones in which I have continual communication and involvement with the company. This isn’t just limited to the CEO, but to all members of the management team and often many other people in the company. Working relationships as well as friendships develop through the interactions.
Instead of being a board member with his arms crossed who shows up at a board meeting every four to eight weeks to ask a bunch on knuckleheaded questions in reaction to what is being presented, I generally know a wide range of what is going on in the companies I’m on the board of. Sure – there are lots of pockets of information I don’t know, but because I’m in the flow of communication, I can easily engage in any topic going on in the company. In addition to being up to speed (or getting up to speed on any issue faster), I have much deeper functional context, as well as emotional context, about what is going on, who is impacted, and what the core issue is.
Every company I’m involved in has a unique culture. Aspects of the culture get played out every day on the firstname.lastname@example.org email list. Sometimes the list is filled with the mundane rhythms of a company (“I’m sick today – not coming in”; “Please don’t forget to put the dishes in the dishwasher.”) Other times it’s filled with celebration (“GONG: Just Closed A Deal With Customer Name.”) Occasionally it’s filled with heartbreak (“Person X just was diagnosed with cancer.”) Yet other times it is a coordination mechanism (“Lunch is at 12:30 at Hapa Sushi.”) And, of course, it’s often filled with substance about a new customer, new product, issue on tech support, competitive threat, or whatever is currently on the CEO’s mind.
As a board member, being on this list makes me feel much more like part of the team. I strongly believe that board members of early stage companies should be active – and supportive – participants. My deep personal philosophy is that as long as I support the CEO, my job is to do whatever the CEO wants me to do to help the company succeed. Having more context, being part of the team, and being in the flow of the email@example.com communication helps immensely with that.
There are three resistance points I commonly hear to this:
1. “I don’t want to overwhelm my board members with emails.” That’s my problem, not yours, and the reason filters were created for people who can’t handle a steady volume of email. If you are a Gmail user, or have conversation view turned on in Outlook, it’s totally mangeable since all the messages thread up into a single conversation. So – don’t worry about me. If your board member says “too much info, please don’t include me”, ponder what he’s really saying and how to best engage him in continuous communication.
2.”I don’t want my board members to see all the things going on in the company.” That’s not very TAGFEE so the next time you say “I try to be transparent and open with my investors”, do a reality check on what you actually mean. Remember, the simplest way not to get tangled up in communication is just to be blunt, open, and honest all the time – that way you never have to figure out what you said. If you don’t believe your board members are mature enough to engage in this level of interaction on a continual basis, reconsider whether they should be on your board.
3. “I’m afraid it will stifle communication within the company.” If this is the case, reconsider your relationship between your board members and your company. Are you anthropomorphizing your board? Are you shifting blame, or responsibility to them (as in “the board made me do this?”) Are you creating, or do you have, a contentious relationship between your team and the board? All of these things are problems and lead to ineffective board / company / CEO interactions so use that as a signal that something is wrong in relationship.
Notice that I didn’t say “all investors” – I explicitly said board members. As in my post recently about board observers, I believe that board members have a very specific responsibility to the company that is unique and not shared by “board observers” or other investors. There are plenty of other communication mechanisms for these folks. But, for board members, add them to you firstname.lastname@example.org list today.
Indulge me while I think out loud. I’m trying to decide if I like the phrase “poke people in the eye with the truth” or not. Help me by reacting to the following rant – good, bad, bullshit – and feel free to poke me in the eye with truth if you’ve got some, just give me a hug at the end.
Last week, at the Startup America Regional meeting, I got into a conversation about the role of state and local government in the development of startup communities. I went on my typical rant about how entrepreneurs have to be the leaders and government is a feeder to the startup community. I talked about a few things government can do that have a positive impact and a number of things government does that hurts startup communities. More specifically, I talked about specific types of people in government and their roles, including the people with an “economic development director” title (or something like that – who I’ve come to learn are called “ecodevos” which makes me think of Devo and the B-52s and then my brain goes somewhere completely else other than startup communities and government.)
One of the people I was talking to said “that’s all well and good, but I’m not comfortable telling my fill-in-the-blank-with-a-government-title person this stuff. I’m concerned they won’t respond positively to this. I strongly agree with you on what your saying, however. How should I approach this.”
I responded that “sometimes you just have to poke people in the eye with truth.” Be blunt. Be direct. Be firm. Don’t be an asshole – just say it like you see it. And if they think that makes you an asshole, that’s their loss. And when you are done, give them a hug so they know you care and are trying to be constructive.
I carried that line around with me for a week. I observed myself (which is deliciously meta) poking people in the eye with truth and then giving them a hug. My animal spirit, according to Amy when she’s in an earthy crunchy woowoo moment, is a giant polar bear. I like to think of this as the warm, cuddly, lovable version of a bear – the one that won’t crush you when it hugs you. Somehow these two thoughts merged together in my head and continue to circle around.
I’m at Venture Capital in the Rockies today. This is our annual Colorado VC / entrepreneur thingy. Last night I had dinner with a bunch of entrepreneurs who didn’t have dinner plans. It was last minute and a lot of fun. At the end of the dinner we got into a great conversation about the state of the local VC community and I was characteristically blunt about what I thought had happened, was going on now, and would go on in the future. While I have no idea if I’m right about the future, I made the strong assertion that it doesn’t actually really matter that much given the incredible underlying startup community and incredible entrepreneurial talent in the region.
While on the surface there’s plenty of political correctness about this conversation, and lots of “we need more VC money”, which I’m sure will be echoing in the hallways at VCIR today, I realized that I was once again simply asserting my belief that this didn’t really matter. At dinner, I wasn’t poking any VCs in the eye with the truth since there weren’t any there, but if they had been, I’m sure that’s how they would have felt I was behaving. It probably wouldn’t have been comfortable, but if they’d been willing to respond and challenge my assertions, it would have been a robust conversation.
I’ve got plenty of other examples of this from the last week, but you get the gist of this. Is “poke people in the eye with truth” a good phrase, or just nonsense?
Today’s “founder hint of the day” is to create an email address called email@example.com and have it automatically forward to all the founders of your company.
I interact with a ton of companies every day. For the ones we have a direct investment in via Foundry Group, I know each of the founder’s names (although with 40 companies, at age 45 – almost 46, there are moments where I have to sit quietly and think hard to remember them.) For the TechStars companies, especially early in each cycle, I have trouble remembering everyone’s names until I’ve met them. And for many other companies I have an indirect investment in (via a VC fund I’m an investor in) or that I’m simply interacting with, I often can’t remember all of the founders names.
Ok – that was my own little justification. But your justification is that as a young company, you want anyone interested in you to be able to reach you. While firstname.lastname@example.org is theoretically useful, in my experience very few people actually use it because they have no idea where it actually goes. On the other hand, email@example.com goes to the founders. Bingo.
We’ve been using this at TechStars for a number of years and it’s awesome. I’ve set up my own email groups for many other companies, but this morning while I was doing it for another one I realized that they should just do it. Sure – there’s a point at which the company is big enough where you probably don’t want to have this list go to all the founders, or there are founders that leave, or something else comes up, but when you are just getting started, be obsessed with all the communication coming your way and make it easy to get it.
I had two similar experiences last week where I heard from employees of two different companies that I’m on the board of. In each case, a senior exec said something like “I heard the board wants us to do blah.”
I was in each board meeting and the board most definitely did not say “we want the company to do blah.” Rather, in each case there was a discussion about the topic in question. In one of the cases consensus was reached quickly; in the other there was a robust discussion since two of the board members disagreed and the CEO wasn’t sure what he wanted to do. Ultimately in that case as well there was consensus.
In each case I asked the executive what he’d heard back from the CEO. I got two versions of “the board had a discussion, there was a lot of disagreement, but the board wanted us to do blah.” I then asked, as non-politically as I could, “Do you think CEO wants to do that?” In both cases, the answer was “I’m not sure, but he knows the board wants that.”
I think this is a brutal communication mistake on the part of each of the CEOs. I’ve seen this many times over the past sixteen years since I stopped being a CEO and started being a board member. In each case the CEO is abdicating some responsibility for the decision. In the worst situation, the CEO is blaming the board for a decision and ultimately setting up a very negative context if the decision is an incorrect one – as in “see – I didn’t want to do this but the board did – so it’s not my fault.”
I’ve come to believe that the only real operating decision that a board makes is to fire the CEO. Sure, the board – and individual board members – are often involved in many operational decisions, but the ultimate decision is (and should be) the CEO’s. If the CEO is not in a position to be the ultimate decision maker, he shouldn’t be the CEO. And if board members don’t trust the CEO to make the decision, they should take one of two actions available to them – leave the board or replace the CEO.
In one of the cases, I asked the executive “if I told you the CEO was strongly in favor of the decision, would that impact you.” The response was a simple one: “yes – I’d be much more motivated to make sure we did it right.” I smiled and reinforced that the CEO was in fact supportive, which I think was a relief (and motivator) to this particular executive.
In my leadership experience, people really value when a leader takes responsibility for a decision, even if it turns out to be an incorrect one. CEO’s – don’t be the guy who says “the board made me do it.”