Sunday, August 21, 2011

Bored Meetings vs. Board Meetings

One thing I've been thinking about for a while is how to make Board Meetings as effective as possible. If you want to read some great posts about the topic by people who've been to many, many more Board Meetings (and apparently Bored Meetings!) than I, check out these links:
In my opinion it's not that much about whether a Board Meeting is boring or not (but the little pun makes for a good headline so I used it too). It's easy to have a good time in a Board Meeting – you talk about a variety of business issues, you learn from other Board Members' experiences, people tell anecdotes etc. It happens rarely that I'm bored in a Board Meeting, but non-boring does not yet equal effective.

The questions that I often ask myself after a Board Meeting are: What are the real, tangible, actionable results of the meeting? Was it worth the time, usually easily 4-5 man days if you count everyone's traveling time, or could the same have been achieved in a 1-2 hour conference call? For SF Bay Area startups, holding physical Board Meetings may be a no-brainer because everyone is close by anyway. But in Europe, getting all Board Members into one room usually means that at least half of them have to spend a day traveling.

The root cause why it's often hard to give a clear, positive answer to the question above (whether the meeting was worth it) is the dramatic information asynchronity between the founders and the investors with respect to the startup's business. It's just natural that the founders know ten times more about their business, but if the information asychronity is too large, the founders have to spend too much time of the Board Meeting updating the investors. Then it becomes an update meeting. (That has its own merits, but running through numbers and current developments isn't something you need an in-person meeting for. In my experience, one-to-many as well as one-to-one conversations can just as well be done over the phone or Skype. Many-to-many discussions about complicated stuff is where the advantages of a physical meeting come into play.)

Also, if the investors aren't sufficiently in touch with the company it'll be hard for them to provide valuable input, and most of the ideas and suggestions they come up with will be things which the founders have already thought about themselves months earlier.

So the most important thing that you as a founder can do in order to enable an effective Board Meeting is to provide a detailed Board Pack before the meeting itself. The Board Pack should be sent out at least 48 hours before the meeting to give the investors a chance to get simple questions clarified prior to the meeting. The investors of course need to do their part as well, i.e. read the Board Pack carefully and clarify questions before the meeting. The idea is to get almost the entire "update part" done prior to the actual meeting so that you have the whole meeting for the strategic or tactical questions that you'd like to discuss.

80% of the meeting's time should be allocated to these 3-4 questions and the goal should be that you leave the meeting with a conclusion/decision on these questions, or at least with significant progress and clear next steps. That means you may have to politely interrupt people to refocus the discussion. If information asynchronity is the #1 enemy of effective Board Meetings, the human tendency to digress is enemy #2. You have to fight both.

Finally, if there are no important questions that you'd like to discuss with your investors, don't hold a Board Meeting. Do an update call instead. Usually there's lots of things to discuss, but don't force it.

One last point, pre-Board updates every ~ 2 months are not enough to keep investors in the loop. If you want your investors to really know what's going on (and thus enable them to be much more helpful), send out a weekly update email with KPIs (or a link to your Geckoboard :-) ) and information on last week's progress, current problems and next week's priorities. That weekly email can and should be very brief so that it doesn't cost you much time to write it, but even just a couple of bullet points can be immensely helpful if they are provided routinely once a week (as a company gets bigger, bi-weekly or monthly updates are sufficient but in the early days I think weekly works best). Just like the founders should do their best to keep the investors in the loop, the investors of course should do their best to stay up-to-date as well – follow the company on Twitter, subscribe to the company's blog, read everything that's written by and about the company and its key competitors, and participate in the discussions on the company's "Board Basecamp" (a Basecamp site set up for the company's founders and investors, something which many of my portfolio companies have done and which is very valuable).


Ryan Born said...

GeckoBoard seems great...any idea why they don't accept AMEX?

Christoph Janz said...

Ryan, thank you for your comment. It must be related to the fact that Geckoboard is located in the UK, but let me check!

Violeta Nedkova said...

This: "What are the real, tangible, actionable results of the meeting?"