Thursday, 26 June 2008
All a Board
Yesterday I sat fuming on the big red Number 33 bus as it crawled agonisingly slowly through traffic, conspiring with the workmen digging up the road to make me late for my monthly Board meeting. Ah yes, the dreaded monthly Board meeting. Something for you to look forwards to once you have taken money from external investors!
When I talk to entrepreneurs about raising VC money, one of the things that sometimes puts them off is the idea of having the dreaded monthly board meeting with their VCs. I don’t think VCs realise how much of a hurdle that is for the average start up guy and how for some the heart sinks and stress levels rise as that time comes round again.
The way the entrepreneur sees it, if you have sweated blood and hung your reputation out there to get your company off the ground, hustled and bustled to kick it in to life, ducked and dived to keep it alive, it can be really galling to be sitting opposite some guys who turn up once a month, ask what the name of your company is again and then proceed to tell you everything you are doing wrong.
In reality, the experience depends hugely on you, on how much you prepare, on what your investors are like and what motivates them.
Preparation is key. When you guys were tucked up in your beds last weekend, I was up at 7am on Sunday morning preparing the monthly Board pack. Your Board pack should include a standing agenda, the CEO’s briefing note, the monthly management accounts, last months minutes and a dashboard showing the key metrics that drive your business at a glance. Putting the Board pack together is a team effort.Various people provide their input and I spent about 6 hours a month reviewing it, writing bits and putting it all together. It should be consistent from month to month, professionally put together and delivered to all interested parties on time every month. Don’t “wing it”! Preparation & professionalism will make for positive Board meetings.
I tend to write a 3 page Board briefing note and I find it a useful way to stand back and have a think about what we’ve done and what we aim to do next month. As an entrepreneur, you and the team tend to hustle day to day, jumping from one thing to the next so one of the real advantages of the monthly Board meeting is that it makes you stop and think. You put on your strategic hat. You look at every aspect of your business from micro details to macro trends. You look at all the financials and other key metrics. Board prep is your monthly stock take and it’s very useful.
However despite all this preparation the experience still depends hugely on what your investors are like. Smart or stupid? Aligned with each other or squabbling? Do they do their homework – do they read your Board pack? We had a new investor at yesterdays Board meeting (welcome, Ms NewMoney :-) and shockingly she had actually read my Board note and marked it up in yellow marker with margin notes and so on. Blimey – glance at it by all means, but don’t get carried away!
In a previous company we had a “shouty” investor on the Board. His one tactic was to be calm and level headed and then at some point just turn on someone and start shouting about something, anything. He was very, very smart and very, very successful in his own right but it made for completely useless Board meetings from my perspective. Everyone was stressed in the run up to the Board. Everyone was waiting for him to explode at the start of the meeting. Everyone was angry by the end of the meeting. So if you’ve got one or more of that type of VC on your Board then, boy, you’ve got a problem.
But if you’ve got a good dynamic, like we have, and VCs who know what they are doing then the monthly Board meeting can be really useful for a start up. New ideas and contacts emerge, you are grilled on some points, patted on the back on others. You take stock regularly instead of just rolling from one thing to the next.
So overall, I think start up guys should get in to the habit of having regular, structured monthly Board meetings with at least one outsider on the Board as early in the process as you can. It’s two hours well spent (or in my case one hour thirty minutes because of that blasted big red bus).