How To Communicate with your Investors between Board Meetings

Posted on May 1, 2010 | 66 comments


Running the “Agile” Board

Most early stage startups having monthly board meetings. I normally recommend 8 meetings per year. It makes no sense to meet in August or December due to travel schedules of most investors. You can do calls if need be. And I often recommend that board meetings be every 5 or 6 weeks rather than 4 to give enough elapsed time for stuff to actually happen between meetings. Quarterly is too few for an early stage business.

But that isn’t what this post is about. This post is about what happens BETWEEN board meetings.  And most companies don’t do enough between board meetings.  Doing nothing between board meetings to me is like running the “waterfall software development process.”  We all know that modern software companies run on the “agile” development process by having short release cycles and frequent communications.  Boards will thrive on this, too.

For the record, this is not a secret, coded messages to companies for which I am on the board! A prominent startup CEO in NYC wrote me a private message telling me that this was an issue he was struggling with. He has high-profile board members and was wondering what do communicate to them between meetings. This is written for him and for anybody else grappling with the same question.

First, let’s look at the “normal” board meeting. I ran board meetings as a startup CEO for more than 8 years. I didn’t love most of them. I found that too often it was an update meeting for investors rather than a meeting for my company to get value. I’ve written before about how to turn this equation around and run more effective board meetings. If you want to prevent board meetings simply becoming investor update meetings? If so, you need to do a better job of communicating between meetings so that they always feel well informed.

For starters, don’t assume that everything I say here is what your investors want between meetings. I suspect many of them do but the best rule for any communications is to agree expectations. Make sure to ask them what they want.

VC’s Want to Help!

To understand what most VC’s want between board meetings I think it’s useful to start with a quote from Mark Solon‘s blog for which I’m in complete agreement (along with agreeing with his entire post, which was brave, honest and accurate)

“The overwhelming majority of VCs I’ve worked with get up in the morning and think about how they’re going to help their portfolio companies that day.”

That’s it. Most VC’s want to help. Most don’t immediately know how. They mostly understand your company, your customers, your competitors and your market but never as precisely as you do.  So help your VC’s help you.  Here’s how:

Intros

So taking Mark Solon’s comments into context, this is what most VCs want to help with most of the time.  VCs know lots of people.  They network with other VC’s, other startups CEOs, larger industry players, journalists, potential executives looking for their next jobs, service providers such as venture debt providers, etc.

And let’s be honest, other than money and coaching most VC’s add little value to your company strategy.  I’m not trying to demean VC’s – I think it’s just reality.  And deep down they know this.  Yet they WANT to help.  So the best way they can do this is by introducing you to people who can help you succeed.

But often they don’t know the right people and therefore you often get a string of introductions of which some are awesome and some are unfocused.  The unfocused ones add obligations to you.  They don’t do this on purpose.  The best way to get the Glengarry leads is to tell them whom you want to meet.  Here’s what I recommend:

  • Create a Google spreadsheet listing your top customer prospects, biz dev prospects and other companies you would like to meet.
  • Have a column for “want to meet now, in 3 months, in 6 months, etc.”.  Listing the future “meets” will help them understand your future roadmap / thinking but will help avoid getting dropped into an exec meeting from which you’re not ready
  • Have a column for board members / investors to put their names against whom they know.  This will help because no investor wants to be the one without their name against anybody.  VC’s compete amongst each other to show that they aren’t the ones not adding value (a nice double negative, but true! ;-))
  • Have a space where you say, “please add other useful intros you feel you could make” and encourage them to add more names
  • Make sure to politely remind investors to run intro’s by you before sending them out.  We want to help.  We don’t want to be unfocused.  But most VC’s are “intro machines.”  Help them to be well behaved.  Help them to follow your process.  If you’re polite and persistent they will – and they’ll appreciate it.
  • Make sure to send a monthly email to all board members / investors with a link to your spreadsheet saying, “I’ve made a few updates.  I’d be grateful if you would quickly check the spreadsheet to see how you could help.”  We will not check proactively without a reminder.  We’re busy.  We want to help.  But we barely get through all our email let alone log into online spreadsheets.
  • Make the spreadsheet short and focused.  The longer it is the less likely we’ll read and help.  Feel free to have color coding for each member with companies for which you think they might be able to help with intros.
  • Finally, make sure you print out the spreadsheet and quickly walk through it toward the end of your board meeting (it’s not part of the strategic discussion – don’t lead with it).  This is partly to help you get the intro’s you need while you’re all in the room.  It’s party to remind board members that you walk through it each board meeting and they’ll know if their name is never on it.  It will help you to get them to remember to update it between meetings.
  • Publicly thank any board member in your board meeting for an intro that led to something spectacular.  I hate to sound dumb, but VC’s are just like any other people and human behavior is predictable.  They work hard to help you succeed.  And the reality is that they’ll never say they want recognition but it’s nice to be recognized when you went out of your way and it paid off for somebody.  That small recognition will help you get a bit more out of your VC’s relative to other boards they sit on.  I know any VC reading this will be wincing and thinking it isn’t true.  It is.  We’re all just grown up big kids who operate the same way we did when we were young.  Recognition is Pavlovian.

Talking about you appropriately in the right settings

The other thing that VC’s need between board meetings is a reminder of all of the key particulars on your company.  They mostly get what you do and whom you compete with but they can’t keep up with the constant changes.  Make sure you have a simple elevator paragraph of what you do.  It’s not a mission statement.  It’s a 3 paragraph statement of what you do.  It’s the kind of thing you’d give to your PR company if you could afford one.

Having these paragraphs in the hands of your investors will help ensure that they position you correctly when they talk to all the important people they see.  If you’ve ever heard a VC introduce you to somebody and describe what you do, you’ll know why you need this.

I also think it’s a good idea to have a competitor matrix that shows your key competitors and how you feel you stack against them +/-.  Unlike the intro Google spreadsheet for introductions, this isn’t something they’ll edit so don’t make them log in to get it.  I would send this out quarterly.  Have a column against each competitor for “recent news” where you have a one paragraph update on your competitors movements.

  • Knowing who the competitors are will help the VC with positioning you.  It will help in your board meetings because you shouldn’t spend tons of time talking about this in the board meeting.  You can talk about “what to do about competitor moves” rather than reminding them who your competitors are.
  • Don’t send with board pack.  Sending with all the other board materials will ensure that it is read in 30 seconds and not properly digested.

Positioning your progress correctly with their partners

The other big thing investors want to do is know how to talk about you with their partners.  Most partnerships are exactly that – partnerships.  We need to be sure we’re not surprising our partners with negative news and want to share the positive stuff also.  Make sure your investors are crystal clear about the things that their partners are going to ask them.

  • Partners will ask about “recent high profile news” that might affect the company.  If Apple announces their OS4 and it affects data gathered from the iPhone and you’re using that data – assume their partners will ask how it affect you.  Or if you’re a mobile ad network and they announce iAd – same thing.  Whenever a big announcement affects you I recommend you send your board / investors a quick email saying, “here’s the iAd announcement and how we currently think it affects us.”  Be honest about what you know / don’t know.  They will be asked by their partners.  They will appreciate your proactively telling them.  They will likely forward your email to their partners.  Make sure when you write it you assume this.  Obviously you’ll write  ”please keep this confidential” but don’t assume it won’t accidentally leak just a little bit.  Be prudent.
  • Make sure all board members / investors are clear when you think you’ll run out of cash.  This is the single biggest thing they shouldn’t be surprised about.  Even it it’s 15 months away they need to know when you think you run out and when you think you’ll need to be fund raising.  Constantly remind them of these dates.  They need to plan and they won’t want to surprise their partners.

Showing up at board meetings ready to contribute

If you want your board members to show up at the board meeting ready to contribute then you need to send out board materials 72 hours in advance.  Your board will say 1 day is fine and 2 days are plenty.  They’re not.  People get busy.  Most of them will read your board pack 30 minutes before the board meeting.  So they have no time to think about it, read your numbers closely, have a quick phone call or two with you about things and generally prepare.

If you can get it done the day before why can’t you get it done 3 days before?  Send it early and make sure to continually remind people politely that you expect it to be read entirely before the meeting.  If you want to be super prepped – call each board member for a 10 minute chat 1 day before the board meeting to chat about anything they saw in the board pack.

I know it sounds like overkill.  But if you’re not regularly talking with your board members anyways that’s probably a problem.  And having this pre board meeting really quick chat will make the board meeting more effective.

Update Notes – Your Board “Sprint” Process

I think the best way to keep your board members generally updated is to have a 1-page, bullet point set of notes that you distribute via email every 2 weeks.  It should be inline in the email rather than a document attachment.  It should be MUCH shorter than this post so your board will actually read it rather than skim it.

  • I recommend bullet points because it breaks up long text and makes it visually easier to read
  • I would break up your section into three categories: major achievements in the past 2 weeks, plans for next 2 weeks, things we could use help with
  • Make it clear to board members that it isn’t an obligation that they consume every one of these but that you want to produce so people will feel  a lightweight sense of what your company has been up to
  • I know it will seem like overkill.  If you keep it high-level enough it’s not.  It will help you better with planning, it will force you to make some commitments and it will help your board feel informed.
  • Think of it this way:  if having your development team work this way through sprints, why not board notes?  Meeting every 6-8 weeks with no interim communication is like the waterfall software development process!

And Finally – work the phones!

A lot of CEO’s ask me for standing “update” phone calls.  Most CEO’s know that I hate the formality of these.  If a board member is on 6 boards imagine how much admin it gives him/ her to have weekly update calls.  But I DO love to speak to the CEO’s all the time.  Often, but impromptu.  Get in the habit of calling board members frequents for quick updates or to ask for quick advice.

Resist the temptation to talk for a long time.  If you get in the habit of calling and getting off within 10 minutes then your call will always be welcome.  Not everybody works this way.  And some people are fine with standing meetings and following a process.  Me, not so much.  So make sure to ask your board members what they want.  I suspect many would say, “we don’t need to speak on the phone all the time.”  But trust me, it’s like vitamins – it’s good for them.  And you.  So make it happen.

That way board meetings will be there to talk about what REALLY matters since you’ve gotten all of the routine kibitzing out of the way.

UPDATE: Having had great feedback on the topic from Babak Nivi and Brad Feld I wrote a short update to The Agile Board.

  • http://giffconstable.com giffc

    Useful addition to the thoughtsphere around this issue. A little diamond in there that caught my eye was about intros: listing not just the people you want to meet now, but the people you want to meet later. Helps you control the timing *and* makes sure your investor doesn't think you're an idiot forgetting about an important and obvious target. Many VCs make snap judgements, so don't allow a negative, even if erroneous, assumption to form.

  • http://giffconstable.com giffc

    Useful addition to the thoughtsphere around this issue. A little diamond in there that caught my eye was about intros: listing not just the people you want to meet now, but the people you want to meet later. Helps you control the timing *and* makes sure your investor doesn't think you're an idiot forgetting about an important and obvious target. Many VCs make snap judgements, so don't allow a negative, even if erroneous, assumption to form.

  • lisahjorten

    Thank you for a great post. I had the exact same experience with board meetings in my last company. There was a sense that some of the board members (not all) parachuted in for the meeting, reading our carefully prepared board report as they were coming in for a landing. It was frustrating to get advice that was clearly out of context with the real workings and progress of the company. Those who I was able to talk with on a regular basis were with it. The others… not so much.

    I have also been an investor in privately-funded companies that don't report at all. See my post on What Investor's Want to Know, http://bit.ly/dt3zNo.

    Your points on recent news and cash burn are favorites. It irks me to no end when a company says everything is great and then the next communication is a capital call or announcement of a new funding round! Even the worst finance guy knows what the cash burn is. This is simple math that can be done on the back of a napkin. And, regarding news — even if it's BAD news, tell us about it before we find it on our own. It just feels better that way.

    Overall, great ideas and suggestions for topics. I'm going to have a new template built a template around your topics and have it added to our InvestorUpdate templates list.

  • lisahjorten

    Thank you for a great post. I had the exact same experience with board meetings in my last company. There was a sense that some of the board members (not all) parachuted in for the meeting, reading our carefully prepared board report as they were coming in for a landing. It was frustrating to get advice that was clearly out of context with the real workings and progress of the company. Those who I was able to talk with on a regular basis were with it. The others… not so much.

    I have also been an investor in privately-funded companies that don't report at all. See my post on What Investor's Want to Know, http://bit.ly/dt3zNo.

    Your points on recent news and cash burn are favorites. It irks me to no end when a company says everything is great and then the next communication is a capital call or announcement of a new funding round! Even the worst finance guy knows what the cash burn is. This is simple math that can be done on the back of a napkin. And, regarding news — even if it's BAD news, tell us about it before we find it on our own. It just feels better that way.

    Overall, great ideas and suggestions for topics. I'm going to have a new template built a template around your topics and have it added to our InvestorUpdate templates list.

  • dshen

    This post was just what I needed. Amazingly I only have one startup who has prepared for my usual “I'm visiting XYZ company and am going to talk you up” email, to which he ALWAYS replies with current company info and pitch talking points. Must get my other startups doing this more.

  • dshen

    This post was just what I needed. Amazingly I only have one startup who has prepared for my usual “I'm visiting XYZ company and am going to talk you up” email, to which he ALWAYS replies with current company info and pitch talking points. Must get my other startups doing this more.

  • inboulder

    “He has high-profile board members and was wondering what do communicate to them between meetings.”

    what to

    “If you want to prevent board meetings simply becoming investor update meetings?”

    Do you

    “Doing nothing between board meetings to me is like running the “waterfall software development process.” We all know that modern software companies run on the “agile” development process”

    FYI: The 'waterfall' vs 'agile' dichotomy is now generally considered bunk in developer world, the cool kids don't talk this way anymore.

    “But most VC’s are “intro machines.” “

    I think they want to be seen that way, but realistically, VCs are not as well connected as they think, and hence not particularly helpful beyond the cash. A good test of a VC is whether they can get the CEO of a fort 500 on the phone. (with whom they have no prior contact or connection)

  • inboulder

    “He has high-profile board members and was wondering what do communicate to them between meetings.”

    what to

    “If you want to prevent board meetings simply becoming investor update meetings?”

    Do you

    “Doing nothing between board meetings to me is like running the “waterfall software development process.” We all know that modern software companies run on the “agile” development process”

    FYI: The 'waterfall' vs 'agile' dichotomy is now generally considered bunk in developer world, the cool kids don't talk this way anymore.

    “But most VC’s are “intro machines.” “

    I think they want to be seen that way, but realistically, VCs are not as well connected as they think, and hence not particularly helpful beyond the cash. A good test of a VC is whether they can get the CEO of a fort 500 on the phone. (with whom they have no prior contact or connection)

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  • http://bothsidesofthetable.com msuster

    VC's ARE intro machines. But your point is taken – the intros might be to the wrong people! Thus, controlling which intros your VC's give you is important. Otherwise they become obligations that bear no fruit.

  • http://bothsidesofthetable.com msuster

    VC's ARE intro machines. But your point is taken – the intros might be to the wrong people! Thus, controlling which intros your VC's give you is important. Otherwise they become obligations that bear no fruit.

  • http://technbiz.blogspot.com paramendra

    A very helpful, thorough blog post. I really liked how you shared why you wrote this blog post in the first place.

  • http://technbiz.blogspot.com paramendra

    A very helpful, thorough blog post. I really liked how you shared why you wrote this blog post in the first place.

  • http://ideas8bottom.blogspot.com/ anshul gupta

    very nice post.

  • http://ideas8bottom.blogspot.com/ anshul gupta

    very nice post.

  • http://twitter.com/mlevison mlevison

    Mark – Nivi is right:
    - short feedback loops is the principle it leads to the practices you mentioned: bi-weekly releases, iteration demos, …

    Other key principles:
    - transparency and honesty begets daily standups; better, more frequent communications; …iteration demos
    - respect for people

    The practices are important but when inventing new ones I always go back to the underlying principles.

  • http://twitter.com/mlevison mlevison

    Mark – Nivi is right:
    - short feedback loops is the principle it leads to the practices you mentioned: bi-weekly releases, iteration demos, …

    Other key principles:
    - transparency and honesty begets daily standups; better, more frequent communications; …iteration demos
    - respect for people

    The practices are important but when inventing new ones I always go back to the underlying principles.