8 Tips To Get the Most Out of Your Investors and Board

Posted on May 27, 2013 | 15 comments


Rob Bailey is the CEO of DataSift. He wrote a post this long weekend on how he manages the board of DataSift.

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You should read it.

More importantly if you don’t know DataSift but have the need to process real-time social data or historic data it’s worth checking them out. It’s valuable to any business for marketing, customer research, product development, market analysis, etc.

In Rob’s post he asserts, “You get the VCs you deserve” and the corollary “You get the performance out of your board that you deserve.”

His argument is as follows

  • Spend time building investor relationship long before you raise money. 
  • By spending more time educating your board on your business you get more valuable advice from them
  • Your goal should be to turn your VCs into extended members of your team to get real value from them
  • Understanding where your VC partner sits in their respective fund and where their fund is in the cycle of its investment lifecycle will help you understand your VCs behavior.

What Rob wrote in his post is right.

Rob is one of the most driven and successful CEOs I work with.

In his tenure as CEO of DataSift we have never missed a monthly revenue figure. He has grown our US operations from 1 employee (him) to a global organization of 75 employees that will finish the year with 8-digit revenues (90+% recurring) and more than 350% year-over-year growth.

Growth like this, this early in a company’s lifecycle rarely happens.

In this period (less than 2 years) he has brought on incredibly talented senior execs is sales, marketing, product management, client services, finance, vp engineering and more. In his spare time he raised nearly $30 million.

But the thing I am most proud of about Rob is that he has taken a company with a uniquely talented founder & CTO – Nick Halstead – and managed to build a very tight working relationship with Nick where we drive world-class product development without having the usual founder / CEO conflicts. Oh, and did I mention – Rob is in SF and Nick is in the UK. Rob has taken > 15 trips to England and Nick even more to the US. It is really working.

I point this out partly out of pride. Partly out of the fact that in 1 week I depart for England to speak at LeWeb, attend our DataSift board meeting and generally make myself available to the DataSift team to meet their customers, partners and employees.

But mostly as I read Rob’s post I didn’t think it did justice to the superlative job he has done at managing his rather boisterous board.

It consists of a highly intelligent and opinionated founder – Nick Halstead. Wallflower – yours truly. Quiet-as-a-mouse Roger Ehrenberg of IA Ventures. True-to-his-heritage Rory O’Driscoll from Scale Ventures. And then there is the one true gentleman of the bunch – Chris Smart, who is non-exec chairman. In addition to helping manage the board Chris also helps represent the interests of the angel investors / common stock holders.

Oh, and did I mention:

Roger – NYC, Rob/Rory – NorCal, Nick/Chris – London & me – Los Angeles. That in itself is quite a challenge.

So what are Rob’s secret hacks that he didn’t spill in his blog post? 

Here is what I imagine Rob would say were his most effective tools. Sincerely – he is better at managing his board than any exec I have worked with.

1. Email updates frequently

Rob is an over communicator. When it comes to your board this is something to emulate. If you have investors or board members that have wide relationships you can get significantly more value out of them by keeping them informed.

Why?

Investors and board members who know your strategic objectives can advocate on your behalf when they have chance encounters with your partners, customers or potential future investors. The more they know your strategic objectives the more laterally they can act on your behalf in key situations.

Investors and board members who know your key talking points (simplified marketing messages) will help you penetrate the consciousness of even the most hard to reach individuals. I am on a board that does business with Yahoo! One key board member knows Marissa. So naturally we’re pushing for him to drop critical information when their paths cross organically.

Trust me – that kind of encounter can mean the difference between securing a contract, protecting yourself from getting turfed or getting acquired one day.

Equally each of your board members are probably on 5-10 boards. Each of your angels or seed investors may have 20-30 investments.

When they meet Marissa – you want them talking about you more than the others.

And as Rob points out – if you email members with short updates more frequently they are more up to speed when you do need them to weigh in.

How much is too much?

I guess you’ll have to ask them but I’d err on the side of more and let them tell you to dial it back. I’d err on the side of shorter updates versus longer ones. Key point – if your emails are as long as my blog posts you’re forked. Board members will file them rather than read them. Remember – they have 10 other boards.

Make your emails actionable. If you want somebody to take action make it clear what you want them to do.

2. Send Text messaging for rapid responses

Any CEO worth his or her salt knows that her investors get an insane amount of emails and often spend 8+ hours / day in meetings (board meetings, pitches, partner meetings, LP meetings, corporate relationship meetings) so often email is done on the run on one’s iPhone or in the early morning / late evening.

It is common for an investor to read the email but not immediately reply. After all – she is just trying to get through 99 unread emails.

I always encourage people to send the email anyways with the full description of what you want but if the email requires an action then send a follow-on text 24 hours later. It should simply say, “I wanted to call your attention to the email I sent yesterday – it has 1 action for you.” Or, “I sent u an email. Can you please call Stacy to ask about our BD deal? Hoping to hear back tmrw.”

I know it sounds obvious. Trust me – most people don’t do it. Rob does it. On steroids. Sometimes 3x / week. He did it yesterday, “Mark, I’m going to write a blog post following on from your VC’s aren’t dumb. k?” and this morning, “Mark, I sent intro to [redacted], she is in LA. Please meet her while she’s there.”

Here’s the thing people don’t quite get.

VCs crave the ability to help portfolio companies. We’re all secretly paranoid we’re not helping enough and want to know how to be more helpful. When a company gives you a discrete action to carry out – it’s gold dust – I promise you. If board members start joking amongst themselves (as we at DataSift do) that you “got another Rob assignment” you know you’re on the right track.

Rob jokes about it. He makes fun of himself for always asking. He is very pleasant when he calls and writes. And by now we all consider him a friend. If anything we feel indebted to him for his hard work. So if all I need to do is make some customer calls, interview potential employees or help with his fund-raising decks – hallelujah.

3. Ask for short conference calls

I would say the norm for many early-stage companies is somewhere between 6-10 in-person meetings per year. The earlier stage the more likely it is 10 meetings and the later stage the more likely it is 6.

In either case it is very helpful to have a series of 30-45 minute calls in between. Don’t have calls for calls sake. Have topics.

“We’re trying to figure out how to best get a deal with Google. Here are our key contacts. I’d like to schedule a 45-minute call to agree our strategy and understand who your key contacts are.”

Sure – you could do this via email. But by doing quick calls you feel more connected. More information comes out. You start to act cohesively as a group.

And you can often throw in a separate action like approving stock-option grants, getting approval for CAPEX spend, discussing fund raising timing – whatever.

4. Always seek input

You may have an opinion on your market-entry strategy for Europe. You may know how much to pay in cash or equity for your new VP Engineering. You may have the best planning for your on-stage appearance at All Things D.

But asking your board will keep them engaged. It will also often yield unexpected results. For starters your board may have a different perspective than you. That role as sparring partner can be useful if for nothing else than to test your resolve.

I have seen these kinds of discussions change the strategic moves of a company or yield relationships that we didn’t know a board member had to help drive forward an initiative.

If nothing else you will create board cohesion and board education by engaging your board.

5. Assigns tasks

Already covered. But seriously. Assign away. Ask for help reviewing your press release. Ask your VC to send a critical email to a contact. Ask them for a meeting to review your pricing strategy with you. Ask for intros. Ask them to mention you to the press, speak about you on stage when they do public events, whatever.

Ask. After all, you don’t ask, you don’t get.

6. Fight hard, yield when appropriate and always be willing to take feedback

In Rob’s spare time he always seems to be going to a boxing class or some other competitive, physical activity. It’s a good metaphor for his board style. He fights hard for what he believes in. In some cases we disagree with him but decide to trust him if his resolve is firm and his logic is sound.

When it’s me who disagrees I usually formalize it by saying, “OK, Rob. I see it slightly differently but you live in this business every day so I’ll yield to your judgment. Let’s just revisit in 6 months and see if you still feel the same way.”

It’s particularly easy to give in to Rob because he is willing to back down when he either perceives that the board is unified on a different perspective than his own or when he realizes that his logic on an issue wasn’t as sound as his sparring partner.

Sometimes we fight. It sort of feels like fighting with my brothers. One of us usually calls back a couple of hours later to say they were sorry. Or they now see the other persons’s perspective.

I respect Rob a lot and the fact that he is willing to take feedback when warranted gives his great credibility.

When we recommended that Rob get a CEO coach he not only embraced it but craved it and thanked us for suggesting it. Rob is driven to learn. And improve.

7. Manages board meeting expectations (before & after)

We’ve had some good board meetings and some bad ones.

One thing Rob is consistent about is feedback. He calls us all before the board meeting to tell us what he plans to cover and see if we have other agenda items.

Equally important he calls us all after the board meeting.

“How did it go? Where could we improve? What worked for you? Where did we fall short?”

He also gives us feedback on our performance. Usually it is reminding us to be a bit nicer ;-)

8. Results & Measurement oriented

Rob is goal driven and therefore measurement driven. He sets clear goals for what he wants to achieve. He doesn’t just set revenue goals but he sets “quality of revenue” goals.

He sets goals for MRR (monthly recurring revenue) to differentiate from one-time revenue, license revenue, services revenue and other.

He sets goals for revenue diversification (can’t get all revenue from few customers or few partners).

By being so metrics driven we can have a lot more quantifiable and objective discussions at board meetings and at mid-point reviews.

 

Further Reading

I cranked this out pretty quickly. Sorry for typos, grammar and length. If you want further reading on boards I have written several other posts on the topic. Some shorter than this one ;-)

* Board Meetings
1. Running More Effective Board Meetings
2. Why You Should Ban Laptops & iPads

* Between Board Meetings
1. Communicating Between Board Meetings
2. The Agile Board

* Board Observers & Advisory Boards -
1. The Problem with Board Observers
2. Rethinking the Role of Board Observers
3. Why Advisory Boards Give Less Value Than Most Hope

* Meeting Dynamics
1. Presenting at Meetings without Going Down a Rathole (this was written for VC pitches but many lessons apply)
2. Meeting Dynamics (also for VC pitches but also some practical tips for board meetings)

  • http://www.hypedsound.com/ jonathanjaeger

    There are a few people who I know who are very busy people, but never seem to drop the ball on communication (and are always more than willing to give advice). I know not everyone lives in email, but I often notice the people who suck at email often suck at other aspects of executing in their business lives (correlation, not always causation).

  • http://ohheyworld.com/ Drew Meyers

    @spencerrascoff is by far the best I’ve ever seen at not dropping the ball on communication. having worked under him for several years at Zillow, it’s even more noticeable when others drop the ball (which most people inevitably do).

  • http://bothsidesofthetable.com msuster

    I’m not so sure. I’m not one of those “I live for email” kind of people. I find it bogs you down in admin. and makes you less effective. when it’s important either I get to it or people make sure I get to it.

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    I am often shocked that some of the busiest and most important people I know are the quickest to respond to my emails. Some of them are VCs that I know get 100s of emails daily. (I am sometimes shocked that they respond at all.)

    It does make me wonder at the correlation/causation. Especially since this continues to be a growing edge for me.

    Gives me something to live up to.

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    Mark, I love that you recognize that just because someone is a brilliant CEO s/he does not necessarily know things like this. This type of detailed practical advice is priceless. Thanks for continuing to write posts like this.

    BTW, even though I’m not a CEO with a board/investors, I am in a role where feedback and action from others are imperative to a successful job. Much of this advice translates to my situation as well.

  • http://mattr.co/ Jack Holt

    Mark- Rob and I talked a couple of weeks ago (we’re customers) about establishing the relationship with VCs before the raise, much like I’d do with an enterprise deal. Q: how much is too much? At what point do VCs just want to see a deck and get on with it? We’re a few months away from starting the raise so I’d rather not pester my small list more than i already have. Thks!

  • http://www.pointsandfigures.com/ pointsnfigures

    I think being honest is an essential quality. One thing I get is “things are always great”-I know that things are not always okay. I want to help them with the challenges.

  • petermengo

    Mark, Thanks for this super-actionable post. I’ve been struggling with timing and frequency not wanting to “burden the over burdened”. Though no formal board yet I’ve been blessed with interested and willing high quality advisors. The concept of assigning tasks to nominally compensated advisory members is basically foreign – at best appearing in the form of “I hate to ask, but if it’s not too much trouble (wimper) …”. That’s now over.

    However, one technique I am having some success with is using a short (less then 1 minute) embedded audio clip in a weekly update email. I can get a surprising amount of information in that short space. Allows me to reach a larger audience then VM and I can punch it up with appropriate emotion. And listeners can listen while on the move. Outline of points is in the email.

    Also been testing much longer quarterly stakeholder updates with audio matched against text outline slides and charts (record function in Keynote). Response has been good – most seem to like it, especially our China team – but it does take a time commitment (15-30 mins). About 1 in 4 request a transcript.

  • http://www.hypedsound.com/ jonathanjaeger

    There is definitely a happy medium. But the people who lose track of email or respond five days later never were the super-productive people — maybe I just don’t know enough people who are the ridiculously busy, 500 emails per day type people.

  • http://www.bermanbraun.com/ Sean Coonce

    @msuster:disqus, slightly off topic but… the more I read you, the more I get the feeling that any good, established VC will likely already have their hands full with the following tasks:

    a) Raising LP money.
    b) Managing current investments/board seats.
    c) Reviewing incoming pitches.

    I guess what I’m trying to say is, it doesn’t seem like a VC’s job scales well (at least beyond ~10 investments). With that in mind (and correct me if I’m wrong), my question to you is: “Where would one look to identify the next, good hungry VC; one that isn’t consumed by prior commitments? Would it be a fools errand to search for such an oxymoron?”

  • http://twitter.com/davidsmuts David Smuts

    I don’t know Rob, but I do know DataSift and Nick Halstead and that DataSift is a great company and Nick a great technologist. Reading this blog, I now learn how great a CEO Rob is- very impressive and hard to emulate.

    What really impresses me (and surprises me) is the team is split across the ocean. And not even E Coast to UK but W. Coast to UK. If I was investing in a company I would never in a million years invest in a team that is so geographically split and yet by all accounts, this seems to be working.

    Would love to know more about how this has been achieved!

  • TyDanco

    The more important the person, the more they seem to be able to respond to real requests. Coincidentally, Boston angel and entrepeneur Dharmesh Shah (of Hubspot) and I just posted a similar type of note last week on the Why and How of Updating Your Angel Investors. Works equally well for VCs. http://onstartups.com/tabid/3339/bid/98311/The-Why-and-How-Of-Updating-Your-Angel-Investors.aspx

  • http://hirethoughts.blogspot.com/ Donna Brewington White

    I was intrigued by this as well.

    Mark wrote a post on this a while back and as I recall discouraged geographically distributed startup teams.

    However as I watch companies struggle to build great teams and compete for talent I can’t help but wonder if in this day and age geography is an arbitrary obstacle.

  • http://www.rho.com/ Roger Chabra

    “VCs crave the ability to help portfolio companies. We’re all secretly paranoid we’re not helping enough and want to know how to be more helpful.”

    I’m 9 years into my VC career and I am not ashamed to admit that I have this paranoia. Well observed and well said.

  • stevewfindlay

    Interesting post…clear collaborative communication is key for effective investor reporting. In response to this we’ve set up Invrep.co as an investor reporting tool for startups and SMEs.

    We feel email, text and ad-hoc coffee meetings are increasingly outdated for today’s more complicated corporate governance and capital structures (broad advisory boards, and angel and crowd funded businesses).

    Please give Invrep.co a try (it’s free for new and small startups). We’d love to have your feedback!