This article originally appeared on TechCrunch. There is an old saying in poker that if you don’t know who the sucker at the table is – it’s you.
The same can be said of critical decisions in a board meeting or frankly any other meeting where major decisions are ratified. If you’re turning up to important meetings hoping to persuade the critical people who attend of a decision you’re trying to make and having already “counted your votes” you are sub-optimizing results.
This is a classic mistake many entrepreneurs make so I’d like to offer some constructive advice on how the savvy hand would be played.
1. Why You Should Pre-Meet Board Members
It is healthy to allocate 30 minutes per board member for a call at least a week in advance of your board meeting. Your objective should be to walk through your planned agenda for the board meeting and seek any major items that he or she would like included.
There is a great YouTube video interview I did with Seth Sternberg with tons of practical advice but specifically where he went through how he did his pre-meetings with Sequoia and others on his board at Meebo.
It may seem like “overhead” to have pre meetings but it is really not. If you have smart investors and board members this time could be some of your most valuable because you get a 1-1 dialog about your business without all of the pomp & circumstance of a formal board meeting.
I’ve written a few posts about boards recently as part of a series on the subject. I should note that my friend Brad Feld has written a new book on the subject that I would recommend if you want the bible on the topic. I admit that I haven’t yet read it but I’ve had numerous discussions with Brad over the years about board structure & conduct and consider him a mentor on the topic.
In the Early Days
When you first start your company and raise initial venture capital your board probably consists of 1-3 founders and 1-2 VCs. The main thing you’re concerned about in this phase of your company is maintaing control of your board, which in a legalistic perspective is ensuring that founders & management have the majority of seats on the board.
Most experienced VCs won’t push you to give up founder control at this stage of the business nor should they.
Recently I wrote the first post in a series on board meetings, entitled, “Why You’re Not Getting the Most out of Your Board,” which focused on the need to prepare properly, set good objectives and discuss mostly strategic topics.
Even if you follow this game plan meticulously your board meeting can be taken off course by well-intentioned board members who lead you down a rat hole.
Here’s how it happens …
1. Topic Creep
You start out your board meeting and a well-meaning board member who read your deck noticed a detail she didn’t understand on page 18, “Bob, I noticed that your margins in Canada declined from 48% to 46% while your margin in Mexico is up by 4%. Can you please explain the discrepancy?”
I call this “topic creep” and it is killing your board meeting. It might be useful for Sally to know the answer to this but it isn’t the most valuable use of the time you spend together as a board.
Most board meetings are “update meetings” where management downloads its status to a group of investors. These outside board members spend most of the board meeting trying to reacquaint themselves with the company’s business and critical issues.
This is hardly ideal and some simple changes could help management avoid both issues. Put simply, the majority of board meetings becomes an exercise in management trying to reassure investors that “we’re doing a good job” and for investors to sounds smart so they can prove that “we’re adding value.”
Both of the functions are a waste of time. So most board meetings become bored meetings.
I’ve attended more than 150 board meetings in the last few years alone. Every time I think to write a post about this I figure the most recent board meeting I’ve attended will think it’s about them so I don’t bother. So I’m going to write a series of board meetings posts unrelated to anybody or maybe an amalgamation of them all. These posts are not about any individual company even though they’ve all heard me say these things often.
Rob Bailey is the CEO of DataSift. He wrote a post this long weekend on how he manages the board of DataSift.
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.
It has always surprised me that founders were so quick to fight over how many board members there were and so quick to agree to have as many board observers as people wanted.
I have always been vehemently against board observers and wrote some of the reasons in this previous post. But over the past couple of years I’ve slightly modified my views, which I’d like to explain:
The Case Against Board Observers
Unless your company is really struggling or there is something very controversial going on at the company (i.e. removing the CEO, selling the company without consensus) then NOTHING ever comes up for a formal vote. Almost all decisions at private, startup, VC-backed tech companies is consensus driven.
The reality of a board meeting is that the most influential and most persuasive voices normally shape the decisions. But the time spent on discussing issues can be really lengthy and get way off target when you have board members who aren’t disciplined or structured.