Announcing Projector — A Startup I’ve Been Excited to Tell You About for Years
A few years ago I spent time in prison with Trevor O’Brien, the founder of Projector. Yes, I always imagined announcing the company that way. We were of course there to work with incarcerated men on developing entrepreneurial skills on behalf of Defy Ventures. We had met previously when Trevor was a product manager at YouTube and Upfront had funded the largest video producer on YouTube, Maker Studios.
When we got out of prison Trevor began describing the startup he and his co-founder, Jeremy Gordon, wanted to build. They had worked together as senior product manager and senior engineering leads at Twitter and identified a problem they saw in visual communication of information. They teamed up to solve this problem and when I heard about their approach it completely resonated with me. Upfront immediately wrote a check to back this vision and we later teamed up with their former colleague from Twitter turned VC, Rishi Garg of Mayfield and we’ve stayed quiet on what we were up to.
The vision is Projector, announced today on TechCrunch — you can sign up if you want to try the service. The mission for the company is to to help people communicate clearly and memorably using visual information. Initially that means a creative, collaborative toolset for visual communications, allowing users to develop really compelling slides, print materials or social media posts that are more visually compelling and easier-to-build for those who aren’t naturally gifted as visual story tellers. Over time we will roll out features the help you to understand the full vision of where we will take visual collaboration.
Why does this resonate so much with me?
I believe that the fundamental nature of getting buy-in from organizations to make complex decisions involves visual storytelling. This is certainly true in how startups raise money from VCs. It is true in how founders share progress and issues with boards. It is how sales reps talk to prospects about their products & services to try and gain buy-in for a sale. And it is true in how speakers stand in front of audiences and take them on a journey to buy into a vision of the speaker.
We know that good visual storytelling can be persuasive and we know that it is also important to retaining key information after a presentation has been completed or a report has been shared.
Yet as somebody who has to read and write decks as a major portion of his job I can tell you that most people struggle with how to tell stories visually and when I need to do it I am aware of how difficult the modern toolsets make it to do this alone, let alone collaboratively. Today, marketers and creative agencies have their work in Keynote/Powerpoint/Slides for presentations, inDesign for PDF reports, other Adobe products for other social media posts and video, iMovie and FinalCutPro for video. And most of these tools are created for designers and aren’t accessible for the wider group of marketers, sales people, agencies and speakers who are actually trying to tell stories.
Projector sets out to simplify this process greatly with one tool & interface for all your visual communication while making your output significantly better by baking great design into your work as you complete it.
What are some examples?
You know when you want to grab an image off of the web and you can’t quite size it so that it fits in Keynote or Powerpoint? Yeah, this sucks. You stretch photos or you can’t tell which part of the photo will be included or not included.
You want to take said photo and make it blurred or lightened so your words pop? You can do that in Keynote but good luck finding the feature buried in 5 clicks of obscurity.
Take a photo and make images rounded as the photo at the bottom of this blog post is? A piece of cake in Projector.
Think of time spent outlining presentations and swapping online and offline notes with co-authors before you even start building. Projector gives you dedicated space for real-time collaborative notes with colleagues on both logic and design, all in the same tool.
We communicate with our friends and family using videos, Gifs, images, texts all in one app. Why don’t our work tools offer the same modern communication style? Projector lets you layer all types of media together.
Want to preview your presentation on social media? Get ready to spend an hour building a whole new visual for the specific Instagram format — or use Projector to quickly resize and export.
I built a few presentations in Projector and began to forget that I was natively building in my browser because it became so seamless as though I had just fired up a local app.
We know that apps are fully moving to the cloud. Just as we use Google Docs for writing or AirTable for spreadsheets, the world finally has an amazing in-browser tool for visual presentations. We are launching the simple feature set version with perfection in the tasks one needs to complete most often and watch for a fast-follow as we layer on full collaboration and integration with other products you know and love. I can’t wait to see where this journey goes.
I hope you’ll give it a try and let us know what you think!
Managing Your Startup Board — A Short Presentation
I was invited to do a keynote presentation at the Khosla Ventures CEO Summit this week in Sausalito. It was an amazing gathering of some of the most ambitious early-stage CEO’s looking to make a dent in fields related to healthcare, biology, AI and other transformative fields. It’s encouraging to know that there are still great VC firms like KV that are looking to make these short of big bets on shaping the future. Hearing views from Bill Gates on how the world deals with issues like climate change, Jack Dorsey talk about the role of social platforms and government and discussions with Kevin Systrom (Instagram), Todd McKinnon (Okta), etc were fascinating.
My talk was about “managing your startup board” and the full deck is on that SlideShare link and embedded below. I also wrote an entire series on the topic of Startup Boards if you want to do any more reading that link has several articles you can dig into. Below is just the highlight points.
How Do Boards Get Out of Sync?
For years software development worked on a “waterfall model” in which you did research, design, build, test, deploy and then watch how users reacted to your product. Often these projects took 12–18 months so by the time companies shipped product they often found out that the product didn’t meet customer needs. I think this analogy can hold for boards. Often executives are operating their businesses for long periods of time where non-exec board members aren’t familiar with the nuances of the changes in the company and therefore are surprised or unprepared when they come to your board meeting.
I think it may be helpful to think about your relationships as “continuous boards” in which you more frequently send texts or emails or do short update calls to keep investors in sync on the changes in your business. The more you are regularly checking in the more room for course correction or at a minimum the more bought in board members are because they participated in the process.
If you take the mentality that your board members are usually pretty well connected and often willing to be helpful if asked, one of the best ways to keep board members involved is to ask them for help. Yes, there is some overhead in the increased communications, seeking opinions and asking for favors but in the long-run I believe it pays huge dividends in keeping your board aligned and supportive.
Why Does My Board Get So Unfocused at Board Meetings?
In each board meeting it is helpful to think through what your goals are. Are you truly looking for board members to debate and make a decision? Most of the time this is a bad idea. I think the best run companies let executives make most of the hard decisions and should try to be helpful in thinking through high-level strategy and weigh in on difficult topics.
Boards will comment on anything you put in front of them. If you want to have a 30-minute debate on whether your company should spend $12,000 on a coffee machine for employees then ask your board and I promise every member will have an opinion. Or as I like to say, “if you ask us to weigh in on your colors or logos and we debate it fore 30 minutes — that’s on you!” We won’t debate at this level if you don’t put it in front of us.
It is the job of the executives to make this level of decision and you can certainly show us your designs but honestly it’s much better to share this kind of information outside of a board context. If you’ve assembled what should be some of your most strategic and motivated people involved with your company to spend time together you really ought to put us to work on your most important, strategic issues.
What Should We Talk About at Board Meetings?
One of the biggest mistakes I see at board meetings is what I call the “filibuster board” in which the executive team spends 2 hours going through 100 slides and runs out the clock with no discussion. There are times where this is useful, for example, in letting senior staff show their work to the board and letting the board get to hear from the broader team. But in general it’s not the best use of board time because much of that knowledge can be shared before the meeting and the team can come prepared for debate.
If you filibuster through long presentations then as a board we walk away understanding your company better but you don’t walk away with any real value. I believe a much better approach is to have a debate with your board on strategic topics. I recommend sending your financials out 72 hours before the board meeting and having you or your CFO call each board member to walk through the financials in advance. You can send out a “pre read” so that board members have to read and digest information and show up ready to discuss these topics.
You’ll notice that in this graphic I’m not proposing that you ask your board to make these decisions for you. You can have a 2-hour debate on important topics including pricing, product features, key hires, whatever and then still go away from the board meeting and have your executive team make decisions. In fact, if you ran your board this way and asked them to empower you then board meetings would feel less like approval meetings and more like a group of senior execs helping you make the hard calls.
Of course there are times where you do need consent and a vote to be made and these ought to be only the most strategic, existential questions of the company. But these kinds of actual board decisions are rare and often only come up once every 12–18 months. Again, if you ask for approval on decisions on stuff that ought to be in the purview of your executive team then don’t be surprised if your board feels entitled to make the decision with you. I would argue this isn’t in your interest or the boards.
Boards are organizations that need managing just as you would do for your management team. You need to make sure everybody is aligned on the goals of the board and you need regular communication to keep everybody in sync. Boards can be helpful if you manage them and put them to work or can be a pain in the ass if you don’t manage them and if they feel uncomfortable with the company’s direction.
Below is the full presentation embedded. I discussed a range of other topics that I didn’t address in this post.
Cal Poly Pomona! What’s up!?! I’m so grateful to be up here addressing you today. Today you’re either here to graduate or support somebody graduating. A graduate is at his or her first major crossroad in life. You are faced with decisions about which road to take. That is the theme of my speech today. My 8 tips for the crossroads you will face.
I heard that your school is 5th in the nation at helping lift people born in the bottom 20% income levels into the top 20%. That’s an amazing statistic and reminded me of my family’s journey.
My dad was an immigrant from Colombia. He moved to the US for medical school, the first in his family to ever do this. His father, my grandfather, ended up in South America after fleeing Jewish oppression in Romania. His crossroads were literally life or death decisions, as they are for millions of people around the world today. My grandfather.
HIS grandfather grew up in an era where there were no crossroads. There were no planes, no cars, no easy access to colleges. His grandfather and his grandmother grew up in an era of arranged marriages as much of the world did back then. Even today more than 50% of the world has an arranged marriage. There were no crossroads.
As you face the burden and the weight of your choices please try to recognize what a blessing it truly is in life. It only feels like burden because we live an Instagram, FOMO world where everybody else’s choices seem better. They aren’t.
Choose your path with conviction. Don’t regret the road not traveled. Regret causes anxiety at every level of success or wealth. I promise you that the more people earn or acquire they are no happier than any of you if they are worried that they chose the wrong roads in life.
If you find happiness on the roads you choose, whatever the sirens of the other roads tell you, you will be happier in life.
So my 8 tips for a successful career as you make choices at your crossroads. I will publish them all online so don’t worry that by the end of today you won’t remember these.
[note: a video of this speech was recorded separately after my commencement speech and I’ll publish it when it’s released]
They say it’s not who you know as much as what you know. But what you know is a function of who you know. You learn so much more in life by surrounding yourself with talented people. The right company and colleagues are better than the perfect title, role or brand name. Many of the friends you made at Cal Poly Pomona will be friends for life. The same is true of the jobs in your 20s and 30s. Find your tribes.
Two. The world works on a pull model.
The best opportunities in life come from people who PULL you into them. When people are building teams and looking for talented, hard-working people they break down walls to pull you in. It is rare in life for even the best people you work with to PUSH you into success. So you need to build a network even outside of your company. I always tell people, “take 50 coffee meetings.” People are uncomfortable asking for meetings with people they don’t know. But if you ask you friends to introduce you to people just 5 years ahead of you in their careers and you meet one / week for coffee by the end of the year you will know 50 new people. You won’t stay in touch with all but you’ll get along with some and if you nurture those relationships over time you’ll find that people will start pulling you in. And pulling you up.
Three. If you don’t ask, you don’t get.
It’s not good enough to know people. In order for them to pull you in and pull you up you need to ASK. I always wanted to work in Europe but it was hard to ask for a sponsoring company to pay for you to come over. I used to work at Accenture as a programmer. I called every person I knew in Accenture Europe and asked for advice to get transferred. I even visited and made friends and went out every night with my peers. They all told me the person I needed to meet was Cory Van Wolvelaere, but I didn’t know him. I knew asking on the phone wouldn’t be compelling so I asked a friend who worked with him to tell me when he’d next be in the US. I found out he had a trip scheduled to Chicago. I sent him a message telling him I’d be in Chicago on such-and-such dates. I scheduled these to be when I knew he also would be flying out. I wasn’t lying — I technically WOULD be in Chicago. I just didn’t say it was conditional on his meeting me. He agreed to meet for a beer at the airport so I booked my tickets and flew from LA completely on a lark. After a pint of beer I asked him if he would transfer me to France. I told him I knew people in that office, my peers. He told me he didn’t need more Americans. I told him I would work hard. He told me that business wasn’t good enough. I told him that I would make sure I’d get my costs covered by clients. He told me no again. So after 20 minutes of back and forth I looked him in the eyes and said, “Cory, you’re literally the only person standing between me and my dreams. You have the power to change the course of my life and if you do I promise I’ll work so hard you’ll never regret it.” Then I stopped, stood quiet and looked in his eyes. He sighed and said, “Mark. You’re a real … pain in the ass. Uh. Ok. Fine. You can come.” And like that I spent the next 11 years working abroad living in 5 different countries and working in 9.
Four. It is better to beg for forgiveness than to ask for permission
After 5 years in Europe I decided I really wanted to work in Japan. By now I knew the world worked on a pull model and that I had to ask. But I was struggling to find somebody to bring me to Japan. It was 1999 and I had valuable Internet skills. So I found a project in a database at Accenture looking for somebody with my background. They were trying to sell a project to the board of Sony. Again, I bought a ticket completely at my own risk. I showed up in the Tokyo office unannounced and said, “I’m here for the Sony project. I understand there is a kick off next week.” They looked at me like I was crazy. Ok, maybe I was. But I figured the worst that could happen was they’d send me home and I’d have to eat the price of my airfare and — hey — at least I got to visit Japan! They called the partner in America responsible for the project, Grieg Coppe, put him on the phone and he said, “what the hell are you doing there?” I told him I must have made a mistake and I’d fly home but since I’m here if he wanted my help for a week I’d be happy to do so. I stayed, worked my ass off and by the time he arrived the local team asked if they could keep me. Thus, I began my work and my life in Japan. I assure you if I asked I never would have made it. Sometimes asking alone isn’t enough. Decide which rules are acceptable to break.
Five. There’s a time to learn and a time to earn.
You just finished your education so you know the value of investing in yourself and your knowledge. Your first jobs should be like this, too. I recommend that you maximize the value of what you will learn on your jobs over fancy titles or arguing over compensation. Learn tangible skills that will be valuable in your future. If at some point you decide it’s time to “earn” — then you can move into a role designed to maximize your potential income. If you really want a shot at wealth creation at some point you may need to bet on yourself or your close friends and colleagues. I left Accenture a year before making Partner. I cut my salary in half and started my own company. After 9 years on the job I knew if I didn’t leap then I never would.
Six. Be politely persistent.
Follow through is 90% of life’s success formula. People come to me to raise money all the time. If I never emailed anybody back after our meeting I can tell you something that would shock you. More than 50% of people I meet with don’t proactively push for more meetings or interactions. You can’t get mad if people don’t return your emails or calls. Every person worth meeting is so busy they can barely get through their day’s work. Success comes to those who follow through and do so with grace and humility.
Seven. Get your foot in the door.
I built two startup companies and sold both of them. I decided I wanted to be a venture capitalist. I found a firm that was interested but they told me they hadn’t raised enough money yet to pay me a full salary. They told me after they raised a fund they’d be ready to hire me. But I figured once they did that they could talk to hundreds of people with my skill sets. So I told them, “No, I’d like to join now. By the time you raise a fund I’ll be working somewhere else. I’ll make you a deal. Pay me half salary and if we raise a fund together you can pay me back.” I figured if I were willing to bet on myself and take away their objection to hiring me I would have my foot in the door. And once in the door it was up to me to perform. That was 12 years ago. After just 4 years I become managing partner of what is now the largest venture capital fund in Los Angeles.
Eight. Build a personal brand. Be known for something. Develop your voice.
The world is filled with people who look and sound the same. They have the same experiences, they wait in line to get promoted and they become part of the system. Every now and again somebody figures out how to communicate a unique message to an audience and become known for something in a field. Developing an audience gives you a bigger network, bigger knowledge and more power to get ahead. I would ask you to look at Alexandria Occasio-Cortez. She is just 29 and is a member of the US Congress. Whether you agree with her politics or not I can tell you that as a newly elected member of the House she has 4 million Twitter followers and 3.4 million on Instagram and this gives her leverage in her work. You may never have this audience but even niche networks create power.
Take some risks. I have. Take the time to experience new things in life. Take hard forks in the road and don’t worry about what the other path held. As you age your crossroads narrow. Remember that your hard choices in life aren’t burdens, they are gifts handed down to you by your parents and grandparents and their grandparents. Your choices, your forks in the road, are what they worked so hard for. Take chances. Ask for the crazy promotion with a sly smile on your face. Show up in an unexpected place. Every now and again beg for forgiveness. Taking risks is, by definition, risky! But nothing ventured, nothing gained. If you make the most of your crossroads and live without regret, your relatives will smile from the beyond knowing their hard work gave you the freedoms of choice that you now enjoy.
The Truth About the Scooter Economy — An Insider’s Perspective“Bird Zero” that are custom designed by the company
There is a story arc of the electric scooter market that took the world by storm in 2018, was second-guessed late in the year and has quietly re-emerged as a powerful force of growth where few really appreciate the speed and scale of what has happened. I’d like to share some insights with you.
Act I was the invasion of scooters that seemed to be taking over many urban environments in 2018 and literally seemed to come out of nowhere. This led to massive funding rounds at Bird, Lime and others. It become such a quick part of popular culture that Jim Carrey rode a Bird in an opening segment of the Jimmy Kimmel show (hilarious if you haven’t seen it).
Act II was “revenge of the luddites” in which some local governments banned them and some annoyed citizens stole them or broke them. (luddite is literally the term for the people in England who put wrenches in the machinery in the industrial revolution and broke things to prevent progress).
Act III was the “I told you so” comeuppance of anybody who we sure that the electric scooter market would fail. The valuations were too high! There was seasonality, theft, tough unit economics and slowing funding rounds.
We are now in Act IV. As an insider I thought I’d offer some views of where I believe we’re at in Act IV and maybe some perspective of the future.
Invisibility & Acceptance
The adoption of Bird was so rapid in 2018 that we went from cities that one day had never seen a scooter to thousands of people riding them daily. They were new, they were strange, they were ridden mostly by young people — they were highly visible. The company started the year with no revenue and at it’s peak had a run rate well in excessive of $100 million / year. Pause to think about how remarkable that truly is.
The world all around us is filled with invisible things that don’t disturb us because they’ve always been there. If our streets were clear and uncrowded we might be outraged to suddenly have cars along our sidewalks, emitting carbon in our air, honking horns or crashing into pedestrians. But they’ve always been there. We’ve come to accept them as a fact of life and we let ourselves be inconvenienced by their presence and pollution without much thought. They’re invisible. They’re acceptable.
Year two in the life is electric scooters is just that — invisble. They are no longer remarkable in Santa Monica or Venice or in many cities in America, Europe or South America. As drivers we look out for them, as pedestrians we might be annoyed if they steer in our way but the riders themselves have developed better norms as happens in all forms of transportation. They’re not new. They’re not novel. They’re invisible. And their usage is growing.
The best cities and campuses have fully embraced scooters and others are waiting and watching this experiment and hoping to learn. In my home town of Santa Monica they painted 19 miles of bike lanes green to help delineate bikes & scooters from cars and they built 3 miles of soft barriers to test how this works with traffic flow. Santa Monica is a city with congestion problems in the Summer and on weekends and ride-sharing exacerbated this problem. Scooters are now seen by the local government as an important long-term solution to both congestion and to reducing pollution.
Springtime is Here: A New Watermark
Yes, there was seasonality. Yes, usage went off a cliff for scooters in Dec — Feb, particularly this winter. No, the scooter companies were not incredibly well prepared for just how steep the drop would be. I know Bird is 100% ready with a plan of action for next winter. There is no problem per se with seasonality — it affects airlines, hotels, rental cars and all sorts of industries with assets. The key is being able to dial back variable costs during these period.
But springtime is here. We’re at a new watermark because there are now global assets deployed and as the sun peeks out so to do the riders and the revenue. Last year at this time Bird was just planning its multi-city rollout having had tremendous success in Santa Monica & Venice. This year we’re in > 100+ cities and 100+ campuses and we’re operational with street teams, better software, better bikes and a more informed ridership. It’s truly staggering to realize that just a year ago we really hadn’t begun nationalizing let along globalizing. It really does put things into perspective, doesn’t it?
Unit Economics Accelerating
One topic I heard a lot in investor circles last year and in the press a lot was that there weren’t good unit economics and therefore the scooter market was never going to perform well. If you read Reid Hoffman’s important book, “Blitzscaling” you’ll realize that in some markets that are large, global and being disruptive sometimes being first to global scale can be more important than short-term unit economics. This is only true when: 1) there is funding available to finance short-term losses and 2) when there is a lucrative positive unit-economics business when you become the winner.
So for the first year Bird used off-the-shelf scooters that weren’t really built for long-term commercial use. They lacked spare parts, they broken down more often than anybody would have liked and they had insufficient battery lives.
Bird moved early to design its own scooters with the launch of the well-received Bird Zero scooters in September of last year. They had better performance, better handling and importantly better battery lives. They also were exclusive to Bird so they gave the company a competitive advantage. With 65% improvement in battery life the unit economics improved dramatically and with longer-term between maintenance and lower theft rates it has been a huge boon to the companies finances. Of course it takes time to roll out new scooters and replace existing inventory but this is already having a dramatic effect on the underlying business.
Turns Out There Are Competitive Moats
There were some tech meme’s out there last year that scooter companies had no moats. I argued pretty publicly that this wasn’t the case and as Bird scales it is becoming more apparent. While the Bird Zero has shown massive improvements, as you can imagine the company has built an entire vehicles team and designed an entire roadmap of scooters that will hit the roads in 2019 / 2020. Having ridden some of the future models I can tell you they are nothing short of stunning. Each with better torque for getting up hills, better suspension, lower maintenance costs and improved batteries.
Simply put — there is no viable business running on commodity consumer scooter hardware. You must have your own vehicle teams or access inventory by a supplier that knows how to produce for industrial usage. But what is unique about Bird is that with each generation of scooter platform we launch our unit economics get better and better. In the ride hailing market there is a competition for drivers and they eat a large part of the consumers’ fee for a ride. In the scooter market, the consumer is the driver. Their time is free and there is no “driver COGS” (costs of goods sold). While the ride-hailing market sees autonomous vehicles as nirvana due to no driver costs, the e-scooter market already has this built in.
Last year I pointed out that software would help build competitive moats and we’re already seeing that. You can’t simply drop a bunch of electric scooters in a market and hope to compete with the data and software advantages of the incumbents. But perhaps one of the biggest overlooked advantage of the incumbents is just how massively complicated it is to run a global or even national or even city version of a transportation company. Hats off to the teams that have done this. I’m not sure I personally could do this.
At Bird, we have built in massive programs to reduce theft, including integration with law enforcement. While I know some people on social media find it funny that people would steal a $500+ asset and repurpose and resell it, in any other world that’s simply theft. It’s no different than stealing bikes, cars, computers or purses — none of which are funny or tolerable. Bird is working with local law enforcement to crack down on theft and has built a team and technology that makes it easier to track criminal rings or even petty theft. We’ve had some high-profile arrests of people in possessions of thousands of dollars of stolen goods and people will begin to realize there are the same consequences as stealing cars.
Photo courtesy of The Rideshare GuySub 3 Miles is Up for Grabs
If you read the S1s of Uber and Lyft you’ve now realized that these are very large, global businesses who deserve all of the credit and financial rewards they have received. You may also have realized that both businesses have a meaningful part of their business tied up in rides that are sub 3 miles. These are the local trips that tend to add to congestion and are the ones that are most vulnerable to alternate forms of micro-mobility. This is the reason you’ve seen the massive rise of Bird and the reduction is some cities (Santa Monica and Venice) of ride sharing.
Aren’t these players just going to Jump into the scooter market? Of course. It’s too lucrative not to. But I would argue that it isn’t either companies top priority with food delivery, globalization, managing public markets and shoring up operating margins as high on their lists.
In the meantime we think we can build a globally complex, economically viable business that will be hard to disrupt. This business is orders-of-magnitude more complex than even the big ride-sharing companies may fully appreciate and will be hard to disrupt just as Google wasn’t able to crush Facebook in the way everybody was so sure they would.
Early Adopter Cities and Early Majority Are Driving Growth
Cities are changing and many are embracing scooters. I’ve already highlighted Santa Monica, who has also drawn markings on side-walks where scooters are meant to be docked. There are cities blessed with perfect infrastructure for scooters like Paris where you can ride down the Seine completely uninterrupted by cars. And there are cities like New York City who are desperately in need of new transportation solutions and are currently studying the best way to accommodate electric scooters. I’ve talked with many campus leaders. They realize that students want to get around on scooters and they’re trying to figure out how to best accommodate and they’re watching the schools who have embraced scooters for clues.
What Does Travis Think?
I sat down with Travis at the end of January to ask his opinions of where the scooter market is heading. It was a fascinating discussion in which he also talked about the early days of building Bird. You may enjoy watching / listening. I think you’ll learn a lot.
I fund startups for a living and before that I ran two software startups that I founded. I’ve spent countless hours looking at historical finances, budgets, forecasts and future projections. With a standard tech startup I can tell you in my sleep that your two biggest cost items by a long shot are people (between 60–75% of total costs) and space (10–20% of total costs). The only other significant cost item that I see in some early-stage startups is inventory (for hardware or eCommerce companies).
In the earliest stages of a company a startup will often cram as many people into small rooms as is possible in order to conserve on office costs. When a company raises capital it inevitably begins to look for office space in order to increase worker productivity and happiness. Because it’s hard to predict how much space you’ll need as you expand (or, gulp, downside) startups have increasingly turned to shared spaces like WeWork, which act a bit like cloud hosting in that they allow you scale up or scale down as your business expands or slows down.
Anybody who has spent time around startups can tell you that there are bunch of productivity drains that can come from these environments:
Lack of meeting space for having discussions
Inability to concentrate due to being surrounded by “loud talkers”
Huge lines waiting at shared security check-ins, elevators or lunch lines
Knowing the problems of “managing people around spaces” was one of the primary reasons I backed the company Density, who built a “depth sensor” that hangs above doors and anonymously tracks spaces as seen in the GIF below.
The technology is now deployed across many clients including LinkedIn, NYU, Dropbox, Envoy and many others so we’ve learned a lot about how people use solutions like Density to increase productivity, improve physical security and better match space with people. Below are some great examples of common problems & solutions we’ve seen:
The meeting room camper / the meeting room squatter / phantom
Gartner estimates the average employee spends 27 hours/year looking for available spaces to meet — this is rarely because companies don’t have enough space. Most often, it’s because they don’t have the right mix of small / large / flex working space and as a result people tend to hog space when it is available.
Once organizations scale they inevitably implement systems to make booking shared spaces more streamlined and usually more democratic — the general procedure being that you “book a meeting room” by the hour via a scheduling system. We’ve all experienced the “squatter” who just goes into a meeting room and startups working on takes a 1–1 meeting in a room built for 12 and doesn’t bother booking it. Some people go the opposite route and book hours on end so that they can “camp” in a meeting room to get long periods of quiet work done or take 1–1 meetings at the expense of group needs.
Equally problematic is the “phantom” who books the meeting room for hours on end to block the room, only using it periodically. I saw this kind of behavior even 20 years ago when I worked at Accenture where staff was mostly at client sites but when they returned to the office there was a rush to phantom book the limited meeting rooms.
At Density we worked with clients to integrate into their Outlook system so management could better evaluate when teams booked meeting room space and then compare against the Density sensor data to see when the room was actually used. It can compare hours booked vs. used as well at number of people booked vs. attended with the goal of helping the enterprise better manage its limited space resources.
The lunch conundrum
Another major productivity drain as companies scale (or as shared work spaces fill up) are lunch lines. We have seen the rise in companies using Density to better track the flow of people through the commissaries at breakfast, lunch and dinner. They have integrated this with internal systems on Slack or Facebook Messenger to allow employees to check the wait times in real time and plan their days accordingly. This has also helped management figure out how to staff up restaurant staff in peak hours. We’ve even seen some forward thinking airlines and travel companies use these sensors to better track the staffing levels of lounges throughout the day.
Most offices employ physical security to protect both assets and safety yet we’ve all witnessed the “tailgater” who waits for somebody else to scan his or her card and then walks quickly behind them and gets access. This is much harder to do in high-rise buildings with sufficient security guards but even there after-hour problems persist. As you’ll see in the video below, Dropbox has used Density paired with its access-control system to flag for security whenever there is a tailgater. In the video they show a real-life situation (faces blurred) where a tailgater posing as just another employee looking at his smart phone who then broke in and stole several laptops. This problem is even more pronounced on campuses where buildings have more ingress & egress points. Dropbox was having more than 100 tailgating events / week and while most of these are likely not nefarious, having employees become aware of the problem is the first line of defense.
The wasted space / the oversized meeting rooms
Perhaps the group that most values the ability to know how people use spaces are the facilities management groups responsible for space planning. As businesses expand you naturally find meeting rooms built for 12 but used mostly for 2–4 people at a time that would more effectively be built at 2 meeting rooms. We see companies that do large acquisitions and have to figure out how to consolidate companies and staff. During a customer pilot, a Fortune 1000 company discovered that an 8-person conference room was used by 3 or fewer people for 78% of all business hours; it was used by 8 people (its intended capacity) just 3% of the time. By expanding the study and right-sizing their conference room mix, this company is likely to solve their meeting room problem and save tens of millions of dollars in avoided real estate expansion costs.
The insurance risk
Have you ever noticed when you walk into a bar, concert hall, stadium or similar venue and there is a person with a counter that clicks when you walk through? Almost certainly what they’re doing is manually monitoring crowd sizes for insurance (and ultimately for safety) purposes.
We now have venues using Density to control crowd sizes and ensure they aren’t violating their insurance policies. A bar we work with was getting multiple $1,000 fines from the Fire Dept every month for being over capacity — this despite having staff on hand to count manually. After installing Density, the fire marshal looked at the count on the bar manager’s iPhone and said, “that’s really cool.” He then left them alone because they could prove they were in compliance w/ the code.
Unintended use cases
By now, we’ve seen a lot! From people wanting Density to track that Alzheimer’s patients aren’t moving outside of a pre-agreed space to gig-economy companies wanting to be able to anonymously track whether their workers or whether their customers are initiating unwanted physical contact. People often ask me, “why don’t they just use cameras?” Of course there are some good uses for cameras in fields like surveillance but in the modern world there are many places where we want to track the flow of people (bathroom usage, just one example!) but don’t want to record people. In addition, the ability to interpret the data and deal with the volumes of information is much more cost-effective when you’re dealing with “polygons” (shapes from a laser) than dealing with full video footage.
Several members of your executive taken hours to prepare board materials so that you can inform your board of how things have gone since you last met 3 months ago and you have 3 hours together to make sure they have an accurate picture and to make sure you have their input into how to proceed in the months ahead. Given how seldom you come together you’d imagine you’d have the boards’ full attention during this time. Most likely you’d be wrong. You can solve this if you’re willing to.
How to Deal with Electronic Distractions
Of course the biggest competition you have with the attention of your board members is their mobile phones. Most board members don’t have the intention of checking email, reading the news or sending a quick text message but just like most smokers don’t want to pull out a cigarette — the modern executive can’t help himself or herself.
This is much easier to deal with that you would think.
Announce at the start of the meeting that you’d like the board meeting to be “electronics free” including mobile phones, laptops or tablets. Have paper and pens available for notes. Be super polite and not aggressive and simply make the point that you really want the most productive time from your board members.
Don’t allow your team to use laptops. I know many executives want to “stay productive” while they’re in the meeting and not being called on but if they’re not present and participating then you might as well leave them out of the room. It’s super distracting when your executives are typing away at email while the rest of the board is meant to be engaged in a discussion.
Many outside lawyers like to attend board meetings. They all bring laptops and they all spend much of the time in the board meeting doing other email. Stop this. Either ask them to dial in or if they come ask them to really be present. If that’s not a good use of their time then simply ask them not to attend.
Schedule a break in the meeting. If you have a 3-hour meeting put this at 1.5 hours in and have it for 15 minutes. Announce it at the start of the meeting and tell every member that this is the best time to check emails or make a short phone call but that you would really appreciate if they didn’t do it at any other time.
If anybody says “I really work best when I can take electronic notes” on my (laptop, iPad, mobile phone) say, “I’m sure that’s right. But if I could ask that you please not do this for today. My goal is to make sure every member is present.” Best will in the world the most disciplined people in the world have a hard time resisting “just quickly checking” their text, email, news when they’re board. Then you’ve lost them.
If you really want to make a show of it you could put the executive’s mobile phones in a tray on the side of the room and ask each board member to do the same when they arrive. I know it’s a bit aggressive but if you do so with a big smile on your face and a big ask of politeness I’ll bet you can pull this off. It’s really a way to emphasize how serious you are. The truth is that people who go out to dinner or to concerts or sports events and who leave their mobile phones in the car are actually more present for the event and enjoy themselves more. The same is true for board meetings.
I know all of this sounds draconian and many would say in the modern world this is counter-productive. But as a person who has sat in the room for years while executives present I’ve seen well-intentioned board members checking email, reading Facebook, scanning Twitter, downloading movies for their flights home, sending texts to friends, reading the news or any other number of things that distract from a productive group discussion.
How to Keep Board Members Engaged
Another problem with board member engagement is you. If you present slide after slide and if this becomes a download of too much information and not enough of a discussion then people’s attention spans wane.
The best board meetings are discussions and debates about the business yet many executive teams spent their time wanting to walk through hours of slides on how great they’re doing. Humans do much better when they’re participating than when they’re being lectured to. The most value you’ll get out of your board is when they’re speaking and offering you feedback and experiences from others companies in which they’re involved.
I recommend that executive teams send materials out 72 hours in advance. I recommend that CEOs do 1–1 calls with board members prior to the meeting to walk through the high-level financials. And I recommend that boards have 2–3 strategic topics that they consider during the in-person meeting. If you run your board this way you’ll maximize the time you have together as a group and keep your board engaged.
How to Stop Board Members from Scrolling Ahead
Final bit of advice. Some teams print out materials and hand out a printed binder during the board meeting. Don’t be this team. While it’s tempting to have a bible for your board members you’ll just enable them to “scroll ahead” and look at future slides when they’re bored. If you serve up their distraction then you only have yourselves to blame when they don’t pay attention.
Sometimes board members print out your decks or financials in advance and bring their own print outs. It’s super easy to politely say, “If you wouldn’t mind I’d love it if you would leave your notes in your bag. I don’t want to be controversial but I would love to try and have everybody fully engaged in the discussion and to do so I want to make sure everybody is on the same page at the same time.”
Networking is a critical part of relationship building and there is no event more valuable to building relationships than the proverbial “breaking of bread” with people. I personally run many group lunches & dinners and I attend even more so I’ve developed a set of tips I often pass along in how to make these the most effective they can be.
This will seem very specific on how I do things. You don’t have to do them the same way but I figured if I gave you my playbook you could decide what’s comfortable for you.
Why a Board Dinner (or Lunch)?
Part of running a board is managing the board meeting itself where you share your financial and operating progress, discuss your strategy & plans going forward and get & give information to your board members. That is the basic function of a board meeting and this is often 2–4 hours depending on how early-stage or late-stage the company is.
Another part of managing relationships outside of the board construct is sending update emails and/or making regular, short calls to board members to keep them in the loop & solicit feedback as well as to create an open channel and build a relationship.
Managing a board is a bit like flying — the vast majority of time you’re at cruising altitude with the seatbelts off and there is nothing out of the ordinary. Every now and again you hit severe turbulence where people are grabbing the arm rests and panicked about what might happen next. It is at these moments that having steady neighbors around you telling you “everything will be ok” really comes into play and having a flight attendant who really knows what to do in an emergency can make a huge difference.
These existential moments come up with companies and with boards. To the extent you have warm, personal relationships between board members you often find a deep commitment to helping each other out with even the bumpiest of turbulence. Boards deal with companies that unexpectedly run out of cash, have lawsuits with customers or suppliers, fight off nasty competitors, deal with declining sales, manage founder in-fighting and so forth. Boards also deal with “good” hard problems such as “should we sell the company now” and if so should we take cash or stock.
Because getting out of the work environment helps build stronger personal rapport and because this rapport leads to more cohesive decision-making in tough times you should consider your board meals an investment today in better decision-making down the road when you need it.
You can’t expect board members to meet for a meal every time because with 4+ meetings / year people have other responsibilities and time commitments but work with your board on what works best for them. Zero meals per year is your loss.
When Should You Get a Private Room?
One of the strongest bits of advice I would give you is to be super anal about the physical environment of your group meal. If it’s a table of 4 you’re hardly going to ask for a private room in a restaurant but I would certainly pick somewhere extra quiet and visit it in advance to book the quietest table. If you care about the quality of your discussion and meal together you should care about noise, distractions and the like.
For any group of 8 people or more I always try to book private rooms in a restaurant and I will go out of my way to pick a restaurant that has a private room, which is infinitely more important than perfect food. Your goal is to have the best possible table discussions and to have time for everybody to get to know each other on a human level and that’s really hard if you can’t hear everybody speak. If you book in an open restaurant with a lot of noise what happens is each person talks mostly to the person to the right or left of them and a bit to the person across. This is sub-optimal — book a private room.
Planning a board meal isn’t an admin’s job — it’s your job. You can work with a great admin to help but you need to own the quality of the physical environment, ambiance and food. It matters.
Should There be a Topic?
My preferred structure is to start for a period of just general catch up with your neighbors. You should allow a period for general networking, a chance to eat your first bites of food and some casual catch ups. I usually recommend about 20 minutes of this if it’s a 2-hour dinner and about 10 minutes if it’s a 60–90 minute lunch.
After the initial kibitzing, I recommend standing up and doing a small toast (if it’s a dinner meeting) and introduce a “topic.” For boards this can be an issue you’ve been debating as a management team that you don’t plan to cover off at the board meeting or you can even go a little bit more fun and introduce a “get to know you” topic if the group is newer. The goal is to lead a table-wide discussion where you’re the facilitator. You can jump in to talk as well but your primary goal is the ring master and to make sure you’re doing the following:
Including everybody in the discussion — so calling on people who have spoken less or should have an answer to this topic
Politely jumping in to stop the ball hogs from monopolizing the conversation
Making sure the conversation doesn’t drift too far out of the strike zone of the intended discussion topic
Moving to the next topic if the conversation goes stale
I recommend that you have several bullet points on notecards to remind you of the topics you want to discuss so that if it’s getting a bit dull you don’t have to think on the fly what to cover. You have to read the room and the mood of the conversation but usually at some point people are talked out. At the point — often around desserts / coffee — it’s ok to drift back to general networking if need be. Or if you need a break you can announce during the main course “Please go ahead and eat. We’ll come back to table topics after the main course.” Every time is different — you have to learn how to be a great meal host.
When to Meet?
When you do a meal will largely depend on when your board meeting is. If you have a board meeting in the morning and if many people travel to your meetings you can easily ask for a dinner the night before. If you do, I would make sure that you don’t have a “pre board meeting” where you simply discuss everything you plan to discuss the next day. If you do this the board meeting will feel like a repeat and people will want to stop having a separate meal.
If you do the board meeting in the afternoon you have a choice whether to do lunch before meeting or dinner afterwards. I would mix it up a bit at various times of the year. Lunch is easier for people to commit to but it’s also more casual and people are thinking about the meeting they just came from or the meeting they need to go to. Dinners are better for relationships but come at a premium to schedule with busy people.
How to Handle Seating?
I generally prefer not to have assigned seating with names pre-assigned. My rationale is that when you do this you run the risk of every person wondering why they were assigned to the seat they were assigned to. There is every chance for unintentionally slighting people.
That said, I prefer not to be completely casual about it either. If you have 10 people at a dinner and 5 are non-management board members you could easily put a name tag on each plate of your company saying your company name so for me I would put, “Upfront Person” on name tags the table and space them out every other seat.
Who Should Attend?
I think board dinners are an excellent chance for your broader team to get to know the board. It’s both a way to reward senior executives with board exposure and relationships and also a chance to make sure your investors build strong, personal relationships with your team.
I would mix it up a bit. I would do some meals over the years with just the board and others where you bring the management team. If you have a big management team you can rotate who comes. At times I’ve enjoyed themes where, for example, one board dinner might invite just 6 members of engineering and another might bring sales.
The key is knowing what you want to get out of the relationships that are built. I would do the first meal with a smaller crowd because the first thing you want going is board member to board member relationships and then you can broaden out.
Where Should You Sit?
The middle. Always. If your goal is to be the ring leader and help control the discussion you should always sit near the middle of the table. When I arrive at a board dinner, in fact, the first thing I normally do is put something down on my chair near the middle of the table whether I’m hosting the dinner or not. Why? I figure if I’m putting in time for a meal I want the chance to talk to and interact with as many people as possible. It’s always hard to do this at the end of the table.
Why You Should Pre-Order the Meal
I love the idea of pre-ordering shared plates that can be passed around where possible. You can easily accommodate eating idiosyncrasies by making sure a few of the dishes are vegetarian and/or fish. At the start of the night (or before) I would ask whether there are any food allergies and/or eating requirements (kosher, vegan, halal, etc.) and treat these as exceptions.
If your goal is to have table discussions then you want to minimize distractions. There is nothing more distracting than a waiter coming around the table and asking people for their order and then bugging everybody to sit plates and ask, “wait, did you order the fish?”
I would pre talk with the waiting staff — almost apologetically — and tell them in advance that your goal is to minimize disruptions and to focus on the conversations. Some waiters feel like they’re the show and love to talk or tell you about the food or generally be the center of attention. This isn’t the night for that. They politely need to know before the meal starts.
Meals are an incredibly effective way to strengthen relationships and discuss important topics. Some boards feel more transactional in nature and these ignore the important social function of building strong ties across board members that are invaluable in times of need. It’s worth the extra effort and time to plan board meals and also to involve your staff.
Produce an agenda with very specific items and times associated with them
Produce a “pre-read” that is distributed at least 72 hours prior to the meeting (financial, strategic analysis, framing of key decisions you want made)
And importantly do brief “pre calls” with each board member to walk them through what you’re thinking and ask whether there is anything super critical in his or her mind that you’re not planning to cover
Good board hygiene is that you should hand out a printed agenda at every seat with times for each topic allocated. You’re allowed to deviate but if you do so make sure it’s a conscious choice.
If you do all of these things in advance you’ve already reduced the chance of going down a rat hole substantially. But it still happens. Here are the characters that take you there:
“The detail merchant” — Some people are just wired to want to ask 55 questions and understand every last detail. They don’t have a strong sense of “aperture” of their responsibilities. If they thought about it they’d realize that asking 55 questions is wasting the time of every board member and they probably don’t mean to do it — it’s just in their nature. A great way to deal with the “detail merchant” is to say, “these are great questions, how about if I put in a pin in it and you and I huddle up post meeting and I can walk you through it details. These are great questions. I’m just concerned we may not get through the agenda.” Most good natured people get the super polite hint — especially if you have a reputation for actually following up.
“The negative nelly” — These are people who can’t help but find fault with anything you present. You might have 5 really positive signs but his or her mind is wired to find the one thing that didn’t go well. If that thing is truly more important than others — fair enough. But if it’s just catching you out for the sake of it to make the negative nelly feel good — it’s your job as CEO to stop it.
“The distracted, senior person” — We’ve all been on boards with super senior investors or executives from companies who don’t read the materials in advance or are on their phones so they miss the tenor of the conversation. They ask 101 questions that were in the deck or they ask about topics you’ve already covered. Listen, it happens. As a fellow board member I try not to get too upset. But what drives me bonkers is when the CEO caters to this bad behavior by spending valuable time going through information that was already available. It is disrespectful of the time of the people who did do the pre-read and pre-call. If somebody isn’t paying a attention I would probably re-answer the question in the first instance to be polite. If it persists I would revert back to, “we covered that point a bit earlier. If it’s ok with you I’d really love to move on but I’m making a note to come back to it at the end of the meeting and make sure you get that answered.” (and actually write it down so they see it)
The ADD Director — This is near and dear to me because this is, well, me! I can’t help it. I sometimes get distracted by what you’re talking about and really want to ask you a question about something not on the agenda. I don’t mean to do it and if I get a gentle brush back I will gladly say, “oh, yeah, you’re right. I’m sorry. Let’s cover that later.” The problem with the ADD Director is that we literally can’t stop ourselves from asking whatever we want. The definition of somebody with ADD is somebody who has “impulse control” issues. Save us from ourselves. Politely answer any one line questions but don’t let us take you off track.
The Ally — This is what you need the most. You need an ally. You need a non-executive board member who is your point person to help keep the meeting on track. This is the person who will step up when you can’t. Have a code word so they know when to help. This is the person who says, “Steve. Your questions are great and I have some similar questions, too. I see Mary trying to stay on agenda and I think this is the agenda we all agreed. Would you mind if we just note that topic and try to come back to it at the end of the meeting? I’m really sorry but I just don’t have time to overrun and I’m worried this is taking us off track.” I’m this guy. I do it without being asked. My ADD is prewired to be super annoyed when meetings waste my time. I start mentally struggling to pay attention because I become distracted by the fact that we’re talking about something completely non-strategic and off agenda. Obviously if it’s a great question and a worth debate and needs to be covered — I’m in. But mostly it’s just somebody’s pet interest to talk and talk and TALK about and it’s off topic. A good CEO finds allies and gets help keeping meetings from going down rat holes.
So here it is in a nut shell. The reason most meetings that go down rat holes end up there is that you have one of the archetypes above who take a meeting off track. Often they do it with good intentions and are willing to behave when asked. Too many CEOs see it as their responsibility to answer every question asked, whether germane to the agenda or not. The problem with this is that it both disrespects the time of every other board member AND it reduces the time a board has to function productively as a group. And the problem is that most board members would rather bite their lips than to speak out against the time waster.
Most board meetings are administrative updates that accomplish very little other than inform board members about the performance of the company since the last board meeting.
That’s certainly one function of every board but if your board is your “brain trust” and the people you can most use as a sounding board to help you make the toughest decisions in your company and if its the one group truly privy to your most confidential information and your hardest choices then it’s a shame if you don’t get more value.
It’s also true that there will be tough moments in your company’s journey where you will want to be able to carry people behind the tough decisions you want. When people are problem solving WITH you they are more bought in because they’re part of the solution. If they only ever received updates then don’t expect them to be bought into tough decisions when you inevitably have the board meeting where the news isn’t positive.
If you buy into the argument that a strong board can actually help you then this post will lay out how to help you have more productive meetings by preparing properly in advance.
I’ve been sitting on tech boards for two decades so I have some experience with what goes wrong. The following is a narrative but if you have a lot of board experience I’m guessing this will sound all too familiar.
Board meeting gets scheduled
Nobody thinks too much about it until a week or two before
Management team has a last-minute scramble to pull materials together
Management is super focused on its daily work of … winning customers, signing biz dev, shipping product … so this prep is a last minute “fire drill” and is seen as a slight distraction. If polled a week before the board meeting a good number of founders would say, “I wish we could delay this meeting a couple of weeks” or “I really could do without having this board meeting at all.”
The board deck & financials arrive the night before the meeting. Investors who are traveling get to their hotels late at night. They decide to wake up early to read the materials. They quickly scan it before breakfast. They get reoriented with the numbers so that they aren’t caught off guard in the meeting. In town board members also only scan it because they, too, have morning meetings before the board meeting starts. Very few people turn up with a strong sense of “what we should be doing” or ready to lean into a productive conversation
The financials were prepared by the VP of Finance / CFO. The deck itself was produced by a committee of functional team lead who were asked to do 5–7 slides each for an update. There are too many pages. It passes the weight test. No board member will truly read and be thoughtful about the entire deck and no team can get through the entire presentation in the meeting. So the end of the meeting people will scramble to make the actual decisions with not enough time or consideration.
The law firm has done its job of preparing the stock option requests, board meeting minutes, 409a valuations. These arrive at the same time so given the choice of reading the deck and the financials or this stuff the board members haven’t pre-read all of these materials.
The meeting starts. It probably starts late. The board goes through admin approvals. Nobody knows how many outstanding shares are in the company so nobody knows what percentage Mary’s 22,475 shares is equal to. Admin times goes into figuring it out. The CEO asks for the board minutes to be approved from last time. Nobody readily knows what was discussed last time but the minutes are high-level so nobody cares. One person has read them so the board says, “if she’s fine, I’m fine” and they get approved.
Each section head reads his / her 5–7 slides. The CEO budgeted 20 minutes for each section but the first 3 take 35 minutes each so we’re already behind. We do a deep dive on financials. We have a few debates in each function because that’s what people do. If you put up 5 slides on “what should we order for lunch today” the board will spend 30 minutes debating that. People debate the information you put in front of them. Never put information in front of people if you don’t want it discussed. There won’t likely be any cohesive, structured debate about the most important items in the company unless you put it in front of people or unless a board member with experience escalates it.
The board members race out because the meeting was running over and everybody has his or her next meeting. The board didn’t agree much of substance, even if it was discussed. People are more-or-less updated. If the company is doing amazingly well everybody leaves in a good mood. If there were setbacks everybody starts to doubt but nobody says anything too substantive, because, well, no time was allotted for how to really make things better.
This isn’t a narrative of every board or every board meeting but it isn’t far off from many boards and board meetings. It should be your guide for what to avoid. This is what I might call the “inertia board meeting” because if you don’t put time & effort into how to get the most value out of your board meetings before hand — you are unlikely to get value on the day.
How to Make Your Board Meeting Really Effective1. Create a Set of KPIs for How You Manage the Business
You should start with a strong set of key performance indicators (KPIs) for how you run your business that your executive team uses irrespective of board communications. I know that’s obvious but I find that many management teams aren’t disciplined about how they measure success (other than standard financial reporting — and even that can be “seat of the pants” sometimes).
Once you have KPIs for how you manage you should run them by board members to find out if they think you’re missing anything. Make them do some work to agree what success would look like. Often board members themselves don’t do the work to say “what metrics would we like to see.” Sometimes they don’t even know.
Any great board member should tell you, “please don’t create any performance metrics or materials that analyze the business that you’re not already creating for your own management’s use.” No great board wants you distracted with doing a whole bunch of financial analysis that is strictly for board purposes. If you develop a strong set of KPIs for how you manage your business and then develop a regular pack that the board is used to seeing it shouldn’t require extra work to prep the quarterly board metrics pack.
2. Decide What Your Most Strategic Issues Are
About 6 weeks before your board meeting you should meet with the executive team who attends or prepares for board meetings and agree what the most significant issues the company is working on. This can include: Fund raising, product development choices, sales, marketing effectiveness, competition, business development, M&A … whatever. But what are the KEY ISSUES management is grappling with. You can write this as a narrative in 3–5 key bullet points. When you have these identified you can agree which items you think are relevant to the board. There are three tests whether this is relevant for your next board meeting
A. I need to disclose this item to the board so that they aren’t later surprised by it. It can be good news or it can be bad news — but it CAN’T be a surprise
B. This is an issue that is bubbling up and I’d like to get my boards input to make sure I’m thinking about it correctly
C. This is something that requires board approval. An obvious example is an annual budget and this usually is a large part of at least one of your annual board meetings. It can also be executive compensation, a big deviation from budget, raising debt, a RIF (reduction in force), etc.
3. Create a Short Strategy / Discussion Deck
Create a 5–10 page presentation in your favorite presentation software on any key issues you are grappling with. It’s sort of a “primer” for the board or as some CEOs call it a “pre read.” This is a way to frame the issue you’re wanting to talk about. If you have some key metrics or financial figures that go with the pre-read even better.
Example: We’re thinking about launching a new line of business
Our current product only has 30% gross margin
We could raise price, reduce costs or keep margin steady and sell more units
If we raise price we worry about competition since we have competitors already below our price point
We can reduce costs but it will take us 12 months to reduce the bill-of-materials
We can stay steady but given our customer acquisition costs we are concerned we won’t scale profitably
We therefore would like to launch an adjacent product. We think it will have a 30% attach rate to our core product. Our adjacent product has 70% gross margins so if we can get even a 20% attach rate we can hold prices steady on our core product and increase total margin from 30% to 38%
This is all made up but an example of what a single 5–7 page discussion deck might look like and what topic it might cover. Is this extra work vs. just turning up at a board meeting and presenting financials? Sure. But it’s a great discipline even internally for solving your most important decisions.
4. Create a Board Agenda
I would create a board agenda in advance with particular focus on topics and time allocations. Be very specific and purposeful about how much time you plan to spend in each area. It surprises me how poorly most boards are about time management and how much time boards allocate to less important topics and get stuck rushing more important topics.
The agenda should be purposeful. Think to yourself about the goals of the day, what is important to you and how much time you want to allocate towards it. If you start with admin (409a valuations, small stock option allocations, board minutes) and you then chew up 20 minutes with this — it’s your own fault. I hate starting with unimportant stuff. We travel by airplane to sit around considering 0.02% stock grants? In my mind the least important stuff should be at the end of the meeting. That way if you’re squeezed for time you either rush the admin (if it’s truly just admin) at the end OR you can approve it via a UWC (unanimous written consent) after the board meeting or schedule a 15-minute admin call in between board sessions to approve this.
Save your agenda for the things that matter most to you.
5. Get Your Financial Deck Out 72 Hours in Advance
90+% of financial packs come out 1–2 days before the board meeting and I think 65% come 1 day before. There is limited way for board members to read them, digest them, compare them to the last board meeting, write up questions. It’s no wonder your board meeting becomes a financial update meeting. You can’t expect your board members to get a deck at noon the day before a board meeting but then not have 3 other meetings the day before so at best they’re likely reading them in the evening. If you establish a pattern of 3 days in advance (72 hours) nobody has an excuse for not reading them and you have strong grounds for not doing a deep dive on them during the board meeting.
6. Send Your Agenda to Each Board Member Individually / Set Up Calls in Advance
Send the agenda in advance and ask for “pre calls” to see whether they’d like to add items to the board agenda or whether they think these topics are the right ones. If you have the time to get your strategy deck done early it’s also worth sending.
I think the best run boards the CEO has 30–45 minute calls with each non-exec board member before the actual board meeting to walk through the financials 1–1 and walk through the strategy information and the agenda.
I think this is critical for a few reasons:
You make sure every board member truly understands your performance and turns up on the day ready for a discussion / debate
You can find out what they really think about the critical decisions you need to make. That way if they think you need to add to your agenda you can. If they disagree with a decision you can understand why. If you want their support for a hard decision you can figure out where they stand
Think of your pre meeting like a congressional whip “counts the vote”
Pre-calls also help you with 1–1 rapport building so that you’re more in control of the room when you’re all together.
Is this “overhead?” Yeah, probably. But it’s part of managing a board, which is part of running a company effectively. If you manage the pre-game, you have a better game. If you drain financial issues before the board meeting you can spend more time on critical discussion and less time on information dissemination.
I’m sure not every board member agrees with my assessment of how to prepare for great board meetings. Some members probably hate pre-calls, which they see as overhead. Some members probably want most of the board meeting to be a review of financial information. I personally don’t think they’re right but it doesn’t matter what I think. What matters is that you figure out how to best work with YOUR board. Decades of experience has taught me that early pre-planning makes for much more effective boar meetings. But even more important than that is having a board that agrees.
Disclaimer: I’ve been on dozens of boards over the years. I am not talking about any individual company. I promise. If this sounds like your company and that I’m talking about you — it’s only because this is how > 50% of boards are run. :)
I’ve sat on many boards over the past 2 decades and seen my share of high-functioning boards and low-functioning boards. Here are some observations I have from this exposure:
If a company moves from strength-to-strength with predictable outcomes, easy financings, low staff turn-over, limited competitive threats then the composition of the board probably doesn’t matter as much. Even the best companies with the best outcomes, however, usually hit some difficult moments where a highly-functioning boards matter.
In the best cases boards come together to help the company get through its trough — in the worst cases infighting can mean an otherwise great potential business is hampered with in-fighting, misaligned incentives and drama.
High-functioning boards have a tight-knit relationship between all members based on mutual trust and admiration. They are able to divide responsibilities and work to gain consensus on tough decisions that every startup inevitably faces.
It sounds obvious, I know. But you can’t take it for granted that your board members will naturally commit to building meaningful relationships with each other. Your role as a founder who brings on board members should be to understand the importance of the team dynamic and try to foster better human relationships so that in the future when you need people to work together for a common purpose a trust and rapport has been formed.
As an investor board member I see this as my immediate goal, too. I work hard to create working relationships with my fellow non-management board members in the same way that every investor ultimately works to develop strong working relationships with founders.
What are the kinds of difficult tasks that need to be solved by boards?
What should the cash burn rate of the company be and how long of a cash runway should the company maintain? (this requires a working understanding of the cashflow statements and key levers)
What should the compensation of key executives in the company be? (this requires a strong knowledge of market data, employee performance, company performance relative to market and available resources — cash & unallocated stock options)
Should we raise capital, from whom, how much and at what price?
Should we cut costs, do layoffs, close divisions and focus scare resources on fewer projects?
The founders of a company are fighting. Can we help them get along? Or is it time for one of them to go? And if so, who should leave and who should stay?
I find that some founders are insecure and hate the idea of his or her board members talking without them present. In fact, last year I was in a board meeting where we asked for time to meet and strategize without the executive team. We were trying to get aligned around a complicated set of issues and since it had new board members we hadn’t all had time to bond and align ourselves yet. The founder kept coming in and interrupting and showing signs of visual frustrations. I tried to explain to him that it was a healthy thing that we were all speaking.
Part of the way you get high functioning boards is to spend social time together. It isn’t always possible but when it is I recommend that you try to building in casual time for breaking bread or a drink before or after a board meeting as a way of building human bonds that lead to higher functioning boards.
I practice what I preach. Every year I invited my largest investors to NYC to have an LPAC meeting (Limited Partner Advisory Committee — kind of like a board for a VC firm). We do lunch where everybody has a casual conversation followed by 6 hours of content and discussion. We then do a cocktail party so that everybody can have informal conversations (including LP to LP) and then we do a dinner in a private room at a restaurant. During the dinner I do half of it casual (chit chat with your neighbors) and half of it group “table topics” where we share ideas.
Whenever I’ve faced my toughest moments or biggest decisions as a VC firm, having trust with my LPs and vice versa goes a long way.
Low Functioning Boards
If you’ve been around startup boards for a while you’ve undoubtedly experienced low-functioning boards.
Many of us have sat on boards with fellow board members who don’t seem to read the board materials before the meeting. Much time is wasted during the board meetings teaching this board member remedial information.
Some boards are ineffective because management chooses to treat the board more as a perfunctory “update” rather than truly engage the board in strategic decisions.
Some boards are designed to showcase each and every member of management by having everybody lead a 20-minute update only to find out that no time has been allotted for discussion or debate. I call these “filibuster” boards.
Some board members spend all of their time in the meeting on electronic devices doing email or even checking social media. I’ve seen both quite a bit. Some board meetings all of the members dial in and you can tell aren’t as engaged as they otherwise would be in person.
Sometimes boards are misaligned due to incentives. One board member comes from a small VC fund hoping to exit early while another has written a $50 million check and expects different decisions to be made.
Sometimes boards are ineffective because management doesn’t schedule enough time, meetings don’t happen frequently enough, key issues aren’t debated.
Sometimes boards have members with no skin in the game and no personal responsibility in outcomes. These board members can be cheerleaders for management in good times but avoid the really hard decision in tough times as they get caught between founder & capital disputes.
And of course there are always the ineffective boards that have too many members, too many +1’s that speak up, too many customers on the board making it hard to discuss difficult issues. In fact, in some of these cases you even seen shadow boards set up that often meet on different occasions.
Summary: Making Your Board More Effective
Chose the right members. Be thoughtful about their skills and motives. Build personal relationships. Spend the time to make sure they’re updated BEFORE the board meeting. Test how they’re feeling about you, the company, fellow board members — know your politics. Be responsive to any issues. Make sure the board member to board member relationships are strong and don’t assume it will happen on its own. Be thoughtful about what you hope to achieve.
A high-functioning board comes with active management and you actually have to care about having a high-functioning board. It’s an easy thing to overlook because often you won’t need to rely upon in. But if a crisis ever arises all of the preparation you put in will be invaluable.