Designing the Ideal Board Meeting – The Board Meeting
This is the 4th post in my Designing the Ideal Board Meeting series. I hope this series so far has helped you think a bit differently about how you approach the lead-up to your board meetings. By the time you walk into the meeting you should have a clear agenda that everyone has agreed to, one or two areas of the business that you plan to dive more deeply into, prepared materials that are of a style, length, detail and consistency that efficiently and effectively brings your board up to speed on the business and have been communicating with your board regularly so that there aren’t any big surprises in store for them when they get to the meeting. Here are a few things to consider in setting up the meeting itself: …
November 1, 2018· 11 min read
Designing the Ideal Board Meeting – Your Board Package
This is the 3rd post in my “Designing the Ideal Board Meeting” series. I didn’t mention this in my prior post but thought of it as I started writing this section on how to put together a good board package. Companies often bias to wanting to hold their board meetings a few weeks after the end of each quarter. The rationale is that this allows the board to review quarterly results. For private companies, I think this is a mistake. For starters, since this is a general bias across the industry you’re fighting for your board member’s time just when everyone else is as well. Not only are these meetings hard to schedule but you’re asking your board members to focus on your business at the same time they’re distracted by being asked to focus on a bunch of other businesses. I also think this is a bad idea because it sets the tone that your board meeting should be focused on reporting. It shouldn’t, as I’ll outline below. Reporting is important but often for startup boards not a very good use of the time you have together. Now – on to the topic at hand, putting together your board package. …
October 24, 2018· 10 min read
Designing the Ideal Board Meeting – Before the Meeting
All good board meetings start well before the meeting itself, so let’s start there for this series on board meetings. Timing – how frequently should you meet? Most boards plan meetings a year at a time. That makes sense given busy schedules, but leads to the question of when and how often should a board meet. As a good rule of thumb, most startup boards meet quarterly (in fact, most boards of any kind meet about this frequently). This cadence feels appropriate for the level of work that’s involved in putting together board level materials and for a board to perform the appropriate level of governance. There was a time when it was typical for venture boards to meet monthly for a full board meeting, but this frequency – at least in our experience – was too much. Overly burdensome on a company and management and not a very effective or efficient use of everyone’s time. It also reinforced the idea that I touched on in my intro post that the board was an operating body, which it is most certainly now. …
October 18, 2018· 6 min read
Designing the Ideal Board Meeting
This is the first of a multi-part series on Board Meetings. The question of what the ideal board meeting looks like comes up quite a bit in my world and I’m hoping to add my voice to the debate through a few posts (with what I hope will be clear and actionable advice). We’ll cover the creation of a board agenda, the board deck, pre-board communication, how to best run a board meeting, decision topics vs. discussion topics and post meeting follow-up, among other ideas in the coming weeks. …
October 18, 2018· 2 min read
Resilience
When asked recently if I could describe the attribute that is most important to becoming a successful entrepreneur the word that came to mind was “resilience”. I don’t hear it talked about much in the context of entrepreneurship, but I think it perfectly captures the combination of the ability to bounce back from the adversity, challenge and failure that goes hand in hand with being an entrepreneur while at the same time recognizing and learning from your mistakes. The best entrepreneurs we work with have an uncanny ability to face challenges head on, recognize where they’ve made mistakes, learn from them and move on. That last part is critical – dwelling on your prior mistakes serves no one, slows you down and makes you less likely to trust your future decisions. Great entrepreneurs learn, bounce back and then go on to the next thing. …
August 21, 2018· 1 min read
What’s a Fair 409A Discount?
Quick note: I’m not your lawyer. I’m not giving legal advice in this post. Back in the olden days of venture capital, company boards had wide discretion in pricing company options. As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the company as well). However the board could determine what that fair market value was and, generally speaking, there wasn’t a practical way that these valuations could be challenged. Most boards did some level of work to determine the FMV of a company’s stock but generally options were priced between 10% and 15% of a company’s then preferred price (because common equity sits behind preferred equity there is typically a discount applied to the FMV of common stock to account for this “overhang”). It was and is imprecise science but – at least in the case of venture backed startups – there wasn’t much harm in an option being priced low. It was a benefit to employees and a slight value transfer from equity holders to option holders (generally speaking in M&A transactions the value of the aggregate option exercise ends up allocated across the rest of the cap table). In a funny way it also benefitted the IRS in terms of tax collections as employees were taxed on the spread between the option and the value of the stock on exit and since these shares were typically exercised at the time of an exit were subject to short term capital gains. Higher strike prices distributes proceeds away from short term gain tax to equity holders who more typically are paying long term gains on the value that was shifted (I’m skipping a huge amount of nuance and detail here but the above is a general representation of how things work). …
August 15, 2018· 4 min read
Different vs. More
I’ve had this conversation with a number of founders recently and thought I’d post something here about it in the hopes that others see it/resonate with it as well. In the world of startups we often talk about “more”. More funding. More sales. More efficiency. More. More. More. And, of course, there are plenty of times when “more” is appropriate. When something is working, and working efficiently, doing more of it is often the right call. …
July 31, 2018· 2 min read
How to Build a Better Network
A few notes before I jump into this. First, I realized in running through several drafts of this post that it can be hard to talk about networking without coming across as a bit cold or transactional in how one approaches relationships. I hope the note below doesn’t come off that way – my aim was to talk about something that I really care deeply about and offer some ideas for how to strengthen and deepen the working relationships in your life. Secondly, I’d like to thank Patrick (who I reference below) for his review and feedback of several drafts of this post – it was very much appreciated (and needed). …
May 1, 2018· 6 min read
Friday Fun #6 – You Had One Job
As internet memes go, You Had One Job is a fun one. There are a few versions running around but the one I pay attention to is the Twitter handle @_youhadonejob1. Full of amusing pictures of things gone a little awry… Happy Friday!
April 20, 2018· 1 min read
What’s The Optimal Portfolio Strategy for a Venture Fund?
Last year I wrote a few posts (here and here) that talked about how skewed venture returns were. The key take-away graphic from that post is below – outsized returns on venture investments are rare. Much rarer than most people realize. A key question my post didn’t consider was what the ideal venture portfolio might look like in the face of these data. Steve Crossan took a stab at modeling the answer to that question using the data from my Outcomes post. It’s an interesting read – you can see his full analysis here. Interestingly, we pondered this exact question at the very start of Foundry Group. Nassim Taleb’s book, The Black Swan had just come out and we decided to read the book and discuss its implications for the venture firm we were about to start in late 2006. I imagine many of you have read the book (if not, I’d highly recommend it) – the basic premise is that humans do a poor job of understanding the likelihood of unusual or improbable events.Black swans are rare but just because you’ve personally never seen one doesn’t mean they don’t exist. Compounding this error, humans are also poor at understanding the causes of these unlikely events after they take place (we misattribute their causes and as a result continue to make poor judgements about their likelihood of reoccurrence). …
April 16, 2018· 5 min read