A few weeks ago, I posted that Foundry had made the decision to remain out of the office until at least June 1st. We’re fortunate that we’re in the position to work effectively this way – because of the kind of work we do and the way our company is set up (not to mention that we’re a team of 14). While we miss seeing each other, we felt it was safer to keep everyone at home.

I’d actually been thinking for months before the crisis about the changing nature of work and had intended to write a post titled something to the effect of, The Future of Work Is Remote – a trend that I thought would be accelerated when some famous remote tech companies such as Automatic (a parent company of WordPress) went public and the world could see just how productive and effective a fully remote workforce could be (wish I had written that – would have been a great reference point right now). In our own portfolio, we have a few companies that are primarily remote – TeamSnap and Help Scout come to mind, as examples. There are many across the portfolio and almost all have some remote workers or at least a satellite office. Most of these “remote” companies also have a main office of some kind that at least a subset of their employees comes to. But often that office is laid out more like a co-working space than a traditional office, allowing for more flexibility for how it is used. One of the main advantages of remote work is that you can hire the best employee for any role, not just the employee that happens to be in your town. This was a huge advantage when the job market tightened and talent for specific positions got tight and we saw companies who were more flexible about remote work be able to take advantage of individual contributors across the country and across the world.

Of course, now many people are talking about working remotely and how the experience of forced WFH because of Covid will have lasting effects on how companies organize their physical relationship to their employees. Fred Wilson from Union Square wrote an interesting post about the future of work last week, which was particularly thoughtful.

For Foundry, we have decided that we are not going to reopen the office until at least Labor Day (that date could move out but it won’t move up). We concluded that this was the safest thing to do and felt like we wanted to eliminate some uncertainty for our staff (more on the topic of uncertainty soon – in a time of uncertainty around just about everything in our lives, providing some amount of certainty, even about something as simple as when employees will asked to come back to the office, can make a big difference). We also felt that this extended period would give us the chance to lean into work at home. As one of our portfolio CEOs said on a recent call, “You can either become world-class in working from home or world-class in creating a safe work environment. It feels like the better thing is to focus on the former.” I totally agree with this sentiment and we felt unprepared to create an office environment that would be fully safe for our staff. But we did know we had the structures in place to be very effective working from home and to continue that for a long period. To be sure of that we did a few things to make sure that everyone was well set up, such as giving everyone a budget to make sure their home office environment was as productive as possible and paying for internet access. Most importantly, we’ve put in place business structures, communication plans, and a regular cadence of stand-ups that allow us to stay connected (in some ways, more effectively than when we were all in the office together).

Obviously, not all businesses have this ability and many businesses need some or all of their employees in an office either to access specialized equipment and machinery or because of the nature of their business. But for those businesses that are able, we would encourage you to consider setting a date for returning to the office that is well in the future to provide some certainty for your staff and to keep the pressure off of the system as states start to open up.

In times of fiscal challenge you can always count on government to come up with some pretty bad ideas to fund deficits. House Bill 1192 is a particularly egregious example of one such boneheaded idea.

The bill as it is currently constructed would place a tax on all software purchased or installed in Colorado. This is a tax not just on the software industry but on every business that uses software. And it’s an incredibly stupid idea.

According to the Colorado Software and Internet Association there are more than 5,500 software, hardware and IT businesses in the state and approximately 175,000 IT professionals (with a total payroll of nearly $5Bn). Across the sate there are thousands of additional businesses that make use of technology to run their businesses. All would be effected.  At a time when we’re trying to encourage business growth and new hiring, HB 1192 will have the opposite affect, stifling job growth and actually lowering overall tax receipts as businesses (smartly) move employees out of state and shift open recs from Colorado to states that don’t impose such a tax.

This sort of thing is unbelievably frustrating. My partners and I (along with many advocates for technology businesses in Colorado) spend countless hours advocating for the state of Colorado (despite the fact that we invest nationally, not just in our back yard).  We’ve invested in companies that have created thousands of jobs in Colorado.  We actively encourage new businesses to form here, existing businesses to move here and people who fund businesses to look locally for opportunities. Passing HB 1192 will be an outstanding way to undermine these efforts.

California, Massachusetts, New York, Colorado. That’s the order of states with the greatest dollar value of seed and early stage investment according to a PWC MoneyTree study that my partner Jason blogged about today. $290M invested in 41 companies based in Colorado in 2011. Compare that with 2006 when Colorado ranked 12th on the list with just under $90M invested in 32 companies.

That’s an incredible achievement and says a lot about the state of the entrepreneurial ecosystem in Colorado and our rising profile on the national stage. I’ve written extensively on why Boulder specifically, and Colorado in general, are great start-up markets (see here, for example). And these data show that the work and effort of many people in our state is paying off. I often tell people when they ask me how to replicate the success we’ve had here in Colorado that the journey is a long one. When building an entrepreneurial community one needs to take a 10+year view of the effort. When I think back to what the Colorado market looked like when I joined the venture industry about 12 years ago (based here, but working for a CA firm), it’s almost hard to fathom the changes. And while the number of venture firms located in Colorado has diminished significantly in that time, the overall entrepreneurial environemnt has really flourished. All giving support to what I believe to be a key truth about our industry – entrepreneurs come first!

So congratulations to all the great Colorado entrepreneurs who have made this state a great place to start and build a business.

Andy Blackstone had a great comment to my post yesterday on Atul Gawande’s New Yorker article about explicit behavior (in the case of the article, doctors using checklists). I’ve edited the comment slightly for clarity.

An important concept in the article is that the checklists are not aimed at a specific condition but at an overall process in the ICU. One of the objections I often encounter in my consulting practice is “my business is different” – I’d contend that at the process level that’s most often not true. The resistance to adopting these checklists often comes from doctors that think the “art of medicine” is being threatened by the regimen of the checklist. In my practice, I see sales managers and salespeople with the same objection. In fact, as the article states, it is the reduction of the routine aspects of the process to the rigors of the checklists that enables the art to emerge. Finally, I was struck by the feeling of the doctors in the ICU that there was just no time available in the midst of their chaotic day to deal with checklists – a reaction I’ve seen in lots of business managers as well. This is a major barrier to implementing any new business process. The success of checklists in the ICU in not only reducing accidents, deaths, and costs, but in making the doctors time efficient, can be seen as new business processes are implemented as well.

It’s the perfect lead in to some thoughts about what’s wrong with many sales organizations – a topic I’ve been meaning to write about for a while). Sales, in my experience, is significantly more scientific than people typically give it credit for. And because people (sales professionals, CEOs, boards) don’t always see sales that way, they let slide behavior that is counterproductive to the overall goals of the organization (i.e., to sell more and – importantly – to sell with increasing efficiency and predictability). Specifically, the lack of a detailed and well documented process for sales results in:

• Salespeople wasting huge amounts of time on deals that are hopeless, because there’s no enforced checklist that keeps them from continuing to pursue opportunities where essential events aren’t being checked off
• Sales cycles that languish while salespeople have “good meetings” instead of checking off the next task on the sales process checklist
• Executive management, sales management, and BOD members searching for the magician that will improve the “black magic” sales situation instead of incorporating and enforcing process that ensures success independent of superstar performance
• Turnover in the sales organization but without improved performance
• A lack of predictability in sales performance (lumpy and generally random sales results)
• A stagnant pipeline – sales people can’t handle as many deals as they should be because they’re spending too much time on deals they shouldn’t be working on and the deals themselves take longer than they should because they’re not actually being pushed through a real process
• “Fuzzy” pipeline reviews (where every deal has a story associated with it, but where the basic questions of where the deal stands are never really answered)

   

High performing sales organizations have real rigor in their process and religiously enforce that rigor from qualifying leads, to initial contacts, to how they move a prospect through their pipeline to an extremely detailed “closing” list that guides an organization through the final stages of each close. They use this rigor to determine which leads to follow up on, what prospects are real, and what steps remain to a sale for each and every potential customer. They quickly put prospects onto a hold list when they don’t meet specific near-term buying criteria and they generally have a good view of what’s possible at the end of each quarter because they know exactly what steps remain for each prospective customer, who needs to sign off on what, and how they will (or will not) be able to make that happen in a timely fashion. Pipeline reviews are focused around where a prospect is in the sales process and are crisp reviews of each account (a few minutes is more than enough time to cover an account at a high level – spending more time than that is either wasting time or a sign that the “story” is covering up the lack of real progress or understanding of that account). Every sales person (not to mention the VP and CEO) can take you through the stages of an account, the “[insert company name] way of selling”, and the closing process. In short, the entire company is on the same page around what it takes to turn a prospect into a customer.

All of this isn’t to suggest that sales as a discipline and sales people as practitioners of that discipline don’t possess skills that range far beyond the ability to check items off a list. To the contrary, skilled sales people are extremely nuanced in their ability to understand the buying patterns of their prospects, navigate the internal landscapes of customers and, of course, effectively convey the value proposition of the product they are selling. But sales people are human and – like doctors in an ICU – benefit from the rigor and oversight that is provided by process.

Thanks to Andy for sharing his thoughts on this subject with me in both his comment and in email (which I borrowed from liberally in writing this post). Head to his site to see more about the sales process work he does at Blackstone Associates.

Credit to Brad for this one – I had completely forgotten about it when he sent it to me (I waited for him to blog it, but he’s been out of town so I thought I’d put it up).

Remember the wayback machine?

www.waybackmachine.org.

It lets you search for old versions of web sites.

Want to know what Yahoo’s site looked like in October of 1996 – here you go .

How about Netscape that same month (makes you wax nostalgic, doesn’t it?) .

Google beta anyone?

Miss the Nasdaq at 4,800? Here it is.

Enjoy!

My partner Chris Wand and I will be in Seattle tomorrow and are hosting a meetup about Techstars (in case anyone missed the event a few weeks ago that Brad held there).  Info can be found at www.techstars.org/meetups.

There’s a great scene in Office Space where the movie’s heroes check their ATM balance after one of them has written a program to scrape tenths of pennies off of Paymetech (the movie’s fictional company) transactions. The guys figure this action will both go unnoticed and also generate a relatively modest sum for them. Instead when they check their balance it turns out that the sum of their tiny rounding transactions actually equated to over $400k to them over a weekend!

It’s a funny scene (and a funny movie) but the moral here is actually important: The sum of a large number of small actions can be huge.

Today we’re announcing the launch of Pledge 1%. A joint effort between The Entrepreneurs Foundation of Colorado, The Salesforce Foundation and The Atlassian Foundation, Pledge 1% encourages entrepreneurs and companies to give back to their local communities through a gift of equity, profits and/or product. With Pledge 1% we’re aiming to aggregate a large number of smaller transactions to create meaningful impact.

For years we’ve seen the benefit of companies giving back to their communities through the Entrepreneurs’ Foundation network. Since it’s founding 7 years ago, EF Colorado alone has generated over $3M in direct philanthropy back to local non-profits. And we’ve seen participating companies benefit from the incorporation of clear values from their very founding.

But we can and should do so much more. 

Pledge 1% aims to encourage all companies to incorporate a small pledge of philanthropy into their corporate culture through the pledge or gift to a non-profit of their choosing. This gift can be in the form of stock from the company, a pledge of stock from founders or other employees, gifts of time, gifts of profit or gifts of product. We’re encouraging the entrepreneurial community to put a stake in the ground around the importance of giving back. Pledge 1% acts as a clearing house for these gifts and pledges with simple tools to encourage and facilitate giving. In addition to myself, the Pledge 1% founders include Mark Benioff of Salesforce, Ryan Maretns of Rally, Scott Farquhar of Atlassian, Jeremy Stoppleman of Yelp and Dan Siroker of Optimizely.

Check out what we’re doing at www.pledge1percent.org. And join me in making the pledge.

I love the way the mind works. I spent years studying cognitive psychology, which was my college major (I was the psych geek who paid you $3 to sit in front of a computer for 10 minutes and take a test where what I told you I was testing for was not what I was testing for . . . ).

My dad sent me the following link, which is pretty fun.

http://www.patmedia.net/marklevinson/cool/cool_illusion.html

Probably the most consistently overlooked “best practice” in venture backed companies is the CEO review. In my experience most companies provide little, if any, structured feedback at the CEO level. Perhaps the board or the members of the compensation committee might provide the CEO with limited (and mostly ad hoc) feedback at the beginning of each year when/if a CEO’s bonus for the previous year is awarded. More often the CEO review is essentially a review of the numbers vs. the financial plan. While that step is important, so is a meaningful discussion of the strengths and weaknesses of the CEO and ways they can improved their performance based on the collective input of the board and other mangers at the business.

I think skipping the CEO review is a huge mistake and I’m working within my portfolio to start implementing a standard CEO review process. Not only is it important for CEOs to get regular, meaningful and structured feedback on their performance, I think a properly organized review process can serve as the basis for an ongoing conversation between the board and the CEO that extends beyond the review period itself. My partner Brad likes to say that the three most important things that VCs do for their companies are 1) make CEO hiring and firing decisions; 2) aid in capital raising and financing strategy; and 3) help facilitate exits. Managing a real CEO review process fits squarely into category 1 which more broadly interpreted is really about managing the success of a CEO.

For those of you looking for a template for this review, here’s what a colleague used for one of the companies we work on together (and which I’ve now used a few times; I’m not sure if this was a form that she put together or that was passed on to her from another source). Feedback of this type should be collected from the board and all of the CEO’s direct reports (and can be expanded to include other important investors and other managers in the business, although may need to be modified some to work in those cases). While incorporating specific feedback is important, I’m not in favor of showing a CEO the raw information that is collected in this process. Instead someone from the board should be appointed to manage the process of collecting information and distilling feedback into a format that is both direct and actionable for the CEO. Finally this person and one other representative of the board should sit down with the CEO and review the feedback in a structured format that focuses on highlighting the positive aspects of the CEO’s performance as well as specific areas that s/he can improve their performance.

_________________________________________

(rate performance on a 1-5 scale, 1 being least favorable and 5 being most favorable; provide support for your rating in the space provided):

Vision: Creates vision and strategy. Communicates vision and strategy both internally and externally.

Leadership: Ensures the support and execution of the vision and strategy by:

1. Establishment and communication of priorities;
   
2. Driving change for improvement throughout the organization;
   
3. Team-building; and
   
4. Creation of high performance environment.
   

Operating Management: Develops and executes sound long-term and annual business plans in support of approved strategy. Manages operations and resources efficiently and effectively.

Values and Integrity: Maintains consistent values and exemplary conduct. Promotes positive corporate culture to reflect corporate mission statement.

Shareholder/Investor/Financial Community: Serves as chief spokesperson, communicating effectively with shareholders and stakeholders. Is well regarded and respected by investment and financial community.

Strategic Partners: Maintains personal rapport with strategic partners through open, ongoing communications

Human Resources: Ensures the development of effective employee recruitment, training, and plans and programs to provide and motivate the human resources necessary to achieve objectives.

Public Relations: Ensures that the company and its operating units contribute appropriately to the well being of their communities and industries. Represents the company in community and industry affairs.

Board Relations: Works effectively with the Board of Directors to keep them fully informed on all important aspects of the status and development of the Company. Facilitates the Board’s governance, compositions, and committee structure. Implements Board policies and recommends policies for Board consideration. Supports a relationship characterized by trust, mutual respect, open communication and responsiveness to feedback. Uses Board meetings effectively.

Financial Results: Financial Results – Establishes appropriate annual and long-term financial objectives and manages to consistently achieve these goals; ensures that appropriate systems are maintained to protect assets and maintain effective control of operations.

Key Challenges in the Year Ahead:

Thoughts and Concerns:

Other comments:

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.

Communicating between meetings. Your board meeting shouldn’t be the only way you’re communicating with your board, of course. This varies from company to company but you should certainly be sending around monthly financials (with some discussion/overview thoughts). Many CEOs we work with send out semi-regular updates as well – typically in email format – to keep the board apprised of business operations. Some companies I work with also provide me either access to their management dashboard (KPIs that drive the business) or include me on a daily or weekly automated KPI email that gets sent to the senior team. Others feel that’s too much data and prefer not to. I had one company (since sold) that put me on their automated “won sales” email distribution list so I received an email every time a deal moved into the close/won category (although tbh, this got to be a bit much over time). How much you share of the day to day operations of your business is up to you. We’ll talk later about overall transparency and about not “managing” your board but the general idea between meetings is to generally keep your board apprised of the key things that are going on at the business so they’re better prepared to absorb the more detailed information you share with them for board meetings.

It’s also worth noting that some level of direct communication is helpful here as well. The cadence of that communication varies but you should be in touch with your board regularly so they feel connected to you and connected to your business. Some CEOs like this to be scheduled (a weekly call with their main investors or a regular breakfast or lunch with their board members) but it doesn’t have to be that rigid. And if you need the board’s time between meetings, ask for it. We have many companies that schedule a regular 1 hour operational update between their quarterly board meetings (not full board meetings and where no official board governance business takes place). But always when something comes up that the board should discuss together as a group, don’t be shy about asking for everyone to get together on a call or video.

Setting and communicating the board agenda. Plenty has been written about getting board materials out early and I’ll add my voice to that later in this series, but what’s often missed in these discussions is the importance of setting a board agenda in advance and communicating that agenda ahead of the board meeting and ahead of materials being sent out. This should be done 10 days to 2 weeks in advance of the board meeting. Lay out the agenda and be specific about what topic(s) you’d like to go deeper on with the board. Ask them if there’s anything they’d like to add to the agenda or if there are specific topics they’d like to be sure are covered. Much of the agenda remains the same from meeting to meeting but the meat of your board meeting should vary from meeting to meeting(my next post will include a lof of additional information on the creation of your board materials) . Setting this up in advance and making sure your board is aligned and has input into what key topics will be discussed is important. And should happen well in advance of the meeting.

To call or not to call. Some CEOs like to call each board member ahead of every board meeting. I hate this. For starters it can feel a bit forced and disingenuous. But really I don’t like it because it ends up evolving into a mini board meeting before the board meeting. I think CEOs like to do this because they’re following the “there shouldn’t be any surprises in a board meeting” advice (see below), but if you’re regularly communicating with your board that shouldn’t be an issue. And, importantly, by having a mini board meeting before the board meeting you also lose one of the most powerful benefits of getting everyone together in the first place – talking together as a group vs. getting one-off advice. It’s also pretty inefficient for you as a CEO. If you’re regularly communicating with your board there shouldn’t be a need for 1:1 calls with everyone before each meeting.

No surprises. The benefit of clear, regular communication and setting the agenda publicly and early is that board members shouldn’t be surprised about what’s going on at your business in the board meeting. It’s a cliche not to deliver completely new news in a board setting, but in this case the cliche exists for a reason. Surprising your board in the meeting isn’t an effective way to get good advice from your board. Of course, there are occasionally some issues that require company counsel to be present for the conversation (to preserve privilege) and can’t be specifically spelled out in an agenda or don’t lend themselves to detailed pre-meeting discussion or dissemination. These need items need to be treated differently and you may only be able to communicate that existence of an item that needs to be discussed at the meeting itself. But as a general rule, avoid surprises.

Coming up we’ll stay in the time period before board meetings and talk about the preparation and dissemination of board materials.