Board Meeting Thoughts
I totally agree with Fred on the value of face-to-face meetings. I also admire Fred's determination to be at out-of-town Board meetings in person. To me, that is a must. I have been in many Board meetings where someone was on the phone. It's a distraction, and you know that they aren't paying 100% attention. I don't blame them. It's hard to follow a multi-person conversation over the phone. Of course, you miss out on the body language, too. My own personal attendence record at Board meetings is above 95%.
Just as VCs tend to have a higher hurdle for out-of-town deals, I think that entrepreneurs should have their own higher hurdle for an out of town investor. What evidence is there that an out-of-town investor will put in the face time to get to know the company? Do they have a network that can be helpful to you? Many times, non-Silicon Valley companies try to add a Bay Area investor to get some visibility and access to contacts in the Valley. That makes sense to me, but most of your Board members should either be local or have a track record of showing up.
I also liked Fred's comment on putting in time beyond just the meeting to get to know the company and the other directors. I have seen others do the same. One person I brought in as an independent director at a past investment flew in to every meeting and planned to spend about one full day beyond the meeting with the company -- meeting with management, having dinner with the CEO, one-on-one meetings with other directors either before or after the formal meeting, etc. This made them a much more effective director.
I'm less in synch with Brad on his point of 80% of the meeting being forward looking. I think that some directors gravitate to that -- they don't have the patience for operational details. I haven't been on a board with Brad, so I'm not describing him. But, I have been on boards with other directors who only pay attention to the big strategic points.
I'd favor more of a 45% operational, 45% forward looking, and 10% administrative split. I think that there is a ton to be gained by looking at how the CEO and management team are running the company. You can spend a lot of time discussing strategy, but if the company is dysfunctional, it will never be able to execute against these great strategies. I believe that more companies fail due to poor execution than due to a failed strategy.
One good approach is to have an operational overview at each meeting, with an emphasis on different departments on a rotating basis. This also gives the Board a chance to see some of the other executives in action as each executive should present their department details. You can also learn something of the team dynamics to see how all the executives interact.
Another lesson I have learned is that the CEO has the opportunity to control the meeting and the agenda. Only a weak CEO loses this. The best CEOs keep the meeting on track and communicate surprises in advance. This allows the directors to get their emotional reaction out of the way in advance of the meeting. The focus of the meeting should be to build consensus among the board members, or at least have a discussion which leverages their broad points of view.
One last thought -- there should be detailed action items captured in a Board meeting, with reporting back at the next meeting on the status of these action items (even if the CEO decides to abandon a particular item). Don't lose the decisions that are made at these meetings. Early stage companies probably have board meetings once per month, so there are probably a lot of short-term decisions made. Later stage companies slow down to once per quarter, and the decisions probably have more long-term impact.
I'd be interested to hear in the comments about other things people like or don't like in Board meetings.