I have something to admit – yes, we do ask the CEOs with whom we have the pleasure of working to do a weekly written board update (email typical) after we invest. I just got one on email to review this evening. In fact, I often am happy to forgo a monthly board meeting (and instead do every other month) if the weekly update shows up regularly. Some CEOs completely embrace this task and say something like “I do this anyway” (which is music to a VC’s ears). Others do not at first and this can be difficult. I should add that before we invest, we bring up the “update”. There is nothing surprising about the ask post investment.
So, why do we like the updates (with “we” being me and my partners and other board members in particular):
1. Shows discipline. The update does show that the CEO has his/her act together and can concisely communicate to the board. I have never come across a board member that does not appreciate receiving regular updates. Conciseness if the key. The update should be a fast process, perhaps 30-45 minutes.
2. Shows execution ability and areas of concern. When asked what should be in the update, I often suggest just give your “top 3” and “bottom 3” of the week. Top 3 high points of the week and top 3 concerns. The updates are typically 1 page or 1-2 pages. Short and crisp, and it keeps the board fully engaged. It allows the CEO to fully utilize the board better as well.
3. Amazing communication tool. The update can be used to communicate with the board obviously, but is also a great piece to circulate among the top management team. It keeps focus. It keeps accountability. It keeps all eyes on the collective ball. Keeps a healthy dialog among key constituents. I suggest erring on the side of over communication.
4. Amazing fund raising tool. Most of the CEOs I work with have used their updates as fund raising tools (sometimes with appropriate redactions). It is simply a fantastic way to show a potential new investor the level of communication and hopefully progress. It is an amazing way of dialogging with existing investors as well and helping assure that they will be there in the future for additional support. Communication = comfort in investors’ minds and comfort = support.
5. Minimizes surprises. The update can be used as a great board management tool. I love it when a CEO or founder says to me “Zach, that was addressed in the update from 2 weeks ago – read it again.” Sure, I might have additional questions, but that is one of the very purposes of the update. The update should surface key issues and keep surprises to a minimum. If routinely done, it provides the CEO with an amazing board management tool.
6. Enhances the quality of board meetings. With routine updates, the actual board meeting can almost always focus on strategy (which is what a board meeting should focus on anyway). The updates will keep the board in the loop on the tactical ups and downs – often no need to cover again at the board meeting.
I am fast approaching my self imposed 500 word limit (just tripped it actually). There are others benefits as well and I honestly cannot think of any downside to the weekly update. Should take 30 minutes and ultimately save hours of communication time.