Brad Feld and Jason Mendelson of Foundry Group have just published a new book that is getting great reviews. Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist.
See Brad’s post on the book here. Add it to your library. I just ordered it.
Brad Feld just posted about his dismay with the lack of understanding from a host of parties regarding financial statements. As a former lawyer, non-MBA type, I have had to do a lot of catch up myself in this area. Learning on the job has been beneficial. Here is Brad’s post.
Brad indicates that he intends to do a series on financial statements. I will re-blog them as they come out. Should be very useful.
In the past 3 or 4 days, I have received blog notices from Brad Feld, Fred Wilson and Steve Blank that they are on vacation. For Fred and Steve, I think the purpose was to let their readers know to expect fewer or no posts while they are enjoying a break (actually Fred’s is apparently a combination of work and vacation). For Brad, I think the purpose is to share his travel adventures, the status of his marital workings with Amy (his wife), his woes of getting adequate internet access on his phone, and what restaurants he is enjoying :).
All this vacation news got me thinking about CEOs and other executives giving notice about their vacation plans. While I think it is kind of funny that Brad, Fred and Steve feel compelled to let the world know that they are on vacation, the more important question to me is whether or not a startup board should know the vacation plans of the company’s executives. Assuming the answer is yes, what level of detail is needed?
I would seem to me that knowing at least a month in advance is probably best. Knowing where they are going would be good (but some folks might find that intrusive). But honestly, if someone is visiting Somalia it might impact some planning activities. I also think it is helpful to know whether or not the executive plans to be online while away or otherwise reachable.
As I write this, it all sounds like common sense. But I remember one instance where an executive took off suddenly just prior to the closing of a financing without notice. It caused some anxiety to say the least.
The flip side is true to me as well – key board members should make sure that they tell the CEOs when they will be on vacation. I will be out the week of July 25th, but will be online and otherwise reachable on my cell.
Anyway, I am interested to know what you think. Just don’t send pictures from your vacation……
Some of you know my feelings about the incredible value of a startup CEO sending out a weekly update to the company’s board. See The Weekly Update.
Steve Blank has taken this to a new level – put it on steroids. In his post today he writes about having an enhanced version of the weekly update replacing board meetings for companies that are in the angel funded stage. I am not sure if eliminating board meetings completely is the right answer, but I currently recommend fewer board meetings (one half in fact) for companies in our portfolio that practice the weekly update routine (and that applies for those well beyond angel funding). The real time updating is teamwork at its best. I could be convinced that Steve is right. It is all about results driven communication between the management team and the board and often certain investors.
Here are links to Steve’s posts. Enjoy.
Reinventing the Board Meeting – Part 1 of 2
Reinventing the Board Meeting – Part 2 of 2 – Virtual Valley Ventures
Interesting conflicts can arise when a non-CEO founder is on the board of directors of a startup.
Assume that Jim is the tech guru founder of Company X. Jim founded Company X with Al, a self proclaimed entrepreneur. Company X raises some venture capital, and after about a year Jim goes to his non-management board members and basically says “Al has to go”. See my earlier post Tech Founder Wins at Early Stage. So the board fires Al and, after a search process, hires Brett as the new CEO; Brett is thus hired in as a non-founder CEO. After the management change there are 5 directors, namely Brett, Jim, 1 VC rep and 2 independents.
The interesting conflicts arise for Jim. He is both a board member and also, as the tech guru (make up any “C” title you want like CTO or CSO), reports to Brett, the CEO. Depending on Jim’s personality, Jim may find it difficult to speak his mind at a board meeting for fear of pissing off Brett “his boss”. Jim might not want to risk management harmony day to day. He might have a sense of loyalty to his boss and not want to show disloyalty at a board meeting by taking a contrary view or raising issues that the CEO does not think important. These are just some examples of potential conflict.
My general feeling is that it is imperative for the non-CEO board member to truly act like a board member at all times. He/she has to accept the dual role and so does the CEO. I think that this should be discussed ahead of time with all parties (and by that I mean the entire board) to help ensure that it happens. The dual role is not easy to handle for some people.
Open communication at a startup is critical. The tech guru board member needs to be able to speak up and voice issues freely. Granted, tech founders sometimes have a different sense of business reality than others, but having them talk freely at board meetings is super important. Each board member should feel unencumbered and empowered. The independent board members should be relying on the non-CEO founder board member to gain additional insights, etc.
I am not suggesting that the CEO and tech founder director should not try to work out issues ahead of board meetings. Rather, I am suggesting that Jim be expressly encouraged to voice differing opinions openly, freely and as needed. Discussion will follow and the board will function better for it.
Happy Memorial Day!
ithaca VC 