5 ms·

"It turns out to be really good for a company to have a board -- it focuses the company if everyone knows they have to present the key metrics to outsiders once

by hglaser 12y ago

"It turns out to be really good for a company to have a board -- it focuses the company if everyone knows they have to present the key metrics to outsiders once a month. ... If I could ask VCs for only one thing in this new world, it’d be to keep showing up for board meetings." This is very interesting. If ownership percentages at Series A are trending down, and investor time & emotional investment per company is trending down as a result, but having outside accountability predicts success, then I wonder how the best companies will replicate outside accountability. Put another way: How could you hack a replacement for a board meeting? I'm a funded entrepreneur without a board. I've tried nominating advisors and/or very-helpful angels as our "pseudo-board" and meeting monthly. This didn't help very much: There's something about having a lot of skin in the game that makes board members really prepare, take it seriously, and summon courage to have hard conversations with CEOs when things aren't working. The one thing that worked pretty well was bolting a whiteboard over the desk area with this month's single goal (a revenue number, natch) and value so far. I don't have any board experience to compare it to, but it certainly keeps us focused. Anyone else have ideas that have worked, or might work?

deleted 12y ago
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sparkzilla 12y ago
Who needs a board when you've got a whiteboard!
claudiusd 12y ago
Your board (and VCs by extension) are not the only accountable 3rd-parties... I'd argue that they're not even the best accountable 3rd-parties because they're interests are not necessarily aligned with yours - VCs have limited partners to worry about. Look no further than your customers for great 3rd-party accountability. If they love and use your product, they will pay you more money and recommend you to others. They should be the only thing that matters. In fact, by not having a board you have the luxury of only being accountable to them.
steveplace 12y ago
>How could you hack a replacement for a board meeting? Mastermind groups.
- Alupis 12y ago
  The valuation bubble will eventually burst -- the question is when? The gross over-valuations occuring today are not sustainable -- the companies that are being purchased for billions USD are not actually worth that much. $16 Billion for an instant messaging company, $2 Billion for a research company with no product. Now everyone feels they are worth Billions when in fact, not only 3 years ago these companies would have sold for maybe a few hundred million USD at best.
  - rqebmm 12y ago
    I see them as merely a correlation of the overvaluation of tech companies, not a continuation of the bubble cycle. Most of those huge acquisitions are done with stock, and if that stock is overvalued, so is the purchase price, even if the purchase price was correctly valued once you control for the price of the stock. Take WhatsApp's acquisition which is the holy grail of overvaluation. If you think Facebook's stock is way overvalued, then Facebook may have correctly valued WhatsApp's price. If you remember it was initially announced as 19b before Facebook's stock devalued it to 16b in the face of the seemingly hilarious overpay.
yesimahuman 12y ago
We just did a late-seed round from a VC firm and didn't set up a board. Something that has worked for us is doing a bi-weekly Google Hangout that has no agenda. The rule is no one prepares for it, but we just talk about stuff at a high level. So far it's been really helpful. We don't feel unnecessary pressure to prepare decks with stats and metrics on things that aren't important or will be changing quickly (plus I have the key ones memorized anyways), yet we communicate frequently enough that issues can be tracked closely and fixed. It also works that we had only one firm in the round so coordinating it is easy. Might not work if you have lots of angels or other investors.
- mncolinlee 12y ago
  While it's an interesting approach that helps the founders by providing advice, no metrics doesn't do much for accountability. How do you ensure someone points out the digital elephant hiding in the Google Hangout room?
  - yesimahuman 12y ago
    Of course we talk metrics, we just don't prepare them formally. And we don't have to because our dashboards are pretty much real time anyways (which we sometimes jump into through screen share).
001sky 12y ago
The fundamental questions seems to be (1)"what is the purpose of a BOD"; and (2) are the "good things" the primary purpose of the BOD or the emergent phenomena that happen as a result of (#1). In other words, will (#2) type events happen outside the context of (#1). And this includes changing (#2) type things to be (#1) at a formal level.
opendais 12y ago
Wouldn't Buffer-like transparency be just as effective, honestly? The thing implied seems to be "The process to generate the presentation to the board == Value due to focus on key metrics." If you know what your key metrics are, if you have to provide them to outsiders once a month, does it matter if the outsiders provide feedback or not? It seems not as long as the only goal is focus on the key metrics. Only flaw would be if you picked the wrong metrics, but if you picked the wrong metrics...would you really have succeeded anyway?
- namenotrequired 12y ago
  My guess is that the knowledge that you will get feedback is significant, because the worry about what the feedback will be like forces you to focus better. That said, public transparency probably has the same effect.
  - opendais 12y ago
    If it is buffer like transparency, the VC can still read through and provide feedback at their leisure. No commute or anything. ;) At least to me, lowering the effort results in more/better participation.
lifeisstillgood 12y ago
My father-in-law works really well as someone I am scared to report key metrics to. We can always find someone we respect and fear (just a little) and yet has enough business background to make intelligent judgements. It is really up to us if we want to have the judgement, and put ourselves in thrall to that judgement.

by hglaser 12y ago

deleted 12y ago

[deleted]

sparkzilla 12y ago

Who needs a board when you've got a whiteboard!

claudiusd 12y ago

Your board (and VCs by extension) are not the only accountable 3rd-parties... I'd argue that they're not even the best accountable 3rd-parties because they're interests are not necessarily aligned with yours - VCs have limited partners to worry about. Look no further than your customers for great 3rd-party accountability. If they love and use your product, they will pay you more money and recommend you to others. They should be the only thing that matters. In fact, by not having a board you have the luxury of only being accountable to them.

steveplace 12y ago

>How could you hack a replacement for a board meeting? Mastermind groups.

Alupis 12y ago
The valuation bubble will eventually burst -- the question is when? The gross over-valuations occuring today are not sustainable -- the companies that are being purchased for billions USD are not actually worth that much. $16 Billion for an instant messaging company, $2 Billion for a research company with no product. Now everyone feels they are worth Billions when in fact, not only 3 years ago these companies would have sold for maybe a few hundred million USD at best.
- rqebmm 12y ago
  I see them as merely a correlation of the overvaluation of tech companies, not a continuation of the bubble cycle. Most of those huge acquisitions are done with stock, and if that stock is overvalued, so is the purchase price, even if the purchase price was correctly valued once you control for the price of the stock. Take WhatsApp's acquisition which is the holy grail of overvaluation. If you think Facebook's stock is way overvalued, then Facebook may have correctly valued WhatsApp's price. If you remember it was initially announced as 19b before Facebook's stock devalued it to 16b in the face of the seemingly hilarious overpay.

yesimahuman 12y ago

We just did a late-seed round from a VC firm and didn't set up a board. Something that has worked for us is doing a bi-weekly Google Hangout that has no agenda. The rule is no one prepares for it, but we just talk about stuff at a high level. So far it's been really helpful. We don't feel unnecessary pressure to prepare decks with stats and metrics on things that aren't important or will be changing quickly (plus I have the key ones memorized anyways), yet we communicate frequently enough that issues can be tracked closely and fixed. It also works that we had only one firm in the round so coordinating it is easy. Might not work if you have lots of angels or other investors.

mncolinlee 12y ago
While it's an interesting approach that helps the founders by providing advice, no metrics doesn't do much for accountability. How do you ensure someone points out the digital elephant hiding in the Google Hangout room?
- yesimahuman 12y ago
  Of course we talk metrics, we just don't prepare them formally. And we don't have to because our dashboards are pretty much real time anyways (which we sometimes jump into through screen share).

001sky 12y ago

The fundamental questions seems to be (1)"what is the purpose of a BOD"; and (2) are the "good things" the primary purpose of the BOD or the emergent phenomena that happen as a result of (#1). In other words, will (#2) type events happen outside the context of (#1). And this includes changing (#2) type things to be (#1) at a formal level.

opendais 12y ago

Wouldn't Buffer-like transparency be just as effective, honestly? The thing implied seems to be "The process to generate the presentation to the board == Value due to focus on key metrics." If you know what your key metrics are, if you have to provide them to outsiders once a month, does it matter if the outsiders provide feedback or not? It seems not as long as the only goal is focus on the key metrics. Only flaw would be if you picked the wrong metrics, but if you picked the wrong metrics...would you really have succeeded anyway?

namenotrequired 12y ago
My guess is that the knowledge that you will get feedback is significant, because the worry about what the feedback will be like forces you to focus better. That said, public transparency probably has the same effect.
- opendais 12y ago
  If it is buffer like transparency, the VC can still read through and provide feedback at their leisure. No commute or anything. ;) At least to me, lowering the effort results in more/better participation.

lifeisstillgood 12y ago

My father-in-law works really well as someone I am scared to report key metrics to. We can always find someone we respect and fear (just a little) and yet has enough business background to make intelligent judgements. It is really up to us if we want to have the judgement, and put ourselves in thrall to that judgement.