@Jeffrey - Very on point as usual. Its amazing to me how people do not collaborate with their advisors or investors. I once had a conversation with a founder whose business I was looking at for investment. I asked him how often he met with Wozniak, who was pictured and listed on their website as an investor. He said that he only spoke once when he made the investment in a round 1 year before that. I was shocked and asked him why he doesn't get more feedback and support from him and what I got back shocked me. It was obvious that he only looked at him as "Eye Candy" for his website. I followed with a point that someone like Wozniak is not just a provider of cash, but someone who liked what they were doing and would be happy to support the company as any smart investor would... I said, "all you need to do is ask." The entrepreneurs response was... " I don't need his help..." Needless to say, I did not invest. And, the business is nowhere to be found. UNBELIEVABLE!
Investors like Wozniak are often vanity metrics. It also helps to know if they actually invested, and what their deal is. Sometimes, they get extra stock for allowing their photo/name to be used (like a NIL deal!) If you know their check size it helps too.
Great advice for all private companies, whether start ups or not. If the management communicates regularly with their investor base, it can pay dividends for them in multiple ways including leads and help in problem solving. And then when and if the next funding round is necessary, when management comes courting again asking for an additional cash infusion the investors might be inclined to be less cynical in their view regarding whether management regards the as partners in the enterprise or just individuals whose wallets may be able to be pried open when support is needed and the projections for reaching break even cash flow have proven optimistic.
This is a real problem both from the perspective of an inexperienced CEO not really understanding the CEO - Board of Directors and the BOD not laying out its charter.
Every board upon which I served, I always gently nudged the board to create a Board Charter (as well as the required committees and committee charters) and in this charter I would insert a list of recurring reports and what specific things the CEO had to obtain Board approval upon before taking action.
I was always surprised how few people initially saw the wisdom of this approach and how easy it was to sell.
Defining the CEO - Board relationship is critical to a smooth working relationship. It creates a degree of clarity that builds confidence that the right things are being done. What we measure, we manage.
I also used to insist upon a master agenda for every board meeting. The agenda listed 26 items even though only 4-5 items would actually be discussed at the board meeting. I also insisted upon a time commitment on the individual agenda topic.
The board book -- required a week before the meeting -- would report on all 26 and if any boardmember wanted an update on something not on the agenda, that boardmember could nudge it onto the agenda.
Every one of those 26 items had backup material supporting whatever was the status of the subject. I was keen on graphing data.
With modern accounting systems, there is no excuse for not creating a suite of reports drawn directly from the accounting system. This is a simple feature of every accounting system.
@Jeffrey - Very on point as usual. Its amazing to me how people do not collaborate with their advisors or investors. I once had a conversation with a founder whose business I was looking at for investment. I asked him how often he met with Wozniak, who was pictured and listed on their website as an investor. He said that he only spoke once when he made the investment in a round 1 year before that. I was shocked and asked him why he doesn't get more feedback and support from him and what I got back shocked me. It was obvious that he only looked at him as "Eye Candy" for his website. I followed with a point that someone like Wozniak is not just a provider of cash, but someone who liked what they were doing and would be happy to support the company as any smart investor would... I said, "all you need to do is ask." The entrepreneurs response was... " I don't need his help..." Needless to say, I did not invest. And, the business is nowhere to be found. UNBELIEVABLE!
Investors like Wozniak are often vanity metrics. It also helps to know if they actually invested, and what their deal is. Sometimes, they get extra stock for allowing their photo/name to be used (like a NIL deal!) If you know their check size it helps too.
Great advice for all private companies, whether start ups or not. If the management communicates regularly with their investor base, it can pay dividends for them in multiple ways including leads and help in problem solving. And then when and if the next funding round is necessary, when management comes courting again asking for an additional cash infusion the investors might be inclined to be less cynical in their view regarding whether management regards the as partners in the enterprise or just individuals whose wallets may be able to be pried open when support is needed and the projections for reaching break even cash flow have proven optimistic.
Great list Jeff. I'd only add a (short) update on material changes in staff/new hire needs. Often investors know of good candidates for jobs.
This is a real problem both from the perspective of an inexperienced CEO not really understanding the CEO - Board of Directors and the BOD not laying out its charter.
Every board upon which I served, I always gently nudged the board to create a Board Charter (as well as the required committees and committee charters) and in this charter I would insert a list of recurring reports and what specific things the CEO had to obtain Board approval upon before taking action.
I was always surprised how few people initially saw the wisdom of this approach and how easy it was to sell.
Defining the CEO - Board relationship is critical to a smooth working relationship. It creates a degree of clarity that builds confidence that the right things are being done. What we measure, we manage.
I also used to insist upon a master agenda for every board meeting. The agenda listed 26 items even though only 4-5 items would actually be discussed at the board meeting. I also insisted upon a time commitment on the individual agenda topic.
The board book -- required a week before the meeting -- would report on all 26 and if any boardmember wanted an update on something not on the agenda, that boardmember could nudge it onto the agenda.
Every one of those 26 items had backup material supporting whatever was the status of the subject. I was keen on graphing data.
With modern accounting systems, there is no excuse for not creating a suite of reports drawn directly from the accounting system. This is a simple feature of every accounting system.
JLM
www.themusingsofthebigredcar.com