(Post 3 of 4 in the series of Scaling CRO’s- the other posts are When to Hire your First Chief Revenue Officer and What does Great Look like in a Chief Revenue Officer).

If you’ve hired a “great” CRO (see previous post) you might think that you’re set for a long time and that the great CROs are also able to scale. Not always, and you’ll have to check to make sure that your CRO is scaling and growing as much as your company. I’ve found that there are several telltale signs that your CRO isn’t scaling and fortunately, they are easy to spot and easy to correct.

First, if your CRO gravitates to being an individual contributor sales rep and focuses on closing big deals instead of mentoring sales managers and sales reps to do that work on their own, that could be a sign that your CRO lacks the confidence to be a true executive.  The risk in being an executive is not that you can’t do the work, it’s that you don’t trust your team to do the work. To be clear, sometimes the role of a sales leader (or a CEO) is to swoop in and help close a big deal–sometimes.  But CROs who can’t shake their addiction to closing deals almost never build enough of that muscle into their organization and end up creating unhealthy dependency on themselves. Worse, they do not create a career path for others in the sales organization to learn and take risks. 

Second, I’ve found that a CRO who gets the sales commission plans out in March or April instead of January or early February is maybe someone who can’t scale.  While it’s true that, in a lot of businesses, it’s very difficult to get sales commission plans out until after the year starts, getting them out after late February is a sign that your CRO doesn’t have enough of a grip on numbers, isn’t partnering effectively with finance, doesn’t care enough about their people, or isn’t good at prioritizing the important over the urgent when needed. Obviously, if this happens once it’s not a big deal, but if you find that the CRO is the last person on your team to get their plans together year after year, that’s a telltale sign that maybe they’re in over their heads. You might hear them say, “They’ll all be fine, they know I’ll take care of them, the plan is a lot like last year’s.” That might be okay for the majority of the sales team but it won’t be good enough for the best reps who are constantly doing Sales Math in their heads.  It’s a lot easier to mentor or CRO, or find a new one, than to build a new team of dedicated sales reps.

Finally, a sign that your CRO isn’t scaling is if they regularly deliver surprises at the end of the quarter – both good and bad surprises.  A “surprise” every once in awhile is not a big deal, but regular surprises are a big deal and that tells you something important about the CRO: They might be incapable of scaling and the surprises are coiming because your CRO doesn’t have a good grip on the pipeline and in particular on larger deals. Either they don’t have a grip on the pipeline or they are bad at managing expectations; or both!

( You can find this post on the Bolster Blog here)

I love stealing/borrowing other people’s good ideas for management and leadership when they’re made public, and I always encourage others to do so from me. I call it “plagiarizing with pride.” So I was intrigued when I saw a new way of doing all-hands meetings published by my friend Daniel Odio (DROdio) on his founder community called FounderCulture. You can see the original post here.

We’ve experimented with different formats and cadences for all-hands meetings over the years. They tend to vary with the size of the company and complexity of the material to cover. Larger companies usually fall into the rhythm of doing quarterly all-hands meetings sometime after the end of the quarter, usually around a Board meeting, with a quarterly recap and forecast for next quarter.

But for early stage companies, there’s no tried-and-true method. We struggled with that for a while at Bolster. Weekly felt too much. Quarterly felt like too little. It seemed weird for me or my co-founders to just have a meeting where we talked at everyone…and it also seemed weird to just host an “open mic night” type meeting. Then I saw DROdio’s video, and we adapted it. It’s working pretty well for us. Here’s what we do in what we’re calling our Open All-Hands Meeting:

• We hold an all-hands meeting every Monday for :30
• A different team member is responsible for being the host/chair/emcee for each meeting
• We run the meeting off of a dedicated Trello board with specific columns of information. Everyone is invited to contribute to the Trello board in the days leading up to the meeting. The columns are:
  • Values-Kudos-Good News: Anyone can call out anyone for doing something that demonstrates one of the company’s values, that is just a big thank you, or that is some other piece of karmic goodness they want to share
  • Wins: All client wins are shown here with some detail, each in its own card with its owner highlighted
  • #MAD: This is where we trade items on which we Made A Decision during the prior week, big or small. We’ve always struggled with the best way to keep everyone informed on things like this…and this works really well for that purpose
  • Learnings/Product Ideas: Anyone can populate this with anything they want as they go about their work and either come across learnings or product ideas they want to share
  • Announcements: Pretty self-explanatory, any corporate announcement, new employee introductions, etc.
  • Swim Lane Updates: Each we, we ask one or two of our functional or project areas to do a deep dive update — Product, Finance, Sales, Marketing, Ops, etc. — and this is also where we’ll do product demos of newly released functionality
  • Permanent Items: this isn’t a column that’s read…it just warehouses things we want on the board like the schedule of hosts, schedule of swim lane updates, instructions for running the meeting, recordings of prior meetings
  • BOLSTER 2022: this isn’t a column that’s read…it contains our mission, values, strategy, and key strategic initiatives and metrics for the year
  • Archive: this isn’t a column that’s read…it just contains the prior week’s items
• There’s a series of light integrations between Slack, Hubspot, and Trello to automatically populate Trello based on certain channels, keywords, and emojis. Every week, the board is automatically wiped clean after the meeting
• The host moves the meeting from column to column and card to card, sometimes reading the cards, and sometimes asking the person who submitted the card to read it or give color commentary on it
• I do jump in from time to time, as do some of my co-founders or our other leaders, to give extra commentary or amplify something or help connect the dots. But that’s about as formal as my role gets other than…
• …when we do have a quarterly board book and board meeting, I host that one meeting and recap the meeting, ask other leaders to comment on specific topics, and facilitate Q&A on the materials we send out ahead of time. So I’m hosting 4 meetings per year
• The host can add a personal touch to any meeting. Custom wallpaper for the Trello board. Asking everyone in the company who has a pet to send in a photo of the pet ahead of time and introducing their furry friends during the meeting. Playing intro or outro music to fit the occasion. Doing spot surveys or game show questions to keep things lively. Interviewing new team members. Asking everyone to do a one-sentence “here’s what I’m working on this week” at the end of the meeting
• Finally, the host passes the baton from one person to the next each week. No one can escape this responsibility!

In addition to the Open All-Hands Meeting format, I send the company an email every Friday with some musings on the prior week. The content of these varies widely – from “what I did last week,” to “here’s something I saw that’s interesting,” to welcoming new team members with their bios, to customer testimonials. Sometimes other founders write these. They’re a good way to add a personal touch to the operating system of the company — and we also send these to our board and major shareholders every week so they, too, can keep a finger on the pulse.

These two things together are proving to be a good Operating System for keeping everyone informed, aligned, and connected on a weekly basis.

(This blog post was first published as an article in Entrepreneur Magazine on April 15.)

Creating strong boards can help propel a board forward. Weak and ineffective boards hold a company back.

As a CEO, one of the most important (yet overlooked) tools in the playbook is building and leading a board of directors. Throughout my 20+ years of entrepreneurship, I’ve led four companies (including Bolster, where I’m a co-founder and CEO today) and served on eight boards. I’ve learned that strong boards can help propel a company forward and I’ve also witnessed how weak and ineffective boards can hold companies back. Mediocre or mismanaged advice, plus lack of accountability, can do long-term damage to a business as well.

Drawing from personal experience and anecdotes from dozens of Bolster’s client CEOs, here are some tried and true “Seven Habits of Highly Effective Boards.”

Habit 1: Begin with the board in mind

A lot of CEOs treat board curation as an afterthought, which means that boards tend to consist largely of who happened to be in their network at the company’s inception: investors. CEOs also tend to treat their boards as a distraction or an annoyance. Both of these lines of thought are problematic. 

Boards should be viewed as a CEO’s second team (along with their management team), as a strategic weapon that helps the company succeed and as an opportunity to bring new voices and perspectives. Research has shown the more independent and diverse a board is, the better it performs.

Habit 2: Be proactive about board recruiting

Devote as much focus to building a board as to building the executive team. This process is time-consuming and can’t be delegated to anyone else. Aspire to reach people who may feel out of reach. Asking someone to join the board is a big honor, so that ask becomes a good calling card. When recruiting, interview as many contenders as possible, don’t be afraid to reject those who aren’t a good fit and have finalists audition by attending a board meeting. Source broadly, too. Diversity is really important for many reasons; challenge any recruiter, agency or platform to surface diverse board candidates.

Habit 3: Keep your board balanced using the Rule of 1s

Whether it’s a three-person startup board or a seven-person scale-up board, it should include representation from all three director types: investors, management directors and independents. A few basic principles on board composition that work well are what I call the Rule of 1s: First, boards should include one, and only one member of the management team: the CEO. Even if co-founders or C-level managers are shareholders, don’t burn a board seat for a perspective that you have access to regularly. Second, for every new investor to the board, add one independent director, which is the biggest opportunity to introduce external perspectives. If your board gets too crowded with subsequent funding rounds, ask one or more investors to take observer seats to make space for independents. And don’t be afraid to change your board composition over time. Companies are dynamic and boards should be, too.

Habit 4: Cultivate mutual accountability and respect

While a board might seem intimidating, work past the power dynamic and push toward collaboration and mutual accountability. To ensure board members are prepared for meetings, keep commitments and leverage their networks, set the example by demonstrating preparation, consistency and reliability. By regularly delivering pre-read materials to the board several days in advance, the board will build a new habit. By soliciting feedback from board members after each meeting (and even offering them feedback), you’ll show the board that you’re listening. Over time, they’ll lean in, too.

Habit 5: Drive intellectually honest discussions

Even on the healthiest leadership teams, it can be scary to disagree with or challenge a sitting CEO (after all, they are still the one in charge!). But this power dynamic flips in a boardroom, which gives that group a unique opportunity to push and challenge business assumptions. While it may be tempting to look for board members with softer dispositions, it can be more beneficial to have tough, direct board members who aren’t afraid to express their opinions, but who are also good listeners and learners. My favorite discussions are conversations where I’m pushed to consider a different direction. It helps get more done, surfaces better ideas and increases the effectiveness of the company.

Habit 6: Lean in on strategic, lean out on tactics

Even board members who are talented operators have a hard time parachuting into any given situation and being super useful. Getting operational help requires a lot of regular engagement on a specific issue or area. But they must be strategically engaged and understand the fundamental dynamics and drivers of your business: economics, competition and ecosystem. This is an easy habit to reinforce in meetings. If board directors drift toward getting too tactically in the weeds, that’s great feedback to offer after the meeting.

Habit 7: Think outside the box

Good board members understand all the pieces on the chess table; great board members go one step further and pattern match to provide advice, history, context and anticipated consequences. This is an enormous benefit to CEOs focused on the minutiae of the day-to-day, particularly if a business operates in a trailblazing industry where many of the rules may not yet be written. As a CEO, if you’ve never seen something first hand before, it’s hard to get clarity and external perspectives, which is why it’s crucial that great board members bring pattern recognition and “out-of-the-box thinking” to their role.

At the end of the day, boards are there to support and direct a company. There’s no perfect formula, but by implementing these steps with a few healthy habits, CEOs can cultivate strong, dynamic boards for their companies.

The Value (and Limitations) of Benchmarking

I think I am starting to drive my team nuts a little bit. I have suggested, prodded, and executed a ton of external benchmarking projects this year, all of which have different leaders inside Return Path doing both systematic and ad hoc phone calls and meetings with peer companies and aspirational peer companies to understand how we compare to them in terms of specific metrics, practices, and structures.  It’s some combination of the former management consultant in me rearing its head, and me just trying to make sure that we stay ahead of the curve as we rapidly scale our business this year.

Why go through an exercise like this?  One answer is that you don’t want to reinvent the wheel.  If a non-competitive comparable company has solved a problem or done some good creative thinking, then I say “plagiarize with pride,” especially if you’re sharing your best practices with them.  The reality of scaling a business is that things change when you go from 50 to 100 people, or 150 to 300, or 300 to 1,000 — and unless you and your entire executive team have “been there, done that” at all levels, or unless you are constantly replacing execs, there’s not exactly an instruction manual for the work you have to do.

But a second, equally valuable answer, is that benchmarking can uncover both problems and opportunities that you didn’t know you had, or at least validate theories about problems and opportunities that you suspect you have.  Learning that comparable companies convert 50% better on their marketing funnel than you do, or that they systematically raise prices 5-7% per year regardless of new feature introduction (I’m just making these examples up) can help you steer the ship in ways you might not have thought you needed to.

What are the limitations of benchmarking?  As our CTO Andy said to me the other day, sometimes no one else has the answer, either.  We do run into this regularly – for example, a tough technical problem where literally no one else does it well like disaster recovery.  Or in how to solve channel conflict problems or streamline commission plans.

Also, sometimes you find out that you are actually best in class at a particular function.  In those cases, while one could just chalk up the exercise to a waste of time, I still think there is learning to be had from studying others.  And if there are a couple other companies who are also best in class, I always encourage group brainstorming among the top peers about how to push the envelope further and be even better.  This can even take the form of a regular peer group meeting/forum.

On the whole, I find benchmarking a good management practice and in particular a good use of time.  But like everything, it’s situational, and you have to understand what you’re looking for when you start your questioning.  You also have to be prepared to find nothing – and go back to your own drawing board.  Good entrepreneurs have to be great at both inventing and, as I noted above, plagiarizing with pride.

To Err is Human, To Admit it is Divine

Forget about forgiveness.  Admitting mistakes is much harder.  The second-to-last value that I’m writing up of our 13 core values at Return Path is

We don’t want you to be embarrassed if you make a mistake; communicate about it and learn from it

People don’t like to feel vulnerable.  And there’s no more vulnerable feeling in business than publicly acknowledging that you goofed, whether to your peers, your boss, or your team (hard to say which is worse — eating crow never tastes good no matter who is serving it). But wow is it a valuable trait for an organization to have. Here are the benefits that come from being good at admitting mistakes:

• You’re not afraid to MAKE mistakes in the first place.  Taking risks, which is one of the things that vaults businesses forward with great speed, inherently involves making mistakes. If you’re afraid to shoot…you can’t score
• You teach yourself not to make the same mistake twice.  Being public about mistakes you make really reinforces your leanings.  It’s sort of like taking notes in class.  If you write it down, you’re more likely to remember it, even if you’re a good listener to the teacher
• You teach others not to make the same mistake you made.  Not everyone learns from the mistakes of others as opposed to the mistakes of self, but being public about mistakes and learnings at least gives other people a shot at learning

We’ve gotten good over the years at doing post-mortems (which I wrote about here) when a major snafu happens, which is institutional (large scale) admission and learning. But smaller scale post-mortems within a team and with less formal process around them are just as important if not more so, to make them commonplace.

We have also baked this thinking into our entire product development process.  We are as lean and agile as possible given that we are closing in on 300 employees now in 11 offices in 8 countries.  Our entire product development process is now geared around the concept of “fail fast” and killing projects or sending them back to the drawing board when they’re not meeting marketplace demand.  Embracing this posture has been one of the hallmarks of our success as we’ve scaled the business these past few years.

One trick here:  If this is something you are trying to institutionalize in your company — make sure you celebrate the admission of a mistake and the learnings from it, rather than the mistake itself. You do still value successful execution more than most things!

Book Short:  Culture is King

Joy, Inc.:  How We Built a Workplace People Love, by Richard Sheridan, CEO of Menlo Innovations, was a really good read. Like Remote  which I reviewed a few weeks ago, Joy, Inc. is ostensibly a book about one thing — culture — but is also full of good general advice for CEOs and senior managers.

Also like Remote, the book was written by the founder and CEO of a relatively small firm that is predominately software engineers, so there are some limitations to its specific lessons unless you adapt them to your own environment. Unlike Remote, though, it’s neither preachy nor ranty, so it’s a more pleasant read.  And I suppose fitting of its title, a more joyful read as well. (Interestingly on this comparison, Sheridan has a simple and elegant argument against working remotely in the middle of the book around innovation and collaboration.)

Some of the people-related practices at Sheridan’s company are fascinating and great to read about. In particular, the way the company interviews candidates for development roles is really interesting — more of an audition than an interview, with candidates actually writing code with a development partner, the way the company writes code. Different teams at Return Path interview in different ways, including me for both the exec team and the Board, but one thing I know is that when an interview includes something that is audition-like, the result is much stronger. There are half a dozen more rich examples in the book.

Some of the other quotable lines or concepts in the book include:

• the linkage between scalability with human sustainability (you can’t grow by brute force, you can only grow when people are rested and ready to bring their brain to work)
• “Showcasing your work is accountability in action” (for a million reasons, starting with pride and ending with pride)
• “Trust, accountability, and results — these get you to joy” (whether or not you are a Myers-Briggs J, people do get a bit of a rush out of a job well done)
• “…the fun and frivolity of our whimsically irreverent workplace…” (who doesn’t want to work for THAT company?)
• “When even your vendors want to align with your culture, you know you’re on the right path” (how you treat people is how you treat PEOPLE, not just clients, not just colleagues)
• “One of the key elements of a joyful culture is having team members who trust one another enough to argue” (if you and I agree on everything, one of us is not needed)
• “The reward is in the attempt” (do you encourage people to fail fast often enough?)
• “Good problems are good problems for the first five minutes. Then they just feel like regular problems until you solve them” (Amen, Brother Sheridan)

The benefits of a joyful culture (at Return Path, we call it a People-First culture) have long been clear to me. As Sheridan says, we try to “create a culture where people want to come to work every day.” Cultures like ours look soft and squishy from the outside, or to people who have grown up in tough, more traditional corporate environments. And to be fair, the challenge with a culture like ours is keeping the right balance of freedom and flexibility on one side and high performance and accountability on the other. But the reality is that most companies struggle with most of the same issues — the new hire that isn’t working out or the long-time employee who isn’t cutting it any more, the critical path project that doesn’t get done on time, the missed quarter or lost client.  As Sheridan notes though, one key benefit of working at a joyful company is that problems get surfaced earlier when they are smaller…and they get solved collaboratively, which produces better results. Another key benefit, of course, is that if you’re going to have the same problems as everyone else, you might as well have fun while you’re dealing with them.

If you don’t love where you work and wish you did, read Joy, Inc. If you love where you work but see your company’s faults and want to improve them, read Joy, Inc. If you are not in either of the above camps, go find another job!

Book Short:  Multiplying Your Team’s Productivity

No matter how frustrated a kids’ soccer coach gets, he never, ever runs onto the field in the middle of a game to step in and play.  It’s not just against the rules, it isn’t his or her role.

Multipliers: How the Best Leaders Make Everyone Smarter by Liz Wiseman and Greg McKeown (book, Kindle) takes this concept and drives it home.  The book was a great read, one of the better business books I’ve read in a long time.  I read a preview of it via an article in a recent Harvard Business Review (walled garden alert – you can only get the first page of the article without buying it), then my colleague George Bilbrey got the book and suggested I read it.  George also has a good post up on his blog about it.

One of the things I love about the book is that unlike a lot of business books, it applies to big companies and small companies with equal relevance.  The book echoes a lot of other contemporary literature on leadership (Collins, Charan, Welch) but pulls it into a more accessible framework based on a more direct form of impact:  not long-term shareholder value, but staff productivity and intelligence.  The book’s thesis is that the best managers get more than 2x out of their people than the average – some of that comes from having people more motivated and stretching, but some comes from literally making people more intelligent by challenging them, investing in them, and leaving them room to grow and learn.

The thesis has similar roots to many successful sales philosophies – that asking value-based questions is more effective than presenting features and benefits (that’s probably a good subject for a whole other post sometime).  The method of selling we use at Return Path which I’ve written about before, SPIN Selling, based on the book by Neil Rackham, gets into that in good detail.  One colorful quote in the book around this came from someone who met two famous 19th century British Prime Ministers and noted that when he came back from a meeting with Gladstone, he was convinced that Gladstone was the smartest person in the world, but when he came back from a meeting with Disraeli, he was convinced that he (not Disraeli) was the smartest person in the world.

Anyway, the book creates archetypal good and bad leaders, called Multipliers and Diminishers, and discusses five traits of both:

• Talent Magnet vs. Empire Builder (find people’s native genius and amplify it)
• Liberator vs. Tyrant (create space, demand the best work, delineate your “hard opinions” from your “soft opinions”)
• Challenger vs. Know-It-All (lay down challenges, ask hard questions)
• Debate Maker vs. Decision Maker (ask for data, ask each person, limit your own participation in debates)
• Investor vs. Micromanager (delegate, teach and coach, practice public accountability)

This was a great read.  Any manager who is trying to get more done with less (and who isn’t these days) can benefit from figuring out how to multiply the performance of his or her team by more than 2x.

Book Short:  Catchiest Title in a Long Time

You have to admit, a book called The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New Rich has a pretty enticing title.  The email geek in me thinks that if it were a subject line, it would have a good open rate.  Anyway, the book, by Timothy Ferriss, is a breezy read that  blends self help with entrepreneurship, has a lot of good resource lists in it, and is worth reading  if you don’t take it too  seriously.

There are some good central points to the book.  First, life has changed, and people don’t want to slave away until they’re 65 any more so they can do all the fun stuff in their old age — they want to change directions, unplug more regularly, and enjoy life with their families when they’re younger.  I buy that.
Second, good companies are increasingly allowing employees more degrees of freedom in the where and when and even how of getting things done, just as long as they get things done — and people should take advantage of that.  I buy that as well — we practice that at Return Path, generally speaking.  Third, startups that are mainly virtual organizations and internet-based are easier, cheaper, and potentially more profitable than most businesses have been, historically speaking.  Ok, fair enough.

Fourth, anyone can be just like the author and do all of this stuff, too, right?  Start a business that turns into a cash machine that requires little to no maintenance while becoming one of the best tango dancers in the world in South America, etc. etc. etc.  Well, maybe not.  I guess the point of self-help books is to show an extreme example and inspire people to achieve it, and I do think there’s a lot to what Ferriss says about how people can live richly without being rich, but the fact is that the world would fall apart if everyone did what he does.  And the other fact is that Ferriss is well above average in intellect and drive, and probably some physical talents as well from his descriptions of tango dancing and kick boxing, which must contribute to his success in life far more than his operating philosophy does.

But as I said, it’s a fun read, and if you don’t take it too seriously, or at least take the feedback directionally as opposed to whole hog, it’s well worth it.

This is another in a series of postings that relate to Fred’s and Brad’s various postings about venture capital funding. (Please note I have added an 11th item in response to a comment by Jack Sinclair, Return Path’s VP of Finance and my partner in crime on all transactions for the past five years.)

I think the most important part of the venture financing process is negotiating the term sheet. Although they’re only 2-3 pages long, term sheets contain summaries of all the critical aspects of a financing, and once they’re signed, the remainder of the financing process is significantly more “automatic.” Based on the financings I’ve seen and worked on – both as a VC and as an entrepreneur – my Top 10 (now 11) biggest takeaways for entrepreneurs are as follows (not in any particular order):

1. Get a good lawyer. I mean a really good one. Not just one who you are comfortable with and who is productive and doesn’t charge you too much (as Brad says, your wife’s brother’s friend’s neighbor), but one who knows venture financings like the back of his or her hand. They’re out there, many of them have worked on both sides of these transactions – for VCs and for entrepreneurs, and they can save your ass. No matter how many deals you’ve worked on, your lawyer has worked on more of them. Return Path’s lawyer, David Albin from Finn Dixon & Herling, is great if you need one.

2. Focus on terms that matter, otherwise known as Pick your battles. A typical VC term sheet will have at least 20 terms spelled out in it. There are only a few that really matter in the end, although you should at least make sure your lawyer is comfortable that the others are reasonable and somewhat standard. Spend time on valuation, the type of security, the option pool, Board composition, and your own compensation and rights.

2a (new). Sacrifice valuation for a clean security. Everyone always thinks that price/valuation is the most important thing to maximize in a deal. However, the structure of the security can be much more important in the long run. Whether the VCs buy 33% of your company or 30% of your company is much less important than having a capital structure that’s easy for an outsider to understand and want to join (e.g., investment banker or later-stage VC).

3. Always have a BATNA (Best Alternative to a Negotiated Agreement – a fancy way of saying Plan B). This is probably the most important piece of advice I can offer, and it extends to any negotiation, not just term sheets. If you have two or three VCs who are interested in funding you, I can guarantee you will end up with better terms from the highest quality investor in the group if you play the negotiation well. If you have one term sheet, you have zero leverage in your negotiation. Yes, you will spend 2-3x the amount of time on the process, but it’s well worth it.

4. Be prepared to pay up for high quality investors. There is a world of difference between good VCs and bad VCs (both the individual partners and the firms) that will ultimately have a lot to do with how successful your company can become. The quality of your VC isn’t more important than the quality of your product or your team, but it’s right up there. But – and this is an important but – you should expect to “pay” for quality in the form of slightly weaker terms (whether valuation or type of security). This is where having a BATNA really comes in handy.

5. Ask for references. Don’t be shy – prospective VCs are checking up on you…you have every right to do the same with them. Ask them for references of CEOs they’ve worked with. Ask them for a CEO they’ve had to fire as a reference. The good ones will give you the full roster of everyone they’ve ever funded and tell you to call anyone. The bad ones will give you two names and ask for time to prep them ahead of time.

6. Don’t let the VC get away with negotiating a point by saying “we always do it this way.” That’s just not true. VCs may have a preferred way of doing deals or handling a specific term, but every deal they’ve ever done is different, and they know it. If there’s a compelling reason for them to insist on a particular term, you have the right to hear it (if it’s important to you).

7. If you have multiple investors in the syndicate, insist on a single investor counsel and a lead investor. This is essential to (a) protect your sanity, and (b) prevent you from paying zillions of dollars in legal fees. You have to make the VCs stick to it, though – they can’t come back and re-trade the deal after it’s been negotiated. This is also helpful in getting a syndicate cooperating with each other and aligning the members’ interests, particularly if it has investors who have participated in different rounds of the company’s financing. Do expect to play moderator constantly throughout the process, however, to ensure that it goes smoothly.

8. Try do deal in advance with follow-on financings. When an investor doesn’t participate in a follow-on financing, it creates a total nightmare for you. Other investors will want to punish their wayward colleague and can create massive collateral damage in the process to common shareholders and management. Just as VCs will insist on something called “pre-emptive rights” (the right to invest in future financings if they want), you and your lawyer should insist on some protection in the event that one of your investors abandons you when you are raising more capital.

9. Handle the term sheet negotiation carefully. Whether it’s an initial round or a follow-on round, how you handle yourself in this negotiation sets the tone for the next stage of your relationship with the VC. The financing is the line of demarcation between you and the VC courting each other, and the VC joining your board and effectively becoming your boss.

10. Finally don’t forget to say thank you at the end of the process. Whether you send a formal email, a handwritten note, or a token gift, be sure to thank your VCs after a financing. They’re putting their butt on the line for your company, they’re investing in YOU, and they’re making it possible for you to pursue your dream. That deserves a thoughtful thanks in my book.

Sorry for the long posting. The next one or ones in this series will be on valuation, preferences, and “Venture Capital deal algebra.”

Book Short: A Marketing-Led Turnaround

Generally, I love books by practitioners even more than those by academics.  That’s why Steve McKee’s first (I assume) book, When Growth Stalls:  How it Happens, Why You’re Stuck, and What to do About It (book, Kindle edition) appealed to me right out of the gate.  The author is CEO of a mid-size agency and a prior Inc. 500 winner who has experienced the problem firsthand – then went out, researched it, and wrote about it.  As a two-time Inc. 500 winner ourselves, Return Path has also struggled with keeping the growth flames burning over the years, so I was eager to dig into the research.  The title also grabbed my attention, as there are few if any business books really geared at growth stage companies.

I’d say the book was “solid” in the end, not spectacular.  Overall, it felt very consistent with a lot of other business books I’ve read over the years, from Trout & Reis to Lencioni to Collins, which is good. The first half of the book, describing the reasons why growth stalls, was quite good and very multi-faceted.  His labeling description of “market tectonics” is vivid and well done.  He gets into management and leadership failings around both focus and consensus, all true.  Perhaps his most poignant cause of stalls in growth is what he calls “loss of nerve,” which is a brilliant way of capturing the tendence of weak leadership when times get tough to play defense instead of offense.

The problem with the book in the end is that the second section, which is the “how to reverse the stall” section, is way too focused on marketing.  That can be the problem with a specialty practitioner writing a general business book.  What’s in the books makes a lot of sense about going back to ground zero on positioning, market and target customer definition and understanding, and the like.  But reversing the stall of company can and usually must involve lots of the other same facets that are documented in the first half of the book — and some other things as well, like aggressive change management and internal communication, systems and process changes, financial work, etc.

At any rate, if you are in a company where growth is stalling, it’s certainly a good read and worth your time, as what’s in it is good (it’s what’s missing that tempers my enthusiasm for it).  In this same category, I’d also strongly recommend Confidence:  How Winning Streaks and Losing Streaks Begin and End, by Rosabeth Moss Kanter, as well.

Book Short:  Long on Platitudes, Short on Value

I approached Success Built to Last:  Creating a Life That Matters, by Jerry Porras, Stewart Emery, and Mark Thompson, with great enthusiasm, as Porras was co-author, along with Jim Collins, of two of my favorite business books of all time, Built to Last and Good to Great. I was very disappointed in the end.  This wasn’t really a business book, despite its marketing and hype.  At best, it was a poor attempt at doing what Malcolm Gladwell just did in Outliers in attempting to zero in on the innate, learned, and environmental qualities that drive success.

The book had some reasonably good points to make and definitely some great quotes, but it was very rambly and hard to follow.  Its attempt at creating an overall framework like the one used in Built to Last and Good to Great just plain didn’t work, as two of the three legs of the stool were almost incomprehensible, or to put it more charitably, didn’t hang together well.

This isn’t a terrible book to have on your shelf, and it might be good to skim, but remember that “skim” is only one letter away from “skip.”