The Gift of Feedback, Part IV

I wrote a few weeks ago about my live 360 – the first time I’ve ever been in the room for my own review discussion.  I now have a development plan drafted coming out of the session, and having cycled it through the contributors to the review, I’m ready to go with it.  As I did in 2008, 2009, and 2011, I’m posting it here publicly.  This time around, there are three development items:

1. Continue to spend enough time in-market.  In particular, look for opportunities to spend more time with direct clients.  There was a lot of discussion about this at my review.  One director suggested I should spend at least 20% of my time in-market, thinking I was spending less than that.  We track my time to the minute each quarter, and I spend roughly 1/3 of my time in-market.  The problem is the definition of in-market.  We have a lot of large partners (ESPs, ISPs, etc.) with whom I spend a lot of time at senior levels.  Where I spend very little time is with direct clients, either as prospects or as existing clients.  Even though, given our ASP, there isn’t as much leverage in any individual client relationship, I will work harder to engage with both our sales team and a couple of larger accounts to more deeply understand our individual client experience.
2. Strengthen the Executive Committee as a team as well as using the EC as the primary platform for driving accountability throughout the organization.  On the surface, this sounds like “duh,” isn’t that the CEO’s job in the first place?  But there are some important tactical items underneath this, especially given that we’ve changed over half of our executive team in the last 12 months.  I need to keep my foot on the accelerator in a few specific ways:  using our new goals and metrics process and our system of record (7Geese) rigorously with each team member every week or two; being more authoritative about the goals that end up in the system in the first place to make sure my top priorities for the organization are being met; finishing our new team development plan, which will have an emphasis on organizational accountability; and finding the next opportiunity for our EC to go through a management training program as a team.
3. Help stakeholders connect with the inherent complexity of the business.  This is an interesting one.  It started out as “make the business less complex,” until I realized that much of the competitive advantage and inherent value from our business comes fom the fact that we’ve built a series of overlapping, complex, data machines that drive unique insights for clients.  So reducing complexity may not make sense.  But helping everyone in and around the business connect with, and understand the complexity, is key.  To execute this item, there are specifics for each major stakeholder.  For the Board, I am going to experiment with a radically simpler format of our Board Book.  For Investors, Customers, and Partners, we are hard at work revising our corporate positioning and messaging.  Internally, there are few things to work on — speaking at more team/department meetings, looking for other opportunities to streamline the organization, and contemplating a single theme or priority for 2015 instead of our usual 3-5 major priorities.

Again, I want to thank everyone who participated in my 360 this year – my board, my team, a few “lucky” skip-levels, and my coach Marc Maltz.  The feedback was rich, the experience of observing the conversation was very powerful, and I hope you like where the development plan came out!

Triple Book Short: For Parents

People who know me know that I am a voracious reader.  Among other things, I probably read about 25-30 books per year — and I wish I had time for more.  I probably read about 50% business books, which I blog about.  Most of my other reading is in a couple specific topical areas that interest me like American History and Evolutionary Biology.  Over the last few years, Mariquita and I have discovered and read a handful of books about parenting that have been foundational for us as we work deliberately at raising our three kids, and two of them have roots in some of the same philosophies, psychologies, and research as a lot of contemporary business literature.  So for parents everywhere, I thought I’d devote a book short to these three books.

The first one is Healthy Sleep Habits, Happy Child, by Marc Weissbluth.  Having kids who sleep long and well has been the foundation for us to have a well functioning household.  Well rested kids are much easier than tired ones.  Well rested parents are more effective.  We have found that the principles in this book have consistently served us well on this front.  All three of our kids more or less slept through the night starting at 6-8 weeks and have been great sleepers since then.

Unconditional Parenting, by Alfie Kohn is basically, for those in the HR/OD field, “Action/Design” for parenting.  The principles in this book have applied to kids as young as 1 year old, and the examples in the book go through the teenage years.  Our main learnings from this book have been around moving away from more traditional forms of reward, punishment, and control and towards helping our kids make decisions as opposed to follow directions by understanding our kids perspective on things, working to help them articulate their own understanding of a situation, and helping them see the perspective of others.

Raising an Emotionally Intelligent Child, by John Gottman, builds on a lot of the same underlying work that Daniel Goleman writes about in articles and business books around Emotional Intelligence (in fact, Goleman wrote the forward to this book as well).  The book lays out a process the author calls Emotional Coaching to help kids learn empathy and problem solving by showing kids empathy, teaching them to understand and label their own emotions, and working with them to craft solutions on their own, but doing the whole process in a very calm and 1:1 manner.  One of my favorite parts of the book, which is so unusual in business books and any kind of self-help book, is that the author has a whole section devoted to when NOT to use this process.

Parenting is a very personal thing, and there isn’t a right or wrong way to go about it.  I have a friend who is fond of saying that parenting is a little bit like the way comedian George Carlin used to describe “other drivers” on the highway.  People who are going slower than you are “a**holes” and people who are going faster than you are “crazy.”  Only you drive the “right way.”  So true, but if you’re a parent, there’s no more important thing to be deliberate about practicing than parenting, and these books have been a good practice guide for us.  We have found a full read of these three books to be very helpful to us in our work with our kids, and we have been very lucky that our main babysitter has been aligned with us on philosophy (and has been willing to read these books with us).

Startup CEO (OnlyOnce – the book!), Part III – Pre-Order Now

My book, Startup CEO:  A Field Guide to Scaling Up Your Business, is now available for pre-order on Amazon in multiple formats (Print, Kindle), which is an exciting milestone in this project!  The book is due out right after Labor Day, but Brad Feld tells me that the more pre-orders I have, the better.  Please pardon the self-promotion, but click away if you’re interested!

Here are a few quick thoughts about the book, though I’ll post more about it and the process at some point:

• I’ll be using the hashtag #startupceo more now to encourage discussion of topics related to startup CEOs – please join me!
• The book has been described by a few CEOs who read it and commented early for me along the lines of “The Lean Startup movement is great, but this book starts where most of those books end and takes you through the ‘so you have a product that works in-market – now what?’ questions”
• The book is part of the Startup Revolution series that Brad has been working on for a couple years now, including Do More (Even) Faster, Venture Deals, Startup Communities, and Startup Life (with two more to come, Startup Boards and Startup Metrics)
• Writing a book is a LOT harder than I expected!

At this point, the best thing I can do to encourage you to read/buy is to share the full and final table of contents with you, sections/chapters/headings.  When I get closer in, I may publish some excerpts of new content here on Only Once.  Here’s the outline:

Part I: Storytelling

• Chapter 1: Dream the Possible Dream…Entrepreneurship and Creativity, “A Faster Horse,” Vetting Ideas
• Chapter 2: Defining and Testing the Story…Start Out By Admitting You’re Wrong, A Lean Business Plan Template, Problem, Solution, Key Metrics, Unique Value Proposition and Unfair Advantages, Channels, Customer Segments, Cost Structure and Revenue Streams
• Chapter 3: Telling the Story to Your Investors…The Business Plan is Dead. Long Live the Business Plan, The Investor Presentation, The Elevator Pitch, The Size of the Opportunity, Your Competitive Advantage, Current Status and Roadmap from Today, The Strength of Your Team, Summary Financials, Investor Presentations for Larger Startups
• Chapter 4: Telling the Story to Your Team…Defining Your Mission, Vision and Values, The Top-down Approach, The Bottom-Up Approach, The Hybrid Approach, Design a Lofty Mission Statement
• Chapter 5: Revising the Story…Workshopping, Knowing When It’s Time to Make a Change, Corporate Pivots: Telling the Story Differently, Consolidating, Diversifying, Focusing, Business Pivots: Telling a Different Story
• Chapter 6: Bringing the Story to Life…Building Your Company Purposefully, The Critical Elements of Company-Building, Articulating Purpose:  The Moral of the Story, You Can Be a Force for Helping Others—Even If Indirectly

Part II: Building the Company’s Human Capital

• Chapter 7: Fielding a Great Team…From Protozoa to Pancreas, The Best and the Brightest, What About HR?, What About Sales & Marketing?, Scaling Your Team Over Time
• Chapter 8: The CEO as Functional Supervisor…Rules for General Managers
• Chapter 9: Crafting Your Company’s Culture…, Introducing Fig Wasp #879, Six Legs and a Pair of Wings, Let People Be People, Build an Environment of Trust
• Chapter 10: The Hiring Challenge…Unique Challenges for Startups, Recruiting Outstanding Talent, Staying “In-Market”, Recruitment Tools, The Interview: Filtering Potential Candidates, Two Ears One Mouth, Who Should You Interview?, Onboarding: The First 90 Days
• Chapter 11: Every Day in Every Way, We Get a Little Better…The Feedback Matrix, 1:1 Check-ins, “Hallway” Feedback, Performance Reviews, The 360, Soliciting Feedback on Your Own Performance, Crafting and Meeting Development Plans      
• Chapter 12: Compensation…General Guidelines for Determining Compensation, The Three Elements of Startup Compensation, Base Pay, Incentive Pay, Equity              
• Chapter 13: Promoting                …Recruiting from Within, Applying the “Peter Principle” to Management, Scaling Horizontally, Promoting Responsibilities Rather than Swapping Titles               
• Chapter 14: Rewarding: “It’s the Little Things” That Matter…It Never Goes Without Saying, Building a Culture of Appreciation
• Chapter 15: Managing Remote Offices and Employees…Brick and Mortar Values in a Virtual World, Best Practices for Managing Remote Employees
• Chapter 16: Firing: When It’s Not Working…No One Should Ever Be Surprised to Be Fired, Termination and the Limits of Transparency, Layoffs

Part III: Execution

• Chapter 17: Creating a Company Operating System…Creating Company Rhythms, A Marathon? Or a Sprint?
• Chapter 18: Creating Your Operating Plan and Setting Goals…Turning Strategic Plans into Operating Plans, Financial Planning, Bringing Your Team into Alignment with Your Plans, Guidelines for Setting Goals
• Chapter 19: Making Sure There’s Enough Money in the Bank…Scaling Your Financial Instincts, Boiling the Frog, To Grow or to Profit? That Is the Question, First Perfect the Model, Choosing Growth, Choosing Profits, The Third Way
• Chapter 20: The Good, the Bad, and the Ugly of Financing…Equity Investors, Venture Capitalists, Angel Investors, Strategic Investors, Debt, Convertible Debt, Venture Debt, Bank Loans, Personal Debt, Bootstrapping, Customer Financing, Your Own Cash Flow
• Chapter 21: When and How to Raise Money…When to Start Looking for VC Money, The Top 11 Takeaways for Financing Negotiations
• Chapter 22: Forecasting and Budgeting…Rigorous Financial Modeling, Of Course You’re Wrong—But Wrong How?, Budgeting in a Context of Uncertainty, Forecast, Early and Often
• Chapter 23: Collecting Data…External Data, Learning from Customers, Learning from (Un)Employees, Internal Data, Skip-Level Meetings, Subbing, Productive Eavesdropping
• Chapter 24: Managing in Tough Times…Managing in an Economic Downturn, Hope Is Not a Strategy—But It’s Not a Bad Tactic, Look for Nickels and Dimes under the Sofa, Never Waste a Good Crisis, Managing in a Difficult Business Situation
• Chapter 25: Meeting Routines…Lencioni’s Meeting Framework, Skip-Level Meetings, Running a Productive Offsite
• Chapter 26: Driving Alignment…Five Keys to Startup Alignment, Aligning Individual Incentives with Global Goals
• Chapter 27: Have You Learned Your Lesson?…The Value (and Limitations) of Benchmarking, The Art of the Post-Mortem
• Chapter 28: Going Global…Should Your Business Go Global?, How to Establish a Global Presence, Overcoming the Challenges of Going Global, Best Practices for Managing International Offices and Employees
• Chapter 29: The Role of M&A…Using Acquisitions as a Tool in Your Strategic Arsenal, The Mechanics of Financing and Closing Acquisitions, Stock, Cash, Earn Out, The Flipside of M&A: Divestiture, Odds and Ends, Integration (and Separation)
• Chapter 30: Competition…Playing Hardball, Playing Offense vs. Playing Defense, Good and Bad Competitors
• Chapter 31: Failure…Failure and the Startup Model, Failure Is Not an Orphan

Part IV: Building and Leading a Board of Directors

• Chapter 32: The Value of a Good Board…Why Have a Board?, Everybody Needs a Boss, The Board as Forcing Function, Pattern Matching, Forests, Trees, Honest Discussion and Debate
• Chapter 33: Building Your Board…What Makes a Great Board Member?, Recruiting a Board Member, Compensating Your Board, Boards as Teams, Structuring Your Board, Board Size, Board Committees, Chairing the Board, Running a Board Feedback Process, Building an Advisory Board
• Chapter 34: Board Meeting Materials…“The Board Book”, Sample Return Path Board Book, The Value of Preparing for Board Meetings
• Chapter 35: Running Effective Board Meetings…Scheduling Board Meetings, Building a Forward-Looking Agenda, In-Meeting Materials, Protocol, Attendance and Seating, Device-Free Meetings, Executive and Closed Sessions
• Chapter 36: Non-Board Meeting Time…Ad Hoc Meetings, Pre-Meetings, Social Outings
• Chapter 37: Decision-Making and the Board…The Buck Stops—Where?, Making Difficult Decisions in Concert, Managing Conflict with Your Board
• Chapter 38: Working with the Board on Your Compensation and Review…The CEO’s Performance Review, Your Compensation, Incentive Pay, Equity, Expenses
• Chapter 39: Serving on Other Boards…The Basics of Serving on Other Boards, Substance, or Style?

Part V: Managing Yourself So You Can Manage Others

• Chapter 40: Creating a Personal Operating System…Managing Your Agenda, Managing Your Calendar, Managing Your Time, Feedback Loops
• Chapter 41: Working with an Executive Assistant…Finding an Executive Assistant, What an Executive Assistant Does
• Chapter 42: Working with a Coach…The Value of Executive Coaches, Areas Where an Executive Coach Can Help
• Chapter 43: The Importance of Peer Groups…The Gang of Six, Problem-Solving in Tandem
• Chapter 44: Staying Fresh…Managing the Highs and Lows, Staying Mentally Fresh, At Your Company, Out and About, Staying Healthy, Me Time
• Chapter 45: Your Family…Making Room for Home Life, Involving Family in Work, Bringing Work Principles Home
• Chapter 46: Traveling…Sealing the Deal with a Handshake, Making the Most of Travel Time, Staying Disciplined on the Road
• Chapter 47: Taking Stock of the Year…Celebrating “Yes”; Addressing “No”, Are You Having Fun?, Are You Learning and Growing as a Professional?, Is It Financially Rewarding?, Are You Making an Impact?
• Chapter 48:  A Note on Exits…Five Rules of Thumb for Successfully Selling Your Company

 If you’re still with me and interested, again here are the links to pre-order (Print, Kindle).

Book (Not So) Short:  Raise Your Hand If You’re Sure

I couldn’t get the catchy jingle from the 80’s commercial for Sure deodorant (you remember, the one with the Statue of Liberty at the end of it – thanks, YouTube) out of my head while I was reading the relatively new book, Confidence: How Winning Streaks and Losing Streaks Begin and End.  Written by HBS professor Rosabeth Moss Kantor, Confidence is one of the few business books I’ve read that’s both long and worth reading in full.

The book has scores of examples of both winning and losing streaks, from sports, business, politics, and other walks of life, and it does a great job of breaking down the core elements that go into creating a winning streak or turnaround (Accountability, Collaboration, Innovation).  Kantor also puts a very fine point on the “doom loop” of losing streaks and just how hard it is to turn them around.  The book also has a good crisp definition of why winning streaks end — arrogange, anyone? — and has consistent, but not preachy recipes for avoiding pitfalls and driving success.  All in all, very inspirational, even if many of the roots of success lie in well-documented leadership qualities like those expressed in Jim Collins’ Built to Last and Good to Great.  The book is good enough that Kantor can even be forgiven for lauding Verizon, probably the most consistently awful customer service company I’ve ever dealt with.

But even more of the roots of success and disappointment around streaks are psychological, and these examples really rang true for me as I reflected back on our acquisition of the troubled NetCreations in 2004.  That company was in the midst of a serious slump, a losing streak dating back to 2000, at the peak of the original Internet boom.  Year over year, the company had lost revenues, profits, customers, and key personnel.  Its parent company saw poor results and set it into the doom loop of starving it for resources and alternating between ignoring it and micromanaging it, and when we acquired the business, we found great assets and some fantastic people (many of whom I’m proud to say are still with us today), but a dispirited, blame-oriented, passive culture that was poised to continue wallowing in decline.

I can hardly claim that we’ve turned the business around in full, or that I personally made happen whatever turnaround there has been, but I do think we did a few things right as far as Kantor and Confidence would see it.  Her formula for a turnaround (Espouse the new message, Exemplify it with leadership actions, Establish programs to systematically drive it home throughout the organization) is right in line with our philosophy here at Return Path.

First, we accelerated the separation and autonomy of a fledgeling NetCreations spin-off unit, now our Authentic Response market research group, and let a culture of collaboration and innovation flourish under an exceptionally talented leader, Jeff Mattes.

But that was the easy part (for me anyway), because that part of the business was actually working well, and we just let it do its thing, with more support from HQ.  The turnaround of the core list rental and lead generation business of NetCreations, the original Postmaster Direct, was much tougher and is still a work in progress.  In the last six months, we’ve finally turned the corner, but it hasn’t been easy.  Even though we knew lots of what had to be done early on, actually doing it is much harder than b-school platitudes or even the best-written books make it seem.

The one thing that Kantor probably gives short shrift to, although she does mention it in passing a couple times, is that frequently turnarounds require massive major amounts of purging of personnel (not just management) to take hold.  As one of my former colleagues from Mercer Management Consulting used to say, “sometimes the only way to effect Change Management is to change management.”  Sometimes even very talented people are just bogged down with baggage — the “ghost of quarters past” — and nothing you do or say can break that psychological barrier.

Boy, have we learned that lesson here at Return Path the hard way.  I’m extremely grateful to our team at Return Path, from the old RP people who’ve seen it all happen, to the old NetCreations people who are thriving in the new environment, to the new blood we’ve brought in to help effect the turnaround, for playing such important roles in our own Confidence-building exercises here.  And I’m super Confident that 2007 will be the year that we officially turn the old NetCreations/Postmaster losing streak into a big, multi-year winning streak.

Anyway, I realize this may redefine the “short” in book short, but Confidence is without question a good general management and leadership read.

Run, Brad, Run!

A few years ago we announced our support of a charity called the Accelerated Cure Project for Multiple Sclerosis (see the post about it here and learn more about Accelerated Cure here).  While we have a strong culture of giving back to the community at Return Path and do that in several ways, we chose this charity as the main beneficiary of our corporate philanthropy efforts for three reasons:

1. We wanted to support research into finding a cure for MS to honor and support one of our earliest colleagues, Sophie Miller Audette who was diagnosed with MS about 5 years ago (and is still going strong as one of our key sales directors!) – and since then, two other members of the Return Path extended family have also been diagnosed with MS
2. We wanted to support an organization with a focused mission and one where our contributions could really make a difference
3. Accelerated Cure has a very entrepreneurial, innovative culture that’s consistent with our own – and a solution-oriented approach to their cause that resonates with our business philosophy

We got introduced to Accelerated Cure by Brad Feld, one of Return Path’s venture investors, who is a friend of Art Mellor, Accelerated Cure’s founder and CEO.  Brad’s an interesting guy for many reasons, but one reason is that he has a goal of running 50 marathons (one in each state) by the time he’s 50.  He has eight years and 40 marathons to go, and to make it a little more significant he decided to try and drum up some sponsorships for his quest and donate the money to Accelerated Cure. 

Return Path has decided to be one of Brad’s anchor tenant sponsors by pledging $1,000 for every race he completes.  This is half of Brad’s goal of $2,000 per race, and we hope it will inspire others to donate so he can beat his goal.  Of course, Brad wants to do more than just run these marathons – he wants to, well, accelerate his performance.  So, taking a page out of the VC handbook, we’re setting up an incentive program for Brad of an additional $500 donation for every race that he completes in less than four hours. 

Besides liking both Brad and Accelerated Cure, this particular vehicle for donating money is especially meaningful to us.  A good number of Return Path employees past and present have run marathons and even competed in triathlons and Ironman competitions (including yours truly, but in a way that certainly makes me want to keep my day job).  And Seth Matheson, Accelerated Cure’s new development director who has MS, is an avid marathoner who is contemplating an Ironman competition himself.  And as I always tell our team members, running a startup is a marathon, not a sprint!

You can follow Brad’s progress – and make a donation yourself – here.

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: Hire Great

It’s certainly not hiring season for most of America The World The Universe, but we are still making some limited hires here at Return Path, and I thought – what better time to retool our interviewing and hiring process than in a relatively slow period?

So I just read Who: The A Method for Hiring, by Geoff Smart and Randy Street.  It’s a bit of a sequel, or I guess more of a successor book, to the best book I’ve ever read about hiring and interviewing, Topgrading, by Geoff Smart and his father Brad (post, link to buy).  This one wasn’t bad, and it was much shorter and crisper.

I’m not sure I believe the oft-quoted stat that a bad hire costs a company $1.5mm.  Maybe sometimes (say, if the person embezzles $1.4mm), but certainly the point that bad hires are a nightmare for an organization in any number of ways is well taken.   The book does a good job of explaining the linkage from strategy and execution straight to recruiting, with good examples and tips for how to create the linkage.  That alone makes it a worthwhile read.

The method they describe may seem like common sense, but I bet 95 out of 100 companies don’t come close.  We are very good and quite deliberate about the hiring process and have a good success average, but even we have a lot of room to improve.  The book is divided into four main sections:

• Scorecard: creating job descriptions that are linked to company strategy and that are outcome and competency based, not task based
• Sourcing: going beyond internal and external recruiters to make your entire company a talent seeker and magnet
• Selection: the meat of the book – good detail on how to conduct lots of different kinds of interviews, from screening to topgrading (a must) to focused to reference
• Sell:  how to reel ’em in once they’re on the line (for us anyway, the least useful section as we rarely lose a candidate once we have an offer out)

One of the most poignant examples in the book centered around hiring someone who had been fired from his previous job.  The hiring method in the book uncovered it (that’s hard enough to do sometimes) but then dug deep enough to understand the context and reasons why, and, matching up what they then knew about the candidate to their required competencies and outcomes for the job, decided the firing wasn’t a show-stopper and went ahead and made the hire.

I’d think of these two books the way I think about the Covey books.  If you have never read The 7 Habits of Highly Effective People, you could just get away with reading Stephen Covey’s newer book, The 8th Habit:  From Effectiveness to Greatness, though the original is much richer.

Was anyone else as appalled as I am by the contents of Connie Loizos’s recent article, Coming out of COVID, investors lose their taste for board meetings? The stories and quotes in the article about VCs reducing their interest and participation in Board meetings, not showing up, sending the junior associate to cover, etc. are eye opening and alarming if widespread. 

The reasons cited in the article are logical—overextended VCs, Zoom fatigue, and newbie directors. Connie’s note that “privately, VCs admit they don’t add a lot of value to boards” is pretty funny to read as a CEO who has heard a ton of VCs talk about how much value they add to boards (although the good ones DO add a lot of value!).  

For the most part, everything about the substance of this article just made me angry.  

Disengaged or dysfunctional boards aren’t just bad for CEOs and LPs; they’re bad for everyone. If the world has truly become a place where the board meeting is nothing more than a distraction for CEOs, and investors think it’s a tax they can’t afford, then it’s time to hit the reset button on boards and board meetings. 

Here are four things that need to happen in this reset:

VCs need to do their job well or stop doing it. The argument that investors did too many deals in the pandemic so now they don’t have any time is a particularly silly one, since the pandemic reduced the amount of time VCs needed to spend on individual board meetings as well. I used to have four board meetings each year with directors who were traveling for the meetings, having dinners, spending time with the team and sitting in on committee meetings. 

Today, boards are lucky to have one in-person meeting a year (more on that later). And as everything else takes less time, and there’s little transit, any given VC should have doubled the time they spend on board meetings.

Serving on a board post-investment is a central part of the VC role. They have obligations to the founders they back and to the LPs they represent. The entire role is “find deals, execute deals, manage the portfolio.” 

If they no longer have time for the third job, they need to admit that to both founders and LPs before stepping down. If a VC can’t be bothered to focus on minding their investments and adding value, they should work with the company to find their replacement.  

CEOs need to take their job as leader of the board seriously. Would a good CEO just throw their hands up if they found management team meetings boring or a waste of time? No. They’d fix the structure of the team or meetings. If not, they shouldn’t be the CEO. 

It’s no different with boards. Whether or not the CEO is the board chair, they’re the leader of the organization. So, one of the few “must do” items in their job description is leading the board. The board is part of the CEO’s team, just like the management team. 

CEOs get to call the meetings, run the meetings, and insist on attendance. The CEO’s obligation is to make it easy and meaningful for everyone so the board isn’t a tax but rather a secret weapon for the company’s success. As my long-time independent director Scott Weiss used to tell me, boards consume whatever you put in front of them. Garbage in, garbage out. That means paying careful attention to the board materials, to meeting etiquette, and everything in between.

If the CEO doesn’t know how to do that, they should find a CEO mentor who can teach them, observe some well run boards in action through their network, or read Startup Boards: A Field Guide to Building and Leading an Effective Board of Directors, a book I just published along with co-authors and VCs Brad Feld and Mahendra Ramsinghani.

Here’s one tip on making Board prep more efficient: work your Operating System and your Board Book formats so you do one set of reporting for the company and management team that is 95% reusable without any changes for your board.

The format for Board meetings needs to evolve. Board meetings need to evolve in our world of hybrid work just as office work needs to evolve. The format that works for in-person can’t just “lift and shift” to Zoom as is, indefinitely.

Here’s how I’m steering my board:

• I insist on one or two “old school” meetings per year, meaning in-person attendance required, half a day long, and including a meal and even an activity. If I’m only going to see my directors together infrequently, I make it mandatory, but I also make it worthwhile and fun.
  
• Remote meetings that happen between the in-person meetings are becoming shorter and tighter. I still send out a lot reading material beforehand, but I make sure to keep the focus on a fixed number of major topics to keep the discussion engaging.
  
• We need a new set of expectations around Zoom meeting etiquette for long meetings. It’s okay to ask people to close their email, browser, and Slack before the meeting starts. If a meeting is more than two hours long, a 15 minute break in the middle is important. Use breakout rooms to mix up topic discussions and working sessions.
  
• I am trying a new meeting format to maximize director conversation and team development. I start every meeting with a director-only session for half an hour that’s not exactly an Executive Session but is more fun and social—usually including a nonwork discussion topic, as if we were sitting around the dinner table having a cocktail. That gets the conversational juices flowing. Then when my team and observers join the meeting, I ask those people to turn their video off, and I ask directors to adjust their Zoom setting to “hide participants not on video” to keep the number of Zoom squares down to the bare minimum. Any time a team member or observer wants to engage in a particular topic, they turn their video on. Then we follow the meeting with Executive Session and Closed Session and a single-director debrief with me. That is a lot of moving pieces to manage, I find that but doing so keeps the meeting fresh and well paced.
  
• Finally, I’m following Fred Wilson’s advice and running a very short survey post-meeting to ask directors basic questions so they can summarize their thinking for me and the team: What are we doing well? What do we need more work on? And did the meeting meet your expectations?

Companies need to Follow the Rule of 1s

The secret to engaged and diverse boards is to mix up their membership more than most companies do. Our Board Benchmark study at Bolster indicates that the vast majority of private company boards have no independent directors at all—only founders and investors—and every year, the vast majority of the “open independent seats” specified in those companies’ charters go unfilled. 

It’s hard work hiring a new independent board member, and it rarely rises to the top of the CEO’s priority list. But the more independent the board is, and the more diverse the board is in every way (in terms of demographics as well as experience and background), the more robust the conversations around the table become, and the more valuable the board is to the CEO.

My Rule of 1s for building highly effective boards is simple:

• Add independent directors to your board on Day 1
• Try to limit your Board to 1 founder/team member
• Then, for every 1 investor on your board,
• Add 1 independent director

A great board is one of a company’s greatest assets. A weak board can kill a company. A mediocre board is just a waste of time. There’s no question that running an effective board, or serving as an effective director, takes serious time and energy and diligence. But that’s not a reason not to try.

(This post first ran on TechCrunch+ and is also running on the Bolster blog)

My long-time friend and former Board member Brad Feld has become a prolific writer on the startup world over the years and is the person (other than me) most responsible for me getting into that scene as well. Startup CEO is part of his Startup Revolution series, which followed me writing an essay for Do More Faster, and then writing a series of sidebars call “The Entrepreneur’s Perspective” in Venture Deals.

All Brad’s books are listed here. If you’re in the startup universe, I’d encourage you to read all of them. I’m excited to dive into his newest book, The Startup Community Way, which comes out this week from our same publisher, John Wiley & Sons. I’ve gotten part of the way through an early copy, and I love it already.

The approach Brad and his co-author Ian Hathaway take is to evolve their Boulder Thesis from the original Startup Communities book. They dive into the topic and examine it from the perspective of a complex system, which of course anything as fragmented as an ecosystem of public, private, and academic organizations is.

The book — and the whole topic, quite frankly — remind me of a great management book I read several years ago by General Stanley McChrystal called Team of Teams. Organizations have gotten more complex and have had to adapt their structures, and the most successful ones are the ones that have shifted from hierarchical structures to node-based structures, or teams of teams, where individual, agile teams operate with loose points of connection to other teams that focus on dependencies and outcomes.

In the same way, startup communities and the broader ecosystems that touch them have changed and adapted, and the successful ones have learned how to stay loosely connected to other startup communities, prioritize collaboration, and remain focused on inclusion and entrepreneurial leadership.

Book Short:  Best Book Ever

The Hard Thing About Hard Things, by Ben Horowitz, is the best business book I’ve ever read.  Or at least the best book on management and leadership that I’ve ever read.  Period.

It’s certainly the best CEO book on the market.  It’s about 1000 times better than my book although my book is intended to be different in several ways.  I suppose they’re complementary, but if you only had time left on this planet for one book, read Ben’s first.

I’m not even going to get into specifics on it, other than that Ben does a great job of telling the LoudCloud/Opsware story in a way that shows the grit, psychology, and pain of being an entrepreneur in a way that, for me, has previously only existed in my head.

Just go buy and read the book.

Book Short:  Like Reading a Good Speech

Leaders Eat Last, by Simon Sinek, is a self-described “polemic” that reads like some of the author’s famous TED talks and other speeches in that it’s punchy, full of interesting stories, has some attempted basis in scientific fact like Gladwell, and wanders around a bit.  That said, I enjoyed the book, and it hit on a number of themes in which I am a big believer – and it extended and shaped my view on a couple of them.

Sinek’s central concept in the book is the Circle of Safety, which is his way of saying that when people feel safe, they are at their best and healthiest.  Applied to workplaces, this isn’t far off from Lencioni’s concept of the trust foundational layer in his outstanding book, Five Dysfunctions of a Team.  His stories and examples about the kinds of things that create a Circle of Safety at work (and the kinds of things that destroy them) were very poignant.  Some of his points about how leaders set the tone and “eat last,” both literally and figuratively, are solid.  But his most interesting vignettes are the ones about how spending time face-to-face in person with people as opposed to virtually are incredibly important aspects of creating trust and bringing humanity to leadership.

My favorite one-liner from the book, which builds on the above point and extends it to a corporate philosophy of people first, customer second, shareholders third (which I have espoused at Return Path for almost 15 years now) is

Customers will never love a company unless employees love it first.

A couple of Sinek’s speeches that are worth watching are the one based on this book, also called Leaders Eat Last, and a much shorter one called How Great Leaders Inspire Action.

Bottom line:  this is a rambly book, but the nuggets of wisdom in it are probably worth the exercise of having to find them and figure out how to connect them (or not connect them).

Thanks to my fellow NYC CEO Seth Besmertnik for giving me this book as well as the links to Sinek’s speeches.