Rob Bailey is the CEO of DataSift. He wrote a post this long weekend on how he manages the board of DataSift.
Datasift is valuable to any business for marketing, customer research, product development, market analysis, etc.
In Rob’s post he asserts, “You get the VCs you deserve” and the corollary “You get the performance out of your board that you deserve.”
His argument is as follows
- Spend time building investor relationship long before you raise money.
- By spending more time educating your board on your business you get more valuable advice from them
- Your goal should be to turn your VCs into extended members of your team to get real value from them
- Understanding where your VC partner sits in their respective fund and where their fund is in the cycle of its investment lifecycle will help you understand your VCs behavior.
Rob has grown our US operations from 1 employee (him) to a global organization of 75 employees that will finish the year with 8-digit revenues (90+% recurring) and more than 350% year-over-year growth.
Growth like this, this early in a company’s lifecycle rarely happens.
In this period (less than 2 years) he has brought on incredibly talented senior execs is sales, marketing, product management, client services, finance, vp engineering and more. In his spare time he raised nearly $30 million.
But the thing I am most proud of about Rob is that he has taken a company with a uniquely talented founder CTO – Nick Halstead – and managed to build a very tight working relationship with Nick where we drive world-class product development without having the usual founder / CEO conflicts. Oh, and did I mention – Rob is in SF and Nick is in the UK. Rob has taken 15 trips to England and Nick even more to the US. It is really working.
The team consists of a highly intelligent and opinionated founder – Nick Halstead. Wallflower – yours truly. Quiet-as-a-mouse Roger Ehrenberg of IA Ventures. True-to-his-heritage Rory O’Driscoll from Scale Ventures. And then there is the one true gentleman of the bunch – Chris Smart, who is non-exec chairman. In addition to helping manage the board Chris also helps represent the interests of the angel investors / common stock holders.
Oh, and did I mention:
Roger – NYC, Rob/Rory – NorCal, Nick/Chris – London ; me – Los Angeles. That in itself is quite a challenge.
So what are Rob’s secret hacks that he didn’t spill in his blog post?
Here is what I imagine Rob would say were his most effective tools. Sincerely – he is better at managing his board than any exec I have worked with.
1. Email updates frequently
Rob is an over communicator. When it comes to your board this is something to emulate. If you have investors or board members that have wide relationships you can get significantly more value out of them by keeping them informed.
Investors and board members who know your strategic objectives can advocate on your behalf when they have chance encounters with your partners, customers or potential future investors. The more they know your strategic objectives the more laterally they can act on your behalf in key situations.
Investors and board members who know your key talking points (simplified marketing messages) will help you penetrate the consciousness of even the most hard to reach individuals. I am on a board that does business with Yahoo! One key board member knows Marissa. So naturally we’re pushing for him to drop critical information when their paths cross organically.
Trust me – that kind of encounter can mean the difference between securing a contract, protecting yourself from getting turfed or getting acquired one day.
Equally each of your board members are probably on 5-10 boards. Each of your angels or seed investors may have 20-30 investments.
When they meet Marissa – you want them talking about you more than the others.
And as Rob points out – if you email members with short updates more frequently they are more up to speed when you do need them to weigh in.
How much is too much?
I guess you’ll have to ask them but I’d err on the side of more and let them tell you to dial it back. I’d err on the side of shorter updates versus longer ones. Key point – if your emails are as long as my blog posts you’re forked. Board members will file them rather than read them. Remember – they have 10 other boards.
Make your emails actionable. If you want somebody to take action make it clear what you want them to do.
2. Send Text messaging for rapid responses
Any CEO worth his or her salt knows that her investors get an insane amount of emails and often spend 8+ hours / day in meetings (board meetings, pitches, partner meetings, LP meetings, corporate relationship meetings) so often email is done on the run on one’s iPhone or in the early morning / late evening.
It is common for an investor to read the email but not immediately reply. After all – she is just trying to get through 99 unread emails.
I always encourage people to send the email anyways with the full description of what you want but if the email requires an action then send a follow-on text 24 hours later. It should simply say, “I wanted to call your attention to the email I sent yesterday – it has 1 action for you.” Or, “I sent u an email. Can you please call Stacy to ask about our BD deal? Hoping to hear back tmrw.”
I know it sounds obvious. Trust me – most people don’t do it. Rob does it. On steroids. Sometimes 3x / week. He did it yesterday, “Mark, I’m going to write a blog post following on from your VC’s aren’t dumb. k?” and this morning, “Mark, I sent intro to [redacted], she is in LA. Please meet her while she’s there.”
Here’s the thing people don’t quite get.
VCs crave the ability to help portfolio companies. We’re all secretly paranoid we’re not helping enough and want to know how to be more helpful. When a company gives you a discrete action to carry out – it’s gold dust – I promise you. If board members start joking amongst themselves (as we at DataSift do) that you “got another Rob assignment” you know you’re on the right track.
Rob jokes about it. He makes fun of himself for always asking. He is very pleasant when he calls and writes. And by now we all consider him a friend. If anything we feel indebted to him for his hard work. So if all I need to do is make some customer calls, interview potential employees or help with his fund-raising decks – hallelujah.
3. Ask for short conference calls
I would say the norm for many early-stage companies is somewhere between 6-10 in-person meetings per year. The earlier stage the more likely it is 10 meetings and the later stage the more likely it is 6.
In either case it is very helpful to have a series of 30-45 minute calls in between. Don’t have calls for calls sake. Have topics.
“We’re trying to figure out how to best get a deal with Google. Here are our key contacts. I’d like to schedule a 45-minute call to agree our strategy and understand who your key contacts are.”
Sure – you could do this via email. But by doing quick calls you feel more connected. More information comes out. You start to act cohesively as a group.
And you can often throw in a separate action like approving stock-option grants, getting approval for CAPEX spend, discussing fund raising timing – whatever.
4. Always seek input
You may have an opinion on your market-entry strategy for Europe. You may know how much to pay in cash or equity for your new VP Engineering. You may have the best planning for your on-stage appearance at All Things D.
But asking your board will keep them engaged. It will also often yield unexpected results. For starters your board may have a different perspective than you. That role as sparring partner can be useful if for nothing else than to test your resolve.
I have seen these kinds of discussions change the strategic moves of a company or yield relationships that we didn’t know a board member had to help drive forward an initiative.
If nothing else you will create board cohesion and board education by engaging your board.
5. Assigns tasks
Already covered. But seriously. Assign away. Ask for help reviewing your press release. Ask your VC to send a critical email to a contact. Ask them for a meeting to review your pricing strategy with you. Ask for intros. Ask them to mention you to the press, speak about you on stage when they do public events, whatever.
6. Fight hard, yield when appropriate and always be willing to take feedback
In Rob’s spare time he always seems to be going to a boxing class or some other competitive, physical activity. It’s a good metaphor for his board style. He fights hard for what he believes in. In some cases we disagree with him but decide to trust him if his resolve is firm and his logic is sound.
When it’s me who disagrees I usually formalize it by saying, “OK, Rob. I see it slightly differently but you live in this business every day so I’ll yield to your judgment. Let’s just revisit in 6 months and see if you still feel the same way.”
It’s particularly easy to give in to Rob because he is willing to back down when he either perceives that the board is unified on a different perspective than his own or when he realizes that his logic on an issue wasn’t as sound as his sparring partner.
Sometimes we fight. It sort of feels like fighting with my brothers. One of us usually calls back a couple of hours later to say they were sorry. Or they now see the other persons’s perspective.
I respect Rob a lot and the fact that he is willing to take feedback when warranted gives his great credibility.
When we recommended that Rob get a CEO coach he not only embraced it but craved it and thanked us for suggesting it. Rob is driven to learn. And improve.
7. Manages board meeting expectations (before & after)
We’ve had some good board meetings and some bad ones.
One thing Rob is consistent about is feedback. He calls us all before the board meeting to tell us what he plans to cover and see if we have other agenda items.
Equally important he calls us all after the board meeting.
“How did it go? Where could we improve? What worked for you? Where did we fall short?”
He also gives us feedback on our performance. Usually it is reminding us to be a bit nicer
8. Results & Measurement oriented
Rob is goal driven and therefore measurement driven. He sets clear goals for what he wants to achieve. He doesn’t just set revenue goals but he sets “quality of revenue” goals.
He sets goals for MRR (monthly recurring revenue) to differentiate from one-time revenue, license revenue, services revenue and other.
He sets goals for revenue diversification (can’t get all revenue from few customers or few partners).
By being so metrics driven we can have a lot more quantifiable and objective discussions at board meetings and at mid-point reviews.