Yesterday in our resources section, we explained why you should NEVER skimp on the hiring process. Today we’re coming back with some numbers. Take a look and then leave us your thoughts in the comments section. What hiring tips do you have?
Yesterday in our resources section, we explained why you should NEVER skimp on the hiring process. Today we’re coming back with some numbers. Take a look and then leave us your thoughts in the comments section. What hiring tips do you have?
For entrepreneurial ventures that are pre-revenue to $5M, a board of directors is a critical team that can make a meaningful impact on the company’s prospects during an impressionable time in the company’s life. Board meetings evolve as the company matures and grows, but for young companies forming their first boards, the task can be daunting.
To give you insight and help you manage board meetings, Douglas Roth, director of investments at CI, talked with Brian Murphy, chairman of the board of Umbie DentalCare, to get his thoughts on effective startup board meetings.
Setting a Foundation
Roth: How often should a board of an early stage company meet, and does that change depending on how early a company is?
Murphy: At an early stage startup, the key to determining frequency is balancing the time commitment necessary to prepare and attend the meetings with the need for regular check-ins and guidance.
It’s difficult for a very early startup to devote time to board meetings and in the case of Umbie, I know they are all very hands on. I wouldn’t want to put pressure on them to have to spend days preparing board decks and things like that. But, they need the check-ins and they need the guidance and the board has investors that have a right to check in as well, so, I think six to eight meetings a year is right.
Roth: What about timing? For a pre-revenue company, there may not be a need to have a meeting past the end of the quarter so that accountants have time to put together the results from the quarter and be able to report on them.
But, clearly, once you’re generating revenue, I imagine it would make sense to time your board meetings around the ability to report on the previous quarter.
So, for a pre-revenue or very early stage company, is there a better time than others to hold a meeting?
Murphy: Yeah, even at our stage, the key topic for a board meeting will be some sort of financial number. With Umbie, it’s pipeline and deals closed and we’re looking at things like that on a monthly basis. I think it’s good to space the meetings out so that you can get the latest data. Generally speaking, if you’re looking at financials and a company takes a week to close the books, you might want to schedule the board meeting no sooner than the second week of the month so you can get that latest data.
Also, like you said, you might want to align some of the meetings with quarter-end results if that’s important to the company and the board.
Roth: You mentioned finding the balance between providing frequent enough touch points to report and advise and not overwhelming the CEO and the team with preparations. So, when the team does have to prepare for a board meeting, what kind of information should they gather?
Murphy: The CEO should prepare an agenda that includes a section for regular updates and also one for strategic discussion. The CEO should have a template that he or she follows so there’s no need to create a new deck each time. Regular topics or regular categories that you can touch on each time can be things like pipeline, sales, key hires, roadmap, etc. It’s important to follow that template for the update portion so that there isn’t a ton of prep.
The CEO should also think about the strategic topics they’d like to cover at the meeting. This is their time with the board to get that advice and feedback that will help move the company forward. It should be the key focus.
During the Meeting
Roth: In general, how much time should be allocated to the various agenda items that you just discussed?
Murphy: The agenda’s going to differ meeting to meeting, so I don’t want to say that there’s just one kind of board meeting. Certainly, if you’re on a calendar year and you’re preparing a budget or an annual plan, your board meetings toward the end of the year are going to be about presenting your next year’s plan and your budget, so that can get pretty tactical in terms of looking at numbers, plans and forecasts. Otherwise, the two major parts are updates and strategic topics. There may be some approval items for the board like key hires, options etc., but, generally speaking, I think people agree that you should keep the updates to a minimum. That’s the reason you should send that portion out in advance – so the board members can read it and as long as they don’t have any questions, you don’t spend a lot of time on that part.
Roth: So the majority of the time is spent talking about strategic issues?
Murphy: Yeah, ideally. It’s going to differ depending on who you bring into the board meeting. The more people you bring in, the more time it’s going to take because you have to go through more presentations.
For example, at Moo Print, most of the meetings included the entire executive team. So, you had a marketing presentation, a tech presentation, a product presentation – and they weren’t all just updates. A lot of times it was proposals and directional things, so it’s hard to say. But in general, you want to spend more than half your time talking about strategy instead of reviewing results.
Roth: Who should come to board meetings? You have the board members and whatever that makeup is – the CEO, upper management, other investors and independents etc., but beyond the actual directors who sit on the board, is there anyone else that shoud show up either consistently or periodically?
Murphy: Certainly members of the executive team. As the company matures, they benefit from direct interaction with the board and direct advice from the board. It’s also good for the board to get a feel for how the executive team is performing. I think that can be very helpful.
Sometimes, though, you’ll want to have closed board meetings where it’s just the CEO and the board, especially if you’re taking up topics that are sensitive or strategic at a level that doesn’t involve the executive team.
Other times, you might want to bring in people who aren’t even on the executive team for something like a special topic presentation. For example, you might want your director of product to come in prior to a product launch for a demo.
You could even have presentations from the outside. For example, you could have a consultant come in if they’re doing a big engagement on brand so they can present their findings to the board.
It all depends. It depends on what kind of executive team you have, what kind of management team you have and what stage the company’s at. But early, early on, I think it’s typically going to be just the CEO or the founders and the board.
Roth: I like the point about outside guests – whether it’s to educate or help facilitate a discussion, or many times there’s a banker helping to raise money or to explore sales and even reporting on those efforts.
Murphy: Sure – or the accounting firm will come in to report audit findings.
Roth: Interesting point with the audits – that raises the issue of subcommittees of the board like an audit committee or a compensation committee. Is there a time where it’s too early to get down into that granularity? Or should every company have those kinds of subcommittees?
Murphy: Of the boards I’ve been on, including Moo that had 200+ employees, we never saw a need for committees. I can’t speak for every company but it just seems like a bit of overhead for a small organization.
Roth: Earlier you alluded to CEO and board member-only executive sessions. Who sits in on those sessions and what are the types of topics that are discussed?
Murphy: Well, you won’t need to have an executive session every meeting, but I do think that you should have them periodically. I think the idea of it is that the board, minus managers, the CEO or any executives, goes into a closed session and talks about how the CEO and the management team are doing. I think it should be viewed as something constructive and just good hygiene for the board to confer on these things. It should be an exercise that builds trust between the board and the management team and I think what comes out of it should be specific and constructive feedback.
And then the role of the chairman is to speak with the CEO as soon as possible after the meeting and distill that information back. Unless there’s a crisis or you’ve lost faith in the CEO, it should never be used as something to make the management team feel uncomfortable.
Roth: So, clearly it’s an opportunity for the board to talk about the performance of the CEO. But, typically an early-stage board will have a number of investors. Does the executive session, in your mind, double as an investor discussion as well?
Murphy: I think so. Early on, your board is typically appointed by your investors. Later on you start to bring in non-executive members who are also not investors. But early on, the executive session conversation is about how the investors feel the CEO is doing and whether they’re concerned or want to give feedback. The whole purpose is for the chairman to distill that valuable information back to the CEO in a way that you couldn’t really do in a meeting with the entire board.
Roth: Right, and I think having the chairman meet one-on-one with the CEO afterwards gives the chairman the ability to have that discussion in a non-awkward way. It’s not “I feel you’re not performing,” it’s “in executive session there was a concern…” It takes it off the shoulder of the chairman and it’s really just the chairman reporting what was discussed and takes that awkwardness away a bit.
Murphy: I agree. The chairman and the CEO should have the best board-to-management relationship and that’s one of the things that supports that.
Roth: That being the case, does it make sense to have a chairman who’s not an investor?
Murphy: Yeah, I’ve seen it a couple of ways. I’ve seen a chairman who’s not an investor and I’ve also seen a chairman who’s an angel investor, so, someone who hasn’t come in at the next round. The board members were from the series A, but the chairman was an angel investor – someone who had been with the CEO and had a relationship with the CEO from day one.
I think it could be tricky to choose a chairman from a board made up of several VC partners. One way or another, the chairman needs to be distinguished from the other board members.
Roth: Okay, so, if you’re having six to eight meetings in a year, how long should each one last? Does that change at different times of the year and at different stages of the company’s development?
Murphy: The duration of the board meeting is definitely going to vary. It’s going to vary depending on the time of year and the type of topics that you’re taking up.
Board meetings around annual planning where you’re trying to go through your plan and have a lot of people presenting are going to take more time.
I personally couldn’t see a startup board meeting taking more than three hours, though. I do understand that when you’re running the board of a public company and you’re flying people in from around the country, you might as well put the time in. But in a startup, I haven’t seen much of a need for that.
I have seen situations where you’re having an all-day, strategic offsite meeting and you invite the board member to participate, but I can’t see a board meeting lasting that long. A strategic offsite is different. It’s a whole different atmosphere. It’s meant to be creative, stimulating and fun.
Roth: I agree. I can see that when there’s a crisis or even a really positive point in the company and you need to really think things through. Or, if there’s some Outward Bound-type of team building that the board should participate in. But if you’re having 4-6 meetings a year, I don’t know how a meeting longer than three hours could be valuable.
Murphy: I don’t know either. And that gets to another point. The CEO should feel free to reach out to the board in between board meetings to discuss things. If there’s more to talk about, it doesn’t have to happen only at the board meeting. The only things that really need to be included in the board meetings are the governance-type things.
Roth: What about the formalities of a board meeting? Do you need to have someone taking minutes? Do you need to have company counsel sit in?
Murphy: Yeah, there’s a backdrop of formalities of course. A board meeting is a necessary and legally required element of governance so there has to be some formalities like minutes and votes on certain things, and it’s the role of the chairman to keep things legal and structured. But that said, at a startup, you want to keep formalities to a minimum and keep the emphasis on ideas and productive dialogue. I don’t think there’s any sense in acting like a public company before you have to.
After the Meeting
Roth: What are some of the follow-up actions that typically occur after a board meeting?
Murphy: As soon as the board meeting ends, it’s really important for the CEO to be sure that he’s captured any takeaways and specific requests of the board for immediate follow-up or for presentation at the next meeting. A lot of times the board will ask for information that you don’t have with you and they’ll say, “Okay, I understand you don’t have this handy, but can you get it to us before the next meeting?” You definitely want to avoid showing up to the next meeting without having taken action on these things.
Roth: Do you typically see interim reporting in-between board meetings – whether it’s financials or product development or pipeline reports?
Murphy: Absolutely, if you’re on a monthly financial reporting schedule, it’s quite common once the management team approves the financials and has reviewed them internally to share them with the board regardless of the board meeting schedule. And you might agree to share other bits of information with the board as well whether it’s sales reporting, pipeline reports etc. I think that’s appropriate.
And then there are also special requests. They may ask for analysis – like if you’re running a TV campaign they might say, “Hey, can you send us the campaign analysis so we can see what the results are?” I think it’s typical for requests like those to be fulfilled between board meetings.
Roth: Earlier you alluded to the CEO reaching out in between board meetings and speaking with the directors either to give them updates or to seek advice on a particular topic. The board meeting is a unique environment in which all the people are together, can hear each other’s perspectives, can push on ideas that they don’t necessarily agree with, offer alternatives, build on ideas they hadn’t thought of that someone else brought up, etc. How do you balance not ruffling any feathers and the benefits of that dynamic with having individual conversations in between board meetings?
Murphy: Well, you don’t want to do something that undermines trust. If you’re going to be reaching out to board members in between meetings, you don’t want to just have to have a close relationship with one board member.
It’s good to have some level of contact and relationship with board members outside of board meetings and certainly there should be no surprises at the board meetings. I think an effective CEO should have a good idea where members of the board stand on issues before the meeting so that no one is surprised.
As with most things, it’s a balancing act. It’s fair game to reach out and say, “Here are some things we’re thinking about and here are some things I’m going to bring up at the board meeting, I wanted to get your input on this.” But it’s not meant to be an exercise of politics that undermines trust.
Did you like the topic? Did we miss anything? Got anything to add? Let us know in the comments section!
About Brian Murphy
Brian is vice president, supply chain and customer experience at Teespring, executive chairman of the board of directors for Umbie Dentalcare and a mentor at Betaspring. Over the past decade, Brian has focused on the digital printing space as a founding manager at both MOO and Ofoto.com (which became Kodak Gallery). With a career best characterized as “bringing order to chaos,” he has helped early-stage companies overcome the special challenges and obstacles associated with rapid growth and constant change. His specialties include international e-commerce operations, product development, manufacturing and finance/analytics.
Senior Program Associate, Small Business Innovation Connecticut Innovations
Capital One wants to know “What’s in your wallet?” but I’m more interested to know “What’s in your workforce?” When forming a staff, it’s tempting to build a team that keeps you in a comfort zone. What better way than to have people who align with your ideas and opinions, right?
Well, commonality can be great when you’re ordering a group pizza, but not so much for the success of your business – at least according to Jack Canfield and Mark Victor Hansen, co-authors of the One Minute Millionaire.
In their best-selling book, they assert that for a team of any kind to have a shot at success, it must first have a “SHOT” or a mix of work-personality types called Squirrels, Hares, Owls and Turtles. So, how can you tell if your company has a “SHOT” or if it needs one? Well, let’s first learn what each work-personality in “SHOT” means.
Squirrels –These are your “doers.” Detail oriented and capable, they will make sure the job is done thoroughly. Methodical and practical, squirrels pay attention to details and see that plans follow an orderly process. They tend to be cautious when trying out something new and think things over carefully before acting. Although squirrels require strong direction and focused objectives so they don’t pursue irrelevant strategies, they can be the lifeblood of any organization. They are the “steady Eddies” who finish what they start and do things right.
Hares – Brainstorming, anyone? Hares are the creative, out-of the box thinkers so necessary to innovation in any business. You’ll definitely want to hear their ideas. They’re big picture people and often risk takers and rule breakers. They’re great at out-of-the-box thinking and exploring alternatives. Every business needs at least one hare, but beware of a complete team of “idea people” – they’re notoriously bad at follow-through!
Owls – Enter your planners and go-getters. Better lieutenants than visionaries, they think about how to make things happen, developing careful plans based on past experiences and proven methods. They want the most direct, efficient means, and are not inclined to let rules and boundaries discourage them. Be aware, you may have to rein them in. With zealous intent to make things happen, the owl may drive to an unrealistic or inappropriate goal by jumping to implement concepts that aren’t completely thought through, or by ignoring danger signs and realistic barriers. With their eye on the right prize, however, owls can be skilled and highly productive multi-taskers able to focus on many things at once.
Turtles – Ah, the turtles. They’re the cautious types – the devil’s advocates who seek out and raise the issues, shoot holes at ideas to test their soundness and the ones that prepare for surprises. They ensure that all the bases are covered and nobody gets blindsided, but if left unchecked on an unbalanced team, they may also unduly influence the group to choose low-risk ideas that might have smaller payoffs. On the other hand, turtles are great for reeling in the more impetuous hares or the over-eager owls and squirrels rushing headlong into trouble.
The right mix alone probably won’t make you a “One Minute Millionaire,” but it can certainly increase your chance at success. And by the way, if you don’t have a big staff budget, don’t worry. One dominant category usually surfaces, but most people are a mixture of one or more types, so you may still have what you need.
Which personality type do you most identify with? Let us know in the poll below.
On Friday, June 20, The Wall Street Journal posted this article highlighting concerns for medical device startups following the merger of Medtronic Inc. and Covidien PLC, two major players in the medical device industry.
Medtronic says the deal will save the company billions of dollars and has pledged it will invest $10 billion over ten years in U.S. technology.
The Wall Street Journal article, however, quotes several VCs that invest in medical device companies who believe the merger could have a negative impact on acquisitions going forward.
There are also some who believe it could have a positive impact, and that’s where Connecticut Innovations investment associate Matt Bloom sits.
Q: What is your reaction to the announcement of the merger and the subsequent concern shown by some medical device VCs?
Bloom: There are good arguments both ways, but overall I tend to fall on the positive side of things here. The big motivator for the merger was tax inversion, which as the article points to, should free up a ton of money to acquire technologies (vs. investing in internal R&D, which isn’t going to happen – not in the U.S. at least.) Industry consolidation has been happening for a little while now as the major players look for ways to boost earnings, so this isn’t totally surprising news. This specific merger, though, was more a byproduct of an evolving political landscape and other macro factors rather than strategic industry synergies (similar to Pfizer’s recent bids for AstraZeneca). Anytime you have industry consolidation there are pros and cons. I think the story here is looking at what drove the deal and, as a result, what the potential implications might be as a bigger industry trend.
Q: Can you explain those pros and cons?
Bloom: Well, there are a few different basic points of view on these types of acquisitions. In addition to tying up and/or distracting top-level management, deals of this magnitude tend to require an enormous amount of company-wide resources for the integration of the two entities. Therefore, some folks interpret this as two bigger companies effectively being taken out of the market, meaning fewer active buyers. That scenario typically leads to less competitive price bidding. In contrast, others conclude that after a bigger merger like this, or when a lot of smaller action starts happening in a space, competitors tend to feel threatened and begin a mergers and acquisitions “arms race” of snatching up new technologies in order to compete. In addition to more (and earlier) buys, this can sometimes leads to higher market pricing. I think you see this type of scenario playing out right now in a couple of different specific device niches, like orthopedics, for example. Considering the U.S. alone, I can certainly see an argument for the first logic, but globally speaking, I think it will better reflect the second one, and that’s the bigger picture to me.
Q: What if the trend continues and other major players merge to also reap the tax benefits? You don’t think medical device startups should be concerned?
Bloom: The trend is sure to continue, just like the consolidation we are seeing in pharma and biotech (recent M&A deals). Going back to the macro-based drivers involved here – I think there’s a kind of ripple effect happening across the healthcare spectrum broadly. High taxes, increasing regulations, lower reimbursements squeezing margins across the board, etc.
Shareholders expect to see steady growth in earnings, but when you have a more mature healthcare market like the U.S. to sell into, operations running efficiently and the profitability pressures listed above, where do you turn to get a bump in the numbers big enough to move the dial? New markets, inorganic growth, or financial engineering; a.k.a. globalization, consolidation, and tax inversion. Precisely what is happening.
There is plenty to be concerned about, I don’t want to imply otherwise. But, I do want to weigh that risk in context with the rest of the puzzle pieces on the table. Distractions and resources being diverted are inevitable with all deals. However, and admittedly this is a gross oversimplification, for the most part, in cases like these, the companies are offshoring where they’re domiciled. They’re not attempting anything close to full-scale operations integrations. This makes the digestion period much shorter than one would typically expect in transactions of this scale. In addition, these deals will certainly lead to the freeing up of cash and will probability heighten the threat-level felt by competitors as well – two key ingredients which tend to stoke the demand for, and ultimate purchasing of, new technologies.
As an early-stage investor in an evergreen fund, I realize I have the luxury of being able to look longer and play with more patient money than most healthcare entrepreneurs – they need to concentrate on their runway and exit opportunities in the here and now. But that being said, I think the buying lulls that are sure to come (as a result of these deals) will be relatively short periods, and I think we’ll end up seeing those initial burps and hiccups lead to an overall increased appetite in the market.
About Matt Bloom
Matt is an investment associate at Connecticut Innovations and is responsible for sourcing and evaluating investment opportunities, structuring new investments and monitoring portfolio companies. You can reach Matt at email@example.com.
After a recent event, we asked Connecticut Innovations venture portfolio CEOs what they thought about questions related to entrepreneurship. In some cases, the CEOs seemed to share the same opinions. In others, the responses were much more divided. What do you think? Let us know your opinion on these questions in the comments.
Marketing Technology Manager
In the age of “big data,” it’s imperative to use a tool to track visitors to your website if you hope to be competitive. Without one, you’re missing out on a wealth of information that can help you convert prospects into paying customers. When it comes tracking to website metrics, you have a ton of options. But if you look at the overall numbers, you’ll quickly see that Google Analytics reigns supreme. The service is used by 49.1 percent of the 10,000 most popular websites on the internet. (Its next closest competitor is used by only 3.7 percent.)
In short, it’s pretty popular. And it’s free! It’s okay, I’ll wait while you get it installed…
Now that you have Google Analytics, it’s important to understand the tool that you have at your disposal. Google Analytics offers insight into your website’s traffic and traffic sources, as well as measurements for conversions and sales. This tool is invaluable to your business to help you better understand your visitors’ needs and where your website might be falling short.
If you’re overwhelmed by all the data, no worries— here are some quick tips on the information that will be most valuable to track.
New vs. Returning Visitors: This information is found under the “Audience” tab in the left-hand column. A unique visitor is a visitor counted once using a Google Analytics visitor cookie. A high number of new visitors indicates that you are successfully driving traffic to your site. If that’s you, congratulations! Many people have made a career out of teaching people how to drive traffic through various marketing tactics—it’s not easy.
The second number you’ll see is “Returning Visitors.” A high number indicates that your site content is engaging and leaves visitors wanting to come back for more. A low number implies that you have a bit of work to do. Want to improve? These three tips, when applied to your website copy, will help keep people coming back. Producing quality, engaging original content on your website will also drive traffic and position you as a trusted source of relevant information.
All Traffic: This information is found under the “Acquisitions” tab. This report will tell you where your traffic is coming from, such as a search engine or another website. But, take note, a high traffic rate doesn’t always indicate quality traffic. Be sure to monitor the bounce rate. The bounce rate tells you the percentage of visits where a person left without viewing any other pages. If the traffic is high and bounce rate is high, chances are the site isn’t relevant to what searchers are looking for. Review keyword searches and adjust your content accordingly.
Also under this tab is “Organic Search.” Wait, what the heck is an “organic search?” While it may sound weird, it’s not as complicated as you might think. Organic search is the traffic your site is getting from search engines not associated with paid advertising. If you haven’t done any paid advertising, all of your traffic will be organic.
All Pages: This report is found under the “Behavior” tab under “site content.” It provides data on the top performing pages of your site. It’s important to see what pages have the highest traffic, but don’t forget about the bounce rate and exit rate. The exit rate represents how many visitors leave the site from a particular page. If people leave from a thank you page after making a purchase or subscribing to a newsletter, that’s desirable, but if they’re leaving from a particular product page, for example, perhaps you’re not providing enough information—or the right information—for them to convert.
Check out the In-Page Analytics Report for a really interesting visual representation of the traffic/clicks within a page. This report will give you a good idea of where you might be losing your audience. You can access this report under the “Behavior” tab.
Want to know where inbound links are directing traffic? The link analysis report can help you with that.
Want to know what keywords lead to the most goal completions? The keyword analysis report will tell you. If you’re looking to drive traffic to your site and stay relevant with your audience, it’s important to build your content around these keywords.
Want to know the best time to post information on your site? You can track the highest traffic days and times with the time and ecommerce report.
Customized reports take a little more work to set up, but can provide a deeper look into the habits of your visitors. To get started with that, here are some tips.
And remember, if you are still unsure of what to track, just Google it!