Board (or Bored) Meetings

“Hedley Lamarr: ‘Meeting adjourned. Oh, I am sorry, sir, I didn’t mean to overstep my bounds. You say that.’
Governor Lepetomane: ‘What?’
Hedley Lamarr: ‘Meeting is adjourned.’
Governor Lepetomane: ‘It is?’
Hedley Lamarr: ‘No, you say that, Governor.’
Governor Lepetomane: ‘What?’
Hedley Lamarr: ‘Meeting is adjourned.’
Governor Lepetomane: ‘It is?’”
Dialogue from Blazing Saddles by Mel Brooks

You would laugh if I told you how many board meetings I have attended where the disorganization and lack of discipline reminded me of this scene from one of my favorite movies. I am amazed when entrepreneurs really go out of their way to recruit qualified people to join their board (regular or advisory) only to subject them to a dysfunctional meeting which in essence, negates the benefit these valuable resources can bring to the table. I cringe when I see them roll their eyes.

But all is not lost. There are three things I would suggest you focus on to convert these wasted opportunities into meaningful events.

First, bifurcate the formal “approval” portion of the meeting. Instead of interspersing required approvals with topics which might result in robust exchanges, have all the standard approval agenda items covered in a succinct manner. Now I do not mean to imply that you should give short shrift to key items that require discussion, but those that have been fully discussed and vetted should be the subject of brief motions and approvals so proper time can be spent on more significant issues.

Second, distribute information on key topics in advance. I once watched a pretty successful owner get dressed down by a Board for distributing a 20-page budget at a meeting and asking for immediate approval. The more he tried to limit discussion, the worse it became. A simple rule of thumb; if it is more than 2 pages, send it in advance.

Finally, don’t forget to discuss “future state.” So many of the meetings seem to spend a disproportionate amount of time discussing current state that there is either no time (or participants are too exhausted) to cover developments like pending paradigm shifts. This usually happens with financial statements which though distributed in advance, seem to be destined to be discussed on a line-by-line basis. If you find this happening to you, take notes at two meetings noting common questions (and they will be apparent) and then use that information to prepare a summary that will accompany the financials distributed in advance. Surprising how that may help.

One side note. Good entrepreneurs are in contact with their board members in between meetings to get their temperature on various hot issues. It is always worthwhile knowing what the “judges” will find important before presenting a case.

So the simple advice is to spend a little time managing your board in this manner and you will turn those “bored” meetings into memorable gatherings of these valued advisors.

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Is There Such a Thing as Dumb Money?

“Dopus. I already had the money in my hand.” – Comicus quote from “History of the World” by Mel Brooks

At times, an entrepreneur is so focused on closing the deal for financing that they forget some of the long-term ramifications. In this scene from History of the World, Comicus is willing to say almost anything to get his weekly stipend. But is this approach dangerous for a business owner seeking financing? After all, money is money and it doesn’t come with a personality — or does it?

We have all heard the expression “smart money”. When one is discussing a successfully funded venture, it is common to hear the phrase “that’s where the smart money is.” Investment advice is often laced with terms such as “that is what the smart money is doing.” While I think you get the point, the question has to be raised: “Is there such a thing as dumb money?” I submit to you that there definitely is. The real question is how to avoid it.

Most owners seeking financing have this uniform image of an investor — serious, numbers-oriented, like Jack Webb (there’s a dated reference for you) they just want the facts. But smart owners do some diligence on their potential partners, and the wise ones know those traits that can come back to haunt you. So here are some warning flags.

Watch out for self-promoters. There is nothing wrong with having some pride in what you have accomplished, but the potential investor who goes on and on about their value proposition, including name dropping like they are some gossip columnist, has to be vetted with a cautious eye. When the next words you expect to hear are “enough of me talking about me; why don’t you talk about me for a while,” it is time to put your private eye glasses on.

The over-promiser is another type to take with a grain of salt. I have been in many meetings where investors are making their pitch and they mention connections they have that can really help the business grow. I can’t count the number of times these conversations resulted in companies accepting these investors, only to find that the two or three contacts they mentioned at that key meeting are in fact the only contacts they have. This is what I call the “big hat; no cattle” approach.

Finally, be careful when confronted by the smartest person in the room. This type tends to look down on the entrepreneur as if they are not worthy to be on the same planet. Without really analyzing the facts, they are quick to point out how something should be done differently and how they will add value by their vast knowledge.

The one common element is: if an investor is really going to help you (besides funding you), they have to understand you. As Stephen Covey advises, “Seek first to understand; then to be understood.” The types noted above may be past the point of being able to listen and understand. And by the way, it is not so much that they are dumb as it is they are not capable of using their smarts effectively. So make sure when you seek investment, you do not get stuck with dumb money because, in the long run, it will be a very painful step in your journey.