Concrete Covina

How Many Meetings...

Brad and I finished another post in our series on board of directors related matters.  In this one, we talk about the number of directors meetings a company ought to have in a year.  There is not necessarily a straight forward answer to the question and we try to convey the boundery of circumstances that would help determine such a thing.  Our next post - "recruiting a new director" should be up within a week.  We at Oxlo - my new company - just ran this process and we gave the best practices suggestions a trial run!  Look for that post within the next week or so!

The Agenda

Brad Feld and I have authored another post in our Board Meeting series - Brad's posted it here.

We wrote about the notion of the Agenda - that little but oh so important and often ignored item - sometimes regarded as boilerplate and it's role in setting the stage for a decent Board meeting.  Let us know what you think!

Board of Director Series

I'm proud to say I am good friends with Brad Feld.  He's a mentor and an advisor and drove the investment in Oxlo that Mobius - the fund he runs - made 2 years back in my new company.

Brad blogs - and he's written a couple series on certain themes (term sheets being one).  We agreed to collaborate on a series about being a director and board meetings.  We've sat on a number of them together.  In fact - I think that I have been a co-director of Brad's on various boards of companies for the last 10 years straight. 

Rather than double post our blogs - I'll put a short post here that points to Brad's blog when we put something up.  We did that today and so enjoy reading - and feel free to email us feedback or topics!

Here's our first post on the topic called:  Board of Directors: Duty of Care and Duty of Loyalty

Resurfacing

Any new start-up, venture backed or not requires substantial Founder attention often to the detriment of other equal if not more important activities.

Family, Friends, Professional Associations.  You get it.

Plainly written – when you start a start-up – you ought to, should, must focus on the start-up and let other commitments “back-burner” by for a while.

I did this. 

Prior to Oxlo, I founded a local organization that my co-founders and I called the CDG or Colorado Director’s Guild.  This was a group of board members – or directors – who agreed to meet regularly with a purpose of being professional about Corporate Governance.  We agreed after some time to transition as a group to become the local chapter of the National Association of Corporate Directors contributing some 200 members at the time we “joined” the organization.

I did this because I think Corporate Governance and the skill-set of a Board member (and therefore the “Board” as a whole) is a critical ingredient to any business success. 

But when I started Oxlo – I consciously let my involvement in the CDG/NACD efforts wane.  I felt an obligation to Oxlo and my investors to concentrate most – if not all – of my attention to the new company.

I tried – hopefully – to maintain Family in the “don’t neglect” bucket.  Karen, my wife, recently shared that I’ve done this pretty successfully this start-up.  So far anyway.

In the pursuit of professional progression a start-up sidetracks.  This is right.  And good.  Because success of the primary venture is critical and well – you can only do so much at once.  And if your pursuit is excellence (and it should be) then success of the venture in hand is more important then the “two in the bush”.  This is like checking your email while driving a night snow-covered road.  Let the email wait and concentrate on the driving.

At some point in the venture though – if is built well in terms of team and other fundamentals – it is right that professional progression (or “outside” activities) be higher prioritized. 

And so – over time – once a start-up is “on its feet” so to speak, other actions and commitments can come back “onto the plate”.  When this is exactly is different for every start-up I imagine.  And I don’t think there’s any set rule but I do know that resurfacing is a common milestone in any start-up, venture backed or not!

That's an RBI

That’s an RBI or “Richard Branson Idea”

I’m going to pick on the guys on my side of the venture community fence.

Over the years, but in particular, over the last few months I’ve been approached by fellow entrepreneurs, who have a “hey I’m going to start a business” great idea. 

To be precise though, the ideas have been great BIG ideas. 

And that’s the problem.

I’ve given these sorts of ideas a name – and in honor of Richard Branson – I’ll call them Richard Branson Ideas – RBI for short.   In addition to the notion that you can hear them coming – literally – hear them, RBIs’ have 5 markers:

·  It’s completely Boardwalk-and-Park-Place-with-Hotels BIG. 

·  It usually requires, at a minimum, $25 million from the get go to kick start. Most of these ideas though, require a lot back-up-the-truck more. 

·  It always relies on a couple large partners to – at the same time – get on board with the idea.  Think NASA space docking guy with the vest asking for updates “same time” synchronization.

·  It usually involves a national rollout.  Not Covina, California one deli store rollout but national 7 Starbucks ine one city block rollout-ness.

·  Typically – the entrepreneur doesn’t have vertical market domain expertise.

RBIs usually have some financial model that scales wildly.  “Imagine I can get $ 0.02 cents per commercial aired on TV” says my wide eyed peer, “this business would make 8 kabillion dollars in

4 years”.

Regarding the RBI markers – here’s how to come down out of your hot air balloon:

·  Remember that good and great business ideas scale.

·  Most VCs (the sane smart one’s) invest incrementally. 

·  Idea’s that require 9 planets to line up rarely make it past concept stage.

·  All ideas rollout with one step forward

·  Become an expert on your vertical.  No excuses.

Now I’ve been guilty of having my own RBI.  I think any entrepreneur worth their Morton’s Salt has one in their sordid past. 

But let’s face it.  Only the Richard Branson’s of the world can pull off a Richard Branson idea. 

A full time job...

Lately - at least over the last month or so for reasons I'll skip - I've reflected a great deal on the amount of time and effort it takes for members of management, mainly the CEO, I think it takes to "close a venture round".

A while back, about 4 years ago actually, the Colorado Internet Kiertsu / Brad Feld asked me to give a presentation my fundraising experiences.  In that presentation, I had a slide called "tools comparison".  It was the kind of slide that would make Seth Godin cringe.  It was basically a table and it was designed to convey the notion that as you raise more money in later rounds - the tools you use grow increasingly more complex, and more exact in nature.  Since this was me telling the story of how we raised money at Vstream/Evoke/Raindance - it culminated in an analysis of the toolset I thought was necessary to execute your IPO.  Using the Seth Godin method - I'd probably verbally deliver the same message but the imagery I would use to interweave and emphasize my points would be something along the lines of a gorilla growing increasingly beastly...

Anyway - a point central to this experience that I tried to share and that I am sharing now - is that in the earlier rounds - it's usually more than one persons full time effort.  And as you raise additional funds in later rounds - it only gets worse in terms of time and effort required.  And that's the point I want to make here. 

It's a full time job.  If you're part of a start-up team and you're raising money - get it through your Neanderthal noggin that this is a full time effort.  100%.  Ask anyone that's done it - and this is what they will tell you.  If you approach your fundraising with anything less of an expectation - or worse you approach it with a yeah-yeah sure-sure attitude but not the action to back it up - you're designing a higher risk process to a critical function of your business.  Be aware.

What would Michael Do?

The Auto Insider section of the Detroit News ran a piece by John McCormick the other day titled “What would Carlos do?”

Read it here.

McCormick writes about the issues that GM and Ford currently face: among them legacy labor issues and pension costs – read the article – it’s a great snapshot on the current condition faced by both companies. 

McCormick tosses out the thought exercise of what would Carlos Ghosn, CEO of Renault, do if at the helm of either GM or Ford. He recounts Carlos’s now famous position that good product can save any automaker.

Coming from a different perspective – I guess I’d ask what would Michael do?

Michael as in Michael Dell.

My guess is that Dell would stream-line the system. He’d make the system as real-time integrated as possible.

He’d aggressively connect his supply system to his demand system. And then analyze the heck out of it.

Right now, the degree of integration between auto supplier (Visteon and Delphi) and most automakers and then on to and into the point of sale – the dealership's management systems would bring John Wayne’s Rooster Cogburn to tears.

This isn’t all the automakers’ fault. The dominant providers of dealer management accounting systems, ADP and Reynolds and Reynolds, are selling seriously dated non integrated technology. These systems are so old they make Phyllis Diller look young.

But back to Dell.  Dell – the company – right now has about 11 days of inventory in carry. Dell’s competition has about 80 days worth.  Want to bring a new product out? Dell does it 69 days faster. Dell shares with suppliers daily production requirements who stock product within 20 minutes of the Dell production line. Dell real-time analyzes their business looking for what ever edge that analysis can offer.

How long do you think it takes Dell to spot an issue that impacts their warranty coverage?  How long does it take an Automaker today? 

How much does Ford save if they can fix - in production - the next 5 big recall efforts - 30% faster? 

How much less would DaimlerChrysler pay for interiors from Lear if DCX transparently shared production demand with Lear - to help Lear produce more in line with demand?

Ask Steve Miller, CEO of Delphi, if this would make a difference in how he runs his business?

Ken Gilman is not a shill

Last week Fin O'Neil - 8 months old as CEO of Reynolds & Reynolds - rolled out his newly chisled growth strategy to an audience of wall street analysts at the Reynolds Analyst day. Go here to listen - and if you care about technology in Automotive retail you should.

In what I think was a rare move - with some risk - Fin invited Ken Gilman, CEO of Asbury Automotive Group to present his/Asbury's view of the marketplace as part two of the presentations offered up in in their analyst day event.  After listening to both presentations - I can say with certainty that Ken Gilman is not a shill.

Why?  Well - first, Asbury is public and so Ken Gilman was hobbled by the fact he was speaking publicly and had to be "straight" with his view of the marketplace from his perspective (for all the reasons in today's market - a CEO of a public company must be).  Second - although I suspect that Ken and Fin are good friends (how else does this sort of thing happen?) and this was somehow favor-based in orchestration - Ken didn't sing just a Reynolds song during his presentation or during his Q&A. 

In fact - I think Ken was fair and balanced and objective despite the "pro-Reynolds" nature of his involvement.  And in doing and being so - I think he helped Reynolds and Fin's cause more than he could have hurt it if he had shown up and talked up Reynolds as thought it were the end all be all...

I'm a fan of unfiltered information.  And Fin inviting Ken to present - I imagine unfilted and uncoached - created a scenario that had some associated risk.  In fact - if you listen to Ken present - especially the Q&A session, you'll hear many pro-Reynolds comments but you will also hear some  commentary that is not only negative regarding Reynolds and how it operates in the marketplace today but commentary that is negative to the very reason for the gathering itself - negative to the strategy that Fin rolled out not a couple hours earlier.

So - my hat's off to Fin and to Ken for doing something rare and risky ...

Mistaken Attribution and the self correcting process

Are you guilty of mistaken attribution? 

I’m not sure why but I see mistaken attribution a lot more lately.  

“Mistaken Attribution” is my term for a behavior seen in some folks where they “mistakenly attribute” someone else’s' hard work and success and claim it for their own.  It's more than plagiarism (worse) because it isn’t an action or condition the afflicted typically try to hide.  Somehow stealing and showing it - is worse then just stealing.

Come to think of it, to suggest it is hidden is wrong.  Mistaken Attribution is usually in your face and it's almost always rude.  Mistaken Attribution is always obnoxious and it is always short-sighted.  It is - most certainly - a behavior based on weakness and ignorance.

I see it around.  More lately.

In an operating business, you see it in people that work for a company that once was great. 

The once great company got there because others worked really hard and worked very smart to get it there. 

But often the once great company is no longer great.  Sometimes it is struggling or worse, failing.  In these company's I'd guess that new folks have joined the business and they somehow have mistakenly attributed the number one position their company enjoys (or used to enjoy) to their own mediocre efforts.  And so the demise begins.

To say nothing of not working hard, these folks often drop humility and general polite behavior and before you can say “Wal-Mart” – poison their once-great company by treating everyone with an imperialistic air that would make the Queen of England flinch.

Short Google when you call them and the new guy acts like his BS from State is the same as Sergey's PhD.

If you’re an entrepreneur and your company has enjoyed some success - look for and root out mistaken attribution.  It will kill your good thing.

In the venture capital profession you see it displayed by some associates or junior partners or non-founding partners.

They are usually the ones who have yet to materially achieve or materially return anything but somehow, someway it has seeped into their grey-matter brain-bucket that the great things, great accomplishments, impact returns their partners achieved - have somehow, someway become a part of their own accomplishments, and their own success. 

They act without humility, grace or the minimum politeness.  They mistakenly attribute to themselves others real world experience, real world return and in the process fail before they have  begun.

Brad Feld called out once his appreciation for "the law of self-correcting process".  Does it apply here?

Tactically Deep

As an outside board member of a venture backed company - now and in the past - I think there are occassions where you go "tactically deep". 

As a CEO of venture backed company - I'm supportive of my board members, now and then, "going tactically deep".   

What do I mean by tactically deep?  Specifically, I mean a meeting that is off schedule and different than a board-meeting where a key element of a business model is explored in more detail to vette for issues, concerns, gaps or problems.  It might be addressing the notion of scaling in business operations or customer support processes.  It is though - more thoughtful time spent on one area of the business. 

I liken this to a physical.  Not the light, quick physical required for key-man life insurance where the part-time PA / full time paramedic drops by your office to take your blood pressure, a couple vials of blood and ask you some questions hunched over some forms.  I'm talking about the deeper - see your primary physician physical - where you are pricked and probed in a more - let's say - thorough way.  Said another way - it's an audit.  And who out there objects to a good-old-fashion check and balance audit?

Why support or conduct a tactically deep audit?  First - it is absolutely good corporate governance.  A tuned in, smart and aware board member is more value-add.  And in the process of going tactically deep - more than knowledge is transferred.  The pace, culture and thinking process of the company is transferred.  Also outside the board-room relationships are cultivated.

Second - it stimulates empathy - in both directions (Management to Board member & vice versa).  Like the adage about walking miles in someone else's moccasins - empathy contributes materially to understanding and who doesn't want more of that? 

Finally (and this list is not exlusive - I just write in three's) - it's professional.  A board member should have fundamental knowledge of the company they are helping steward.  A CEO should facilitate this.  On occassion - now and then.