feld on directors meetings

Helpful piece by Brad Feld on the characteristics of effective board meetings. A small excerpt:

What I mean by this is that most board meetings are 80% status updates, 10% strategy / issues, and 10% administration. I’m fine with the 10% administration, but the 80% / 10% split on status vs. strategy should be reversed. There are plenty of different ways to organize the “strategy” (I’m using “strategy” as shorthand for “forward looking discussion”) and strategy includes a blend of short, medium, and long term issues, as well as plenty of “tactical stuff” (for those that think “strategy” is too specific a word), but I imagine you get the idea.

He also sets out a detailed list of steps that contribute to successful meetings which certainly is worth a read.

One suggestion in particular that he echoed from Fred Wilson was that board meetings should be in person to be most effective. I’d perhaps go a bit further than that – wherever possible and where the issues to be discussed warrant the time and expense I always recommend that any meetings, discussions, negotiations, etc. be done in person or alternatively by videoconference and only by teleconference as a last choice. I recall reading somewhere in the past about studies that have concluded that the vast majority of communication at such meetings are non-verbal in nature – gestures, expressions, body position, etc. In my experience this is definitely the case. And perhaps for this reason negotiations done face to face typically yield better results – greater relationship building, fewer arguments and, generally, more diplomatic behaviour. My own personal theory on the latter is that people are much less inclined to be rude, snarky, argumentative or simply impolite when meeting with someone face to face – it’s much easier to behave that way to a disembodied voice. In addition to the fact that people are more likely to focus and less likely to “multitask” in face to face meetings than they are in teleconferences.

On a somewhat related note, on several occasions where I have seen board minutes drafted by clients, they have gone into a significant amount of detail regarding what was discussed, by whom, who agreed, who disagreed and so on – almost a blow by blow transcript of the entire meeting. Not recommended. Minutes should be short and concise, not a complete record of the discussion. A note that a discussion occurred is sufficient. Of course, if a decision is made, then the resolution should be recorded, including those voting in favour, against or abstaining. Consider picking up a copy of Wainberg’s Company Meetings, or ask your lawyer for sample minutes if you plan to record minutes yourself. You’ll likely be glad you did a few years down the road, when a small army of lawyers comes in to do due diligence before your major financing, IPO or acquisition, and crawls through each and every sentence in your minute book.

(hat tip to @RuddockMH for pointing me to the feld piece)

Top Ten Twenty Lies

Yes, this is a bit old, but quite good. I was wandering around and found these two articles on Guy Kawasaki’s website, about The Top Ten Lies of Venture Capitalists and The Top Ten Lies of Entrepreneurs. Great, great reading. One small snippet from each. On the VC side:

“This is a vanilla term sheet.” There is no such thing as a vanilla term sheet. Do you think corporate finance attorneys are paid $400/hour to push out vanilla term sheets? If entrepreneurs insist on using a flavor of ice cream to describe term sheets, the only flavor that works is Rocky Road. This is why they need their own $400/hour attorney too–as opposed to Uncle Joe the divorce lawyer.

and one on the Entrepreneur side:

“Oracle is too big/dumb/slow to be a threat.” Larry Ellison has his own jet. He can keep the San Jose Airport open for his late night landings. His boat is so big that it can barely get under the Golden Gate Bridge. Meanwhile, entrepreneurs are flying on Southwest out of Oakland and stealing the free peanuts. There’s a reason why Larry is where he is, and entrepreneurs are where they are, and it’s not that he’s big, dumb, and slow. Competing with Oracle, Microsoft, and other large companies is a very difficult task. Entrepreneurs who utter this lie look at best naive. You think it’s bravado, but venture capitalists think it’s stupidity.

Great stuff.

Pretexting, Ethics and Clients

Still catching up a bit – very quick post on the HP “pretexting” thing. As you may recall, HP asserted that its practice of pretexting – i.e. pretending to be someone else to get confidential telephone records – was legal. They were investigated leaks to the press by one of their board members and had resorted to this practice to try and find the leak. I had commented elsewhere long ago when this story first broke that even if it were illegal, very few (if anyone) could consider such actions the least bit ethical.

As most of you know apparently there was some disagreement as to legality and a few folks at HP were charged. Then I read this recent story about how HP was ending its special ties to Larry Sonsini, of the California powerhouse firm of Wilson Sonsini:

Sonsini – famous for decades in these parts – gained national fame in September during HP’s spy scandal hearings in front of Congress. Emails between the lawyer, HP executives and former director Tom Perkins raised serious questions about how sound Sonsini’s advice was around the practice of pretexting. He seemed to indicate that phone record fraud sounded like fair game, after being nudged in that direction by HP’s internal lawyers.

My emphasis. Its unfortunate to hear of something like this. I don’t doubt that he took the time and effort to research the law to come to a reasonable opinion on the matter before advising his client – obviously it was a very grey area of the law. In those circumstances its unfortunate that he didn’t perhaps suggest, notwithstanding the black letter of the law, that it would be unwise do take the course of action they were contemplating. That as good corporate citizens with a significant public profile, that such a practice is not something they should even consider. But then again, maybe he did and they didn’t listen (and of course he would surely have the good sense never to say that in public and embarrass a major client) or maybe he thought that such comments were not for legal counsel to make. Who knows.

The situation is not unfamiliar to many lawyers – particularly when it comes to giving opinions – lawyers are sometimes subjected to pressure to deliver the opinion that a client wants to hear rather than the one they should probably be delivering. By this I’m certainly not suggesting lawyers are delivering bad or incorrect opinions. What I am saying is that there are often grey areas of the law (which tend to be the areas on which legal expertise are sought) and in respect of which opinions can go one of two or more ways. And sometimes, the client will want to hear a certain outcome – for example, in the case of HP, I’m sure they would have liked the comfort to hear from their external counsel that their actions were legal – it would serve as some evidence that they took some degree of diligence and could serve to mitigate consequences if it turned out governmental authorities differed. If he, on the other hand, refused, or proffered a legal opinion that it was fine but qualified with a recommendation not to take such actions, HP likely would have not been very happy with him. And everyone knows what happens when clients aren’t happy.

Its an unfortunate situation to be in. Particuarly in this case, where, at the end of the day, HP still, obviously, isn’t happy with him.