“The Board Brought Me In” Telltale

There’s only one executive who should ever say, “the board brought me in,” and that is the chief executive officer (CEO).  Yet, you’d be surprised how often you hear other executives — chief revenue officers (CROs), chief marketing officers (CMOs), chief product officers (CPOs), and most often chief financial officers (CFOs) — say, “the board brought me in.”

It usually comes up in an interview, with a candidate running through their background.

“Well, I was at XYZ-Co, and things were going great, but at PDQ-Co they needed some help, so the board brought me in to help get things back on track.”

A+ on storytelling, but (usually a) C- on reality attachment.  “And where,” methinks, “was the CEO during all this board bringing in and such?”

(And if things really were going so well at XYZ-Co, tell me why’d you jump ship to do a fixer-upper at PDQ-Co again?)

I always view “the board brought me in” language as a telltale.  Of what, I’m not entirely sure, but it’s usually one of these things:

  • Self-aggrandizement.  Sometimes, it’s just the candidate trying to sound larger-than-life and they think it sounds good to say, “the board brought me in.”  In this case, the candidate’s judgement and credibility come into question.
  • Innocent miscommunication.  Perhaps the candidate knew an existing board member and was referred into the position by them.  OK, I suppose technically they could think, “the board brought me in,” but didn’t the CEO interview them and make the final call?  Did the board really bring them in — as in, against the CEO’s wishes?  Maybe it’s just old-fashioned communications confusion.  Maybe.
  • Genuine confusion.  Or, perhaps the candidate is under the illusion that they somehow work for the board and not the CEO.  This can happen with CFOs in particular because, unlike all other CXOs, there is something of a special relationship between the board and the CFO.  But in tech startups, in my humble opinion, the CFO works for the CEO, period — not for the board.  They may have a special relationship with the board, they may meet with the board without the CEO being present (e.g., audit committees).  But they work for the CEO.  If you feel differently, great.  If you feel like I do — best to use this as a telltale of a potentially huge problem downstream.
  • A placeholder CEO.  There is always some chance the CEO is somehow a placeholder (e.g., a founder who’s lost all but positional power in the organization and acting in some lame duck capacity).  In this case, the CXO in question might just be saying the truth — perhaps the board really did bring them in.  But then the candidate’s going to need to explain why they jumped into such a mess [1].

I’m sure there are other possibilities as well.  But the main point of this post is to say that your ears should perk up every time you hear a CXO [2] candidate say, “the board brought me in.”  Mine do.

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Notes

[1] And I suspect the most common answer will be, “and they were planning to make me CEO in X months once they worked on the transition.”  In which case, I’d want to understand why the candidate is so trusting (or naïve), what written assurances were given, and why they would take a CXO job with a dubious call option on CEO as opposed to taking a straight-up CEO job.  (To which the best, but still somewhat unfortunate, answer is — it was the only available path I had at the time.)

[2] For all values of X != E.

 

 

Join us for Tomorrow’s SaaS Product Power Breakfast with Dan Faulkner of Plannuh on Building Great Product Teams

Please join us for tomorrow’s SaaS Product Power Breakfast where we’ll speak with Dan Faulkner, CTO of Plannuh, about building great product teams.  I serve as an advisor to Plannuh and I wrote the foreword for their book, The Next CMO, which Dan co-authored with Plannuh founder and CEO Peter Mahoney.

After getting a master’s in speech and language processing, Dan worked for speech recognition powerhouse Nuance for well over a decade, first as a researcher and later moving product and business unit management.

Our topic will be how to build great product teams.  Among other questions, we’ll ask Dan:

  • What makes a great product team?
  • What is his four-part framework for thinking about product teams (e.g., context, talent, change, and location)?
  • Why context matters so much?
  • How to deal with the army you have vs. the army you want?
  • How to think about change and risk?
  • The tradeoffs in location strategy and colocation of PM and ENG?
  • How to think about and drive diversity across a number of dimensions?

Hope to see you there!

Diary of a Novice NED: A Look Inside the World of Independent Directors at Startups

What’s a NED, anyway?

NED stands for non-executive director (also abbreviated as NXD) and it refers to a member of company’s board of directors who is not on the executive management team.  While NED is the more common term in Europe, in Silicon Valley we typically say “independent director,” which I have always taken to mean a director independent of both the company’s executive management team and the company’s venture capital (VC) investors.

Startup boards typically have three types of directors:

  • Founders, who represent the common stock [1]
  • VCs, who represent the various classes of preferred stock [2]
  • Independents, who represent (what they believe) is the good of the company [3]

By virtue of my joining the board of European work management leader Scoro, I came to meet Martin Fincham of The Gorilla Factory (presumably a reference to Geoffrey Moore’s metaphor), a fellow NED, and the board chair of Scoro.  So I naturally was eager to read Martin’s new book, Diary of a Novice NED, and put it on the top of my reading list once it came out.

While I won’t dare to review a book written by a new colleague (and our board chair!), I will say a few things about the book:

  • It’s a quick read, enjoyable, and at times quite funny.
  • It truly is a diary:  mostly written in the first person and with lots of interesting stories.
  • It bottles a lot of wisdom:  Martin seems to be a fellow reductionist, so the book features many pithy pieces of wisdom, derived from his years of experience.
  • It has a European tilt to it:   while it’s certainly relevant to startups everywhere, some things are different in Silicon Valley [4]
  • More than anything:  it provides a rare inside look at how Martin prepared for and made the jump to “going plural” [5], making a new and satisfying living as an advisor and director.

Diary of a Novice NED is available on Amazon here.  Congrats Martin and looking forward to the foreshadowed second book!

For my thoughts on how to be a good independent director, or NED, see here.

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Notes

[1]  While founders typically have common stock, they sometimes have their own series, often called Series F (founder), that has the same liquidation preference as the common stock, but additional rights such as multiple (e.g., 10x) voting rights or protective provisions.

[2] Read this paper from Wilson Sonsini for a look at the challenges faced by VCs in wearing two hats on company boards.

[3] For more on the role of an independent director, you can read this UK article, The Role of a NED, or this Utah Law Review paper, The Role of Independent Directors in Startup Firms.

[4] And it discusses tax “schemes” (I love the connotation difference between the UK and USA on this word) that are UK specific but, I believe, have rough spiritual equivalents in the USA (e.g., QSBS)

[5] Seemingly, a UK idiom for working with multiple companies as an advisor/consultant, as opposed to just working at one “real” job.

B2B SaaS Metrics 2020 Benchmark Report: A Discussion with Ray Rike and The SaaS CFO

The purpose of this post is to embed the video recording of my recent appearance on Monday Night Metrics with Ray Rike of RevOps^2 and Ben Murray, also known by the sobriquet, The SaaS CFO.

In this fast-paced episode we move through topical discussions of the major SaaS metrics followed by investors and operators alike, and look at the size-segmented benchmarks presented in Ray’s 2020 B2B SaaS Metrics report.

I think the episode is suitable both for the SaaS metrics beginner because we review the basics for most metrics as well as for the grizzled professional because we dive into topical (and sometimes fairly non-obvious) discussions for many of them.

Here’s the video:

Thanks to Ray and Ben for having me!

Tomorrow’s Product Power Breakfast with Paul Jozefak on Introducing SaaS as a Layer to Lighten the Legacy Load

Please join us for tomorrow’s SaaS Product Power Breakfast with entrepreneur and venture capitalist Paul Jozefak, CEO of Receeve (an all-in-one platform for collections and recovery), on how to use SaaS as a layer atop legacy systems to prove return on investment (ROI) and smooth the customer’s transition before setting out to rip and replace them.

This is an interesting strategy that I’ve seen numerous times in SaaS and it cuts to core product strategy issues, most notably, to what extent and in what timeframe do you “design in” versus “design out” the underlying technology.

In addition to both impromptu and (hopefully some) audience questions, we’ll be asking Paul:

  • Why layer on top in your target segment?
  • Are there any risks to layering?
  • What are your customers trying to accomplish when it comes to working with Receeve?
  • Where is technology in the segment headed?
  • What hurdles do you hit with decision makers?

Thomas has not been feeling well so, while he’s slated to be our lead interviewer tomorrow, I may end up taking the lead on this episode.

Either way, see you there!