Repost of my post at Nivi and Naval's great VentureHacks. Every entrepreneur should get VentureHacks for Christmas.
There is a behaviour I witness in some first-time CEO's that I meet, not necessarily the younger and more mavericky generation, that I do not think is necessary nor helpful. It's an insidious but frequent tendency to let the board decide rather than advise or approve. It goes like this:
Because VC's have blocking rights on some important decisions (approving the budget, your comp, raising money), they are often able to wield way more power than their 20% ownership would suggest they should have. As a result, entrepreneurs often talk of coming to the board with their slides in hand asking "what does the board want me to do ?", which is code-speak for "I am here to ask for permission from my investors to do what I need to do".
They will present the strategy they believe in but essentially allow the board (read: the investors) to walk straight through the carefully thought out action plan and redesign the entire strategy in one swell meeting. The investor probably walks away feeling like he provided value and the entrepreneur now goes back to his team to explain that his investors puked over the team's strategy and that the priorities have changed.
That may be the product of investor behaviour, but I would argue this is the CEO's fault. Nature hates a leadership vacuum, and VC's will fill that gap if you don't.
If you really believe in what you are doing, you come to the board telling board members what you are planning to do, taking considered advice on whether this is the right strategy, considering that advice and executing on what is, in your best judgement, the right path for the business. That's what you are there to do. Take decisions fast, don't fall for analysis-paralysis, trust your gut, execute and iterate. As Tim Ferriss would say, ask for forgiveness, not permission.
Guy Kawasaki does lists all the time and it seems to work for him so I thought I would try one too: Here are the top five lighthearted reasons why VC's should not drive your strategy:
§ We forget 50% of what we said at the last board
§ We don't know the people inside the company and hence have no clue what the team can really execute
§ We meet many smart people and hence we have way too many ideas that you cannot possibly implement
§ We are focused on the 5 year vision, yet we are focused on the quarter too, even we are confused
§ We don't need to deliver on it, you do. We come and collect when the job is done.You want to leverae your board, and you don't want to get fired for being a solo player either. Personally I really like what my partner Jeff refers to as a culture of "champion and challenge". I guess you have to be born in the USA to say phrases like that but it's spot on. If I really disagree with a strategy decision, trust me, we will have a serious discussion about it. But come and champion what you believe in, take ownership, step into the role. Ultimately, I backed you because I believe in you, and you know better.