Reinventing the Board Meeting – Part 2 of 2 – Virtual Valley Ventures

There is nothing more powerful than an idea whose time has come
Victor Hugo

When The Boardroom is Bits
A revolution has taken hold as customer development and agile engineering reinvent the Startup process. It’s time to ask why startup board governance has failed to keep pace with innovation. Board meetings that guide startups haven’t changed since the early 1900’s.

It’s time for a change.

Reinventing the board meeting may allow venture-backed startups a more efficient, productive way to direct and measure their search for a profitable business model.

Reinventing the board meeting may offer angel-funded startups that don’t have formal boards or directors (because of geography or size of investment) to attract experienced advice and investment outside of technology clusters (i.e. Silicon Valley, New York).

Here’s how.

A Hypothesis – The Boardroom As Bits
Startups now understand what they should be doing in their early formative days is search for a business model. The process they use to guide their search is customer development. And to track their progress startups now have a scorecard to document their week-by-week changes – the business model canvas.

Yet even with all these tools, early stage startups still need to physically meet with advisors and investors. That’s great if you can get it.  But what if you can’t?

What’s missing is a way to communicate all this complex information and get feedback and guidance for startups who cannot get advice in a formal board meeting.

We propose that early stage startups communicate in a way that didn’t exist in the 20th century – online – collaboratively through blogs.

We suggest that the founders/CEO invest 1 hour a week providing advisors and investors with “Continuous Information Access” by blogging and discussing their progress online in their startup’s search for a business model. They would:

What Does this Change?
1) Structure. Founders operate in a chaotic regime. So it’s helpful to have a structure that helps “search”
 for a business model. The “boardroom as bits” uses Customer Development as the process for the search, and the business model canvas as the scorecard to keep track of the progress, while providing a common language for the discussion.

This approach offers VC’s and Angels a semi-formal framework for measuring progress and offering their guidance in the “search”
 for a business model. It turns ad hoc startups into strategy-driven startups.

2) Asynchronous Updates. Interaction with advisors and board members can now be decoupled from the – once every six weeks, “big event” – board meeting. Now, as soon as the founders post an update, everyone is notified. Comments, help, suggestions and conversation can happen 24/7. For startups with formal boards, it makes it easy to implement, track, and follow-up board meeting outcomes.

Monitoring and guiding a small angel investment no longer requires the calculus to decide whether the investment is worth a board commitment. It potentially encourages investors who would invest only if they had more visibility but where the small number of dollars doesn’t justify the time commitment.

A board as bits ends the repetition of multiple investor coffees. It’s highly time-efficient for investor and founder alike.

3) Coaching. This approach allows real-time monitoring of a startup’s progress and zero-lag for coaching and course-correction.  It’s not just a way to see how they’re doing. It also provides visibility for a deep look at their data over time and facilitates delivery of feedback and advice.

4) Geography. When the boardroom is bits, angel-funded startups can get experienced advice – independent of geography. An angel investor or VC can multiply their reach and/or depth. In the process it reduces some of the constraints of distance as a barrier to investment.

Imagine if a VC took $4 million (an average Series A investment) and instead spread it across 40 deals at $100K each in a city with a great outward-facing technology university outside of Silicon Valley. In the past they had no way to monitor and manage these investments. Now they can. The result – an instant technology cluster – with equity at a fraction of Silicon Valley prices.  It might be possible to create Virtual Valley Ventures.

We Ran the Experiment
At Stanford our Lean Launchpad class ran an experiment that showed when “the boardroom is bits” can make a radical difference in the outcome of an early stage startup.

Our students used Customer Development as the process to search for a business model. The used a blog to record their customer learning, and their progress and issues. The blog became a narrative of the search by posting customer interviews, surveys, videos, and prototypes. They used the Business Model Canvas as a scorekeeping device to chart their progress. The result invited comment from their “board” of the teaching team.

Here are some examples of how rich the interaction can become when a management team embraces the approach.

We were able to give them near real-time feedback as they posted their results. If we had been a board rather than a teaching team we would have added physical reality checks with Skype and/or face-to-face meetings.

Show Me the Money
While this worked in the classroom, would it work in the real world? I thought this idea was crazy enough to bounce off a five experienced Silicon Valley VC’s. I was surprised at the reaction – all of them want to experiment with it. Jon Feiber at MDV is going to try investing in startups emerging from Universities with great engineering schools outside of Silicon Valley that have entrepreneurship programs, but minimal venture capital infrastructure. (The University of Michigan is a possible first test.) Kathryn Gould of Foundation Capital and Ann Miura-Ko of Floodgate also want to try it.

Shawn Carolan of Menlo Ventures not only thought the idea had merit but seed-funded the LeanLaunchLab, a startup building software to automate and structure this process. (More than 700 startups signed up for the LeanLaunchLab software the day it was first demo’d.) Other entrepreneurs think this is an idea whose time has come and are also building software to manage this process including Alexander Osterwalder, Groupiter, and Angelsoft. Citrix thought this was such a good idea that their Startup Accelerator has offered to provide GoToMeeting and GoToMeeting HD Faces free to participating VC’s and startups. Contact them here.

Summary
For startups with traditional boards, I am not suggesting replacing the board meeting – just augmenting it with a more formal, interactive and responsive structure to help guide the search for the business model. There’s immense value in face-to-face interaction. You can’t replace body language.

But for Angel-funded companies I am proposing that a “board meeting in bits” can dramatically change the odds of success. Not only does this approach provide a way for founders to “show your work” to potential and current investors and advisors, but also it helps expand opportunities to attract investors from outside the local area.

Lessons Learned

  • Startups are a search for a business model
  • Startups can share their progress/get feedback in the search
  • Weekly blog of the customer development narrative
  • Weekly summary of the business model canvas
  • Interactive comments and questions
  • Skype and face-to-face when needed
  • This may be a way to augment traditional board meetings
  • This might be a way to rethink our notion of geography as a barrier to investments

Or watch the video here.
Listen to the post here: Download the Podcast here

34 Responses

  1. Steve,
    This really looks like a critical development in the startup funding ladder. Can similar thinking be applied to the pre-funded startup to change the process of getting from inspiration to initial funding? I know the lean startup process addresses it, but there’s a very difficult process from idea to prototype in which great innovation still dies. FFF funding to seed to angel process is still tough if one is not based in SF.

  2. Another benefit of having a clear “scorecard” + “lessons learned” blog is helping to clarify lessons and progress for the entrepreneur. I think a lot of startup founders (especially solo ones!) don’t do enough documentation of what they’re doing and learning.

  3. Steve – I greatly enjoyed both parts of this topic. You made some excellent points and the information is timely for the growth of our business which I hope to roll into our current board process.

    I really like the idea of using a blog to communicate process. I currently use our company blog as a means of commonplacing and documenting my business learning, but to a lesser degree to what you are describing.

  4. “Reinventing the board meeting” is catchy title but what you are really proposing is just a recommendation how to do “weekly reporting”.

    – and weekly reporting is something that many companies are already doing

    – you are recommending they should write about their customer development progress and update the canvas – that’s great for startups!

    – but I think this should not replace the board meeting (and in the summary you say that also) so the title is imho exagerated and misleading

  5. Great idea. Communication between startups and their board members/advisors is often easily disconnected and random, especially when people are more than 30 feet apart. Why not extend your idea of using a blog to a collaboration platform that allows investors, vcs, or adivisors to connect with startups and share multiple types of data and information?

  6. Agree totally with all points. The bulk of your recommendations go to two points, 1)improving speed and relevance of communications and 2) avoiding the wasting of big amounts of time in preparation for the meeting. As you put in the end, these must augment board meetings…but I believe that a startup that implements such a setup could reduce formal board meetings at startups to perhaps 2-3 a year from 6-8. I think this communication would also allow for a lighter formal board, which will be limited now to formal oversight as required by legal obligations or major changes in strategy where you need everyone on deck and focused. The “bits” approach, however, should be including advisors, not just formal board members, to increase the benefit of available fonts of wisdom.

    I don’t think your proposals are limited to startups, by the way.

  7. Forget the board, this is a model for how startups should generally tap investors, advisors, believers, and other friends of the company. In an era of crowd intelligence, startups should be looking to extend their smarts and know-how with any competent people they trust.

  8. [...] Reinventing the Board Meeting – Part 2 of 2 – Virtual Valley Ventures [...]

  9. [...] have found their business model they don’t fit the lean philosophy at all.  His focus is on reinventing the board meeting which he blogged on this week.  At the Citrix Startup Accelerator we are looking to bring these types of innovations to our [...]

  10. Thanks Steve, a serious evolution from board metting to ongoing conversation and company evolution.

    This feels like a critical step in making business more dynamic and I’ll be very surprised if this hypothesis doesn’t get as much attention as customer development and the business model canvas.

  11. The idea of investing in universities with entrepreneurship programs but little VC structure is excellent. As a Pittsburgh native, I would highly suggest looking into Carnegie Mellon University and the University of Pittsburgh. Both are very strong universities that put out top talent, but often don’t get the recognition they deserve. Pittsburgh lacks a lot of VC structure or money, so it seems that this would be a good city to focus on.

  12. you forgot to mention all the wasted time the founders and their entire team spend preparing for Board meetings. Days…

    I have always felt Board meetings are a waste of time. Most Board members do not spend enough time with a company to really understand the issues/challenges and provide meaningful input. And many do not even give their full attention to the Board meetings when they occur.

    Not sure about the Blog idea but more frequent casual/unprepared meetings are most productive for founders. Not necessarily VC’s who sit on too many Boards to be really helpful anyway. More than 4-5 and you a relegated to the problem rather than the solution.

  13. Very intriguing suggestion… would these blogs be 100% public or would the information be limited to employees, directors, and investors?

    • Completely up to the company.

      I’d imagine if you had VC’s and a formal board you’d want to password protect and limit access to the site.

      On the other hand if you’re a 2-person startup looking for advice you might want to crowdsource your progress and get advice from all. You can sort through the good versus bad.

  14. I have seen startup/companies with public blogs doing quite well. Getting feedback (comments) seems to be an obvious advantage.

    It would be very interesting to see an ab-test between password protected and public blogs.

    When I read the post I thought of a crowdsourced VC board as an alternative. 50 VC signs up to get rss feed back from x number of startups and comments on problems they think they can solve.

    The VC:s dont need to be from the same company.

    Since its more likely that one of 50 VC.s have a better than one of 2 VC:s then the startups would be more likely to suceed.

    A VC would probably say then we would need to follow 50*5 startups blogs. Which might be a problem. But it doesnt need to be the conventional way of real “hard looking”. I think it would enough for the VC:s to just skimmer through the posts. And of course pick out the posts they think they can offer better help to.

    If small VC firms doesnt find a way to work together, at least in theory, the bigger firms could have an advantage with more VC:s following their startups blogs.

    Before they have might offered help as well to startups in the firm which they arent on the board for. But if all the startups start blogging I think it will be much easier for them to follow, in contrast to tagging along to a board meeting or talking to a partner VC.

  15. A dream would be:

    A webb app does this:

    1. It combines the teachings of Cust. Dev. and business model canvas with a real nice interactive interface.

    2. It collects data about the startup.

    3. It sends the data to the startupgenome API and get back what the likely problems/pitfalls/opportunities might be for this startup in this stage.

    4. Based on the problems/opportunities etc, the weekly blog post of the startup is sent out to 5 of 1000 advisors/VC:s/mentors/angels that through a super intelligent formula has been selected to be very ,or more, likely to offer great advise for these types of problems/opportunities.

  16. [...] Reinventing the Board Meeting [...]

  17. [...] Reinventing the Board Meeting – Part 2 of 2 – Virtual Valley Ventures « Steve Blank. [...]

  18. [...] on June 7, 2011 Last week at the Startup Lessons Learned conference Steve Blank discussed the lean board meeting which we are going to help support with GoToMeeting.  The basis of this, which is worth reviewing [...]

  19. I like this idea, but I’m not so sure if you can really become location independent. Your class consisted of ten teams and I’m assuming they were not kept in quarantine. How much of the startups learning can be attributed to this offline interaction and how much to their online interaction?

    Another issue is group decision making: I don’t have a single positive experience with online decision making. Having key figures in one room seems to me the only way. Of course they should spend their expensive time together on making these decisions. The canvas, blogs and email (about mundane stuff) allow board members to do homework.

  20. Lots of fanboys in the comments section but I’m skeptical, especially for companies beyond the very early stages and those with experienced CEOs.

    Here’s the line that bugs me the most: “3) Coaching. This approach allows real-time monitoring of a startup’s progress and zero-lag for coaching and course-correction. It’s not just a way to see how they’re doing. It also provides visibility for a deep look at their data over time and facilitates delivery of feedback and advice.”

    How is zero-lag coaching and course-correction going to save a CEO time in dealing with the board, especially since it seems the author is proposing this process to augment (not replace) in-person board meetings? It also seems unlikely to replace investors calling the CEO whenever they want to ask about something that’s on their mind or suggest a pet idea.

    Count me out.

  21. [...] Reinventing the Board Meeting [...]

  22. My wife did this in her start-up and it was very successful. She wrote up key progress in various blog articles and they were (and still are) publicly accessible.

    Enables you to communicate directly NOT JUST WITH THE BOARD, but with all the users, customers, partners and suppliers etc who surround you as well as employees, volunteers, contractors and obviously your board.

    I think it allows you to create critical mass much earlier and makes everybody feel much more involved. Writing things up publicly also forces you to crystallize your thoughts extremely well and this helps you with learning (ala customer development).

    However, this is much of a one way street. The CEO will get little back in terms of useful feedback. I personally find that weekly scrum-style meetings/calls are extremely useful for giving feedback (what have you done this week, what do you plan to do next week, what are your problems). I think the chairman of the board should have that call with the CEO every Friday afternoon without fail. It can be extremely powerful in guiding the thinking and planning process of companies.

  23. [...] Reinventing the Board Meeting – Part 2 of 2 – Virtual Valley Ventures – Steve Blank brings up some good points on what board meetings should be like. [...]

  24. Sometimes necessity and common sense prevails. Meeting, board, advisory, everything else starts to look like a drain with a little bit of value. Mostly that value can be shared and debated online and save the personal meetings for trouble and celebration.
    Problem six years ago when I started a product called Personal Board of Advisors on my forum site, most “seasoned” advisors struggled getting on board. Still true today, but getting better. Your post could help so I share. Thanks! By the way my creative problem solving students love that I share ALL your work so thanks again ;)

  25. [...] Bland recently wrote this interesting post on why he thinks traditional board meetings are a waste of time. He proposed an novel hypothesis [...]

  26. Steve,

    I think your blog idea can be applied to the entire corporation. I wrote my own blog post exploring this further:

    http://wp.me/p1AdBI-30

    I’m always hesitant to add more time burdens to a team. This does, however, seem like a good way to efficiently communicate with both breadth (to the entire team) and depth (with a thought-through post).

    Erik

  27. [...] Bland recently wrote this interesting post on why he thinks traditional board meetings are a waste of time. He proposed an novel hypothesis [...]

  28. [...] via email. The best companies I’m involved in actually do this weekly and, if you follow Steve Blank’s “Boardroom as Bits” hypothesis, you can turn this into real time info where the board is incorporated into the information stream [...]

  29. For a young startup, the “Bits” model fits perfectly. Besides, the board may be comprised of the less valuable when it comes to advice\experience. What I’ve tried to do is meet with the rest of the syndicate 1:1 to collect their thoughts, engage, and illicit referral contacts or introductions. You’d be surprised how much better a forum that is than a board meeting. The follow-on can then be documented and shared out.

  30. [...] “Reinventing the Board Meeting — Virtual Valley Ventures” by Steve Blank [...]

  31. [...] blog about more on this topic from time to time.  But for more reading, check out Brad Feld and Steve Blank’s posts on reinventing board meetings.  They have way more experience with the topic than I do. [...]

  32. [...] Steve Blank, Reinventing the Board Meeting – Part 2 of 2 – Virtual Valley Ventures [...]

  33. [...] meetings.  Some of my favorites are from Brad Feld (also this one from him), Andy Payne, and Steve Blank.  All three have perspective as both entrepreneurs and as investors / advisors in the startup [...]

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