I was on a panel this week with some really good VCs and several equally high quality entrepreneurs.
The topic was managing a Board and we covered a bunch of important topics.
One subject that came up was communicating with your board and investors. One of the entrepreneurs said that she had been advised to send a weekly status email to her board and investors and she cringed when she thought of that. Another entrepreneur said that there’s a danger in "overcommunicating" and the problem with something like a weekly email, other than the time it takes to compose a decent one every week, is that you will set the expectation and you won’t be able to stop without disappointing your investors.
Here’s what I think about all of this:
1 – Communication (both ways) is the hallmark of a healthy entrepreneur/VC relationship. The more communication, the better the relationship. It should not be all one way. The VC should initiate the contact as much as the entrepreneur.
2 – Formal communication is overrated. Weekly status reports that go out to the entire board are often not read, particularly if they are delivered in an attachment like a pdf or a spreadsheet. I much prefer the ad hoc phone call or email. The closer it gets to a conversation the better it is.
3 – It’s hard to have a "conversational" relationship with a bunch of people at the same time. I am on several boards where we have that. Particularly via email. When the CEO can send out an informal email and copy his entire board and possibly a couple senior managers and the group can have an email discussion, that’s a really good thing.
4 – If you are going to do a weekly status report, I’d suggest making it short and sweet. And do it via email without attachments. Just the Good, The Bad, and The Ugly in five paragraphs or less. Don’t spend hours editing it. Just put down your thoughts and hit send.
5 – You need to change your communication techniques with your board and investors as your company grows. Maybe it does make sense to send a weekly email when you have ten or fifteen employees but doing that when you have 200 seems nutty to me, unless the company is in a significant crisis mode.
6 – The entrepreneur should determine the mode of communication and should not have something mandated to him or her. Suggestions on how to improve it are fine, but requests for reams and reams of information and analytics are not.
There is no one good way to manage communication between an entrepreneur and the Board and investors. Each entrepreneur needs to find a method that suits them best. Efficiency is key. But it has to be effective. And it should be frequent.
Because I’d rather be guilty of overcommunicating than undercommunicating every time.