Being A Shock Absorber
I saw this tweet yesterday:
“Great Board Directors behave like shock absorbers, not amplifiers”
wisdom from @roelofbotha
— Tom Hulme (@thulme) August 4, 2016
It really resonates with me.
Companies go through lots of “shocks” over the years. I have seen Boards react in different ways. Sometimes they freak out and make things worse. Other times they are the calming force and voice of reason.
It is that latter behavior that the Company needs in that moment. Everyone is already freaking out. Amplifying that, as Roelof calls it, is not in the least bit helpful. Their is plenty of time for post-mortem analysis and learning from the situation. That can wait.
Companies need support and help during times of crises. Boards are uniquely positioned to provide that. The ones who can actually do that are incredibly helpful.
Comments (Archived):
Yes, and doing that projects that the Board has confidence in the Company.
which is critical at those times
This is a good point – I usually see myself as an oilman with a choice; pouring oil to troubled waters or adding fuel to the fire – mind you, both can have its uses.
Boards should be finely-calibrated signal tuners. Then they’d help amplify what was valuable to do but dial down (shock absorb) all the noise.
Board is like parenthood: you simply need to be there for the company. Back it when needed, share thoughts and concerns when necessary and mainly let it grow and develop knowing you care.
No it is most certainly not.At times–and rightly so–the board removes the CEO. No one removes their child from the family.Too easy.
I think you’re confusing the CEO with the company.
Almost all boards interface directly to the company through the CEOIn a crisis situation they deal with the ceoThis is work not family and the metaphor doesn’t hold.
It’s a simile not a metaphor.My point wasn’t about ‘who’ the Board interfaces with but rather ‘how’ it reacts to changing realities in the journey of the venture.Parenthood represents a deeper level of caring, tolerance and long term view. It is there to serve another entity rather than itself. It is usually the older ‘mature’ person in the room.
The only part that works is when you tell your kids, I am not your friend I am your parent.
This is so the truth.And now that my kid is grown up, I can finally be both at times.
Exactly. The board may not be the captain of the ship, but It’s their job to look over the Horizon, using their skills and experience. And if they see reason to change course, it’s their job to communicate that to give the CEO captain enough time to maneuver.
I have a 17 year old. You are telling me this is an option?
This goes back to your post (3/12/12) where you addressed the importance of building the Board of Directors and the long-term effects it can have on your company: positive or negative.
Speaking of tweets we saw yesterday, I saw this tweet…https://twitter.com/Jason/s…
https://www.instagram.com/p…
I thought that was an entirely natty look and it reminded me of some actor but I couldn’t quite place it. So I ran it through google image search and got the below “visually” similar images. Most of them make no sense at all….
Yeah, that photo looks like a promo for some 1990’s sitcom.I mean that in the nice way.
That’s it. Just came to me. Bob Saget….
i wish i was as funny as Bob Saget
I don’t know why I do this but your comment made me curious about Bob. I just found out that he went to the same high school as my daughters did as well as Steve Schwartzman (where the football stadium is named after him).Also:wanted to be a doctor but one of his teachers, after seeing his creative talent, pushed him towards pursuing a career in the movies.As far as being funny if you were as funny as Bob think of how your life would have been vastly different, most likely because of attention from women at an early age and a different career path!
Yeah, only ran 1 season tho.
Good one. That is an original Fred Wilson with Jason Calacanis right?A while ago.
Yes
looking good guys, (and the suit only looks slightly dated..)
Didn’t the guy on the left used to host an MTV show?
I love being on the board. I am good at it for the company, and it also makes me better at running my own. Something about from the outside looking in…
agree and well said.
“..resonates..”Great dad joke.
But sometimes the ship is off course and some harsh language may be required. Not hysteria but not pleasant either. Some Boards can do this and some the politics doesn’t allow any disturbance of the distortion going on.
Agree the devil is in the details so it’s hard to take a generalization and apply it in many cases. That said my interpretation was more in terms of a board not airing dirty laundry (or making it any dirtier).
How often, with failing companies, do you hear about boards acting prematurely vs acting too late or not at all?
Not my area of knowledge someone else can probably answer this I most likely.
Hindsight is not 20-20There are no do overs.If you do well could you have done better???Poorly, worse???You will never know. The only people that think they do are Monday morning quarterbacks who have never played the game.
https://www.youtube.com/wat… couldn’t resist
OK sure, but this is only possible if there is real alignment on the BOD. Alignment regarding ST and LT strategies, the right CEO and the timing and type of exit. And those things are hard given the numbers and types of investors on any given BOD and where each investor is in the lifecycle of their funds. Which is why Founders should seriously consider these issues above all others before selecting any investor. It’s alignment or freak out.
This is truth spoken from experience which I am sure was learned the hard way.The biggest challenge is that sometimes things started in alignment which then got thrown out worse than a bad back as time went on.Let’s say your investor had spectacular unexpected quick flameouts in their portfolio blamed on bad founder management, and while your company is doing ok, the market wasn’t as big and isn’t moving as fast as you hoped/projected.One of their partners is freaking out about raising their new fund and their LP who inherited the investment from a predecessor is now doing anything they can to distance themselves from the funds original champion. You are going to slog it knowing there are no quick wins, but you know with time opportunity will present itself.You are in a freak out situation.
The board can serve many roles. In times of crisis or where critical matters must be decided, a board can be supportive, decisive and provide perspective. Boards can provide access to people and resources the management tie might not normally have access to. But boards also need to be able to provide the “parental supervision”, strategic insight and represent the rights and interested of investors, employees, customers and – at times creditors.
To stretch the automotive analogy further, maybe Board Members are shocks, not pistons. Separately, what’s your view on new smaller funds forming boards in younger portfolio companies?
Super tough: The founder just stepped into smelly, sticky stuff. Maybe partly it was his fault, but now he needs to get unstuck and out.Then he could use some genuine help, knowledge, wisdom, etc.So, he goes to his BoD? (A) They didn’t see the smelly, sticky stuff, either. (B) They know much less about the details of the business than the founder. (C) They want their investments of time, money, and effort to pay off big time; just now they had a setback; and they are disappointed and torqued. (D) They have the power to fire the founder.So, the founder wants to sit with the BoD, sleeves rolled up, with the smelly, sticky real situation and all the candidate solution scenarios with the pros/cons of each on the table fully, objectively exposed, the hard challenges of reality replacing the former moonbeam optimism, with each BoD member asking himself what he will tell his partners and limited partners, wondering what those people will think, wondering if his wife will notice his concern and lose confidence in his ability as a good provider of security for her and their children, etc.The founder, not a total idiot, may just keep his counsel or seek outside advice. Or, the founder clearly understands that he built the business and just saw something he built break but also clearly understands that since he did the work the first time he can do the work a second time and fix the broken part.Hearing about what broke, what the BoD members would do is likely, in a word, unpredictable. Or, heavily we are dealing with a situation of human emotions facing the unknown — then commonly the human emotional reactions will also be unknown. So, hopefully the BoD was comfortably sound asleep — in that terrific case, don’t wake them up.If want to do well entertaining the BoD, then, once have the solution, report to the BoD that there was a problem but we got a good fix right away. Maybe give the BoD a memo on the problem and solution, a memo that is short on real details and makes the founder look like Superman or some such. Also maybe good to blame the problem on something unpredictable, uncontrollable, and external, say, bad capacitors on a motherboard.My experience with the BoD at FedEx was sad: We’re talking nervous, say, like a fluttering, little bird at a bird feeder, eager for the food but very afraid of other birds or the cat. Also, the members were short on understanding; their poor understanding meant that they couldn’t have confidence in a solution and remained nervous. Well, I got a solution right away, pleased the BoD, and saved FedEx. Twice.After that experience with the FedEx BoD, instead of bringing a real problem to a BoD, maybe I’d rather try to get some nervous little bird on my back porch believing in E = mc^2.All in the school of been there, done that, got the T-shirt, and paid “full tuition”.
Good post. I always say a manager’s job is to know when to give somebody a pat on the back, a kick in the ass, or to be the firm hand on the rudder during rough seas.
In early stage unless you have the capital to hire senior people you will end up with a firm hand on the rudder as honestly the seas are always either too rough or not enough wind. Both challenges that require actions.
You always will always need to be there to instantly put a firm hand on the rudder.I love analogies. I’ll use one. I have a boat. I live on the main shipping channel of the Chesapeake. I let my son capitan while I stand right next to him. Sometimes I tell him great job. Sometimes I tell him I’ve told you ten times how to navigate that wake. But when I see a ship like this I take the rudder. For perspective that bridge is 150 feet off the waterline, the ship is coming through at low tide and the captain is pushing it so it squats in the water and clears the bridge.
This raises an interesting question. If the captain has to squat the ship (did not know what that was until I read your comment) then what happens if for some reason he has to slow down prior to clearing the bridge. Are you saying that it’s that tight of a fit (even at low tide) that it might actually hit the bridge? Is this along the lines of an airplane potentially not taking off when at v1 if something were to happen at the last minute?https://en.wikipedia.org/wi…
He isn’t slowing down. Can’t even if he wanted. Hence why I take the rudder.More than one person in a sailboat has lost their lives when they read the first line of the right of way rules below and not the second (they also are not allowed to be under sail in the channel)”Sailboats under sail power only are always the stand-on vessels in crossing and meeting situations, so look out for them when you’re under power. Also, commercial vessels restricted by their draft or by fishing gear, such as nets or trawls, hold privilege over all recreational vessels, including sailboats.”You are going to get the horn (it is really, really loud, makes a train sound like a car) and then if you don’t get out of the way you will find out first hand what Newtown’s law of momentum is all about. The shocking thing is how fast those ships go. It’s about 22 knots or 25mph. That doesn’t seem fast until you see how big it is in person. He is carrying 5,000 luxury German cars plus whatever the boat weighs.Mass x Velocity is really not your friend.
He is carrying 5,000 luxury German cars plus whatever the boat weighs.Never forgot [1] when I would buy machinery that was made overseas and had it delivered and installed. Came in all laden with grease to prevent corrosion when at sea. Tech spent maybe a half hour just cleaning off the gook before getting to work. Loved that shiny chrome.[1] But I can’t remember what I ate two nights ago…
Worth watching on Netflix:Abandoned (many titles, you want the boating one)http://www.imdb.com/title/t…Hijackinghttps://en.wikipedia.org/wi…
Sorry he is squating it for margin of safety. Bet he can make it at high tide at dead idle.But it reduces any margin for error. If you are moving you also have better rudder control.A captured German Tanker Vessel knocked it down in 1942:http://www3.gendisasters.co…We lose people every year. Boating is serious. Not like a plane but not to f around with.You will like my college fraternity brother roomate (we had adjoining rooms) site:www.notallthosewhowanderare…I am always the one of the first and last entries on his trips including when he circumnavigated the globe and started at my house and sold his old boat 13 miles south of my house.
But it reduces any margin for error. If you are moving you also have better rudder control.This is what I will call the paradox of velocity. (My name for it). I noticed it applies to both boating and shaving as two examples. When you are learning to shave with a blade you need to have a certain speed or you can’t cut. It’s strange because as a newbie you want to go slow but going slow won’t get you where going fast will. (Taking off a bandaid maybe qualifies as well).Ditto for what I learned when docking a power boat. I never had anyone to teach me. So I would go slow when entering the dock. It took me some time to figure out that I had to go fast (as you say more control) and then hit reverse so I wouldn’t hit the dock. Once I mastered that it worked very well.Also in a power boat you go fast when in shallow water. That way you ride on top instead of sinking down.I once took a friend out on my power boat (Penn Grad no longer in touch) and he jumped out of the boat while the boat was next to the dock (and bouncing around). He thought it was funny I guess he didn’t realize how easily he could have gotten crushed (24 foot Sea Ray bouncing around).Re: Your friend. Amazing what people do when they don’t have children to ‘worry’ about.
CONTRIBUTORS:In regards to the comparison of a Board of Directors being similar to a Parent to a Child. Sometimes the turbulent times in the relationship the best decisions by a Parent (BOD) are made after the tidal waves have receded.The move that Hampton Creek Executives allegedly committed according to the SEC by purchasing their own products beyond sampling. How in the world the BOD didn’t knowand the CEO is being implicated. That is the issues investors have to deal with.We enjoy the high priced Vegan options and offerings on many products.The CEO is still employed.http://fortune.com/2016/08/…
CONTRIBUTORS:OFF TOPIC:Has anyone signed up for Superhuman (email client)? Developers attempting to revisitwhere Gmail started as speed. A.I. Triagehttps://superhuman.com/
Roelof Botha is like the Big Daddy Kane of VCs.
Totally agree. See my comment below. The people that are most sure of what to do have no clue.
i’ll reuse that one today.