Thanks to Atlas Venture for supporting Venture Hacks this month. This post is by Fred Destin, one of Atlas’ general partners. If you like it, check out Fred’s blog and tweets @fdestin. And if you want an intro to Atlas, send me an email. I’ll put you in touch if there’s a fit. Thanks. – Nivi

There is a behavior I witness in some first-time CEOs 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 VCs have blocking rights on some important decisions (approving the budget, your compensation, 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.”

Entrepreneurs 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.

It’s the CEO’s fault

That may be the product of investor behavior, but I would argue this is the CEO’s fault. Nature abhors a leadership vacuum, and VCs 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 judgment, the right path for the business. That’s what you are there to do. Make decisions fast, don’t fall for analysis-paralysis, trust your gut, execute and iterate. As Tim Ferriss would say, ask for forgiveness, not permission.

Why VCs shouldn’t drive strategy

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 VCs should not drive your strategy:

  1. We forget 50% of what we said at the last board meeting.
  2. We don’t know the people inside the company and hence have no clue what the team can really execute.
  3. We meet many smart people and hence we have way too many ideas than you can possibly implement.
  4. We are focused on the 5 year vision, yet we are focused on the quarter too — we’re confused.
  5. We don’t need to deliver on it, you do. We come and collect when the job is done.

You want to leverage 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.

If you like this post, check out Fred’s blog and his tweets @fdestin. If you want an intro to Atlas, send me an email. I’ll put you in touch if there’s a fit. Finally, contact me if you’re interested in supporting Venture Hacks. Thanks. – Nivi

Topics Board of Directors · Plans · Sponsor

7 comments · Show

  • Dan Cornish

    This assumes that the VCs on the board do not have an alternative agenda like firing the CEO. If a VC tells a CEO “The board wants…” then the point of this article is moot even if they do not have a majority on the board. If the CEO stands up then tells the board what he/she will do, then they have stepped into the trap set by the VC. It will make it much easier to fire the CEO.

    The most important thing to remember for a CEO is to pick the right VC and then this is a scenario they will never have to worry about.

  • Nivi

    This post reminds me of a great quote from Bill Watkins, the CEO of Seagate:

    “You never ask board members what they think. You tell them what you’re going to do.”


  • AG

    Is it me or has the quality of this blog gone way up recently? Maybe I’m just now noticing, but the last handful of posts have been excellent.

    Maybe it’s just that now our company is at a stage where this stuff is starting to become relevant.

    Either way, cheers to great stuff!

  • actroll

    Nature abhors the pathetic fallacy. No wait; that’s me.

  • Nic

    I read a corresponding post some time ago.

    It stuck with me, as the analogy was John Lennon listening to his Manager while the Beatles were trying to ‘make it’ and then telling him to bugger off once they started making and selling music.

    After some searching, I found the post:

    Keep up the great work!