A while back I was retained to help develop a new strategic plan for the management team and the Board of Directors of an angel-backed technology company.
Soon after I started the project, the CEO told me that a significant angel investor/board member (Moneyman) called either she or the CFO every day at 4:45 for an update on the company. Every day, not kidding…
Was Moneyman, “Just checkin’ in…?”
Was he simply showing enthusiasm, expressing interest, acting curious, proffering sage advice, coaching the senior team and being ‘hands on’?
He wasn’t calling to coach or offer operating advice. Moneyman was meddling.
The constant, meddling actions of the controlling, outside investors in the day-to-day affairs of the organization have a direct, negative impact on the organization’s performance.
Meddling can cause a company to be Stuck in a Ditch.
The Board of Director’s Bell Curve
I think a ‘bell curve’ (normal distribution) can be used to understand the participation level of a Director. Here is my interpretation:
Over time, I’ll be writing blog posts about the broad topic of private company boards and governance. I’ve been a member of nine boards (private equity backed, vc/angel backed or family owned). I’ve also been directly involved with many other company boards through my consulting work.
These blog posts are not going to cover what I would call the ‘board/governance basics’ (i.e. ideal member, term, compensation, etc.). That sort of content is plentiful.
I will examine the different Board personalities and styles of governance I’ve experienced over the last 20 years with a hope that these shared experiences and stories can make your Board more cohesive, and improve the interactions between management and individual board members.
How did Moneyman become a Meddler?
I’ve already said Moneyman is a #5. I think this table sums it up.
Moneyman:
- was impatient, increasingly frustrated and dissatisfied with the company’s overall performance…his performance expectations were not being met
- had put a lot of personal money into the company – he had the courage to commit his money to a new venture
- did not have a good understanding of market size and customer acceptance of the products; he thought the market was HUGE – it wasn’t
- questioned the skills of the management team
- had no meaningful experience in this company’s business or industry; his personal financial success came from a completely different business experience
- had a very intense personality
All of these factors together produced a combustive mix and created a difficult relationship with the management team and some other Board members. If he was not one of the ‘lead angel investors’, he should not have been on the Board.
What happened?
Management and the Board came together around a revised strategy, a new operating plan and a realistic set of expectations about customer acceptance and addressable market size. Revenues increased, the company became cash flow positive and the financial pressures subsided. Moneyman became less fearful that the value of his investment was heading toward zero. He had renewed hope and the meddling diminished and became less intense.
Have you experienced the Meddler? Do you have suggestions on how to work with this type of Director?
Blog of Intellectual Capital 