When I was in law school, my favorite courses were taught by lawyers who were not professors but who simply like to teach. They typically taught at night and most of the time gave us all kinds of war stories. They lived it and were giving us real examples from the real world. They talked about everything we wanted to do - and they were doing it!
Today's Enable incorporates this concept via Joe Hadzima, a senior lecturer at the MIT Sloan School of Management, Director and General Counsel to the MIT Enterprise Forum, Inc., and Managing Director of Main Street Partners LLC, a venture investing and technology commercialization firm located in Cambridge, Massachusetts. He is a former partner and founder of the High Tech/ New Ventures Group and Sullivan & Worcester LLP, a major Boston-based law firm.
Hadzima writes a column called Starting Up for the Boston Business Journal. The column is written about real life problems and experiences faced by new and emerging companies in the New England area - but the topics covered are relevant to startups around the globe. The column, like my favorite law school professors, provides practical information to entrepreneurs.
Enable has reviewed the column, including the archives. Today we’ll see how Hadzima deals with a crucial issue – the Board of Directors.
Don’t Bore the Board of Directors - How To Use A Board Effectively tells you how to get the most out of your Board and how to ensure you don’t waste their time. The ins and outs include:
Board Size Size and the resulting group dynamics will dictate much of how you deal with the Board. Most entrepreneurial private companies have Boards comprised of 3 to 5 Directors. Some have advisory boards (e.g. a Science Advisory Board) which are larger but the legal Board usually does not exceed 5 in number and rarely is greater than 7. Larger public companies usually have larger Boards, partly because of the need to have specialized committees (e.g., Audit Committee, Compensation Committee).
Outside of the Board Meeting In recruiting a Director you should have worked out the Director’s level of activity and attention both in terms of the number of Board Meetings expected and, if the "job description" includes it, interactions outside of the Board room. These outside interactions with individual Directors are your opportunity to obtain individual advice and assistance. Establish a format which works for the individual Director and for you- a weekly breakfast, a monthly lunch, twice a week telephone call, frequent email, a tennis match followed by a half hour discussion by the juice bar-whatever works.
The Board Meeting The strength of the Board of Directors system comes from the collective action of experienced and informed people. It follows that the Board Meeting has to be a combination of information transfer processes and resulting decision making. Board Meetings rarely last all day unless some major event is being considered such as an acquisition. For a normal Board Meeting plan on a minimum of 12 to 2 hours, more typically 3 to 4 hours.
Information Because time is limited, you should "offload" as much of the background information transfer process as possible so that the Meeting can focus more on decision making. The "Board Package" is the main method of off-line information transfer and should be distributed to the Board with enough time for the Directors to be able to read and digest the material but not so far in advance that the information is out of date. Plan on getting the materials to the Directors about 3 days before the Meeting. A typical package will contain the following: An Agenda, Draft Minutes of the Last Meeting, Financial Reports with Management Commentary, Other Relevant Information. Be sure to keep the Directors informed of general developments between meetings- e.g., include the Directors on press release lists, product mailings etc. It can be very annoying to a Director to find out something about the Company from a source outside of the Company.
Knowledge@Wharton Revisited
As promised, we now return to Knowledge@Wharton to finish our overview of this excellent site. As mentioned last week, this is an online resource that offers the latest business insights, information and research from a variety of sources, including an in-depth searchable database.
In completing our look at this site, we move to the section entitled: Innovation and Entrepreneurship. Here, you will find an excellent piece called
Uncertainty, Technological Turbulence, Competition - What’s a Manager to Do? Thrive on It, that teaches the concept of "habitual entrepreneurs." Habitual entrepreneurs have made careers out of starting businesses either within existing firms or independently. You will learn that they passionately seek new opportunities and pursue them with enormous discipline. Furthermore, they pursue only the best opportunities, and avoid exhausting themselves and their organizations by chasing every option. They focus on execution and change direction if necessary. And they engage the energies of everyone who works with them. You will also be provided with a detailed plan, based on these qualities, for you to apply to your own company.
In the same section you will also find an article entitled:
Mercenaries vs. Missionaries: John Doerr Sees Two Kinds of Internet Entrepreneurs. John Doerr is a legend in the venture capital industry and you should pay very close attention to what he has to stay.
Doerr believes that as the new economy develops, several trends are emerging. Among his forecasts for the future:
- IP, or internet protocol, will be as important as the car or television.
- The web will become the standard communications platform in healthcare.
- Charter schools, and educational portals for the home and school, will transform education.
- Bandwidth will be crucial.
- Despite current skepticism about business-to-consumer e-commerce, it will remain a big trend, as will business-to-business e-commerce.
- Wireless information appliances will be big in the future. "That’s how a billion Chinese will get onto the Internet," Doerr says.
- Genomics will be "fabulous" after 2005, as the human genome is fully mapped.
Doerr also predicts that the Internet will evolve into what he calls "the Evernet," which is "always on, high speed, ubiquitous and available in multiple formats." These formats will include a "voiceweb" for voice communications, a "handweb" for hand-held devices, a "PC web" for PCs, a "videoweb" for video and an "e-web" in which machines will communicate with machines. These changes will consolidate the foundations of the new economy.
Read the entire section and learn from one of the leading venture capitalist in Silicon Valley.
Published by Israel's Business Arena on September 26, 2000.