Redeye VC

Josh Kopelman

Managing Director of First Round Capital.

espite being coastally challenged (currently living in Philadelphia), Josh has been an active entrepreneur and investor in the Internet industry since its commercialization. In 1992, while he was a student at the Wharton School of the University of Pennsylvania, Josh co-founded Infonautics Corporation – an Internet information company. In 1996, Infonautics went public on the NASDAQ stock exchange.

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Board Transparency -- and the Implicit Web

I just read Fred Wilson's post about communicating bad news to investors.  I completely agree that it is important for CEO's to avoid surprising their board and to communicate bad news just as fast as you share the good news.  However, one of the big changes I've seen in the last several years has been the incrased use of SaaS tools to manage reporting -- and how that subtlely changes the dynamic of board meetings.

For example, through Google Analytics, I have access to real-time dashboards of almost all my portfolio companies.  So, when I walk into a Modcloth board meeting, I already have seen their traffic and revenue for the month.  Several of my portfolio companies that focus on direct sales have created accounts on Salesforce.com for board members with a customized Board dashboard to provide a 30,000 foot view of the pipeline.

The power of the Implict Web is that data that previously had been in hard-to-access silos is now easily accessible and shareable.  This can change the way information is used and shared within organizations.  I've written about this before, and said:

By providing [a board with] open access to information sources there are a number of benefits:

  • It eliminates surprises. By providing a continual stream of information, the board should never be surprised.

  • It makes board meetings much more productive.  Rather than spend a lot of time presenting the raw data, the CEO can now provide interpretation and analysis of data -- they can put the numbers in context.

  • It allows board members to make more meaningful suggestions.  Different board members have different skills. Some are strong at enterprise sales -- and by tracking a sales pipeline over time they might be able to identify areas for improvement in the sales cycle.  I personally am stronger at online consumer marketing -- and feel that by having access to website traffic reporting I can ask better questions and make better recommendations. 

Sharing data with a board does not mean that you are sharing control. Rather, I believe that an informed and knowledgeable board will be less intrusive (and more hands-off) than a board that is in the dark. (That said, a CEO should clearly set expectations that they are not looking to get the "why are Tuesday's sales 2% lower than Monday's sales" phone call. )

Too many CEO's try to hide their bad news and setbacks -- they stick it in the fifth paragraph of a six paragraph email.  I get extremely uncomfortable with that approach. It forces the investor into the role of detective -- constantly on the look out for hidden clues.