Lunch for board meeting: $68; director stock options: 1,000 per meeting; being saved by a director: priceless.
The day I met Bob, a venture capitalist and angel investor whom a banker had suggested would be a good addition to our board of directors, is still vivid in my mind. I was dead tired from working late into the night on cash flow projections – trying to figure out how to pull enough cash together to fill a big order. But I chose not to discuss that dilemma with this visitor. Instead, I put on my “public face” and briefed him on the exciting opportunity in our growing business.
We talked, and he asked question after question. It quickly became clear he had “been there and done that.” He already knew what kind of challenges I was facing with this growth stage and asked the most intelligent questions I had ever faced in my years of running growth companies. Bob put me at ease with his jokes about the choices I faced – whether to pay the rent or to pay the freight company. And he offered me a couple of his contacts at an electronics distributor to help me find a supply of badly needed and hard-to-get parts.
Before he left, Bob had me laughing and more relaxed. He mentioned that he remembered the job as CEO of a start-up being the loneliest job in the world and he would like to work with me. Already, I knew this was someone I needed on my board and on my side. Now I know bringing Bob onto my board of directors was one of the most important decisions I made in that company’s lifetime.
Over the next two years, there were many days I turned to this director for a fresh set of eyes to review a plan under development or for a sanity check on decisions I was facing. Some days, I called him just because I needed someone to talk to who understood what it was like being in my shoes. And every time I was in a fix, I called him for help.
This director was invaluable. When we needed longer payment terms from a supplier, he made a phone call. When we were scaling manufacturing from 15,000 units to one million units per month and I needed to hire a vice president of operations, he sent me a guy to interview who had the right experience. When we wanted a new banking contact, he introduced one.
But these things were small compared to his most important assist. This came when our less experienced investor became nervous and wanted to sell the company for a small amount rather than keep running the risk of needing more financing. Bob served as the “experienced outside voice,” who verified the management team was on the right path and our need for cash was simply due to rapid growth. He assured this investor that we could shortly be financed by a bank, and the company would be worth much more in another year if we just stayed our course. He also helped me understand this investor’s fears, which kept me calm and upbeat. I went ahead and investigated the sale and used the exercise to set up for a future relationship with the potential buyer.
This director saved my job and gave me something I could never buy – restored credibility. In a world where most CEOs can’t own the controlling shares of their companies, this indeed was a priceless contribution.
And a year later, when we did sell our company at an extraordinary return for us all to one of several interested buyers, Bob was the one I chose to sit with me both at the negotiation table and at the closing when we sipped champagne. And today, when I am acting in my current role as a director and angel investor, I am reminded entrepreneurs have a tough and lonely job, and I want to use my expertise and experience to help them when they need it.