“Love notes”: Building trust between board meetings
by Stephen J. Hoffman, PhD, MD
Steve is an experienced board chairman, former CEO, and venture capitalist who has served on the boards of over 20 biotech companies, from raw start-ups to commercial-stage public companies. He has a lot of gray hair, in part from learning things the hard way.
March 30, 2022
I’m just going to say it: I’m not sure holding four board meetings a year is right for most companies.
I think the practice of quarterly board meetings is mostly associated with public companies’ obligation to file quarterly earnings announcements. But private companies don’t have that requirement and most would be better off having one or two more per year, or at least one-hour calls between board meetings to discuss key updates and pressing matters. (Parenthetically, I was once Chairman of a company with nine venture groups holding Board or Observer seats, and somewhat jokingly told the board that what we really should do is cancel all the remaining board meetings and reconvene a year later to see what the incredibly capable management team had accomplished - because all we would do in the meantime is get in their way! Needless to say, my suggestion wasn’t implemented, but one size does not fit all.)
I know full well how much time it takes for a management team to pull together a board pre-read, and I know what it’s like to receive those materials on the other side of the table. And I think we can all agree that more efficient communication between board meetings would lessen the burden on both sides.
When I became CEO of my first company, Allos Therapeutics, I found myself working with board members who were located all over the world, from the San Francisco area to London and Basel. Balancing nine time zones, disparate communications preferences, and social relationships of varying strengths was challenging. Board meetings often meant balancing one member’s ravenous appetite for scientific minutiae with another member’s desire to talk only about what was most relevant for the company’s next raise. It was a struggle to focus our meetings on goals and strategy when we had to get through a deluge of operational updates first - especially when directors came in with lots of questions that could derail the more strategic conversations I really wanted to have.
Eventually, I landed on a workaround – a tactic I’ve suggested to all of the CEOs I’ve worked with since.
I found that if I would just take the time to send the board a simple bulleted email every three to four weeks describing major operational updates in areas like discovery, nonclinical development, clinical development, regulatory affairs, business development, manufacturing, and finance, my board members would magically stop bugging me so much. It was like waving a magic wand. Directors could count on my email updates to arrive regularly and knew that they could respond with any questions. I started calling these emails my “love notes,” and this regular, consistent line of communication built trust in my company’s trajectory and my capabilities as CEO. And because board members could rely on the content of my notes - upfront, transparent, detailed but succinct, and friendly – they didn’t pester me as much between board meetings and arrived at meetings more fully informed with fewer questions about the small stuff.
I recently contributed the “love note” idea to RA Capital’s “Strategic Alignment: Board & Executive Resource” deck. In my career as biotech CEO and venture investor/board member to over 20 companies, I’ve found that way too much time is spent at board meetings merely updating directors and investors on what the company has done since the last board meeting and not nearly enough time discussing key strategic initiatives the company is facing. “Love notes” serve the purpose of keeping the board appraised of operational matters so that less time is needed at the actual board meeting for those lengthy updates, allowing more time for discussing key strategic issues. They’re the email equivalent of the “Elephant Slide” – a one-stop shop for what’s really important.
Addressing the Elephant in the Boardroom
Starting a board meeting with the Elephant Slide puts updates into broader context. It reassures the board about your company’s fundamentals and illustrates how changes have affected them.
Later in my career, as a venture capitalist, I appreciated why these notes worked so well for my investor-directors. While many (most?) of you might not believe it, venture capitalists do work long hours. A typical week involves regular partner meetings; reviewing multiple incoming new deals; taking meetings with companies of potential interest; doing diligence on potential deals; meeting with entrepreneurs, scientists, and other venture colleagues; attending scientific and investor conferences; doing our own investor relations work with Limited Partners; AND dealing with existing portfolio companies. Before Covid and now increasingly more often, you could also throw in travel to one or two board meetings a month (I typically sat on 5-8 boards as an investor and currently know of one investor who now has more than 14 boards).
Inevitably, most investors spend a disproportionate amount of time and mental energy dealing with their portfolio companies that need the most help (and/or scrutiny), working out management issues, addressing misalignments among co-investors, and dealing with failed trials and financing shortfalls. It’s a lot to manage. And it came as no surprise that when I received regular, detailed communications about my companies on a regular basis, I found I was both more likely to remember what was going on when it came time for the next board meeting and less likely to continually call my CEOs to figure out the bottom line. “Love notes” are a win-win.
I also feel strongly that communication between board meetings shouldn’t be limited to the occasional email, no matter how well constructed. Our society is so digitally inclined that I understand it can be quicker and easier to send a text or email than to pick up the phone and give someone a call. It’s been my experience that investing in personal, one-on-one relationships with board members pays off in spades.
I encourage the CEOs I work with to put a call with one of their board members on the calendar every week - even if that sounds painful (whether because it’s hard to schedule or because you may not know or like the director that much). Even if you don’t have anything specific to discuss, spending the time to get to know your board directors as people builds a foundation of trust that will buoy you up through the hard times that more than likely lie ahead. If there’s nothing urgent to discuss about your company, ask about their lives, families, and ideas. And then, when it comes time for that difficult discussion at the board meeting, you’ll work through it with trusted colleagues sitting across the table. Invest time in this – 30 minutes a week – and it will help alleviate what investors hate the most: future surprises.
Here’s one last example. I encouraged a first-time CEO that I backed years ago to write love notes to his board. He did for a while, and then got “too busy.” Distracted with running the company and raising money, he stopped. Though his company continued to grow and all signs pointed to him doing an excellent job, one of the most consistent points of feedback he received from board members was that they felt they weren’t getting information from him as regularly as they’d hoped. Communication between board meetings was insufficient. So guess what? Even though the company had gone public and was doing well, he started sending board “love notes” again. Almost all the board members expressed how great it was to get these periodic updates.
It’s the easiest step you can take to keep your board directors informed, engaged, and out of your hair. I suggest you give it a try.
(And then pick up the phone and speak with them.)
Further Reading
