👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.
This week we’re talking about board meetings. More specifically, we’re talking about the CEO and CFO materials that you create for these events.
Board Materials and Metrics (THIS POST!)
Templatizing your materials
The CEO’s Materials
The CFO’s Materials
Strategic Readout Materials
Reminders, Before You Hit Send…
Templatizing
Templates Build Agreement:
In the words of the Great Dave Kellog, “Templates Build Agreement”.
So build agreement with your board on what they want
And then go and design a slide loop they’ve agreed to be trained upon
VC Seth Levine further opines on regularity in reporting:
The key here is consistency… the idea is to develop the outline of a board package that can be updated meeting after meeting.
It’s surprising how few companies actually do this and instead start from scratch for each meeting.
Not only is it not time efficient for you and your team, it’s hard on your board members – the lack of consistency in reporting makes it hard to compare board meeting to board meeting and hard to find the information you’re looking for meeting after meeting.
You Don’t Get Any Style Points
~1/2 of your deck should be the same, but updated for the latest information, from quarter to quarter
The sales and operational stuff is prime material to templatize - no sane person should need to reinvent the tried and true ARR Bridge
In fact, people are lazy when they don’t pick templates and cherry pick them from existing decks they have lying around from a recent operational update
It’s easy to tell when someone cobbled together a handful of slides from disparate decks
I see you, Jerry, tryin’ to repurpose that net retention slide with a random customer cohort called out. You lazy bastard, Jerry.
The Fear of Repeating Thyself:
Listen to any public company earnings transcript - to a certain extent, they are an exercise in repetition
There’s actually something beautiful in driving the same points home. It helps establish a theme and a consistent strategic narrative
I used to be afraid of repeating myself over and over. But then I realized that I think about this topic more than anyone else, so it probably just seems overly repetitious to me
"Three things you need to do: Tell them what you are going to tell them, tell them, then tell them what you told them” - Maybe Aristotle
CEO Materials
The CEO should present the following three slides up front
Example of 3x3 splash slide
Splash Slide of Top Metrics
This is a tear away, or take home slide
I like the 3x3 tile format
It allows everyone to see the most important metrics on one page
Make sure to include the change period over period (e.g., y/y) in smaller font on each tile
Example of What’s Working / What’s Not
What’s working / what’s not working
A simple, two column slide
Bullet points on left of here’s what’s going well
Bullet points on right of here’s what’s not
Doing this honestly will t-up the other presenters and set the tone for the rest of the meeting
This is a 20 minute slide
It should take a while to get through because it consists of the highest level stuff affecting the company
“Every bullet is definitionally worthy of discussion” - Dave Kellogg
Another, very similar format from Jeffrey Busgang of Flybridge Capital:
I often suggest presenting this in a "Red/Yellow/Green" format – what's going well, what's making you nervous, and what's not going well.
The best one-page summaries are very brief – hence the one page rule – and help focus the board's energies as well as provide a window into the CEO's priorities, thinking and "stay awake" issues.
P&L and Cash Burn
Trailing 9 quarter format so you can see seasonality, and 2 full years of history
May include some of the operating metrics from the Splash Slide, like CAC Payback Period or Net Dollar Retention
CFO will usually repeat this slide and proceed to go a level deeper, later on
CFO Materials
This assumes that the CEO went through general Sales performance in their section, including pipeline, expectations for next period etc.
The Appetizer
I like to hit people over the head with the key headlines for the quarter, usually in the form of a five line slide that addresses all sections of the P&L, from top to bottom.
This anchors people to all the key themes at the start (no more than five) and sets the tone for the rest of the meeting (was it a great quarter? will this board meeting be a friendly check in? or are we strapping in for some uncomfortable conversations?)
Think of this slide as the “hook” to get them interested as to what comes next, where you’ll “double click” (ergh punch me in the face) into each theme, illustrating trends over time.
Example of 5 financial themes for the quarter
The Entrée
I like to think of this as two sub sections:
The SaaS Metrics: Your SaaS metrics shown as graphical trends
The Meat and Potatoes: QTD and YTD P&L + Reforecast for the rest of the year
Keep in mind that whatever you show here should be pretty repeatable each quarter. And the consistent formatting actually makes a big difference (pick a damn color for your P&L headers).
To elaborate on the first point, you shouldn’t randomly decide to show renewal trends one quarter and then drop this data point the next. It sends a bad sign (whether you meant to or not) as to why you just stopped talking about a metric. Are you hiding something?
The metrics I visit regularly include:
Revenue: ARR Additions, Total ARR (or GMV if it’s a platform or marketplace biz)
Take Rate: For marketplaces, platforms, payments businesses
Leverage: Gross Margin
Retention: Net Retention, Gross Retention, Renewal Rate
Efficiency: CAC Payback Period
What I sometimes like to include:
Burn multiple: Make sure you know where this one is trending before you put it on the screen… If you are burning cash, and you have reached an inflection point where from here on out you expect to be more efficient, go for it. Otherwise, come correct with your story.
Revenue per employee: In my opinion, this is the GOAT of SaaS metrics. Just make sure you know what season you are in.
Revenue per sales headcount: A derivative of Revenue per Employee, focusing on one part of the org and demonstrating improving capacity.
Product attach rate: Crucial to track if you are a multi product business
What I don’t like to include:
LTV to CAC: It swings period to period and is lumpy
Rule of 40: More for investment decisions, less for running a company
Employee Attrition Rate: No one can ever decide if you are in a “good spot or bad spot”. If it’s under 10% “not enough poor performers are leaving”; if it’s over 20% “too many talented people are leaving”. The world’s problems are never solved with this metric. Unless it’s astronomical, I don’t think it’s worth the oxygen in a board meeting, given the limited time and the potential for rabbit holes.
It’s important that all the metrics you include minimally show y/y growth and ideally also include reference to what the plan was.
OK, you did $15M in ARR additions… is that good? IDK in a bubble. I need historical context… and seasonality.
You’ve gotta remember that your investors are likely doing four to eight board meetings a quarter. They probably won’t remember your Q2 of 2020 off the top of their heads as easily as you do, and could easily confuse your prior performance / current plan with that of another company in their portfolio (four redeyes between NYC and SF in six weeks will do that to you). Always include historical context. And strive to always compare to your plan, whether original or reforecasted.
The Dessert
Dessert can come in one of two flavors:
The Proposal [1x per year]: Your proposed annual operating plan for the next year
Ad Hoc Analysis [3x per year]: Deeper dives into an underlying trend in the business, show casing the team’s analytical prowess and awareness of the important levers
Later in the year we’ll cover annual planning, where we’ll go deep on how to present the proposed budget to your board as a finance leader.
For now, know that the annual plan presentation should roughly follow the same format as the historical data you reviewed above:
Themes: What will pursuing this plan do for the business? Write out the three to five overarching storylines that your financial profile achieves
SaaS Metrics: If I were to run out all the SaaS metrics we care about into the future, what would they be?
P&L’s: Self explanatory
OK, let’s talk about the ad-hoc financial analyses you may choose to present.
If you are feeling really bold, you can show off some neato analyses you’ve been working on internally. Examples that have worked in the past:
Cohort analyses - How a particular customer segment is expanding over time
Contribution margin - How specific geos or segments are performing, if you strip out shared fixed costs
Churn and retention - There are a million different flavors of churn, and you can’t always hit them all in your SaaS metrics. Sometimes you need to expand on a view to prove a point.
Much like Dessert at the Cheese Cake factory, something tasty can quickly devolve into debilitating heart burn in a flash.
I’ve seen “ad hoc” stuff go wrong in a few ways:
You spend too much time introducing people to the “view” or “metric”, as it requires a lot of explanation, and you don’t have enough time for actually discussing the “so what”
You get mired in a discussion over definitions, assumptions, or inputs, which always means you’ve lost people
Your audience thinks it’s kinda cool, but it’s more noise than signal, and they could have done without the school talent show
So proceed with caution. Remember - your main goal of any board meeting is to get in, share progress, receive guidance, and get out. There aren’t any style points for kickflips.
Readouts from Subject Matter Experts (CRO, CMO, CPO)
This is relevant for CROs, CMOs, CPOs, CTOs etc.
All VPs should include some semblance of the following:
Objectives and Key Results (OKRs)
Standardize on what your group’s goals are, and how you are progressing against them
Org Chart
Most VC’s sit on multiple boards - they don’t remember your specific marketing team’s org chart
Circle the openings and explain why we are hiring there (make it clear why it’s worthy of investment)
Summary Metrics
What are the key metrics your department owns?
Note: If the CEO referenced a metric that you own in his or her initial slide loop, MAKE SURE it ties out
I can’t tell you how many CMOs and CROs sneak in a metric without checking if it’s the same as the one the CEO referenced earlier. Facepalm.
Drill down
This is where you get funky with details, and it is not templatized
For example, the Marketing drill down might be on outbound experiments that are underway
But don’t go into this detail until you’ve sufficiently addressed the above
Who Attends
As a guiding principle, don’t put people in the room who are not going to contribute.
This is not bring your kid to work day.
And conversely, don’t exclude people who should be there just because they aren’t execs
That means you can bring in the Director of Rev Ops or Senior Director of Growth if they are the most knowledgeable person on a topic.
What to Cover
Most companies try to script this out in advance (i.e., we go deep on product roadmap in Q2, we cover 5 year plan in Q3…) but the subject matter should ultimately be whatever is most relevant to the business at that time. You can’t get overly prescriptive.
Board members don’t care if you anticipated it being important in November last year
If you have a churn problem, you may do Customer Success twice in the year and Roadmap may get pushed - that is what the business calls for
How Many Topics
Ideally you have three 30 minute discussions
This comes out to 1.5 hours total, or approx. half the total board meeting
However, I’ve also seen the whole block dedicated to a single meaty topic
I like to budget close to 2 hours in reality here, because there’s always some transition time between the topics (bathroom breaks) and one topic inevitably runs way over
Discussions vs Readouts
Strategic topics should air on the side of discussions, rather than readouts. And there’s a big difference between the two types of presentations.
One is an update (readout)
One is asking for input (discussion)
Readouts are more akin to what the CEO and CFO presented first in the General Session
Strategic discussions are just that - discussions. And you should…
Get to the Point, Quickly
The t-up should be only 5 minutes
That only leaves 25 minutes for discussion
And when it comes to discussion…
Roughly 5 minutes per person of cumulative air time if you have 5 board members
Most boards have “that guy” who takes 15 of the 25 - don’t be Lewis. People don’t like Lewis.
Before you hit send
The meeting before the meeting: To Call, or Not to Call?
Sometimes CEOs like to give each board member an individual call before the meeting so they can head off any surprises
This also serves as a way to flesh out what you think people’s opinions on certain topics will be, so if they don’t speak up during the meeting the CEO can guide them to add their input
“I know you like this tell, Jim, tell us what you told me two days ago, tell the group, damnit!”
And if there is a controversial issue it will help the CEO to read the room - like if you are doing a reorg
The very extreme case is calling to walk each member through the entire deck ahead of time. This is Defcon Level 5
VC Seth Levine weighs in on this practice:
Some CEOs like to call each board member ahead of every board meeting. I hate this.
For starters it can feel a bit forced and disingenuous. But really I don’t like it because it ends up evolving into a mini board meeting before the board meeting.
I think CEOs like to do this because they’re following the “there shouldn’t be any surprises in a board meeting” advice… but if you’re regularly communicating with your board that shouldn’t be an issue.
And, importantly, by having a mini board meeting before the board meeting you also lose one of the most powerful benefits of getting everyone together in the first place – talking together as a group vs. getting one-off advice.
It’s also pretty inefficient for you as a CEO.
Regardless of what you decide, it should be symmetric
Don’t tell just the investors something beforehand but not the independents
When some know and some don’t, that’s not good
You are either on the board or you aren’t
Send deck 48 hours in advance
The CEO or CFO typically sends the deck out
5 days is too much time to give people to sit on it
24 hours is too short
Can either send the whole thing or a selection
Lifehack: BCC everyone so the discussion happens in the meeting, and not over email the weekend before
Some board members hate this, but I don’t want to play Words with Friends on Reply All ahead of the meeting
Say in the email, “If you have last minute questions, call me directly”
Supporting materials
You should attach the latest financial statements in excel
You should also include a “SaaS metrics dashboard” of sorts in that package for them to review in conjunction with the deck
Most VCs will have their valuation teams reach out for these financials separately, but it’s nice to provide them in a package directly to the VC as well
Want more on board meetings? This series relies heavily on this awesome podcast I recorded with Dave Kellogg. He’s the GOAT of board prep.
And his excellent blog can be found here.
