YouSaid · the spoken record

Cathy McKnight

lines on the record
28
first
2017-05-11
most recent
2017-05-11
sittings or episodes
1
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podcast

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  1. “It can absolutely backfire, although my team are killers. And that's also part of the skill teaching your management team how to engage with the board, right? Preparing them. And so if you are going to engage them with your board, you should don't send them in alone. Don't send them in without a parachute, right? Make sure they know what they're there for and they also know what they're not there for.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “But I would tell you that one of the things I learned from that rigor and that discipline and that process was there's a way to bring your management team into the meeting and there's a way to kick them out and it's called the ops review. And so you structured the agenda so that you have a private session, you have an operating review, then you might have a follow-up session. There might be a one-to-many CEO-to-board session. They may then kick me out of the room to talk about me, and then they'll bring me back in and tell me what they said, or at least some of it. But you structure it in the agenda. It's highly structured. And sometimes the agenda flexes And I said to my team when I first got there, you won't all always be in the board meeting. It's a waste of time.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “And many of them think that happens there, and I keep telling them no, that happens here, right? And that happens here in our management room, not in the boardroom. But they do want access. And a lot of CEOs, I think, also want to be present and control that access between board members. As a CEO, I don't want my board members calling everybody in my company all the time willy-nilly. So we have a principle that if my team talks to the board, they copy me. And if my board talks to the team, they copy me. And then everybody knows where I was doing, it's all beautiful. Right. Now, if I go break the law or do something really terrible and they want to talk to my GC about it, I absolutely expect that to happen. But I would tell you that working in a private equity-backed business is like working for an Olympic fitness trainer, right? They're not your coach. They're the people that are going to beat the crap out of you and make you stronger, faster, smarter, et cetera. And you want to kill them half the time, but you really love them when you see how much rigor discipline, et cetera, they've helped camp.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “A great question, something I've grappled with in my last three companies, right? As to how they get that balance right, because your management team wants access to the board, right? They want to be a part of the most strategic, highest order conversation.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Folks who are trying to get to the invitation of being on a board, I think one good path is just to be insanely helpful to a set of people that you respect because that's just you kind of show the work and action is, I think, maybe a good way to think about it. I have one other question. When I've been on a board, a lot of it is the board meeting often tends to be this dog and pony show for the team. How do you think about that? Because there seems to be something motivating about it, also nerve wracking. I'm not sure it's always a good use of time.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Yeah, or they've been operators, and some investors just don't get it. And don't, frankly, don't care and aren't interested, right? And so you have to make them interested or you have to help them get to the right decision. So having an independent that comes to the table with experience that can serve not just as a mentor, but be another voice in the room that understands, that deeply understands operating challenges. And when we hit bumps or we see challenges, maybe has been through that process before, right? Now, they're not the only person. I have many mentors that I can call.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Absolutely. It's a really good question. I'll start with what is missing. I mean, it would be really nice to have a sitting or retired CEO on my board. It would be nice to have somebody else in the room that literally has been in my chair, right? When you're having conversations around executive comp or employee stock plans or et cetera, it's really great to have somebody in the room that has been through that process and really understands the trade-offs in the way an investor just may not be able to get to. Some investors are awesome because they've got pattern recognition. They've seen it across seven, eight.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Well, that way you also enable the board to have your back, right? Absolutely. That's just a great social contract to have. We talked about board members and how they have different skills. Are you sharing everything with every board member? Are you going like, okay, so John is my deal guy. So I'm going to get input from him on that. And so, and you look at the board composition, so like, okay, what is missing?”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “I'm very transparent with our board. I tell them in advance I'm going to be, it scares the crap out of some of them because some of them just do not want to know how the sausage is made, right? And sometimes you really shouldn't bother them with the details on how the sausage is made. So being transparent doesn't mean telling your board everything. But it means making sure that there are no surprises. I'm a no surprises person. Even flowers and jewelry, I have certain requirements for. And then the last thing that I look for, and board members, or that I try and create in board members that don't readily come to the table with it, is operator empathy, management empathy. If you have a board that can quit their feet in your shoes and sit in your chair and understand things from your perspective, then even when you don't agree, you'll”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “They do. I called John not for permission, but to say, hey, I just want to run this past you. I'm about to set this customer on fire and literally fire them. I want to make sure I'm talking to somebody about this before I do it. And John's like, you know, we went through it. He asked a lot of really good questions. He's like, yeah, that sounds right. That was like in week three, right? And so the other thing that I'd say is important in managing a board, and I think it comes down to personality, but for me, it's almost impossible for me not to be is transparency.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “Right, and you could argue that I have conflict because I'm a shareholder, but I'm not vested, I'm new, so that was the easy one. I would also say that each of those people, even though we can label them as an investor or a founder, they have specific interests, specific hobbies, specific skills, et cetera. So John O'Farrell, who's my board member from Andreessen, it was a rock star Corp dev Biz dev person. And so when I'm negotiating a deal or when we had one customer that basically wanted us to give them the product for free.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “These are all things that even though I promised myself as a board member I would never do as a CEO, it still happens sometimes. But I would tell you that managing a board is not the most important thing you do as a CEO, but it is important. And I sort of look at it in a couple of ways. I think about the board in terms of their responsibility from a governance and a fiduciary perspective and trying to make it easy for them to always do the right thing and feel good about the right thing. So in other words, make the decisions easy. Give them as much information in a succinct way so that when they go to make the decision, they have the facts that they need as opposed to having to interrogate us and line up for five calls. We don't always get it right. We're getting better. But also leverage it, figuring out how to leverage each one of our board members. So today my board looks like a lot of venture back boards. We have two founders and two investors and me. It has to change because.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Which makes me a better enterprise leader, makes me more empathetic to my end customer, right? And so I've always had my own incentive, my own reason for wanting to join each of the boards that I've joined. And likewise, I think it makes me a better leader to understand, have the empathy for how my board's probably thinking about things when they come in. So now with 10, 12 years of board, I guess more than that, 15 years of board experience, I can walk into a board meeting and I can kind of predict how my board's going to be thinking about certain things I do. I probably feel worse than some CEOs that have less board experience when we surprise the board and need a fire drill decision from them on something or when we're disorganized. Anybody recognizing this in our process of getting executive comp app app app app app app app app app approved or when we send them 150 pages to review instead of the 10 that matter?”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Yes. And I'll tell you that I sit on both sides of the table on purpose being a board member makes me a better CEO. My first board seat was in a consumer products company. And even though I was building a career in enterprise software, it enabled me to flex my consumer marketing muscle.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “Right, but the thing you have to remember when you're sitting in a boardroom is you know a small fraction of what's actually going on in that business. You do not feel any of the pressure that that management team is feeling from all of the different stakeholders, employees, customers, investors, et cetera. And so you're looking through a very narrow window with a view that in many ways is great because you're at a distance and maybe you can see the forest or the trees a little better. But in other ways is really challenging because you're always going to be making decisions and providing opinions on something that maybe you have 30 or 40 percent less information than you'd feel comfortable with.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “And so they really wanted the subject matter expertise, but they were also interested in my style, how I would behave, and would I be able to, it came up a couple of times, particularly with the other independent who had been a sitting CFO and was a retired full-time board member, he really wanted to understand if I would be able to make the transition between being an operator and being a board member. So he asked me a lot of questions like, how do you feel when you give somebody advice and they don't take it? And I ask that question now frequently. It can be frustrating.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Super interesting though Yeah, and so when you're interviewing with the other board members, you're thinking about what are these people looking for in a partner and where do I fit into the composition of a board? If you Google board composition, there's tons of research on it and what people are looking for, et cetera. And I often find when I talk to people who are looking for board opportunities, they'll say, oh, well, I have all this great experience, et cetera. And I'm like, yeah, but how is that experience relevant to this particular company? And so in my interviews with that particular team, all they wanted to talk about was pampers. And in fact, I almost had this sense that when they came in, they just wanted to suck me dry for information in case they didn't like me. At least they would have learned everything they needed to know about pampers, right?”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “And work on first principles against who is it we're trying to solve problems for, who is the core customer, and therefore what should our core competency be from a product development strategy, right? That had nothing to do with governance, nothing to do with Comp Committee or any of the other kind of official responsibilities you have on a board member and everything to do with having insightful dialogue that helps the management team progress their thinking in a constructive, productive way.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Buying another company's patents, licensing the patents for certain technology, et cetera. And I ask this simple question, who is your target consumer? Are we targeting the premium female head of household first mom? Are we targeting a cost-conscious mother of five kids? Is this going into 7-Eleven equivalents? Are we trying to get into Sam's? And to me, that was a simple question to help me sort of understand how the company was thinking about things. But the CEO came to me afterwards and he said, oh my God, that was the right question. And we hadn't really thought of it. And now we're going to go back.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “It's a great question. So I took that board seat, I think, in 2001, 2001, early 2002. And the members of the board consisted of two investors, another independent who was an audit chair. I was the comp committee chair, which was pretty funny because I didn't even know how to spell comp committee then. The CEO and the founder of the business we required were all on the board together. And I found my first year in that particular experience, I didn't say a lot. Someone gave me some great advice and said, manage your urge and desire to want to add value in the room. Listen carefully, do your homework. When you ask a question, ask a question that is going to help the operating team get to a better answer. And that serves me very well. Sure. We were talking about profit margins and some particular trade-offs in.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “By saying, I'd really like to meet the team I'd really like to meet every board member, which may or may not make sense depending on the size of the board and the pace of whether it's an active search or not and where you sort of live within the search process. And NMO is also efficient about it. I would say that to the extent that you don't waste people's time and in every step of the process, I wanted the other party to feel like they were gaining value, not just getting interviewed, not just getting interrogated. And I do that when I go through a job search. You know, I gave more founders free advice in the last three years in looking at their businesses and looking at their companies probably than any person should. But I figure if they're going to give me all this information, if they're asking for the help, provide some insight and, you know, maybe shine some light on paths I've seen stumbled, trip down, you know, run through before.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  22. “Well, the great thing about MA is if you end up being part of the diligence team, whether you're part of facto or casual, et cetera, you get a lot of access, right? But I've been on several other boards since then where there was no transaction going on. And I got very similar access by asking for it.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  23. “You also, if you can find a way to get to know those people in the process before you're in a room with those people, that is super helpful because there should be diligence on both sides of that equation, not just on their side or on your side.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  24. “No, I didn't ask to be on the board when they asked for help. I dug in as if I was going to buy the company myself. I had nothing else to do. And to be honest, my learning model is to diligence something almost from the ground up and figure out how I would value that business as opposed to taking somebody else's word for it. And in that process, it was very helpful for them. From a due diligence perspective, I also, I think was able to demonstrate a lot of what I call operator empathy. So the CEO of the company we acquired was quite keen to keep me involved because I was the person saying sensible things about the business to the investors around the business. And so, you know, I had fans, I guess, on both sides of that dialogue. And that was how the board seat eventuated.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  25. “Nephews by then. So I kind of knew how diapers worked. And they just asked me for help, and they didn't said, Do you want a consulting gig? I said, no, I just, what do you want to know? I can help you, et cetera. And that turned into my first board role because I ended up helping them with that acquisition. And we rolled into that acquisition. They wanted a subject matter expert on the board. And I had Procter& Gamble in my name. And they all just pretended to ignore that weird software stuff that I had been doing for the last several years. But the most important thing about that opportunity was the person that I followed onto that board. And I think choosing a board to participate in is a lot like everything else in life. Choose the company you keep wisely. And in this particular case, Bill Ferris led me into that opportunity. He's now the Minister for Innovation in Australia. He's considered the father of private equity in Australia. He launched the first private equity and venture firms in the country.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  26. “Nope. So, what am I going to do with my life? And so I started just talking to a lot of people and networking with people. I even, you know, stoop so low to network with my husband's friends try and get to know people in the market. And they'd say in Australia like, well, you know, what school in Melbourne or Sydney did you go to? And I'm like, what do you mean? I have this global career. I've done these things. Yeah, but who do you know in Sydney? And I'm like, oh my God, this is a disaster. And I met a private equity executive, a firm actually that was doing some work. looking at purchasing a disposable diapers company and having been assistant brand manager of the Pamper's brand, I suddenly seem very useful. And they really just approached me for help. And the great thing about Australia is everything's in like a 10, 15 year time warp from the US. So what I had done 10 years ago at PNG was totally relevant in Australia at that time. I was not married, had no children, but had, I think, 12.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  27. “No, and if you've got kind of OCD and are used to having control and having a say and sometimes having the final say, it can be a big transition. Fortunately, my first experience, I was pretty early in my career. So it also gave me a lot of insight into what my management was going through when they would say, oh, we've got to prepare for the board or we need to run this past the board. I actually had a very strong picture of what that probably meant. My first company board role or corporate board role came along sort of opportunistically. I had moved to Australia in the middle of, you know, the internet bubble bursting and time to get out. Really good. It was great. My timing was excellent and frankly lucky. But it was interesting because I got to Sydney and I thought, metropolitan town, surely there's going to be tons of tech here.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source

  28. “Earlier than I planned, to be honest, my father passed away when I was young, when I was 24, and we started an endowment for him. And so I chaired the endowment and had to learn very quickly how to run a nonprofit board at the ripe age of 25. Probably my great learning there was that you gain a lot of insight by not being in the middle of everything. And so being sort of on the fray of how something operates and supporting the operating team exercise is a very different muscle than being in a central operating role.”

    2017-05-11 · a16z Podcast · a16z Podcast: Boards, from Both Sides of the Table · IDENTIFIED FROM THE TRANSCRIPT · source