Board Games

As a venture/private equity investor, I have one of those jobs that is somewhat nebulous to most people.  They ask questions like, “What the heck do you actually DO?”  “How do you spend your time on an average day?” and “Do you actually, you know, work?”

For those of you who think that the life of the venture capital or private equity investor looks like a walk in the park and that all of us are sitting around eating pre-peeled grapes while getting neck rubs and rolling naked in cash, all I can say is, “I wish.”

It’s actually a pretty intense job, much more complex and nuanced than I expected when I first started at it 13 years ago.  So much of it is about working in partnership with people in an environment where you personally have little control or direct authority to make things happen and yet where you feel you know the right thing to do (“so why aren’t they just doing it already?!”).  You have to drink from a magical cocktail of knowledge, experience, guessing, and luck to figure out what needs to get done.  Then, since you are basically in charge of nothing but responsible for a lot (especially your investors’ money and your partners’ collective sanity), you have to rely on an arsenal of gerunds to get your partners and entrepreneurs to do what you want them to do.  My average day includes listening, pontificating, arm-twisting, cooperating, begging, threatening, explaining, cajoling, convincing, arm waving, apologizing, compromising, whining, bluffing, and trying to charm those with whom I come into contact.

I have had more career years than I care to admit, but there is no doubt in my mind that my most relevant work experience comes from being a mom where every one of those same activities are in use every day, sometimes even before breakfast.  Comedian Red Buttons once said, “Never raise your hand to your kids.  It leaves your groin unprotected.”  You could replace the word “kids” with the word “syndicate partners” or “founding CEOs” or “general partnership” and it could work almost as well.

One of the most important roles we play as investors is serving as members of the Boards of Directors of the companies in which we invest.  I remember when starting this job that I thought the Board room had such mystique. I recall thinking, “What are those guys doing in there behind closed doors to answer the deep questions of the universe? Do they have a secret handshake?”  It felt very Goblet of Fire to me, this idea that the Board room was the “big leagues” where all would be revealed.

Isn’t it funny how things are never what they seem?  Now, having been on the Boards of many companies during my tenure at Psilos, it is pretty clear that the Board experience can be anything from  sublime to ridiculous. I have been on Boards where everyone pitches in together, rows in the same direction, respectfully listens and learns from each other and holds hands in unison to sing Kum-ba-ya while sailing along behind the CEO leader.  I have also been on Boards that look a lot like pre-school age soccer leagues:  lots of people running around in circles, contemplating the sky, and working hard to avoid coming in contact with the ball while everyone on the sidelines screams out directions so loudly you can’t figure out who is the coach.  In case you are wondering, the first scenario works better.

But when it works well, when there is a strong set of people who can truly set aside their personal interests to think about what’s best for a company, who can sublimate their (often expansive) egos to pick the best ideas regardless of their source, and who can appreciate each others’ strengths while keeping a good sense of humor in the face of adversity, the experience of being a Board member can be incredibly rewarding.

The one thing I know for sure about my job is that adversity will come to every company.  Not one company that has been a great success in our portfolio has gotten there without trying to commit suicide at least once, and sometimes more than once.   It is in those times, when companies need to take a deep breath, retrench and re-set their course, sometimes under new management, usually with a new strategy, that the quality of the Board is most important.  You really want to be sitting around that Board table with a group of people who you trust to lean in and grab an oar when the storm is raging.  If instead everyone dives for their own personal flotation device, the company is going to wash up on the beach with a mouth full of seaweed. Not pretty.

When a Board comes together and perseveres through a time of company adversity, great partnerships and friendships are forged.  I have been lucky to have come out on the positive end of that journey a few times, emerging from the surf with the sun shining and course corrected.  Last year featured one of those times and I was extremely surprised to be rewarded with the great honor of the company’s CEO nominating me for a prestigious Director of the Year Award.  Apparently my skill with gerunds has paid off, as I actually won and get to collect my honor in San Diego in September.  An article about my receipt of this award is included here from the July 21, 2011 San Francisco Chronicle.

Pretty cool stuff, as we investors don’t get a lot of tangible feedback on our accomplishments except when we exit a company successfully.  That is a wonderful experience, but it is also wonderful to feel appreciated by colleagues you respect and admire, as in this circumstance, and to know you were a part of a crew that got the ship sailing in the right direction.  So thanks to all you guys at Patient Safe Solutions, especially CEO Jim Sweeney, for being great colleagues and professionals and for being good partners in this never-ending drama that is building a young company into a great company.  I am hoping that before long our Board meetings will include gerunds like congratulating, back-slapping and celebrating as we reap the rewards of our hard labor together.