What’s Important to Your Board?

Well, let’s assume you’ve been smart in choosing good board members and that you have a variety of inputs and opinions that can actually help your business scale. So now your choice is, do I use this time to do a PowerPoint flip through, or do I use this time to actually deal with some core issues? This is Revenue Makers, the podcast by Sixense investigating successful revenue strategies that pushed companies ahead. So, Simon, are you feeling a little nervous about something that might be coming up or ready to go? A little nervous. A little nerves are good, but also so ready to go. We have our board meeting tomorrow. And so what better way to prep for that than maybe have a member of the board on the podcast? It’s good for two things. One, we can just really get into the prep, talk about it. But also so Gary Servais, who is a operating partner at Insight Partners, he is part of our board, but sits on a lot of different boards and really is at a unique position because he’s an operating partner again. So operating meaning he was a marketer. He’s been in business. So he’s sitting from that lens of done the work that’s being done by the people that are in that particular meeting, the executive team. And so he’s really looking at it from a lens of how’s the business running versus a much more sort of financial investor type of point of view, which we’ll talk about as well. So, really, we got into some really actionable insights that I thought would be great for anyone who’s feeling what you might be feeling right now. Again, I feel every go to market leader listening is gonna take away what KPIs to focus on and what boards care about, how to structure your board meetings to get the most out of them. And then, of course, we had to talk AI. Gary had really I mean, just distills it down. Just a really great perspective on it and what it actually means. Yeah. Let’s do it. Hey, Gary. So the topic of the episode is really to understand what boards care about. And I would venture to guess that what boards care about now versus maybe a couple years ago is different because of what you like to call unprecedented times. Do you wanna share a bit more about that? Well, as you and I chatted, I think everyone who is involved in the venture world has been going through unprecedented times, you know, starting with COVID, going through, you know, this crazy dislocation that occurred after COVID, then a recession, then a funding issue, then a bank failing, then like, the list goes on and on of things. It’s just a lot for many of our companies to deal with. It’s just a lot of change, and that change has pushed a different funding environment, different exit environment, and that impacts how companies are making choices about their runway. How much runway do they need? What are the things that the board is expecting the company to do? And I I would say, first and foremost, the idea of growth at any cost, that stopped, you know, sometime in twenty one. And I think the much more of a rational growth plan that the spend and go to market matches the growth. It is unacceptable to have a growth engine that you’re spending more on than is the revenue it’s producing. I mean, it sounds like obvious. In fact, I have to say it is actually kinda crazy. And I think the boards are just saying, you know, we want efficient growth. We want growth that makes sense for the industry you’re in, for where you are in your life cycle. And tell me how you’re gonna be a rule of forty company. Tell me how you’re going to get to being profitable. God forbid. Profitability. Who even even knew that was a possibility? Yeah. So definitely, you know, unprecedented times. You mentioned rule of forty. What other KPIs do you feel boards are honing in more on? And I know you have a really interesting point of view around the difference between metrics and KPIs. I think that for most of our portfolio companies, we’re, as marketers, overrun by metrics. It used to be really hard to measure marketing. Now we measure everything. Whether it’s false precision or not, we can have a discussion on that another day. But the key point here and the thing that I think matters is really much more about the metrics you need to optimize a tactic are different than the KPIs that you measure the success of a function. And so if you’re in marketing or sales, you need to move up a level for the board. They need to be hearing about what a KPI really is meant to do, be an indicator of the health of your business. These should be not twenty things. It should be a handful of KPIs that you know for your business. I can tell you, you know, as a marketer, I would be always looking for I wanna know what my conversion rates are. I wanna know what my ASPs are. I wanna know what my selling cycle is. I wanna know how much pipeline I’m contributing, and I wanna know how much it’s costing to create that pipeline. If I tell you that, you won’t know the overall health of marketing. That’s a good segue too because you mentioned, you know, your background, you’re a marketer. Right? And you’ve been an operator. And I guess talk about the difference between operators and financial people because of who’s sitting on a board it’s a very different type of approach, what they’re thinking about, what their goals are versus that operator who’s thinking about inwards, I guess, you could say of the business. I agree with that characterization. It’s a little bit of Mars and Venus here going on. If you are a board member, I have a lot of respect, especially not an operator board member like myself, but more a true investor perspective. It is an incredible skill that you have in being able to cancel out the noise and focus on what is needed or what you believe is needed at this particular time. And the world is much simpler if you’re an investor because your world works as if I do this, I get that. And as I tell people all the time in operating roles, you and I can have a beautiful discussion of all the complexity and the details to get right in order to execute on this. But in the end, it has to bubble up to a board level discussion or a CEO level discussion as it might be where I believe we need to do this in order to get back. If you can boil it down to that simplicity, you’ll get better understanding from your work by not muddying it up with all the details and all the other elements that could be part. Okay, Gary. We’re gonna hit on a topic that everyone’s talking about, and I know you have a strong POV on, and that is AI. I’d love for you to comment on both kind of the operational impact of AI, but also from a product perspective because so many companies are now adding in a generative AI component to the products. And so how do you think about both of those? I think a little bit about a talk that I gave over a year ago and was entitled no one buys AI. And if you are in this space, you recognize it doesn’t matter if it’s AI or any particular feature of your product. It’s only the benefit that matters. That hasn’t changed. And sprinkling AI over your website and on your products and look. We have AI isn’t going to get people to like your product more. The way to think about AI is there is the lowest common denominator of AI functionality, which I believe is Copilot. Copilots are lovely. They are generically dispatched across just about every platform today, and they perform an interesting service at some level, but they are not truly AI in your product, to be clear. And I think we’re just starting to see among our portfolio companies AI actually being integrated into the offering as net new functionality. And and the way I sort of look at the stack is you had in the BG world before generative, any group of software point solutions, I’ll use Drift as an example, did something very particular about conversation. But the reality is even if I inject AI in that, that’s different than an AI first point solution that is being coming to market. Now I have a chat that is completely generic, completely next gen, completely AI. And so I would move to the next piece and say, there’s also going to be your platforms, like your successes of the world. They have an inherent advantage of being able to integrate AI right into their platforms, and they’re already there. And whether it be what Salesforce does or any of these platforms, they have a built in advantage in this world. There’s this new thing that we just started to experience, which I would call it to be your enterprise LLM, best characterized as the heartbeat of your organization. And so that heartbeat of your organization is driven by the insights that your LLM at an enterprise level gathers. That’s telemetry data from your product. That’s the CRM data. That is information or that’s first party, second party. All of that coming together to really drive insights that plug into other platforms that a success may be leveraging. That’s your proprietary LLM insights. And so I think AI across software is evolving quite a bit in that regard. So in that evolution, I think there’s been this sort of everyone’s what are you doing? What’s your AI strategy? Whether you’re a marketer or sales for whatever it may be. Despite the fact that we’re in a world of budget cuts and efficient growth and do more with even less and and all that, do you think that budgets and priorities are opening up even though everything else might be tight? So, you know, you need to invest. We know there’s efficiencies there. Like, are you seeing that where there’s suddenly line items for generative that weren’t there before? I think it’s a really interesting time. I think that the board wants to see the impact of AI, but they don’t want you to invest too much without showing that you’re gonna have impact from it. And I think if I were to both put a board hat on as well as an operator hat, I think our goal should be to look at a workflow instead of what I’ll call random acts of AI. Like, oh, I can write a blog quicker, or, oh, I can do emails quicker. How do I meaningfully change my process and workflow by injecting AI and do the hard work of measurement and what it looks like at the other end? You know? I had a a portfolio company that I work with that basically said, you know, we run a ton of ads, and we basically eliminated our design team. We’re able to generally do the design. We also got rid of all of our stock photography. And so measurable savings, better process, and by the way, the lift on the ads is better. They can take an image of a beautiful woman like you and change that around to work in Europe or Mexico. It doesn’t matter. Like, we know that image works. We’ll just generatively change into the way we want it to be because we know it performs. And that’s incredible power. It’s better, more effective, and cheaper. That should be a no brainer. The impact of AI on our internal workflow has been huge. You know, in the past quarter, eighteen percent of total pipeline was generated using conversational email, twenty five percent of new business pipeline, believe it or not. If you’d asked me a year and a half ago even what I think the impact would be, I would never have even imagined that twenty five percent of new biz pipe could be generated using AI, but it’s here and now. So it’s crazy. One of the things that I’ve gotten comfortable with is I spent all day thinking about this, looking at talking to smart people like you folks and and realize this is a really, really small part of the world that is doing this and seeing this. And there are people I talked to that, Gen a, I think, have you, like, touched it. And so I believe what you’re seeing is just the tip of the iceberg. I think what you’re seeing in terms of how the generative tools work, but there’s a cautionary tale here. I generally say this all the time that marketers ruin everything. I say that because we are always looking for an advantage, looking to do something better. And what we’ll do is we’ll hammer that advantage into obsolescence. Everyone will do it, and therefore, it won’t work. What’s gonna happen is we’re gonna generate better emails, more effective emails, and then my copilot that runs on Outlook is gonna read those emails, determine what to do and respond to those emails. We’re not. And we’re gonna be back where we were again at some level, which I don’t have a really good answer yet for what we’re gonna need to do. But I will say that we’re gonna need more authentic ways to communicate with people and connect with them. I believe live events, field events, those kinds of things are gonna take on a very important role. Your job will be less to get them to open an email or click on a digital ad and more to get them to a place where you’re actually speaking to them. And it’s gonna be hard for BDRs and SDRs to connect on the phone, but maybe that role morphs and becomes more about how do I create an authentic way to connect with you that makes sense. And so we’re at the early, early inning. So, like, there’s a lot of change coming down the path. A little bit earlier, we talked about the distinction of product based AI features. So this is still AI related, okay, versus operations. But when you’re looking and you’re sitting on boards that are I mean, these are tech companies, a lot of software, and you’re thinking about the development of the platform, the road map, and the conversation about adding feature set and and what are you gonna do to competitive edge. I’m sure the conversation of okay. Let’s go build something or let’s go start acquiring companies. You talk a little bit about, like, that mentality build versus buy and how it maybe it’s changed in the last couple years and how you look at it. The issue for us is about first competitive advantage. And in the old world, there was an investment in software that should create a competitive moat for your company that should be defensible over a period of time. What I think is changing is that the amount of time that you get to have that competitive advantage is getting short. So if you believe that to be the case, then the issue becomes, how do I determine how much resources to put in for what ROI? And if you believe that that ROI is going to not make sense from an internal development, but you could get to market quicker with an acquisition and, therefore, drive the revenue sooner that drives a higher ROI, that will argue for a buy versus build decision. And I think it’s gonna be a very different decision because we don’t have the time necessarily to do the full builds. How do executives get the most out of a board meeting? Because it can end up morphing into this operational readout of we gotta show you all the metrics, and, hopefully, it’s not like a top of funnel traffic number like you said, but all the operational metrics for all the functions versus actually using the wisdom in the room and the experience in the room from the board to get guidance on where the company needs to go. And I think it’s a tricky balance, but how should we think about structuring the meeting itself? So it begins with a decision of the executive team, how they wanna use that meeting. And we have seen a huge variance in those choices. Sometimes, there are teams, which I think, by the way, this is the world’s worst choice, decide, you know, we don’t wanna give the board too much information. Like, we’re gonna give them just what they need. And that generally comes to bite you in the rear when things don’t go the way you hoped. Absolutely don’t do that. The second issue is how are you gonna use that time most productively? Well, let’s assume you’ve been smart at choosing good board members and that you have a variety of inputs and opinions that can actually help your business scale. So now your choice is, do I use this time to do a PowerPoint flip through, or do I use this time to actually deal with some core issues? Because what you should do is, here are our KPIs. Here’s how things are looking across our business from engineering, through marketing, through sales, through CS, through all the functional areas. And then you should have some topics that are good, beefy topics, not for you to tell them about, but to get their input and their recommendations on. And if you’re using your board that way to solve the media problems, to talk about the issues, and that can be a variety of issues. It could be competitive threats. It could be product functionality issues. It could be, you know, crowded messaging and positioning and what you’re trying and what you’re seeing, whatever it is. But use the board because, hopefully, they’ve seen more than you have, and they have more data points and more companies that they’re experiencing. They’ll say, you know, I have another board that I’m on that they’re dealing with this exact issue. Here’s what they did. That’s getting the wisdom of the board, not using it as a check the box activity. So, Gary, we have a question that we usually ask every guest on the podcast, but I’m gonna change it up a little bit. So the question that we normally ask is, what’s the most ridiculous thing that you’ve been asked to do in your career? But I’m gonna change it to be, what’s the most ridiculous thing you’ve seen happen in a board meeting? I was in a board meeting where one of the people there was gonna be let go, but it was in the board meeting. And we had to somehow navigate the situation of literally asking him to leave the room because we didn’t want him to be in on the discussion without letting him know because he hadn’t been let go yet, but he was soon to be let go. And then we had to come up with this elaborate force, and we took out some other people just to make it seem it wasn’t just him. It was just craziness. It’s like, how can you plan so poorly that you would put us in that situation? It puts into, you know, question the wisdom of the CEO who should be, you know, better orchestrating what was going on there, but that was crazy. You can imagine the fun. Well, that definitely qualifies. So, Gary, thank you so much for joining us. I think this was super actionable for someone, especially Simon who has a board meeting in less than twenty four hours. But for our listeners out there too, some really, really great insights, thoughts. Really appreciate it. You’ve been listening to Revenue Makers. Do you have a revenue project you were asked to execute that had wild success? Share your story with us at six cents dot com slash revenue, and we might just ask you to come on the show. And if you don’t wanna miss the next episode, be sure to follow along on your favorite podcast app.