Governance Bites #106: startup CEO reporting to the board, with Jon Davies

In this episode, Mark Banicevich talks with Jon Davies about startup CEOs reporting to their boards. He asks about the relationship between the startup CEO and the board, and managing accountabiity. They discuss board packs, key performance indicators, and meeting frequency. They also discuss the CEO disagreeing with the board, and how to deliver bad news. 
Jon Davies is the CEO of InsuredHQ, an award-winning insurtech headquartered in New Zealand, helping modernize insurance companies across global markets. Jon trained in marine biology and zoology, worked as an professional outdoor guide and paramedic in the USA, and move into technology in the Bay Area and Silicon Valley. He built a career working with and inside startups, scaleups, and giants like Microsoft, NASA, and Yammer. He later served as Tech Sector Lead for New Zealand Trade and Enterprise and sits on advisory boards including the Nasdaq Entrepreneurial Center. He’s also the author of the Top 10 in Tech newsletter and a passionate advocate for using technology to make industries more human, efficient, and future-ready.
#governance, #leadership, #corporategovernance, #boardcraft, #decisionmaking, #makingadifference, #governancebites, #boardroom , #cgi, #charteredgovernanceinstitute, #director, #startup, #technology

Transcript

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My name is Jon Davies. I'm the CEO [Chief Executive Officer] of InsuredHQ, currently. I have a history in the technology industry, specifically in San Francisco, Silicon Valley. And before that, I was an outdoor guide for 10 years. And today's topic is reporting to the board as a startup CEO, and startup governance and advisory boards. Hi, I'm Mark Banicevich, welcome to Governance Bites. As you, today again, I have the pleasure of spending some time with Jon Davies. Jon, thank you very much for your time. Thanks for having me. You may be my first Silicon Valley entrepreneur that I've worked with on the podcast, so it's really cool to have you. Can you start by telling us a little bit about how did that come about? How did you end up as a tech person in Silicon Valley as a kiwi? Sure, sure. So I left New Zealand on my overseas experience trip and studied life science, was an outdoor person, and became an outdoor guide, outdoor educator, which I did for 10 years. And so I ended up in New York City of all places working as an outdoor guide. That's where you do, yeah. Yeah, as you do. And through that, I also became a paramedic. I was trained by the fire department of New York, southern Manhattan, and this was right before September 11th [2001]. And so for four years I was there. Pretty much a year after September 11th, I was like, let's get out of here, and moved to the other side of the country to the Bay Area, specifically San Francisco and Silicon Valley. Continued my work in outdoor education and outdoor trips, and by osmosis kind of, because I knew where the on button was better than most people on, in computers, worked my way into a job in technology, became the number one hire of an Inc [incorporated] 100 startup. Right. And so now you find yourself in a position where you are, as you said before, you're the CEO of InsuredHQ. You've done some board roles. You've been involved in startups and funding, and so forth. So we're talking today about reporting to the board as a startup CEO. What's the ideal relationship between CEO and their board? I think the most helpful thing it lets me do, because in startup land you are constantly wearing many, many, many hats, you are very deep in the weeds. The best thing it does is it forces me to rise up to a more cruising altitude. So I'm coming up to altitude, and then, you know, often times people will roll their eyes and see this as just a box check exercise. But I am reporting on the KPIs [key performance indicators], the success, the struggles, and the strategic decisions made over the last quarter, or whenever it is my board meets, kind of like every one to two months. That process alone is very valuable, and then being able to discuss it with very experienced people is the next most valuable thing you can do in a one-hour, two-hour session. Before I have to descend down back into the weeds again and put on all of my different hats. Yeah. So as a starting point, even preparing for those board meetings forces you to stop and think about where is the business now, where's it going? Yeah. And then as you say, you get into the room with those advisers and you're drawing on their expertise and getting help making decisions and so forth. That's right. Yeah. Right, right. And, and you, because I spend so much time changing gears well down, way down low, and this is the best thing, it's like, okay, I have to do this. I'm being forced to do this, and it's good. Yeah, absolutely. So given your relation, your role as CEO, and you've got three probably advisers that you're working with, - Yeah. - how do those relationships work? Are they kind of one-on-one as well as in the room once a month or, you know, and how collegial are they? Yeah. Well, I think, I'm not sure if I'm unique in this situation, but I'll tell you. So my chairman kind of, like, we're checking in once a week, one-on-one on the phone. One of the directors is also my employee, so employee by day, director by night. Were they founder? Yes. Yes. Not uncommon. Yeah. And the other founder, I took over her role, but she is now also my legal counsel. Right. So, and that's a role that is, you know, we probably would have gone bankrupt if not for her input just on legal fee. Yeah. Because, you know, InsuredHQ operates in eight different countries. We have staff in six different countries, right. So it is multi-jurisdictional. And so, you know, even operating in the US [United States], the legal fees alone would be insurmountable. Yeah. The insurance alone is almost insurmountable to operate in the US. Wow. So, the particular founder who is an employee and an adviser, - Yeah. - how does that relationship work? How do they take off one hat and put on the other? Do you find they ever cross-contaminate, and how do you deal with that? It's good. I mean, when they're showing up in the board meetings, it's almost as another employer who's reporting back to the board in terms of what's going on. Right. And so, you know, the insight they get at the board level is actually from within the business at a deeper level than me, because they're doing the business development. Right. And they're from the industry. So I'm not from the insurance industry, I'm from the SaaS [software as a service] world. And so what I really need from them is actually their insurance expertise, and the same with the other co-founder. Right. Is their industry expertise, because before this role, the last role I had in insurance was doing a data cleanup job for Tower in the late '90s, actually mid-90s. Before you went to the States? Yeah. Right. Yeah, when screens were green, and the paper was printed out, you know, in those dot matrix ones. Yeah. You're going to tell me about punch cards next, aren't you. Yeah, that's what, because I'm a second generation engineer, that's what my dad did. But my dad used to install computers when computers took up a whole room of a building. Yeah, right, right. With punch cards. That's how you programmed them in those days. Yep, yep. Yeah, he started with punch cards. Yep. Yeah, yeah. Moving back to the 21st century, what do you include in the board packs? You're reporting to a mix of people who are in the business and advisers from outside the business to draw information. Yeah. So what do you include in the board pack, and how do you structure the updates that you provide them? So the chairman puts the board packs together, and then my contribution to that is what I call the CEO report. So it is in, the things that we're doing, and whether they're on track, whether they're off track, or they're on hold or something. So high level. Success, what I'm, what's keeping me up at night, and then core metrics in terms of revenue, you know, debt ratios. Yes. Trends over time, those kind of things. Right. That I can pick out and talk. And then what is the chairman adding to the pack? He's bringing in all of the formal P&Ls [profit and loss statements], he's bringing in the kind of monthly spotlight reports, and then he's bringing in the higher level things at the board level to discuss that are not necessarily at the CEO level. Right. Right, so I'm, you know, I'm there as an attendee. I'm not there as a governance member. Yes. As a governor, yes. Right. So I'm to report on what's happening. How do you present KPIs of strategy and risk in a way that invites feedback from the other people in the room rather than,"Oh, shit!" So it's going to be proposal. So, you know, this is what I'm proposing to do. This is how much it's going to cost. This is the current impact on cash flow, but this is the hopeful outcome. Please destroy this thesis for me. Right, right. Right. So, it's the invitation of please, please criticise every last bit, so it's been thoroughly thought through and addressed. Give it a robust smacking - Yep. - so that what comes out the other side is more reliable. Clip round the ears. Right, right. What is your approach to disagreement, particularly if the board challenges the strategy that you presented? Yeah. Everyone's allowed to disagree. We all need to decide, right. So disagreements are part and expected of the process. So oftentimes the equation here is, sorry, the equation, the analogy is, we're all holding hands in the fog often times, because we're going through some amount of uncertainty. You know, I started this role and then three months later COVID[-19] happened, right. So, I come from this background of uncertainty being part of the process and knowing that if you all hold hands in the fog together, some kind of certainty will show up. In San Francisco, you know that's fog, right. So like literally you would be holding hands in the fog. Yeah. And it's a nice analogy because you're going to be seeing slightly different things, a slightly different view of the world, and no one's going to see everything because of the fog around you. That's right. And holding hands gives you a certain comfort in uncertainty. Yes. Because you're all going through it together, and it's an innate human need to have certainty. And so becoming more comfortable with uncertainty is actually a skill everybody should learn. Yes. Including directors. Yes. Yeah, absolutely true. Yes. How do you deliver bad news without triggering your pink slip [getting fired]? As quickly as possible. Right. Right. So whenever there's bad news that has to be delivered, I'll call the chairman, talk about it, and then figure out how that's going to be delivered to shareholders, to directors, to the team, you know, if it means that we have to do some layoffs or some, you know, there's some team reduction in size, or there's some strategic decisions that need to be made, COVID happens, you know, those kind of things. Yeah, right, right. Okay, so initially talk to the chairman, get some thoughts about how best to tell the story, and then get out there and tell the story. Yeah, there has to be a dialogue started somewhere. My default is to go to the chair, and then we'll figure out how the CEO and the chair can deliver that message to other stakeholders. Right, right. What's something you've gotten wrong in board reporting and what did you learn from it? Oh, what have I got wrong? I mean, I think the CEO report is just an evolution in what's helpful. Got my budgets wrong. Be very surprised if you got them all right. We're walking through fog here. Yeah, yeah. But it's my first time reporting to something that's not an advisory board actually, and so it's just learning how to navigate that where it's not necessarily wrong, it's just not right, yet. It's, yeah, right. It's taking feedback from the individual directors about how they want it presented and modifying the report based on the information they see. Yeah. And over time you figure out what the best things are to report, the cadence of how the meeting goes, what the structure is, when I need to shut up and when I need to speak up, you know, those kind of things. And all of that is there, it's just not been figured out. It's like the, what we just talked about earlier, the forming, storming, norming, performing, right? Happens in governance, too. Of course, it does, yeah. Yeah. Yeah, absolutely. Now, you've had experience on some boards as well as reporting to boards. You've had experience starting up and so forth. So you've had a number of governance- style conversations. What's the best advice you've received? The best advice I've received has not been from a board, it's been through colleagues and through kind of like people who I would consider mentors. And they're really stupid, but for whatever reason they stick in your head. So one is, if I don't bite off more than I can chew, how am I supposed to know how big my mouth is? Yeah, that's, yeah, interesting, which is like, this is the big entrepreneurship-based ambition, right. Yeah, right. It's like, why would I not do that? I know what I'm capable of if I do, and I know where the edges are, right. And so that is a mantra that constantly rings through my head. The other one is around the people structure, I think that we mentioned earlier of the pirates, shepherds and Sherpas. Yes. Right. Those are the three pillars that you need within a team to get anything done. Right. So who's going to lead the way, who's going to guide the people, who's going to do all the heavy lifting? Are the tenets, the very top of the pyramid when I'm planning something. A strategic initiative or a new product or a new startup. Right. Yeah, that's a really nice structure to work with. Cool. Jon, again, thank you very much for your time. It's been a cool conversation. Let's catch up again soon. For sure. We'll see you next episode. Thanks for your time. Thank you. Thank you for watching this episode of Governance Bites. We have more episodes on YouTube and your favourite podcast channel where I interview directors and experts on various topics relating to boards of directors and governance. We'd love to see you back and please like, subscribe and share the videos and podcasts.