May 222016
 

Earlier this week I had the opportunity to interview Evan Goldberg, the founder of Netsuite at the company’s Suiteworld conference in San Jose.

While one of the topics we covered was Goldberg’s support of the BRAC Foundation, I was also keen to discuss the company’s complex senior management and board dynamics.

Along with being the CTO, Goldberg is also Chairman of the Board which means CEO Zac Nelson answers to him on board matters but the roles are reversed in their executive management roles.

To make matters even more complex, Chief Operating Officer Jim McGeever is also the board’s President so he also answers to Nelson in executive matters while presiding over both of the others as a director.

“We call it the circular firing squad,” laughed Goldberg when I asked him about it. “We are all incredibly committed to the company and we get along really well. We get our egos out of the way and we just want to do the right thing.”

“Humour is a very important part of it,” Goldberg observes. “Fundamentally it has to be the right people for that to work. Three is a good number as you get to vote on the matter.”

So Goldberg’s view is Netsuite’s arrangement works because the three are friends and leave their egos out of decision making.

Goldberg’s observation is true of any successful business relationship – like a succesful personal relationship a thriving business partnership relies on respect and the individuals being able to give a little, or a lot, without bruising their egos.

Ultimately though, it’s interesting to observe how tolerant investors are towards such arrangements. As an independent, outside investor having too many Executive Directors on the board dilutes the critical management supervisory role of the board and that can’t be encouraging for shareholders.

Tech companies though get some slack from investors given their relative youth and market dynamics so it’s not surprising Netsuite gets away with this. The bond between the senior executives must also count as well.

Leave a Reply

%d bloggers like this: