Building a Great Startup Board: Pt 1


This post is by Reid Hoffman from Reid Hoffman


When entrepreneurs gather to swap war stories, whether they’re meeting in person or virtually, one of the biggest categories of horrific tales are bad board stories. Every entrepreneur I know has them; I’ll even share a few of my own in this essay. But far too often, the conventional wisdom imparted to entrepreneurs is to treat board meetings as a necessary evil, part of the price you pay for raising money. True, many boards are dysfunctional, but when you build a great startup board, it will be a powerful tool that can help the CEO make the company successful.

This essay, which is based on Part 1 of a two-part episode of the Greymatter Podcast, will cover the fundamentals of building great startup boards. You can listen to the podcast here, or search for Greymatter Podcast in your podcatcher.

WHAT DOES A BOARD OF DIRECTORS DO?

The structural role of a board of directors is corporate governance, specifically, making sure that the company is managed in accordance with the interest of the shareholders (and if liabilities exceed assets, the interest of debtholders), and in compliance with applicable laws and regulations.

The most important point to keep in mind is that the board’s role is not to manage the company; it’s to provide oversight for the actual management team, especially the CEO. That’s why one common mistake boards make is slipping into management without realizing it (we’ll discuss this in greater depth later on).

With his usual awesome first principles focus, (Read more...)