One of the most interesting things about speaking, as of now, to over 100 unlisted Board folk is how important ones initial frame of mind is to so many things that one meets on the journey of growth from idea to substantive company.
As we discussed in “Prometheus the Muses and the Startup” your whole enterprise grows from a single creative seed which arises in your mind and which must be nurtured.
Separately a thirty-year VC emphasised to me that it is what the founder thought long before they decided to raise capital that makes all the difference. Indeed one can go back as far as what they thought on day one. Some first-time founders are muddling through, learning as they go. Some first-time founders have been scared off by what they have heard, some prior-experience founders have had a bad “marriage” and resolve to never “get married” again (at least to the same type of partner). Others, especially serial-entrepreneurs, know that they will need to raise big money along the way in order to realise their vision and start creating on day one with that in mind. You can imagine how they experience “capital raising” compared to those who just started a NewCo, scrimped and saved, borrowed here, borrowed there, got some mates to invest and then one day decided they need to do a proper “capital raising”.
In the same way what founders think – consciously or subconsciously – about The Board hugely impacts how your Company’s Board will end up. And if you think that you don’t need a “proper” (as opposed to de facto/legal) Board then you are definitely missing out on the huge multiplier of business success that is a Board which is an Engine of Growth – check out “What Serial Entrepreneurs Know About The SmallCo Board That First-Time Founders Don’t”. The moral of the story is that your Board is what you make it – for better or for worse – you either get a turbocharger at one extreme or a gallows at the other and everything in between. As with most things in life if you don’t design it someone else will design it for you – and they will have their needs in mind not yours.
But back to the seed ideas that you consciously or unconsciously have about Boards. These are those which you would have had the day before you even thought of an idea for a new business. If you have had any exposure to business in the past 28 years you cannot have avoided the “Corporate Governance” phrase – a unique experiment in the nigh-on 500 years that the Company has existed in the State defining near endless boxes to tick and procedures and processes to follow. It is philosophically a very strange thing is you stop to think about it. The State does not tell you how to organise your Xmas party (pace at this rate the current UK Government may well tell you how many people it will allow you to have for Xmas lunch) so why should it tell you how to organise your private Company? Good question well presented.
This is a most pernicious seed if it is the only one you have in your mind as you will end up with something that is far too unbalanced towards a bureaucratic approach to Corporate Control and away from the vital task of Corporate Creativity. Indeed an early stage Board that is excessively focused on control or rules or trying to be a mini BigCo Board is almost always a recipe for killing a company. Control is vital for everything to do with finance – we need to control our own bank accounts, we need to keep an eye on our credit cards. But – back to seeds – we are here not talking about trying to control bindweed – where it spreads all on its own and is hard to control. Very very few startups are that model – most are rather like some weak seed in a difficult climate which will need much TLC to survive let alone thrive.
So if your idea/startup is far off needing a “proper” Board – bear this one thing in mind – when you do need a Board make sure that you, the founder, design it as much as possible to be a Board which provides TLC for your company and helps it to grow as well as keeping it free from pests. And, in the mean time, get as much of the benefit that a great Board will bring to you by surrounding yourself with mentors, and those older, wiser gardeners who can pass on tips gained from long experience of growing your type of seed.