People around the startup
Loading ...In the last column People First, I talked about the need to have the “right” people in your startup. But there’s another important set of people the startup should surround itself with namely, a board of directors (BOD) and a set of advisors/mentors. While no man is an island it is even more true that no startup can be built in isolation. The importance of building and leveraging relationships cannot be over-stated. The importance of sounding out business strategies, feedback on technology direction, dealing with employee issues (hiring, retaining, company culture), sales & marketing, customers introductions and management, partnerships and so on with people who’re experienced in these areas can be critical. Governance, financial discipline and reporting systems are important soft infrastructure issues that also need to be put in place to ensure that the company is professionally run and built for scale.
The BOD decides on the company strategy, governance, financial issues, senior management hires and fires (including theoretically having the power of replacing the CEO), various company policies, it is a good idea to have people of credibility, capability and trust on the board. If there are investors in the company, they will have an important role to play in deciding this as well. The number of board seats is usually odd (i.e.3, 5, 7) and investors will take board positions. Board seats in such startups are usually split down the middle between the investors and the management team with a mutually acceptable person occupying the “odd” seat. Board members are typically seasoned executives. Such board members are usually compensated with stock in the startup. The board is supposed to be a sounding board and help the CEO achieve the company goals. They also ensure that the CEO is discharging obligations keeping the best interests of the company in mind. But the buck stops with the CEO as far as taking and executing decisions is concerned.
In addition, it is worth considering the setting up of an advisory board consisting of people who bring a diverse set of complementary competencies to the table and who can provide credibility and legitimacy to the fledgling company. Well known top corporate executives, successful entrepreneurs, experts in finance and technology or marketing, academics, professionals from the legal, accounting, PR, head-hunting worlds are some of the people you may want on your advisory board.
There are two types of advisors worth considering: (a) a big name brand individual with an acknowledged set of achievements & expertise and (b) an executive who might not be personally well known but by virtue of his/her position in the corporate world can positively impact the startup. These advisors can help you tremendously; so spend quality time in creating the advisory board. Engaging with your advisors and mentors on a regular basis, providing updates, seeking and receiving feedback can prove to be invaluable. Having a shoulder to cry and lean on in times of trouble can be uplifting. Being spoken to directly about the dangers ahead can be critical for success. For this to happen, inhibitions need to be shed; fear and anxiety need to be replaced by confidence, humility and a willingness to learn. Experienced people who understand startups and entrepreneurs can help the CEO navigate stressful decision-making scenarios.
However, Indian entrepreneurs in general appear to be shy about appointing advisors and board members. There’s a hesitancy to have “outsiders” involved. Some of the hesitation can be attributed to lack of awareness and inhibition. The larger reason and more serious reasons are due to fear, ignorance and perhaps arrogance. Fear about losing control and influence. Fear of sharing company information with a “third party”. Fear of having to share the pie. Lack of awareness about what benefits can accrue to the company. Being uncomfortable about having to report to someone and being questioned – arrogance?
Just like a child learns and grows not just from the parents but through multiple and varied interactions and interventions with the world outside, so too with a startup and the founders. Having access to a group of experienced well-wishers can be quite invaluable for startups that wish to learn and grow.
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All you have written is applicable in the sense when company is running in post startup mode, when people need to focus more on relationships and start processes. This is the stage when company is running out of startup mode and entered in much more complex place which people called a matured company.
As per my thinking startups do need assistance and advise from experienced people but not give them power to decide for them what to do. Startups need people who can guide them technically and place a vision for them and the company, people who work in hand by hand and face the problems at each front with company and keep the moral of people with company high.