A Philosophical View Of What Boards Should And Should Not Do(techcrunch.com)
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A Philosophical View Of What Boards Should And Should Not Do
http://techcrunch.com/2013/02/26/venture-assistance-a-philosophical-view-of-what-boards-should-and-should-not-do/
2 comments
The original purpose of a board of directors was to manage the company at a strategic level. To do the job properly takes time and effort. Unfortunately, there is no limit to how many boards on which one can sit, and the quality of corporate governance at the board level has degraded accordingly. Allowing people to sit on multiple boards also breeds group think, conflicts of interest and back-channels for insider information. Interlocking boards are another way our economic system is gamed to favor the wealthy. We should restrict membership to a single board, leading to a greater diversity of qualified people in the boardroom.
I don't disagree with your assertion, but how do you deal with the fact that there is a finite number of qualified people who can sit on boards?
Its not like there are 10,000 past CEOs willing to sit on the boards of these companies.
I think it is a really tough challenge, and one that is not easily solved.
Its not like there are 10,000 past CEOs willing to sit on the boards of these companies.
I think it is a really tough challenge, and one that is not easily solved.
I believe there are many more people with sufficient qualifications than there are board seats for them to sit on. They don't all need to be past CEOs, just ethical people with business experience and good sense. And frankly, it wouldn't hurt to trim the size of the average board, if it really becomes a problem.
Definitely agree with this. One of the key innovations to free up more capital in the fly over cities has been de-coupling the board membership from the capital at the Angel or Seed level. We found that early stage investors would put up the money but didn't have the time.
This isn't about Boards of Directors so much as about how VCs should act when they act as advisers. And the article doesn't make the VC sound like an adviser as much as a business partner. The problem here is the adviser isn't a founding member of the company, even though the VC wants to be one. And when you want to go a different direction, your adviser can all too easily become a back-seat driver.
A VC is a person with time and money but no ideas. If they had ideas, why wouldn't they make those ideas into real products?
A VC is a person with time and money but no ideas. If they had ideas, why wouldn't they make those ideas into real products?
But the VC has an idea. Which is use the money to make more money by allowing others to build businesses. That's a business model itself. It requires the same amount of planning, marketing, PR, etc. They also have to turn a profit or face a bigger doom of losing lots of money on a bunch of bad businesses.
This is far too simplistic a view. Being a good operator requires different skills from being an effective investor. Also, a lot of VCs are ex-operators who wanted a saner pace of life after being in the trenches for 10+ years.