Getting most out of your board — as a Seed or Series A entrepreneur
By: Simon Schmincke
Tags: Startup, Board Of Directors, VC, Entrepreneurship, Resources

1. What purpose does your board serve

A board is a sounding organ to your operations and your strategic planing. On a technical level, it’s a governance body that guides and advises the managing directors — the leadership of a company — on strategic questions, governance decisions and on a variety of formal tasks, which are distinct for each legislation and laid out in the SHA, the Articles and the Rules of Procedure.

Furthermore, it has become custom that certain board majorities have a formal quorum on specific operational decisions. This majority is usually leaning towards your most recent lead investor.

2. What a board is not

Your board is not running your company. The board directors are not involved in running your operations, making day to day decisions, or easing the burden of making tough verdicts for you. Board members don’t do the job for you, and should not eat time from you where the output you get from them doesn’t justify the effort.

As usual, the line is blurry. I have seen great board members directly involved in business development through the member’s previous industry network. That’s pretty operational. But it’s the exception!

3. What differentiates a great board from a meh board

A good board finds a balance between controlling governance guidelines — laid out in your articles of association / shareholder agreement / rules of procedure — and on helping to make the right strategic decisions. Especially in the beginning of the company, it is custom that the investors do not take control of the board alone.

A good board does not slow you down, but a good board is able to help you reiterate your thought process, when it feels you are rushing into strategic decisions without having heard all relevant arguments. The method of formulating your arguments on why you want to make a decision, often helps to see things from a different side.

A good board never runs your company, but is able to help you make decision both strategically and on high impact operational questions. A good board is able to help you sell your company to high profile candidates, when they have competing offers. Ultimately, a good board is a tool that you can use to your advantage.

But as any good tool, you need to make use of it.

4. What you can expect from a great board

Understanding how a great board works will enable you to set your own expectations. You can of course expect preparation for meetings, discretion on all things discussed, follow up on deliverables, a group of people that fights with you for the long term success of your company. That’s the basic.

A good board should be your sounding board for options. It often helps to lay out different paths, explain the pros and cons in order to feel right about your decision without much external input. A great board allows you to get to your own conclusions by simply asking the right questions, sharing learnings or patterns, and ultimately connecting you to the people in the ecosystem that can help you best with your current situation.

At it’s best, a great group creates a dynamic discussion culture, which allows to jump from ground level to 30.000 foot view on the relevant strategic decisions. Where does this lead to? What options do we open and which doors do we close — and what resources do we need to make this happen — given that every decision has opportunity costs.

Most importantly, a great board encourages you as the entrepreneur to dare more, think big and move on in times that are rarely easy or calm. A good board is able to manage control and encouragement at the same time. This split of the role of the board member is difficult, yet good boards manage to fulfill both roles.

Ultimately, good board members represent not only the shareholders they are nominated by, but also the ones who do not have a seat. The greater good of the company is the focus, rather than the short term shareholder gains. You will instantly note if a board member tries to hide one behind the other.