In a recent post on his blog, entrepreneur Will Herman argues that every startup should establish a board of directors — even if you’re small or don’t have funding.
Herman’s main point is that startups need as much guidance as they can get, and a board of directors can offer long-term, formal advising — why wouldn’t you secure mentors who have an official attachment to the success of your company?
To those entrepreneurs who are hesitant about the costs of recruiting a board, are concerned that employing a board will cause them to lose ownership of their startup, or who think they already have informal mentors who can offer them everything they need, Herman responds with three points:
- “Don’t be cheap. The compensation will be with equity, likely a single percentage point or lower and vesting over four years. What you will get in return will likely help you immeasurably.”
- “Virtually no one outside wants your job. If they did, they’d just go start another company or take their money to another playground.”
- “Outside advisors will never have the volume of background data that your directors have to analyse situations nor will they feel the responsibility to do the right thing. Directors are tied to the company’s success and failure. Advisors and mentors are not. There’s a huge difference in responsibility and, ultimately, quality of action.”
Ultimately, Herman argues that early investment in a board could make the difference between success and failure.
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