How to avoid frustrations of the startup board

7 months ago

Startups need capital and startups need experienced business people on their boards. So far so good. The challenge arises when people from those two worlds interpret reality in different ways. The risk for clashes is tangible. This is our advice for an effective startup board.

How to avoid frustrations of the startup board

All of us know that a startup is called a startup because it is newly started. There is no track record, no former fiscal years to compare with, no processes or routines, no internal old-in-the-game-guys who can guide the new ones. Actually, it can be even worse – the startup perhaps runs their business around a totally disruptive idea! A situation like this requires humble people whose only focus is the startup – not principles or any need to show power. And this goes in both directions.

No one is ‘the smartest’

The first thing to understand is that a founder of a startup can be whoever. A young newly graduated individual with almost no work-life experience. Or a senior person with 20 years of experience and maybe some expert knowledge within a certain industry. Still there is one personality trait they have in common – they see no limits. That’s why they are entrepreneurs and why most of us aren’t. As an external board member this is very important to understand. The entrepreneurs can be as smart as you are. It’s their focus that can be a little bit different… When you think about structure – they think about speed. When you think about administration – they think about speed. And then you think about risk analysis – yes, they still think about speed. Their gas pedal is much bigger than the brake pedal. 

Our advice is to get to know your entrepreneur. Be inspired and avoid lecturing. Instead try to figure out how you can support without taking the spirit and motivation away. And if you are an entrepreneur – be careful in your choice of board members. Take advice from more experienced people, make the background check and have a couple of meetings before to make sure you pick a person with relevant competence and the right focus. 

Accept reality – even if you don’t like it

Entrepreneurs as well as external board members face situations they don’t like. It can be about the difficulties to measure market potential if the startup is breaking new ground or understand why the company needs to put effort into brand building. Other situations can be the entrepreneur’s demand for acceptance on new bold investments although the cash flow is unstable or the entrepreneur’s unwillingness to understand why a basic level of administration is a must. Examples of situations that can cause conflicts are many.

Our advice is communication and to stay focused on making the best choices for the company. Instead of being upset – listen to each other and learn from each other. Do you think the entrepreneur is too bold and naive? We are sorry but – most of them are. They have to be! Do you think your external board member is too focused on safety and administration? Try to listen, maybe the person is right to some extent. 

Running a startup is not for everyone – and being on a startup board is not for everyone. If you get the opportunity to join a startup board, be prepared for the unknown. Challenges will pop up like mushrooms – but also the rewarding feeling of having overcome them.

 

 


 

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