6.1 Boards are even more important for start-ups

A highly performing Board of Directors is more often critical to the success of a technology start-up company. Here are some common challenges:

  • Inexperienced management. Most tech companies are founded by young entrepreneurs. Typically, they lack experience in the many facets of growing a successful technology company: planning, budgeting, human resources, finance, governance, risk management, etc.
  • Under capitalized. Most technology companies do not have the cash to hire experienced senior executives. Consequently, many founders perform many functions themselves for which they are not trained and ill-suited.
  • Rapid change. The technology industry moves quickly. Decisions must be made quickly often without all of the information required.
  • Large consequences. Often, an opportunity or a problem can have significant impacts. Whereas larger, more mature companies can diversify their risks, early stage companies are often confronted with a single, "bet the company" decision.
  • Hubris. Also called "Founder's Syndrome", technology entrepreneurs are typically high-energy, confident people. While this strength of character is essential to driving the company through the many challenges, it has a dark side. Many entrepreneurs believe they have all the answers and want to make all the important decisions themselves. Frequently they over-rule decisions with which they do not agree. This behaviour typically prevents the company from growing, and can often cause it to fail.

In later articles, we will explore how experienced Boards can help start-ups overcome these inherent limitations.

 T his article first appeared in the Winter 2007 edition of The Hire Standard – the newsletter of Corporate Recruiters, British Columbia’s leading recruiters of high technology talent.