The Venture Edge

Many entrepreneurs launch their businesses with a board of directors that consists of the founding team and perhaps the first investor while they rely heavily on board of advisors for everyday guidance and to open doors. There's a good reason for this approach: it's easier and less costly to find people willing to be on an advisory board because advisors don't have the legal liability associated with being on a board of directors. Most potential directors will not serve unless you carry directors' and officers' (D&O) liability insurance to indemnify them, and the expense of this insurance is often prohibitive for a startup. However, I would argue that establishing corporate governance early in the life of a startup will often enhance the quality of the company as it grows.   

Okay. I know I was on a major rant a couple of months ago about all the magazines and newspapers I subscribed to, and how I was going to cut back. I did indeed cut back, but there's one magazine I decided to hang on to: The New Yorker. I love how you'll be reading a story about some topic -- say, Edgar Allan Poe, or the Parrot Panic of 1930 -- and just when you think the article is going to end, it goes on for another page, and then another, and another, and another. I find myself learning a LOT about some very interesting topics. Anyway, that was a long way of saying that one article in last week's issue caught my eye -- Board Stiff -- which explores how the nature of corporateboards has changed as people have tried to improve them over the past couple of decades.