BOARD ISSUES.

Client: Please I need clarity on something. What’s the difference between co-founders, partners and directors in corporate governance.

Me:
Co-founders: they both CONTRIBUTE, AND RUN a startup together in equal measure even if not same kind of contribution.

Finance-Presence

Presence operations – presence Human Resources

Strategy – operations, etc.

A co-founder ensures that there is day-to-day contribution to the Biz.

Partners: not all partners are on ground. Especially in Managing Partner contexts. They can share the areas I shared in co-founder but they don’t have to be on ground. Usually, ONE PARTNER is on ground. The other(s) are in absential.

Directors: these is 2 ways:
Executive and non-executive.

Executive: MUST BE ON GROUND. He is ED. He is Management staff. That’s the highest promotional role in any company after which is appointment to CEO of same firm or another firm.

Non-executive: is exactly like partner… doesn’t have to be on ground but is on the board.

Client: Can siblings be co-founders or is it better to have an external person especially if one targets funding?

Me: The WHO is usually not an issue. If the person is PROFESSIONAL ENOUGH TO DELIVER, that’s all that matters. There are siblings who deliver more than non-siblings. There are non-siblings who are better off than siblings.

Whoever works for your strategic vision, that’s it.

Client:
One last thing: will the co-founder be on salary or will it be profit sharing?

Me: At the beginning, profit sharing is best for the health of the business. Salary is a burden on a new business. Salary can happen when the business is making at least 3x its overall costs.

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This reminds me of another conversation I had with a different client who said “I want my old mother-in-law on my Board but she won’t have time to read reports or vote on Board issues. What do I do?”

My response was: it is possible to have NON-VOTE SLOTS on your Board or BLOCK VOTE SLOTS. An example of this is what we practice at SOBCA. SOBCA management has a slot on the Advisory Board, which means both PRESIDENT & COO can sit in for Board Meetings but both delegates can only deliver ONE VOTE.

A business can have an observer status on a Board who is INELIGIBLE to vote. So either way, it is possible to have more people on your Board even if the voting rights are fewer than the head count on the Board.

I hope this helps.

m a k t u b!!!

SO