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Posts Tagged ‘Board of Directors’

Does your start-up need a board?

So you are the founder, you had the idea, you probably are the best to know where your  company needs to go…why should you involve anybody else in managing your company?

Particularly at a time when big and successful companies like Facebook and others have kept voting rights in excess of their economic stake after an IPO, isn`t it justified to avoid granting control to strange people?

Johanne Bouchard recently depicted how boards are at Unicorns, (1) these powerful but still at an early stage in their life companies. According to her, they use to be smaller, usually made of (relevant) investors and founders and other executives, (equity ownership at the board usually high), so that its leadership style adopts the shape below; these boards spend their time in value creation and growth related issues, which is perhaps their most relevant difference with mature or consolidated companies,  where (broadly speaking) compliance topics may reign. So, why should a founder have a board at all, particularly when the company hasn`t received large amounts of VC or early funds yet, when only you, your family and friends have contributed to launch the project? Read more…

Powerful Independent Directors

The European Corporate Governance Institute published in January 2014 a working paper written by Fogel, Kathy and Ma, Liping and Morck, Randall, in which they advocated for “Powerfull independent directors” (PID) to be present in boards. (1)

PIDs are defined as individuals placed in the top quartiles in distributions for at least three out of the following factors:

  • Degree centrality, or number of people with whom the person is connected;
  • Closeness centrality: mean degrees of separation with others in the network;
  • Betweeness centrality: number of pairs of people he serves as connector;
  • Eigenvector centrality: weighted average of his/her connections`s social power.

  Read more…