Comments on: Why I Don’t Like Board Observers http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/ Entrepreneur turned VC Mon, 14 Nov 2011 23:37:00 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: Patrick Ambron http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-31823 Patrick Ambron Tue, 25 Oct 2011 22:29:00 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-31823 There's one scenario you didn't mention and I'd be interested in hearing your thoughts. What if the observer is a third founder who doesn't have a seat on the board? For example, say the company has three founders--one is the acting CEO, one is the CTO and the other is just another developer, call him "lead developer/design".  In a series A, it's standard to have 2 management/founders, 2 investors and an independent. On the one hand, you don't want to disrupt the even balance, but on the other, it seems like an easy compromise rather than shutting a founder completely out. After all, the other two members are more than likely to speak for him, and you wouldn't expect him to veer in any unpredictable direction. What are your thoughts on this scenario? I ask because I've had experience with it There’s one scenario you didn’t mention and I’d be interested in hearing your thoughts.

What if the observer is a third founder who doesn’t have a seat on the board?

For example, say the company has three founders–one is the acting CEO, one is the CTO and the other is just another developer, call him “lead developer/design”.  In a series A, it’s standard to have 2 management/founders, 2 investors and an independent.

On the one hand, you don’t want to disrupt the even balance, but on the other, it seems like an easy compromise rather than shutting a founder completely out. After all, the other two members are more than likely to speak for him, and you wouldn’t expect him to veer in any unpredictable direction.

What are your thoughts on this scenario? I ask because I’ve had experience with it

]]> By: rafer http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-12985 rafer Fri, 16 Oct 2009 20:41:44 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-12985 I think that's a california passive-aggressive thing. run the darn things like formal meetings and make the observers feel explicitly silly if they voice an actual vote. I think that's a california passive-aggressive thing. run the darn things like formal meetings and make the observers feel explicitly silly if they voice an actual vote.

]]> By: rafer http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-1483 rafer Fri, 16 Oct 2009 20:41:44 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-1483 I think that's a california passive-aggressive thing. run the darn things like formal meetings and make the observers feel explicitly silly if they voice an actual vote. I think that's a california passive-aggressive thing. run the darn things like formal meetings and make the observers feel explicitly silly if they voice an actual vote.

]]> By: msuster http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-12984 msuster Fri, 16 Oct 2009 20:35:30 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-12984 Yeah, for sure. But all too often boards never do that and frankly I think some boards over time sort of forget who the observers are and who the "real" board members are. I'm not that concerned with the crucial decisions but rather the garden variety decisions that boards make. The reason is that the entrepreneur wants to limit the number of investors on the board and sometimes doesn't realize that they end up with "back door" investor board members stacked against them. Yeah, for sure. But all too often boards never do that and frankly I think some boards over time sort of forget who the observers are and who the “real” board members are. I'm not that concerned with the crucial decisions but rather the garden variety decisions that boards make. The reason is that the entrepreneur wants to limit the number of investors on the board and sometimes doesn't realize that they end up with “back door” investor board members stacked against them.

]]> By: msuster http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-1482 msuster Fri, 16 Oct 2009 20:35:30 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-1482 Yeah, for sure. But all too often boards never do that and frankly I think some boards over time sort of forget who the observers are and who the "real" board members are. I'm not that concerned with the crucial decisions but rather the garden variety decisions that boards make. The reason is that the entrepreneur wants to limit the number of investors on the board and sometimes doesn't realize that they end up with "back door" investor board members stacked against them. Yeah, for sure. But all too often boards never do that and frankly I think some boards over time sort of forget who the observers are and who the “real” board members are. I'm not that concerned with the crucial decisions but rather the garden variety decisions that boards make. The reason is that the entrepreneur wants to limit the number of investors on the board and sometimes doesn't realize that they end up with “back door” investor board members stacked against them.

]]> By: rafer http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-1481 rafer Fri, 16 Oct 2009 15:41:44 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-1481 I think that's a california passive-aggressive thing. run the darn things like formal meetings and make the observers feel explicitly silly if they voice an actual vote. I think that's a california passive-aggressive thing. run the darn things like formal meetings and make the observers feel explicitly silly if they voice an actual vote.

]]> By: msuster http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-1480 msuster Fri, 16 Oct 2009 15:35:30 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-1480 Yeah, for sure. But all too often boards never do that and frankly I think some boards over time sort of forget who the observers are and who the "real" board members are. I'm not that concerned with the crucial decisions but rather the garden variety decisions that boards make. The reason is that the entrepreneur wants to limit the number of investors on the board and sometimes doesn't realize that they end up with "back door" investor board members stacked against them. Yeah, for sure. But all too often boards never do that and frankly I think some boards over time sort of forget who the observers are and who the “real” board members are. I'm not that concerned with the crucial decisions but rather the garden variety decisions that boards make. The reason is that the entrepreneur wants to limit the number of investors on the board and sometimes doesn't realize that they end up with “back door” investor board members stacked against them.

]]> By: rafer http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-12983 rafer Fri, 16 Oct 2009 13:30:40 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-12983 It's generally within the rules to exclude observers from certain segments of board meetings. Pulling that trigger occasionally tends to keep the situation manageable. It's generally within the rules to exclude observers from certain segments of board meetings. Pulling that trigger occasionally tends to keep the situation manageable.

]]> By: rafer http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-1479 rafer Fri, 16 Oct 2009 08:30:40 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-1479 It's generally within the rules to exclude observers from certain segments of board meetings. Pulling that trigger occasionally tends to keep the situation manageable. It's generally within the rules to exclude observers from certain segments of board meetings. Pulling that trigger occasionally tends to keep the situation manageable.

]]> By: msuster http://www.bothsidesofthetable.com/2009/10/14/when-the-board-of-a-startup-votes-theres-a-problem/comment-page-1/#comment-12987 msuster Fri, 16 Oct 2009 05:23:10 +0000 http://www.bothsidesofthetable.com/?p=1058#comment-12987 I think it can be really productive to have the head of sales lead a pipeline review, the head of marketing talk about the initiatives and the CTO talk about tech issues. But in my experience this works best when they come in for point presentation and don't stay for the whole meeting. I think it can be really productive to have the head of sales lead a pipeline review, the head of marketing talk about the initiatives and the CTO talk about tech issues. But in my experience this works best when they come in for point presentation and don't stay for the whole meeting.

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