31. Board of Directors


You are hired (or at least not fired)…

In a traditional corporation (but not necessarily in the case of every LLC), there must be a board of directors. When the company was just you or you and some co-founders, the board might have been just you or your co-founders, too. However, starting with any significant investment, the board likely needs to be formally organized, with real board meetings, minutes, and a seat for the investors.

Corporate law (in most locations) specifies the responsibilities of a board of directors. They are legally obligated to make decisions that are in the best interest of the company and its shareholders. I often simplify this to: employees work for management, management works for the board, and the board works for the owners.

This sometimes gets a bit circular in startups, where a founder can be owner, board member, and employee. Or in companies that provide stock options to employees, who are then owners and employees. In any case, the board as a whole makes decisions that will affect you, as an employee and founder, even if you are the majority shareholder and a board member.

At VC-funded startups, the norm is for the board of directors to meet monthly for the first year or two, and then every six weeks thereafter. That may seem often and, if you are organizing such meetings, feel very often. This quick pace is due to the desire to grow VC companies as quickly as possible and make changes to the plan on a monthly basis. You may have to make changes only a few times per year, and, thus, not every board meeting is crucial. But if you have regular board meetings, then, as decisions need to be made, you can be sure that no board meeting is more than a few weeks away.

Angel-funded startups are different. They can vary from having no formal board meetings to the same cadence and formality as venture-backed companies.


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