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What's corp governance?
What controls drive execs do the "right" thing?
The professionals will talk about process and structure. Governing docs, Board composition, committees, benchmarks, etc.
Check
the box nonsense
In practice, it's people. It's relationships. 1/n
What controls drive execs do the "right" thing?
The professionals will talk about process and structure. Governing docs, Board composition, committees, benchmarks, etc.
Check
the box nonsense In practice, it's people. It's relationships. 1/n
This is especially true in tech where founders have near absolute power (esp via dual class shares).
Corp governance is people.
Sometimes corp governance is literally one person.
"Adult supervision" is the running joke but there's some truth to it.
Corp governance is people.
Sometimes corp governance is literally one person.
"Adult supervision" is the running joke but there's some truth to it.
Remember founders have near absolute power.
Which means they control who get rich.
Which means they are surrounded by "yes people" and agendas.
This leads to some awful outcomes as people feed & encourage the founder's worst habits. It's easy. Manage up via dopamine flood!
Which means they control who get rich.
Which means they are surrounded by "yes people" and agendas.
This leads to some awful outcomes as people feed & encourage the founder's worst habits. It's easy. Manage up via dopamine flood!
Instead of Boards and execs serving as a guide to harness greatness, agendas dilute decisions and founders end up in extraordinarily awful situations (whether they realize it or not).
So how do founders avoid this?
They need at least one person to "call it as it is".
So how do founders avoid this?
They need at least one person to "call it as it is".
Easier said than done.
No likes being told they're the emperor w/ no clothes on.
And those best equipped to deliver that news have valid concern/fear about speaking the truth...
..."yes people" are excellent at burying dissenters.
But founders need someone they trust.
No likes being told they're the emperor w/ no clothes on.
And those best equipped to deliver that news have valid concern/fear about speaking the truth...
..."yes people" are excellent at burying dissenters.
But founders need someone they trust.
What does this trust and "one person" governance look like in practice?
You won't find many public examples, but you'll hear & see echoes of it.
There's a reason someone like Bill Campbell is continuously brought up as a person who played an essential role in a key decision.
You won't find many public examples, but you'll hear & see echoes of it.
There's a reason someone like Bill Campbell is continuously brought up as a person who played an essential role in a key decision.
A great story about "one person governance" is Ben Horowitz's Why I Did Not Go To Jail.
He tells the story about avoiding jail because his GC pushed back on options backdating.
Don't forget backdating was once considered "compliant with the law". https://a16z.com/2014/02/06/why-i-did-not-go-to-jail/
He tells the story about avoiding jail because his GC pushed back on options backdating.
Don't forget backdating was once considered "compliant with the law". https://a16z.com/2014/02/06/why-i-did-not-go-to-jail/
Think about that for a moment...
Options backdating was once:
1. Broadly adopted
2. Considered necessary to be competitive
3. Designed by outside counsel
4. Approved by auditors
5. Considered legal
It took someone with common sense and the CEO's trust to push back.
Options backdating was once:
1. Broadly adopted
2. Considered necessary to be competitive
3. Designed by outside counsel
4. Approved by auditors
5. Considered legal
It took someone with common sense and the CEO's trust to push back.
Now this is not to say founders need someone to tell them what to do. (Not that they would 100% listen anyway lol)
Founders need to make decisions "their way" but they need someone they can trust:
1. To push back
2. Is honest
3. Has their best interests in mind
Founders need to make decisions "their way" but they need someone they can trust:
1. To push back
2. Is honest
3. Has their best interests in mind
[This is where I announce my founder friendly, one man governance VC fund...kidding]
Corporate governance is relationships. It's people who will tell the truth when they have little or no incentive to do so.
It's never too late. Start with one person & build from there.
(fin)
Corporate governance is relationships. It's people who will tell the truth when they have little or no incentive to do so.
It's never too late. Start with one person & build from there.
(fin)
