In an era where corporate ethics are bottoming out and star CEOs are running amuck, do Indian startups need a board of directors since the start of their businesses to get guidance on critical matters? In all probability, we will nod our heads in unison.
But just having a few individuals, who might or might not relate to your company’s vision to navigate your business in a right direction, is not what the board does; corporate governance or the right practices to run a company starts from the promoters, believes Sanjeev Bikhchandani, Founder, and Executive Vice Chairman, Info Edge.
Bikhchandani was speaking at India Internet Day 2017 with Sanjeev Aggarwal, MD, Helion Ventures at an event organized by TiE Delhi NCR.
On being asked what should be the role of ‘board’ for a startup who are planning to scale profitably and sustainably, Bikchandani said, “The primary responsibility is that of an entrepreneur; the board is for oversight and nudging promoters to move towards the right direction. It is an entrepreneur who is sailing the ship.”
“Corporate governance, as we say, lies in the promoter’s head. If the promoter is right and knows the business fundamental and plans right, the company will be well-governed. There have been cases where the best of the best boards fail to perform because the entrepreneur is not sure of the company and its best practices. Therefore, it flows from entrepreneur to board and not the other way round,” he added.
Bikhchandani was also of the view that new-economy companies should invest in right people at the helm – one who has the capabilities and desire to do something better for the company- rather than aiming to reflect big names on their boards.
“Startups should focus on hiring people who are full time with them rather than having big names on their boards. Hire CEOs and CFOs who can relate to the company’s vision and give his/her time to the organization’s success and growth. In the long run, it will be the promoters who will be the real glue for all stakeholders- customers, merchants, et all and not investors,” he said.
Agreeing with Bikhchandani, Aggarwal said, “There should be no board members till the product is established in the market. Bring a board in an acceleration stage. But if their motive to join the business is to earn money or fulfill their own entrepreneurial dream then they are not the right people. An apt board member will join you for his passion for the field.”
Both Aggarwal and Bikchandani concluded with a view that while boards can make the sail smoother for an entrepreneur, the motive should be to grow your business from the customer’s money.
“The customer’s money is always better than the investor’s money. When founders have the luxury of living with investor’s money, they stop working hard to earn consumer’s trust and thereby money. Former can get you latter but no guarantee on the other way around,” concluded Bikchandani.