Boards of a different breed.

• Author: McKenna, Regis
• Position: Directors of corporations

High technology is the rage of Wall Street. Relatively new companies in computers, software, telecommunications, networking, and biotechnology, most of whom are listed on the over the counter market, are considered higher-risk investments. The nature of a technology business is constant change. National and local media cover the events and happenings of the industry every day much as I remember the news of the auto and steel industry back in the 1950s.

This wasn't always the situation for high tech or, for that matter, other types of entrepreneurial companies. In the 1960s and '70s, virtually no attention was given to companies listed on the OTC market. Since the early '80s, high-growth startups such as Intel, Apple, Genentech, Compaq, Sun Microsystems, Microsoft, Linear Technology, Adobe, Dell, Cisco Systems, Netscape, and a host of others entered the public market, capturing the imagination of investment bankers and investors. Of course, high-tech IPOs are not the only hot companies to excite investors. Companies such as Boston Chicken and Gymboree and other low-tech IPOs have received much attention as well.

In 1994, some 600 companies entered the public market, according to Going Public: The IPO Reporter. A large percentage of these were classified as high technology. My personal experience has largely been in the hightech arena. However, I am sure from discussions with friends in many different business categories that similar observations apply. New public entities, or entrepreneurial-based companies, are unique in many ways.

Early-stage businesses are a different breed than the established Fortune 500 company with 15 or more years of operating and public-life experience. The new high-tech public company faces a daily onslaught of technology, market, and competitive risks that could have rapid and dramatic effects on their success and market value. Yet, public expectations are constantly reinforced by models of outstanding performance, such as Intel and Microsoft. These new companies face unique issues and challenges, not only for their management but for their boards as well.

I truly believe that the character and makeup of a board are different in these early-stage companies. And it often requires a different board to help a company move from the fast-paced entrepreneurial world to a more mature company I have identified a few of the major issues facing the entrepreneurial company because these issues illustrate the kind of insight...