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Michael M. Carter
Managing Director
The Musser Group

Editor's note: Each month, we ask a Directors & Boards reader to comment on critical issues facing directors today. If you'd like to participate in this section in the future, please email Scott Chase.

What is your opinion of the importance of boards in emerging growth companies?

Boards of directors can be even more important for emerging growth companies than for their traditional later stage counterparts. In emerging growth companies, the board can work with the entrepreneur to help set the strategic direction for the company and really establish that company’s business DNA. I’m not talking about establishing technology, product or service strategy, but the business growth and exit strategy. A lot of entrepreneurs fail to plan for these factors, and they are ultimately critical to a business’s success.

A proper emerging growth board helps the CEO and entrepreneur set proper milestones: hire executive management; find M&A candidates; land large deals; set the business growth roadmap. Compliance matters are crucial, but less complex at the earlier stages of an enterprise.

How is governing them different from larger more established companies?

Governance of an emerging growth company is less about compliance and more about business, finance and strategy. Governance in many ways means ensuring proper information flow occurs at all levels and creating an environment of openness to enable this growth. Governance in my mind means playing "offense" and helping to challenge the company to meet new heights. Compliance to me means "defense" and following procedure. Emerging growth companies need to play offense to grow.

Does SOX play a role in even smaller, more emerging growth companies?

I am reminded of the quote someone once said – that SOX was the greatest single dividend ever paid to the accounting profession. But the truth is SOX helps hardwire in many solid business practices that will help a company of any size ensure certain "controls" over the business and operations. Having a proper accounting firm in at the earliest stages of a company helps emerging growth companies by establishing a solid foundation to build upon.

Tell us about Web 2.0 companies and why there has been such a mass proliferation of them.

Web 2.0 companies are the companies we thought we invested in or created in 1999. These are essentially "Mash-up" websites, which are websites that combine multiple sources of data into one tool; they were nonexistent in the early days of the internet but are everywhere today. Part of the proliferation of Web 2.0 sites is due to new technologies, new integration capabilities and new broadband access. Users now can do everything on one site that used to require users to visit multiple sites to accomplish.

Today users expect multi-functionality: Better content; collaboration; email; calendaring; social networking; and business intelligence capabilities can all be in one site. Web 2.0 is a moniker that a great entrepreneur out West coined to capture this phenomenon.

So, you started a Web 2.0 company called DirectorForce based on the needs you saw as an entrepreneur and investor. Recently, you also helped incubate and launch the Web 2.0 site CollegeFanz.com, a website dedicated to college sports fans. What makes these sites unique and what role does the board play in these ventures?

DirectorForce offers a secure online workspace for board members, enabling them to work collaboratively without having to be in the same room. I started DirectorForce as a service to other entrepreneurs more than anything else. I figured there is a category of software for every corporate user group except for the most important one - the board. Additionally, I’ve had a lot of experience on boards, and the good ones always had one common theme: the information flow was fluid, collaborative, and consistent.

DirectorForce is a tool that helps CEOs ensure proper information flow and 360 degree knowledge of the business metrics to ensure that everyone is on the same page

We are excited about College Fanz. College Fanz is a Web 2.0 site geared toward college sports fans that was founded by Bill Rasmussen, the founder of ESPN. I am proud to say they are a DirectorForce client!

What are the biggest things you think young entrepreneurs can do to ensure they get the most of their board and their board gets the most out of them?

Pick the right ones and don't be afraid to have them challenge you. If your DNA is "Marketing or Sales" based, find a financial guru to add to your board. As a young company, your board may be composed of professional investors if you received venture or private equity money. In these instances, make sure for every one of those members, you bring in an independent industry CEO or fellow entrepreneur to add the right balance of expertise to your board mix.

Also, it is important early on to create a Business Roadmap and a Business Dashboard (paper- or web-based) that you and your board agree to track together at every board meeting. This dashboard should contain key business performance and risk indicators that you track. Remember: You are all in it together and these tools can help you create a culture of collaboration that will help the business succeed down the road.

Michael M. Carter is managing director of The Musser Group, where he works with entrepreneurs to help finance, structure, and build growth companies. Mike is a former software and IT Services entrepreneur and executive. Mike is founder and former CEO of Dashboard Systems, sold to Cisco Systems. Prior to founding Dashboard Systems, Mike founded and was CEO of Ajunto, the first online marketplace for the IT Industry and now part of Web Services software leader SOA Software, where Mike served as chief sales and marketing officer following the acquisition in 2001. Carter was chief marketing and business development officer for US Interactive and helped take the company public as the youngest executive officer of any Safeguard Scientifics funded public company.

Carter began his career in client-server technology with Cambridge Technology Partners working in a variety of leadership roles in consulting, business development, and marketing. Carter holds a B.S. and M.S. from Saint Joseph's University. Mike serves on various boards including the Board of Visitors for the Moorestown Friends School; the board of The Musser Foundation; the board of the Innovations Committee for The United Way of Pennsylvania; and on the Philadelphia Library technology board. Additionally Mike serves as Co-Chairman and founder of DirectorForce, a leading OnDemand Software company for directors and boards, and board member for D&O Direct and College Fanz, Inc.