The young startup company may have a great idea, market potential, or hot technology, but that's often not enough to get it over the hump. A strong success buzz on the firm, which can be self-fulfilling, often depends on whom you know.
Silicon Valley tech firms can gain an enormous boost if a name lead investor or venture firm is connected with it, bringing credibility and contacts. But wise board recruitment can also give a startup this winner's sheen -- if you add a "golden director." Ed Merino, honcho at "Office of the Chairman" board recruiters and consultants in California, says that "a marquee name in the boardroom can be tremendously important, like gaining a name lead investor."
However, a high-profile name is not enough if "he doesn't have your company's best interests at heart. He has to really believe in your company and not be just a fair-weather friend." But finding such a big-name believer isn't easy for the striving startup. How can you do the mutual selling needed to land a "golden director" for your boardroom?
- Work your extended network, and consider recruiting help. "Go to a recruiter with a golden Rolodex," says Merino. "They can assess both your company and potential board talent, and suggest people who could really benefit socially and financially."
Tapping a third party extends your reach, and adds a verification buffer that can make both you and the potential boardroom star more comfortable. Don't be afraid to aim high -- shoot for a director who'll elicit a "wow" from investors, clients, and job prospects.
- A golden director will require some selling on your prospects. "This director will ask, 'Why do you want me? Why should I join this board?' They want to add value, but will have to believe that they really can." A star talent for your boardroom will want to be more than a name on your letterhead. "They help you solve problems, and their network becomes your network."
- Don't add someone who's mercenary, but realize that "people do what they perceive to be in their own self-interest" notes Merino. "These talents don't come cheap, and they like to be compensated." Increased use of equity for director pay can make this practical for the young firm -- it increases this director's buy-in, and actually adds to his or her endorsement value with other investors.
- A golden director can help lead you to platinum directors. "As an example out here [in Silicon Valley], buy.com founder Scott Blum initially made connections with [former Pepsi CEO] Donald Kendall -- who happens to be John Scully's father-in-law. That got Scully involved as a director [in July 1998], and it snowballed from there."
Copyright Â© 2000 Ralph Ward's Boardroom INSIDER