The Pitfalls of Chasing the Rock Star By: Mark Rogers
It’s only normal for start-ups to want to beef up their board of directors or advisory board. The phrase “How do I get to (insert big name person in their industry)?” is all too common, as that person is viewed as the one who will put them “on the map.” I call it “chasing the rock star” and it is one of the most common mistakes that a start-up can make. Of course, what start-up in the technology sector wouldn’t want Eric Schmidt (former CEO and now Chair of Google) to serve on their board? The start-up immediately feels that they are legitimized, and that very well may be the case. But the question remains, at what cost?
Having a big name on your start-up board or advisory board can have significant benefits. In particular, that individual can serve as a catalyst for investors, in addition to the potential of the individual also investing. Professional angel investors and venture capital firms instantly take notice and think, “what does this person see in this venture?” Furthermore, media coverage of the individual’s presence on the board (orchestrated, of course, by the start-up) can be a significant boost to customer acquisition. The start-up, however, has to weigh the risks with the benefits. The failure to undertake such an analysis can be costly.
As with any board recruitment process, a start-up should begin its search with an assessment of the skills-sets, experience and expertise currently involved in the venture. The results of that assessment should serve as the guidepost for the search process. Far too often, a start-up immediately commences the recruitment process by identifying the rock star(s) they want and then trying to determine how they get to them. The chase of the rock star can be a tremendous distraction for the venture and its founders. Unavailable time and resources are spent trying to connect with the individual, all to the detriment of the business. Instead of concentrating on the core of the business and how to realize true value, the founders work themselves into a frenzy on who can get them to the person who actually knows the rock star. Most rock stars don’t want to be found.
Now, move beyond the chase. What if the start-up actually connects with the individual and he/she agrees to serve on the board. If the individual becomes an interested and active participant on the board, and has a valuable role beyond just their name, it is a home run. Unfortunately, in many instances that individual is already stretched too thin with various commitments and cannot participate at the level he/she is expected to. As a result, other members of the board have to pick up the slack and may begin to feel resentment (e.g. “my time is just as valuable as that individual, why is he/she receiving preferential treatment – aren’t we all being compensated the same amount?”).
It is important to note that this problem is not exclusive to the start-up world. Many non-profits and even public companies fall prey to the problems associated with chasing the rock stars. How many times do we hear of the successful philanthropic who serves on five, six or even 10 non-profit boards, along with for-profit boards and their full-time day-job?
Start-ups face so many challenges in creating a valuable enterprise. Chasing the rock star can often be an additional challenge they do not need in reaching this goal.