Startups and the gray-haired chairman
Having been around entrepreneurs for more than 30 years, I can tell you from firsthand experience that the rules for building a successful startup have changed. The costs of building a product and the time-to-market have been slashed in Internet and App-store times, and the available markets are global, with immediate reach.
At the same time, it’s important to remember that the basic fundamentals of growing and managing a business – having a clear strategy, focusing on value to customers, hiring the right people, raising enough funds in a timely manner, keeping expenses under control, and understanding market dynamics – remain basically the same.
Last year I joined WalkMe, a new startup that guides users step by step to successfully complete their online tasks, as an investor and chairman. Part of my role is to advise Dan Adika, its young CEO and co-founder. At WalkMe I found a company with several potential markets – from large banks and enterprises, to SaaS companies and small retail websites. Each has different needs, different time to market, and different costs. I saw the potential, but also knew the company needed focus.
But before taking on the Chairman position, I prepared a document on the role of a chairman, which I offer below:
1. Sounding board for the CEO -- The chairman serves as a confidant for the young CEO who can discuss with him strategic direction, financing alternatives, and even personal issues. By heeding the advice of the chairman, the CEO/management can avoid mistakes that are directly related to their lack of experience.
2. Opening doors to key customers -- The chairman usually has important contacts at key companies, people who are ready to meet and consider the product and service of the new startup. Because getting first “reference” customers is one of the toughest missions, this contribution can be quite dramatic.
3. Assisting with financing -- Startups are constantly in “fund-raising” mode. A reputable chairman can open the doors to the right VCs, as well as top angel-investors. In addition, the chairman can help the management make the right decision regarding how much money they need, and, no less important – when to start raising it.
4. Providing credibility by association -- A strong chairman (who is usually an investor) brings immediate credibility to a startup. The fact that a senior industry person is tagging his name to the company gives investors and customers some reassurance as to the seriousness of the company.
5. Recruiting key people -- The chairman usually has direct contacts with senior people with whom he has worked in the past and who are ready to work with him in his new enterprise. In addition, the chairman can help by interviewing candidates for senior positions, assisting the company in finding the best people.
6. Cheerleader -- Companies have ups and downs, and in many cases management needs a “cheerleader” to hold their hand in tough times (and kick them in the ass when they’re smug.) The chairman is there by their side, and having seen many ups and downs in his career, he can help the founders cross a crisis.
7. Building the initial infrastructure -- The chairman has, in many cases, contacts with top attorneys and auditors who are ready to help his new enterprise at initially reduced costs. Moreover, the chairman can actually do part of this infrastructure building by himself, freeing the management to build the business.
8. Arbitrator (Peacemaker) -- In many cases, a company’s founders find themselves in conflicting situations, be it regarding the direction of the company, the amount of work each invests, etc. The chairman, as a trusted third-party, can help resolve these issues, as well as settle future issues before they explode.
9. Assisting with strategic contracts -- The chairman was exposed to many contracts in his business career, so he can foresee future contract difficulties before they arise. Though the company’s attorney should protect the management from these pitfalls, there are many business issues that are above the legal backdrop, and are detectable only to the experienced businessman.
10. Backup -- The chairman can hold the helm for a short while, when the CEO is out (for example, sick or injured). The chairman can also replace the CEO if he needs to retire, and hold the helm until a replacement is recruited.
To summarize the role of the “gray-haired” chairman in today’s startup in one sentence: Bridging the gap between Internet era entrepreneurs and the business fundamentals of a successful company.
[Image courtesy wackystuff]