How can we restart our stalled company?

Nov. 1, 1999
My 10-year old company is going nowhere, even though we are a technology leader. How do I find a VP of marketing to make the company fly?
1304qa Chang New

Q: My 10-year old company is going nowhere, even though we are a technology leader. How do I find a VP of marketing to make the company fly?

A: Your situation is not unique in our industry. Let me first answer your question and then broaden the discussion to make it more helpful to other readers as well.

People in positions to make critical decisions can make or sink a company. Therefore it is very important to hire the right person. Most of us have a limited reach in terms of the network of senior people we know, so it is necessary to use a good recruiter to find the optimum person. Yours is a particularly difficult search because it is a turnaround situation, or more accurately, a restart. The challenge is how to get the recruiter excited about your company. Without that you are likely to get stuck with B recruiters and C hires.

You are assuming that hiring a nebulous superstar will solve all the problems, which may be wishful thinking. Undoubtedly a good marketing person worth his or her salt will reposition your company. Still, you have to define the general direction your company can do well in, then you can specify the qualifications of the person who is most likely to succeed. That means you have to define that grand company vision first and sell it to the recruiter. The recruiter can then in turn sell the job to the appropriate candidates. The rigorous approach is to start with a clean slate. Devote quality time to develop a crisp two-page executive summary to use as a selling document. Think of this as a startup with your current business as one of the many variables pertaining to the new direction.

Now let us look at the bigger picture. Our industry is about 40 years old. In the good old days, one could build a successful business based purely on technical strengths, because businesses were mostly "Ph.Ds selling to Ph.Ds." As broader applications were found, businesses became more competitive and faster moving. It now takes a blend of technical skills and business acumen to succeed, and this trend is likely to continue. Buyers are less impressed by the technology inside the box and more on what the box will do to solve a specific problem or to fill a specific need cheaper, faster, and more reliably. Execution becomes key, and that requires business skills. So the company must be prepared for that trend and reflect that in the makeup of its top-management team. A technical CEO must consciously bring in business talents to supplement the team. More often than not, most technical founders really feel more comfortable in the technical realm dealing with facts than the touchy-feely and nitty-gritty challenges of running a company. A change at the top is often necessary to change the company's focus to one of business development. What has worked well, based on my observation, is when the technical founder is willing to step aside, but remains actively involved at the top level. This allows the formulation of an optimum strategy, which usually requires an intricate weave of technology, financing, and execution.

So, in fact there may be a multistep process involved in answering this question. First hire a business-oriented CEO and develop a direction; then hire a marketing VP.

Q: The VC firm that wants to fund my company requires one of their partners to be on my board. They have also invested in competing telecom companies. How do I protect confidential information?

A: Some VC firms will invest in companies competing in the same business space, but it is usually with companies that take different technical approaches. Rarely have I seen the same firm invest in direct competitors. So your concerns may be unfounded. Cross-fertilization without letting out proprietary information can be very helpful to the companies involved. In fact, that is often cited as one of the key reasons why the Silicon Valley works so well.

Legally, directors have fiduciary responsibility to the company. Therefore confidentiality is implied. The VC firm does open itself to legal action or at least awkward questioning if they mishandle this. That's why VC arms of big corporations usually do not serve on any boards—they want to avoid being accused of transferring information to their parent company. One way the VC firms mitigate this conflict-of-interest problem is by not having the same partner serve on the boards of competing companies. This allows the VCs to claim the existence of the "veil" that banking firms use to justify serving competing companies.

It all boils down to trust and personal relationship. You can't work effectively with a director whose allegiance you question. So when in doubt, don't take their money.

About the Author

Milton Chang

MILTON CHANG of Incubic Management was president of Newport and New Focus. He is currently director of mBio Diagnostics and Aurrion; a trustee of Caltech; a member of the SEC Advisory Committee on Small and Emerging Companies; and serves on advisory boards and mentors entrepreneurs. Chang is a Fellow of IEEE, OSA, and LIA. Direct your business, management, and career questions to him at [email protected], and check out his book Toward Entrepreneurship at www.miltonchang.com.

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