More Evidence That EACH Board Seat MATTERS


Board Seats MatterWould you turn down an offer in excess of $19 Billion from Google CEO Larry Page to buy your startup business? According to the 02/21/14 article (Williams) in The Guardian, that’s exactly what WhatsApp, Inc. co-founders Brian Acton and Jan Koum did. Most people are guessing that Google wanted to keep WhatsApp away from Mark Zuckerberg and Facebook. So why did Acton and Koum turn down the larger offer? Koum wasn’t offered a seat on the Google Board. WhatsApp will now be added to Facebook’s portfolio and apparently Koum will serve on their Board.

You and I may not be co-founders of an innovative mobile messaging startup or CEOs of huge corporations, but we can learn from this transaction.

From the Viewpoint of the Buyer

  • Keeping a game changing technology out of the hands a primary competitor is worth a great deal of money, but compromising board effectiveness is a very high price to pay.
  • Just because a technology-focused person has developed one highly relevant product does not mean that he/she can ever repeat that accomplishment. Not every geek is a Thomas Edison, Albert Einstein, Benjamin Franklin or Leonardo da Vinci.
  • Just because a person can develop a product does not mean that he/she has the knowledge, analytical mind, experience, contacts and skills needed for successful board service.
  • The composition of a corporation’s board of directors involves an integrated process regarding strategic direction, recruitment of complementary skills, fiduciary responsibility, etc. An individual who assumes that he/she deserves to be a board member just because he/she developed one product is probably too self-serving to be an effective board member focused on building shareholder value.
  • The corporation may make decisions about the newly acquired product that the founder/previous owner might not like. The last thing the corporate CEO needs is an inappropriate, disruptive, divisive episode about a single product played out at the board level.

From the Viewpoint of the Seller

  • Above a certain amount of money (which differs from person to person) other factors are more important than more money.
  • Creative people believe that they have more than one innovation in them. They seek situations that encourage continued creativity and influence.
  • Access to the information shared within a powerful corporate board keeps a creative person relevant, excited and involved. That’s priceless.
  • So many corporations are dominated by their Chairman/CEO. Another board member wouldn’t represent any threat to the status quo.

My guess is that Jan Koum is bright and creative, but he lacks training and experience about the responsibilities of corporate board members. Perhaps he has served on the board of a small privately held company where board members were essentially viewed as advisors.

About Aldonna Ambler:
Known as The Growth Strategist®, Aldonna Ambler built and grew a suite of companies to help midsized B2B companies achieve accelerated growth with sustained profitability® A Certified Speaking Professional (CSP), Ambler has addressed over 2000 audiences and hosted a syndicated online talk show about growth strategies for 9 years. As a growth financing intermediary, Ambler raised over $1 Bil dollars for midsized companies. The winner of over 2 dozen prestigious national and statewide "entrepreneur of the year" awards, Ambler is available to speak about “profitable growth during any economy” and/or serve on the board of a growth-oriented privately-held company.

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