The marketing arms race (for board directors)

There’s a bunch of analogies between non-executive directors and venture capital firms. But the most important one is for a long time they’ve both succeeded on a “rich get richer” model.

The ‘rich’ get ‘richer’ in both venture capital and board directorships

Ben Horowitz is a founder of Andreessen Horowitz (US venture capital firm). He’s also broadly recognised as one of the most influential people in technology right now.

In 2015 Horowitz gave an influential lecture at the Stanford Technology Ventures Program. In the lecture Horowitz talks about this idea that for a very long time in venture capital there were five leading firms. And those five firms got richer and richer by the year. Because the more deals they were involved in, the more deals came to them.

Like venture capital, the way you get elected to a board hasn't changed for a long time. A rich get richer effect means the more prestigious boards you currently sit on, the more attractive you are as a candidate

Like venture capital, the way you get elected to a board hasn’t changed for a long time. A rich get richer effect means the more prestigious boards you currently sit on, the more attractive you are as a candidate

The analogy to non-executive directors is pretty clear. For a director, the more prestigious boards you sit on, the more attractive you are as a board member. So the ‘rich’ get richer and secure the most exclusive non-executive director jobs.

That’s all very interesting, not entirely unexpected and completely unhelpful. What is very interesting and helpful is how Andreessen Horowitz broke this model and built the most influential venture firm in less than 5 years.

Andreessen Horowitz broke the rich-get-richer model in venture capital with a marketing ‘arms race’

As a venture firm, Andreessen Horowitz did something that no-one else had ever done in venture capital. They started marketing. And in a market where nobody has ever done marketing, that gets amazing cut through.

This strategy wouldn’t work today, because it’s now the default that every venture capital firm markets as aggressively as Andreessen Horowitz. So the strategy took them to the top of the market, and then closed up behind them.

It was basically the great marketing arms race in venture capital. Hear Ben Horowitz describe what happened at 33:15 of this lecture. 

My analogy to non-executive directors is pretty clear. If you want to get on boards, there’s a real opportunity to get cut through by marketing your opinions, your skills, your thought leadership. Almost nobody is doing this today. This will be hugely effective whilst there’s hardly anyone doing it, moderately effective when a few people start doing it actively, and then will be required ‘price of entry’.

As a non-executive director, you can either choose to lead or follow into the marketing ‘arms race’

As a potential non-executive director, you get to choose if you lead or follow into the marketing arms race. If you lead, you will get disproportionate rewards – in a similar way to Andreessen Horowitz in venture capital.

There is real first mover advantage in play with non-executive director marketing. As more and more NEDs start copying, the likelihood of your opinions standing out decreases. It’s your choice when to start – but have no doubt that In 5 years time all NEDs will be actively marketing what makes them different, unique and expert.