Execs gives up the security of a big company

The end of life as they knew it

By Constance Loizos


Peter Caswell had spent a decade at Advent Software, a publicly traded company in San Francisco that employed about 1,000 people.

He'd gone from managing the marketing and sales department to running the whole show, but he and Advent's board of directors were moving in different directions, and he'd begun to feel like he didn't have enough control over his own destiny.

Then he got a call from a recruiter. How would Caswell like to head up a promising start-up? Other recruiters had called before, but on that day in 2003, looking around Advent's offices in the city's hip South of Market district, Caswell decided, “This isn't fun anymore.'' He said yes.

Two start-ups later, Caswell has no regrets. “I love growth companies. You see the decisions you make with your team take impact within a month or two, and that's very cool.''

Caswell is among a steady stream of executives who jump from the big to the small pond. They leave behind the power, security and resources of big corporations to lead a start-up, where they get the satisfaction of being the ultimate boss and making an impact throughout the business. What they come unprepared for are the long hours, the all-consuming demands and the realization that in the start-up world, they still have little control over their own destinies.

Today, Caswell, CEO of Siperian, a software analytics company in San Mateo, wakes at 5:30, spends 12 hours a day at the office, and fights to keep his Saturdays free. And while he may be able to implement change more quickly than at Advent, he admits to feeling “less in control'' of his life than ever because of the endless demands on a start-up CEO.

Joe Kennedy, who joined the free online music service Pandora in 2004, is also working his hardest, which means struggling to spend time with his two young children. Unlike during his five years as an executive at automaker Saturn, he said that “I probably won't take another vacation until I leave Pandora,'' which employs 75 people, far less than the 1,200 he oversaw at Saturn. Added Kennedy, “Start-ups are probably better suited to people in their 20s, without kids.''

Jon Holman, the San Francisco recruiter who persuaded Caswell to join the start-up world, says executives who leap to small companies are usually in for a bit of an eye-opener. “Most big company executives think running a start-up sounds easy,'' said Holman. “After managing hundreds of employees, if not thousands, the idea of having a 50-person staff sounds like a walk in the park. Then they discover how hard it is.''

So why do these executives, typically much better paid by their blue-chip companies with more job security, take such jobs? After all, unlike in the go-go '90s, when hundreds of start-ups went public and made their management teams rich overnight, the reward no longer seems to outweigh the risk.

Holman said the biggest factor is personality. Executives unable or unwilling to navigate the in-house politics of a big enterprise often conclude that they themselves should be boss.

Dell Larcen, a Los Altos-based consultant who works with venture capitalists and start-up CEOs — she conducts personality assessments and helps mediate conflicts — said the ability to shape a company's product and its employees also remain big motivations for dissatisfied executives.

“You can literally reach out to your employees and directly put your imprint on what is being worked on,'' she said. `It's very appealing to some people.''

People still believe in the big potential payoff at start-ups, too, despite how few and far between those have become. In 1999, 250 technology companies went public, according to industry tracker VentureOne; last year, 56 did. That doesn't dissuade the optimistic, most of whom now focus on finding a buyer.

Still, many new start-up CEOs encounter a number of unhappy surprises, including how closely they must work with their venture capital backers, who often sit on the start-ups' boards. Ben Golub left his post as marketing head of publicly traded Verisign two years ago to become the CEO of Plaxo, a content management software start-up in Mountain View. Though he says he loves the job and admires Plaxo's backers, he has also realized that “I traded one boss for 60 bosses — my board and my 50 employees.''

Funding tends to require more attention than many executives expect. Though Golub has been involved in just one of Plaxo's five rounds of venture capital — the company has so far raised $20 million from VCs — that fundraising “took up about 80 percent of my time for three months.'' The other things he needed to be doing didn't go away.

Forget about perks, too. Golub, already making half of what he was paid at Verisign, used to take direct flights on United Airlines, sometimes in business class. Today, he books connecting flights on discount carriers and stays at Motel 6 when meeting with potential customers.

But the biggest surprise — and the most challenging — is how different the roles really are. Caswell learned this lesson at his first start-up, where he didn't last long. “I needed to resurface some of the [skills] that you bury in the early stages of your career, and bringing them back is harder than you might anticipate.''

While much of what they encounter comes as a shock, the executives who take the plunge to a start-up do gain the ability to make a big impact. Said Kennedy, “I can try and change the game rather than focus on eking out a few more percent growth this year over last.''

The learning experience is unrivaled, too. “There are so many things that you take for granted at a large company that you have to build at a small company,'' said Golub. “It's humbling.''

The ability to influence a product also appears to be addictive. “I could never go back to a big company,'' said Kennedy. “There's nothing better than envisioning something, creating it, and having consumers embrace it.''

Indeed, to make it in the start-up world, it's largely a matter of understanding the trade-offs. “Thinking you're going to be your own boss is a mistake,'' said Caswell. “Thinking you can change business — that's the buzz.'

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