"You have to be willing to learn all over again, to reinvent yourself," says Cotsakos. "You have to be stupid."
Jerry Useem is an associate editor at Inc.
Searching For The Next Jim Barksdale
By Jerry Useem
Is that charcoal-suited executive sitting across from you the next James Barksdale--Netscape's famous gold charm--or the next gold-plated belly flop?
Plenty of backers of start-up companies would like to know the answer to that one.
For start-ups looking to hire a big-name corporate executive as CEO, Barksdale is the benchmark. After high-profile runs at Federal Express and McCaw Cellular, Barksdale was recruited to run Netscape, which then had an initial public offering that hiked his net worth to $100 million. (Did wonders for a lot of other folks' net worth, too.) Now everybody wants a Barksdale of his or her own, and the rush is on for separating performers like him from pretenders like--well, they're too numerous to mention. (For a list of other defectors, see "Big Fish, Small Ponds," page 54.)
Strategies for divining who's who vary. Joe Schoendorf, a partner at venture-capital fund Accel Partners, talks business strategy with prospective CEOs and then springs the question, "What will you do if you're wrong?" Explains Schoendorf: "I want to put a little fear into the guy so he understands there's no certainty here--that this isn't the same as running another division, that all these things fly close to the sun. I'm looking for somebody who can provide assurance, not someone who needs it."
What did it for Rajendra Singh, one of the founding shareholders who brought AT&T president Alex Mandl to Teligent Corp., was the fact that Mandl had emigrated from Austria as a youth. "He brought all his belongings to this country in a single suitcase," says Singh. "I figured he could live without all the luxuries of a big company." Still others prefer executives from particular corporations. Hewlett-Packard, for instance, is a favorite poaching ground because it's broken down into small business units--not functionally organized, à la IBM--affording early-career managers the chance to run their own "business."
Venture capitalist Bill Unger of Silicon Valley's Mayfield Fund has developed a more complex screen. "What you have to do," he says, "is look for behaviors." To that end, Unger looks for someone who--
1. Has courted failure. "You might look for someone who has literally bet their job. In a large company, most people, if they fail, get reassigned to a new job. That's a key difference with a small company, where there's generally one product between you and bankruptcy. So you look for someone who took on a project so risky that failure would have put him or her out on the street. Or you look for someone who did things without necessarily getting permission."
2. Has hired people who subsequently moved up in the company. "Hiring people is the single most important thing you can do at a start-up. The kind of people you need in technology-based start-ups are in tremendous demand by other companies. You have to be able to show them why they're better off working for you, even if they could earn more money somewhere else. That takes a tremendous amount of selling and positioning on the part of the executive. So we look for somebody who has a record of hiring people who have gone on to be promoted. That's something you can actually quantify."
3. Has already made a successful career transition. "Barksdale was brought to Netscape because he had already proven his ability to adapt. By going from Federal Express to McCaw, he had changed industries entirely."
4. Evinces paranoia. "Often, people aren't paranoid enough. They think that because they do all the right things, everything will work out. So they get a plan, execute it, and feel they've done enough. But it doesn't do much good to double in sales and then find out a year from now that you've been outflanked by all your competition. It's kind of like Star Wars. Yoda says, 'Don't try, do.' Being willing to try is not sufficient."
5. Shows an independent compulsion to work for a small company. "George Balanchine--one of the great choreographers of 20th-century ballet--used to say, 'I don't want people that want to dance. I want people that have to dance.' Persuading people to go to early-stage companies is not my business. It's finding people who know they belong at one. We want people for whom working in a large company is no longer an alternative. If people are compelled to be entrepreneurs, they're not waiting to be recruited; they're getting involved in small companies."
6. Hails from the right functional area. "I've seen a lot of people from finance backgrounds make the transition very well to smaller companies, better than people from any other functional area--engineering, for instance. It's partly because finance people desire cash over everything--it's in their bloodstream. Plus, in small companies you need creative financial transactions."
7. Doesn't come from America's stiffest corporations. "Companies like IBM, EDS, McDonnell Douglas, Boeing--I would still say that very few people out of those companies make the transition successfully."
8. Doesn't mind cleaning toilets. "In a small company--this sounds trite, and everybody in big companies denies it, but-- there is nobody to do anything. Frequently, from executives who don't make a successful transition, we'll hear things like, 'Look, I can focus on the execution of the company, or I can focus on the long-term planning, but I can't do both.' In a small company, that's too ba
