Out of Control

Travis Parsons lost his CEO title when he sold to a rival. Now, he's trying to stay on --- and stay relevant.

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Travis Parsons was tired of sitting on the sidelines. He had spent six years dispensing money and management advice as a venture capitalist. Now, he was itching to run a company himself -- not only to prove he could do it, but also to build something that would truly last. "I really wanted to try my hand at it," he says.

He was convinced he had the right idea: an Internet-based software application that would enable clients to coordinate their shipping and delivery activities across multiple warehouses and destinations. And so in late 1999, in a tiny one-room office in Charlotte, N.C., Elogex was born. Within two years, Elogex had a solid product, customers from the top ranks of corporate America, scores of employees, and millions of dollars of venture funding. "We were making progress," Parsons says. "We had momentum."

But he wasn't the only one to notice the company's success. Just three years after Elogex was launched, a Dallas investment group, flush with cash and packed with tech-industry heavy hitters, offered to buy a majority stake in Parsons's company. Parsons couldn't deny that the deal seemed like a smart strategic move; a merged company would be able to get a more robust product to market much quicker. But selling meant surrendering key decision-making power. Was Parsons really ready to climb into the back seat and let another CEO take control?

The deal seemed like a smart strategic move. But was he really ready to let another CEO take control?

After all, the 32-year-old entrepreneur was having the time of his life. In fall 2001, he had scored his first big sales coup when Kroger's, the national grocery chain, signed on for Elogex's software, which allowed it to manage and track shipping and delivery of thousands of products to some 2,500 supermarkets in 32 states. More grocery giants, including Safeway and Publix, soon followed. Every day brought new challenges, and Parsons pretty much forgot what having a personal life was like. Not that he was complaining. "This was his life," says William Donner, Elogex's chief information officer. "He was totally submerged."

By December of 2002, Elogex had seven customers, 100 employees, anticipated revenue of $15 million, and $34 million in venture capital from New York City-based Fenway Partners. Parsons's plans were only growing more ambitious. Specifically, on top of the company's core transportation-management software, he wanted to begin providing inventory tracking and other services that would make Elogex attractive to industries besides supermarkets. He assigned a group of engineers to work on the new, expanded software and began lining up potential customers.

And then everything changed. Early this year, Parsons learned that another start-up was moving forward with a nearly identical concept. And this wasn't just any competitor. It was Greg Brady, former CEO of Dallas-based i2 Technologies, one of the world's leading suppliers of logistics software and a huge name in the industry. Brady had left i2 in 2001 with a mountain of cash from stock-option sales. Now his investment group, Transcend Partners, was poised to invest millions in the new start-up that was challenging Elogex. Even worse, Transcend was talking to one of Elogex's existing competitors about a partnership.

The prospect of going up against somebody with Brady's track record and resources definitely wasn't appealing -- especially since Brady's software was closer to market. So Parsons and his VC backers decided to explore the idea of striking their own deal with Brady. In early February, Parsons put out the call. A week later, he and Brady met at Fenway's Manhattan offices. Right away, it was obvious that Elogex would be able to go further faster with Brady and his team on board. "It was awfully compelling," says Fenway partner Greg Smart.

Brady also wanted a deal. But the terms he laid down -- his fund would take a majority stake in Elogex, and Brady would be CEO, based in Dallas, with his own team of senior managers -- were tough to swallow. Parsons, after all, had only gotten started at Elogex three years earlier. And he had accomplished a lot. While he'd still have a top management and decision-making role, Elogex was definitely going to change, and there was no way of telling what that would ultimately mean. He didn't have much time to think it over. "They wanted to move fast," Parsons says. "We needed to say whether we were interested."

The Decision

In early May, the two sides struck a deal. For an undisclosed amount, Brady's group got 51% of Elogex's stock. Parsons, they agreed, would become Elogex's executive vice president and CFO and retain a seat on the board. He remains one of the company's four largest stockholders. The way he sees it, he's got a piece of a company that's far better equipped to exploit a potentially huge market supplying retailers with software to handle all aspects of getting consumer products to their shelves. Thanks to the merger, Parsons says, Elogex could well become a multibillion-dollar operation. To be part of that, he says, it was worth it to take a less exalted role.

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