The call of the wild - CEOs leave established companies to join upstarts - Nightmares - Technology and the CEO: Nightmares, Daydreams, Solutions

Chief Executive, The,  Feb 15, 1998  by Keith Ferrell

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Mere mortals dream of trading the rat race for an inn in Vermont. Many big-time chief executives nurture a different dream - trading the global giant for a rambunctious upstart. Particularly if the upstart's got technology in its business plan.

Back in October 1996, Joe Nacchio, then 47, was avidly climbing the ladder to the top of AT&T. After 26 years with the telecommunications behemoth, he was running the company's consumer business and was widely considered to be no more than a step or two from the corner office. But then, his boss, Robert Allen, the company's CEO, picked John Walter, chairman and chief executive of publishing giant R.R. Donnelley, as his successor, effectively pushing Nacchio further from his own goal. Angrily, Nacchio spoke up, publicly criticizing Allen's choice. Walter struck back, muzzling Nacchio and banishing him to a hinterland position. By December, wags assumed Nacchio's days with AT&T were numbered. They were right. Three days after Walter announced Nacchio's reassignment, Nacchio resigned, heading west for a bigger - if smaller - opportunity.

As far as Nacchio is concerned, getting out of giant AT&T might have been the best thing that ever happened to him. Less than two years later, this Brooklyn-born Denver cowboy is not only back in the saddle, he's galloping through the telecommunications industry, taking Qwest, the Colorado-based fiberoptics provider, from being a $700 million construction company to a $3 billion network service provider, and discovering that, for him at least, smaller is better.

James E. Cannavino would clearly agree. Cannavino, 53, is currently chairman and chief executive of CyberSafe Corp., a tiny $10 million Seattle-based company engaged in electronic transaction security issues and technologies. But executive career watchers remember Cannavino's more than three decades at IBM where, among other positions, he served as senior vice president for strategy and development. And later, they remember his rise from chief operating officer to CEO of Perot Systems Corp.

And don't forget Alex Mandl, 53, who traded a direct shot (even closer than Nacchio's) at Bob Allen's AT&T job in 1996 to launch Teligent, a northern Virginia-based telecommunications company, whose ace in the hand is "fixed wireless" technology. Or Jack Scanlon, 56, who, just this spring, abandoned Motorola, where he was slated to run the company's $14 billion industrial division, to be chief executive of Global Crossing, a start-up specializing in undersea fiber-optic telecommunications systems. Or J.B. Holston III, 39, who left the presidency of Ziff-Davis's International Media Group to produce educational software for NetSage. Or Christos Cotsakos, 49, who switched off ACNielsen, where he was co-CEO, to run E*Trade, a $23 million on-line investing service. Or Judith Hamilton, 53, who left 600 employees and a co-CEO position at top research firm Dataquest to join FirstFloor Software, a 35-employee Web-based document delivery service. Or, not so very long ago, John Sculley, 58, who migrated from the rolling hills of Purchase, NY, to Silicon Valley, where, with Pepsi behind him, he took a bite out of Apple Computer.

Increasingly, these executives are not alone. More and more job-change columns seem to be filled with the names of large-corporation movers and shakers - CEOs and their heirs apparent - who are hearing, and heeding, the siren call of small computer and telecommunications companies, leaving the rewards and challenges of biggest business to seek the challenges and potential rewards of building something big out of something small.

A trend? Not yet, says James Copeland, managing partner of Deloitte & Touche and a longtime executive observer. "But it's definitely a blip on the radar."

It's not hard to see why. The media are filled with stories of vast fortunes made overnight when a technology company takes off. Of techno-wonders pouring from labs and programming desks, in need only of the right CEO to set them on the path to global greatness. The Internet, itself an all-but-overnight success story, is filled with corporate sites extolling their hosts as the next big thing.

For the executive who's risen high within a well-established corporation, the call of the small high-tech company can be quite alluring, and not just for the potential financial gain. Indeed, as Copeland points out, financial rewards should not rank high on the executive's dream list. Given that the small company's compensation potential can rarely - in the short run at least - compare to the guaranteed and sizable package provided by the large corporations, "there needs to be something more compelling," he says. And, many executives agree, there certainly is. If you're up to and ready for the challenge.

WILD DUCKS FLY FREE

If you can run a big company, some believe, you can have a lot of fun, without a lot of the headaches, running a smaller one. You've proven yourself in the intrapreneurial corporate arena; what's to stop you from succeeding in the more entrepreneurial world of high-tech start-ups and growth companies?