@LARGEExperience wanted
By Scott Kirsner, 12/3/01Tech start-ups used to frolic in the fountain of youth, ascribing their fresh ideas and fast pace to armies of 20-somethings fueled by Jolt cola and plentiful late-night sushi.
Now, fledgling tech companies are singing the praises of Codger Power. They still believe that youthful enthusiasm and cutting-edge ideas are important, but they've realized that having successful, established entrepreneurs on their team could be the key to surviving (and maybe even thriving) in tough times. If the most sought-after recruit of the late 1990s was a recent college graduate with superlative programming skills, today it's the veteran tech entrepreneur who has been there, done that, and bought the T-shirt.
The trend is most evident in the people start-ups pick to serve as directors, investors, and advisers.
Bob Metcalfe, inventor of the Ethernet networking protocol and founder of3Com Corp., serves as a director of three promising local start-ups: Ember Corp., Nanosys, and Narad Networks. He's a technical adviser to a fourth, Avaki Corp., which develops grid computing software.
Nantero, a Woburn company founded earlier this year to develop nanotube-based memory chips, counts Teradyne founder Alex D'Arbeloff as a director and Analog Devices founder Ray Stata as an investor.
Sycamore Networks founder Desh Deshpande is a director of three companies pushing the technological limits: Airvana, a maker of 3G wireless equipment; Webdialogs, which makes technology for online meetings; and A123Systems, a stealthy company being started by Ric Fulop and Yet-Ming Chiang of MIT to create new portable power sources that could one day supplant batteries.
Enlisting graybeards as allies isn't an entirely new phenomenon for technology companies. But the guidance that experienced entrepreneurs can offer and the connections they can help make are more important now than ever, and many people say that intergenerational alliances are being forged on a scale that's unprecedented.
"There are many more experienced people around in IT because the industry is so much bigger than it was 20 years ago," says Metcalfe, now a venture partner with Polaris Ventures in Waltham.
"Companies have been through the mill, and out pop all these codgers. It's probably good, because it supplies intellectual capital that's necessary for the innovation process."
Deshpande, chairman of Sycamore Networks in Chelmsford, says that when he was starting his first company, there were "only about five" top-notch technology entrepreneurs, among them Ken Olsen of Digital Equipment, Bill Foster of Stratus Computer, Stata, D'Arbeloff, and Bill Poduska of Apollo Computer and Prime Computer. "I could probably name about 50 people now," Deshpande says.
Deshpande considered it impossible to get a seasoned veteran involved with his first start-up, Coral Network Corp.
"I would go [to see people like Olsen speak and] sit in the back and listen. But that was as close
as you could get to them," he
says.
Connections between established entrepreneurs and the next generation of company-builders seems to benefit both sides.
"[Stata and D'Arbeloff] have the knowledge of the industry, and they understand the day-to-day realities of getting a product made and sold," says Greg Schmergel, chief executive of Nantero. "They can help us figure out where to allocate our resources. We raised $6 million, which is a lot of money, but it's not infinite."
Nantero is trying to create a new kind of memory based on carbon nanotubes that would consume less power than existing forms of computer memory, would be able to squeeze more memory into a given space, and would also retain your data even when the power was turned off.
Like Nantero, A123 Systems is facing a year or more of research before the company will have a working prototype. Having Deshpande involved lent the company credibility as it talked to potential investors and customers about its concept of a power source that would have a much longer life cycle than current batteries and be capable of near-instant recharging.
At StorageNetworks, a three-year-old public company based in Waltham that has recently suffered from a sagging stock price and analyst downgrades, chief executive Peter Bell says he still appreciates having a number of seasoned hands on his board.
"They don't get fazed when the economy's tough, and the challenges are different," Bell says. "I wanted people on my board who had actually seen things before, rather than just read the book."
Among those Bell cites as especially helpful are Roger Marino, a StorageNetworks director who cofounded EMC Corp.; Sigma Partners' Bob Davoli, founder of SQL Solutions and former CEO of Epoch Systems; and Steve Gaal, an early Data General employee and longtime venture capitalist with TA Associates(and one of the few people mentioned in this column who actually has a gray beard).
Some companies require more input than others, Metcalfe says.
"There are some board meetings where I just raise my hand and approve the minutes and go home," he says.
But at other companies, "the people have very little experience in starting and growing a company, and even the simplest things I know about strategy, or sales, or organization charts, are useful to them."
What do the codgers get out of the arrangement, other than a tidy payoff if the company succeeds?
"Entrepreneurs thrive on creativity," Deshpande says. "It's always an immense pleasure when you start with a clean sheet of paper, and a twinkle in somebody's eye, and you can create a business that changes the way things are in the world."
Alex D'Arbeloff, founder of Teradyne and now chairman of the board at MIT, says that helping out an early-stage start-up is "a way to see what's really going on in the world" with regard to new technologies. And, he adds: "If a thing succeeds, somehow you've helped mentor the next generation."
There is potential for conflict, though, when battle-tested entrepreneurs team up with relative rookies.
"If you have too many [entrepreneurial veterans] involved, they waste your time fighting with each other," Metcalfe says. "A little diversity of opinion is helpful, but you can overdo it."
Close partnerships between old-school and new-school entrepreneurs could help young companies gain momentum, even in a slower time. And they seem likely to yield a healthier crop of tech start-ups in Massachusetts.
"Do you really want to rediscover everything from first principles?" Metcalfe asks, rhetorically.
Pioneering a new kind of technology, says Greg Schmergel, is a big enough job.
"We don't want to try to do too much," he says. "There are people like Ray [Stata] and Alex [D'Arbeloff] who are already experts in manufacturing and distribution. We want to do one big breakthrough, then leverage their expertise."
Codgers, we salute you.
Scott Kirsner is a contributing editor at Wired and Fast Company magazines.