December 03, 2008, 12:07 PM — Remember the late '90s, when tech managers left corporate IT in droves join Internet start-ups? Some people got rich, and others got burned, but everyone agreed -- working for a start-up is a unique experience.
Flash forward a decade: In today's economic climate, few start-ups are actually starting up. But companies that did manage to launch in the past couple of years still need IT managers. And tech professionals -- particularly those who've already been laid off or are in shaky positions -- still need jobs.
Thus, a whole new class of technology leaders might find themselves for the first time seriously contemplating employment at a start-up.
If you're in that group, get ready for an exhilarating -- if bumpy -- ride, say four IT managers who have made the jump from corporate IT to a start-up.
The managers we interviewed warn that you'll have to leave behind some benefits of the corporate world you may not have fully appreciated: predictability, proven procedures, vendors willing and waiting to talk with you, and the knowledge that the company you're working for will still be there when you wake up in the morning.
Even so, for every start-up negative, these veterans say, there's a matching benefit: You'll be working more, but you'll be more invested in your company's success . Procedures may be haphazard or nonexistent, but decisions will be made quickly. Top management may be inexperienced but more likely to give you free rein over IT. That free rein, however, will nearly always be held in check by money concerns.
Corporate IT people who switch to start-up life can expect "more chaos and dysfunction," says Peter Sharer, a corporate IT veteran who's made the start-up move not once, but twice -- moving first from a 14-year stint in software development at NASA to Oblix Inc. , a small personal-identity software firm later bought by Oracle Corp. , before eventually taking his current position as CEO at Agilewaves , a Menlo Park, Calif.-based firm that helps companies monitor energy and water expenditures for high-performance buildings.
"Start-ups often don't have defined processes, which can mean a lot of wasted effort and energy," Sharer points out. "But the positive is that because you're in a small company, you can make decisions more quickly. And you work harder. I've never worked so hard in my life."
If that hard work sounds like something you'd be willing to consider, read what our survivors say to expect at a start-up:
You'll be starting from scratch
"From an IT perspective, being at a start-up is a lot more interesting," says John Wegis, who worked at Sun Microsystems Inc. and Ziff Davis Media Inc. before taking a position as chief technology officer in 2007 at What They Like Inc. , a San Francisco start-up geared to helping parents evaluate video games and other child-targeted entertainment. "There are no legacy issues to deal with. There is an opportunity to evaluate new technologies and solutions."
David Street, who left Compaq for a start-up in 1999, concurs. "You get to implement the technology you want -- the latest hardware, your choice of software standards. You pick all of your own tools without having to worrying about a bunch of data being locked up in an incompatible legacy database," says Street, who was chief operating officer and head of IT at now-defunct network computer maker The NIC Co. (which -- full disclosure -- was co-founded by this reporter).
Launching IT from scratch "isn't really very hard if you have enough money to hire a company to do the work," says Street, who now runs the online store Protrumpets.com . "We set the specs, picked the equipment and software, and they set it up as we directed."
It's not always that easy, he acknowledges. "At a big corporation, there are often a lot of resources available for IT, particularly for primary initiatives," Street says. "At a start-up, usually not."
It'll all be up to you
"At a start-up, the huge plus is that you are responsible for what you are developing. The minus is that you are responsible for what you are developing," quips Thomas Cramer, a senior software engineer at BeliefNetworks Inc. , a Charleston, S.C.-based company that helps companies predict and analyze risk. "Everything that is developed or doesn't get developed is squarely on the developers' shoulders."
Though Cramer says he occasionally finds himself missing the days when his work was largely scheduled in advance -- he previously worked in the IT department at the Medical University of South Carolina (MUSC) -- he likes the do-it-now atmosphere of a start-up.
"It is great to have a brilliant idea in the morning and have it implemented that evening without having to have it run up a flagpole and take a week before approval or finances or personnel can be allocated," Cramer says.
He's been most surprised, he says, by how few people it takes to develop a system. Looking back, he now wonders "how the larger software-development companies get anything developed without being totally incapacitated by everyone stepping on one another."
Appealing as they are, brilliant ideas and fast-paced programming often take a backseat to more mundane concerns at a start-up. "The day-to-day maintenance can be problematic," warns Street. "At first you won't be able to justify a full-time support tech, so every time you need to set up a new account or reset a password, someone has to take time from their real job to handle it."
Wegis says he is all too familiar with that scenario. At Ziff Davis Media and at Sun, employees with a tech problem "had to file a ticket and wait for someone to come to their desk. There were big processes in place," he recalls. "But the way it is now is, someone says, 'Hey, John, I have a problem.'"
Still, Wegis says he tries to see it all as positive. "Every day is different. Some days I do peer development, or some days it's [quality assurance]. Some days it's administrating servers, or I'm getting hit with IT problems or setting up new computers," he says. "I have less time, but I'm definitely more laser-focused at work."
Start-up expert Melissa Chang, who is president of Pure Incubation LLC in Beverly, Mass., says wearing many hats is par for the course at most start-ups. "The change in mentality is huge [between] an established company and a start-up," she says.
"In a big company, it is much more accepted for an IT person to say, 'I can't' to a request, and have a reason for it. But in a start-up, the mentality of every person, including the IT person, has to be, 'Yes, we can make this happen.'"
Organizational structure will be minimal
While you work to start up an IT department, the rest of your new company will also be in gear-up mode, which can make for an interesting work environment, start-up veterans say.
"The most surprising thing might be that the leadership is not as strong as you suspect. There's a certain amount of flailing and floundering," says Sharer.
Take a job at an existing enterprise, and you will probably be asked to focus on only a handful of tasks, says Street. "You're likely to be able to start doing your primary job almost immediately." In a start-up, he says, you could be asked to help out with any or all of the following: corporate concerns like tax IDs, licenses and insurance; human resource responsibilities; physical plant concerns, including telephony; sales and marketing; or management and accounting.
Even if you're not recruited to help in any of those areas, say Street and others, you should be prepared to work in an environment where only some, or none, of those departments are fully up and running.
Money will matter
Baldly stated, when it comes to start-up capitalization, you want to ensure that your new company has enough money to pay you and to adequately fund an IT operation, to say nothing of financing its line of business.
Street advises that IT people clearly understand the finances behind a start-up before they sign on. "To me, the single most important thing to determine about a start-up is whether investors are willing to put in enough funds for it to succeed, and if the investors are truly committed and willing to give it a chance to succeed," says Street, who watched The NIC Co. pay off its bills and close up shop in 2003 after its sole investor, Oracle CEO Larry Ellison , pulled funding during the dot-com meltdown.
It's not just the company's finances that matter; yours do too. "My advice to anyone considering a move [out of corporate IT] is to learn the business side of stock options," says Sharer. "A lot of people coming from IT are na?ve about that."
If options are part of the compensation package offered by a start-up, it's key to understand the type of stock options you're receiving because they can affect your tax status, Street says. "It is really best to consult a lawyer or accountant" if you don't understand what you're getting going in, he advises.
"And don't join a start-up because you want to make a lot of money," Sharer adds. "Many start-ups fail. I'm not wealthier now, but I'm happier because I feel I'm doing something important and meaningful."
You'll work harder, but your work will matter more
After a year of working for a start-up, Cramer says his advice to workers considering such a move would be to "make sure [you] can really handle the environment. In a start-up, you have to be innovative and creative, and you have to be able to produce," he says.
Cramer had lots of experience in infrastructure support and had previously done some programming, but in his new position, he's had to put all that together and more. "Moving to a start-up and having to coordinate, review and collaborate on all aspects of the code life cycle -- not to mention the daily beatings associated with breaking the builds -- that was all very new," he says.
What has Cramer learned from that experience? "You must be open to others critiquing your work, which includes having a brilliant idea that you worked on for a week set aside because the product needs to go in a different direction," he says.
For Sharer, who once worked for a defense contractor, working at a start-up was his chance to align his business goals with his personal beliefs. And while he'll never say never about returning to corporate life, "my goal is to never again have a job that is not aligned 100% with my values," says Sharer, whose new company is focused on the environment. "If you're looking for a company that's in alignment with your personal beliefs, odds are that it is going to be a smaller company."
In the end, all four IT managers say working for a start-up is the quickest way to leave the frustrations of the entrenched corporate workplace far behind.
"One of the frustrations for me at Compaq was it was pretty much impossible to really make a difference," notes Street. "When there are 80,000 people, individual contributions are largely meaningless.
"At a start-up, your work seriously matters, which for most of us brings great satisfaction."
Gina Smith, a co-founder of start-up The NIC Co., is the co-author with Steve Wozniak of iWoz: How I Invented the Personal Computer and Had Fun Along the WayÂ (W.W. Norton, 2007).