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Sell your company, not your soul

By
Matt Vella
Matt Vella
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By
Matt Vella
Matt Vella
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February 5, 2013, 11:35 AM ET

By Scott Weiss, contributor

FORTUNE — It took almost six months for my former company IronPort’s acquisition by Cisco to close and it seemed like forever. Although I was still the CEO by name, I was essentially running a “puppet” government with every hire, major expense and strategic shift needing explicit approval from my soon-to-be-overlords. Since Cisco was a functionally organized company, I would soon be losing half of my direct reports as sales, HR, and finance would report into their respective groups. My job was becoming smaller and it had considerably fewer degrees of freedom. So here was the big dilemma: I had signed up for 24 months of re-vesting my founder’s shares that wouldn’t begin until the deal was closed and it already seemed like a paint-drying eternity. I was pretty sure that I wasn’t cut out for a big company but I just couldn’t spend the next two years watching the clock or I’d spiral into insanity. What to do?

An analogy hit me as I watched my son at recent team practice: Water polo. Despite growing up on Florida beaches, I’m not that great of a swimmer. I’ve never even put on a Speedo.  I didn’t think that I would like anything about water polo. However, if I was locked in a sports complex every day for two years and everyone else was playing water polo – how long could I sit on the edge of the pool before I gave it a go? Should I just go through the motions? Splash water on my face and feign participation? No, I came to believe there was only one way forward: shave all the hair off my body, put on the Speedo, start throwing elbows, making shots and playing with vigor…

Seriously and specifically, after six months in, I strongly advocated to be put in charge of all Security products at Cisco (CSCO) – a business that was three times larger than IronPort. I believe if the leaders of a newly acquired company are locked up for a significant period of time (i.e. greater than 18 months), they should strongly advocate for bigger jobs within the acquiring company. This is especially true if the leader
isn’t
planning on staying around after the vesting period. This may seem like odd advice, but here’s the rationale:

It’s not about you, it’s about your team. If you’re a disaffected leader, moping around, “doing time” and talking smack, your team will disintegrate and the acquisition will fail. On the other hand, if you land a larger role, you are in a unique position to help them out. You owe it to the people who ate Ramen noodles while you paid them in potentially worthless stock to work at your company in the beginning. In addition to promoting some of them to larger roles within your new org, you will be much more connected to the cross-company opportunities and can advocate for your top performers. When your team sees you engaging, they are more likely to pull harder, too. Most of the mid-level managers at IronPort had a significant increase in their responsibilities at Cisco and it prepared them to take on even larger roles both in and outside the company. There is a myth that employees that come from a startup aren’t cut out for a large companies – in fact, many may be ready for a change. Over the eight years we built IronPort, many of our single employees got married, had kids and wanted the current income, benefits, lighter work hours, and increased  stability of a larger company.

You need to “sew in the organ” to make the acquisition successful.  Most acquisitions fail. If something isn’t big enough to stand on it’s own or doesn’t logically snap into an existing business line, it will usually wither and die.  This is especially true if the acquired leaders leave or become disaffected. Employees mimic leaders’ behavior or get shifted to new leaders when the previous ones exit and have no connection or trust with their new reporting chain. If the leaders take larger and different roles within the acquiring company they form beachheads of trust and points of navigation. It becomes less “them” vs. “us” and a more collective “we”. Look, I’m not saying it’s ever going to be Kumbaya over s’mores, but it’s a helluva lot easier to accept the bullshit you get at a large company if you have someone you trust explaining the rationale to you.

You will meet amazing great people as you get closer to the inner circle. If your head isn’t in the game, you’ll never spend any meaningful time with the best people. After my promotion, I got to spend a ton of time with the senior team, went through their version of VP leadership training, and tackled many tough strategic issues. I believe it’s only by really getting to know the key people that you can make an informed decision about making a career at the new company. Yes, I met my share of climbers, passive-aggressive assholes, and C-players but that didn’t really matter long-term. The rockstars I came across have become lifelong colleagues – some of whom have stayed – but many have moved on to bigger, more interesting jobs in hot Silicon Valley companies. Don’t overlook the importance of this opportunity.

If you decided to take my advice and push for a larger role, I have a few more suggestions once you’re there:

Don’t play favorites with your old team. If you’ve run a successful startup, you’ve likely attracted first-rate talent to join you. Invariably, the close relationships, trust from working together, and familiarity with their great work will lead you to promote them first and fast. However, it’s important for them to earn some credibility with the new organization first. In retrospect, I moved too quickly and put my old team in charge too fast.  We suffered from a perception of an “IronPort takeover” that was hard to reverse. I should have taken more time to evaluate my inherited Cisco team and let the cream of the crop rise naturally.

Mix up the talent. When we announced the reorg, I shuffled the leadership decks completely. The IronPort SVP of Engineering took over the firewall group and the Cisco VP running firewalls took over IronPort.  Each had a fresh set of eyes and legs to apply to their new areas and attacked getting up to speed with vigor. In addition, we flew in all the director-level leaders and above from all the product groups to do group brainstorming and come up with new roadmaps for every product. Because the plans were argued and debated out in the open with everyone involved, there was much more buy-in with the employees working on the products.

Speak your mind. I was constantly pointing out inconsistencies, stupid directives, red tape, and anything that got in the way of doing the right thing. The fact that I wasn’t nursing a 10-year career trajectory and was on the fence about staying long-term was incredibly freeing in terms of getting things done. In general, large companies get caught up in their processes so much that the leaders forget how to push to do the right thing. In addition to making the experience more entertaining, I met a bunch of other, like-minded leaders and made progress on important projects.

Negotiate for more compensation. Although this is starting to change at companies like Facebook and Google, most large companies are not prepared to be competitive with hot startups for compensating executives. As the leader, you can create a business case of what a comparable compensation plan would look like for a CEO of a private company.  The main benefit here, again, is for your team versus you. If you can set up a compensation umbrella for you, it will apply directly to the rest of your executive team and top engineers.

Put together a succession plan (Especially, if you’ve definitively decided it’s not for you). In today’s world, 18-month stints are the norm at well-run large companies so there’s no need to feel bad leaving at the end of your vesting period. If you’ve integrated the team, someone would have likely distinguished his or herself and can be promoted into your role. If you’ve addressed your compensation and met all the best people, you’ll have all the data in place to make an informed decision to stay or move on.

In the end, for a variety of reasons, I left Cisco two years to the day when my vesting period was over. My former SVP of marketing at IronPort took over my role as head of all security products at Cisco.  Many of the best people at IronPort stayed as Cisco for many years after their IronPort vesting was over. I believe the main reason the acquisition was a success was because the team engaged and meaningfully integrated into Cisco.

Scott Weiss is a partner at Andreessen Horowitz and the former co-founder and CEO of IronPort Systems, which was acquired by Cisco in 2007. Follow him on his blog or on Twitter.

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