Young firms often face trials in executive talent


Ed Barrientos, chief executive of McLean-based Brazen Careerist, left retirement to lead the company after its founders weren’t able to move it forward. (Jeffrey MacMillan/Capital Business)
February 24, 2012

Ed Barrientos was several years into his retirement from executive life when a friend suggested he take a look at a Wisconsin-based company called Brazen Careerist. The career management Web site was meant to be an investment prospect.

Instead Barrientos wound up taking the helm of the company in 2010 after the original founders — a trio of career advice bloggers — lacked the business acumen to turn a good idea into a viable company.

The investor-turned-CEO narrative isn’t necessarily unique. Start-ups often face a change in leadership, sometimes at the behest of investors, when the existing chief executive can’t deliver returns or the company grows beyond his or her control.

“Sometimes the idea is just that good it transcends the existing team. You can imagine if things keep going there will be a need for a new team or a new CEO,” Barrientos said. “In another instance, the whole business revolves around an individual.”

In a young and typically small company, the chief executive often wields magnified influence. There are fewer people to share in the work and less infrastructure to mitigate mistakes, all at a make-or-break point in the firm’s lifespan.

There are success stories on both sides. Bill Gates took Microsoft from a fledgling firm to a technology behemoth. Meanwhile, the late Steve Jobs was replaced after his first stint as Apple CEO, only to return years later.

“You have very few CEOs who can take a company from a start-up based on the force of his personality and vision, and drive it to a billion-plus company and 10,000 employees and still run that company,” said Glen Hellman, the “chief entrepreneureator” at a company-building consultancy called Driven Forward.

Hellman has parachuted into four start-ups at the request of investors. In most cases, investors had lost confidence in the executive’s ability to lead or willingness to tell the truth, Hellman said.

Looking with a critical eye

Many founders treat the companies they’ve created as children, he said, overlooking their flaws and thinking the best when the facts point to the contrary. Leadership requires a critical eye.

Locally, Hellman has stepped in as chief executive of message encryption company Ikimbo, corporate governance adviser Proxy Governance and parking meter outfitter IntelliPark. The first company shuttered its doors while the others were acquired.

“I have closed companies at the cost of my job, telling investors we’re not going to get anywhere with this thing,” Hellman said. “Because it’s not my baby, my motivation is to do what’s best for the investors.”

For Barrientos, however, the role of chief executive and investor are intrinsically tied. Although he doesn’t collect a salary from Brazen Careerist, the company’s ability to eventually be bought or go public determines the return on his investment.

“A CEO salary can be really tough for a start-up and a lot of start-ups can’t afford that, so that’s one of the benefits of this setup,” he said. “I see my pay as an ultimate return on investment rather than a salary.”

Bob Proctor also wears both hats. He is a founding partner at Blu Venture Investors in Vienna and chief executive of Silver Spring-based FlexEl, a company that’s developing thin, rechargeable batteries.

Proctor stepped in as CEO in 2009 after being introduced to the company at a University of Maryland business plan competition. A firm founded by academics, FlexEl needed a business mind.

“You need to find that customer out there that has such an acute need that they’re willing to talk to a fledgling start-up, and a seasoned executive sitting across the table feels like a kindred spirit,” he said.

“Often, if I put myself in a larger company’s shoes, and I’m thinking of using a start-up’s piece of technology, one question you’re asking yourself is if this company is going to be around in six months,” he added. “So management is a significant evaluation criteria for a customer, regardless of how good the product is.”

Steven Overly covers the business of technology, biotechnology and venture capital in the Washington region for The Washington Post and its weekly Capital Business publication. In that capacity, he has written about start-up struggles, investment trends and major drug discoveries.
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