By Michael S. Rosenwald
Washington Post Staff Writer
Monday, September 10, 2007
Joseph Berardino is wearing a monogrammed shirt. "But if you look at it, it was made 10 years ago," he says. "It's frayed. It drives my wife crazy." He is sitting in his office, on the fourth floor of a biotech incubator near the Baltimore airport. If he spreads his arms out he won't be far from touching both walls. He's got a couple of bookshelves, but they are mostly bare.
Berardino's surroundings make this fact of life plainly evident: He has come a long way from the top of corporate America. Five and a half years ago, he was chief executive of Arthur Andersen, the world's premier accounting firm, overseeing 85,000 employees. Then one of its clients imploded: Enron. Andersen was convicted on criminal charges, later overturned, for its role in the Enron debacle. Berardino resigned, saying he hoped that doing so would save the firm. It did not.
And so now here he is, sitting in this teeny office, working on his second act in American business. He is chief executive of Profectus Biosciences, a start-up of a dozen or so people working on an HIV vaccine based on technology developed by scientists including famed and sometimes controversial AIDS researcher Robert Gallo. Berardino's life is no longer in crisis. "I was not going to stop working after Arthur Andersen," he says. "I wasn't going to go into the sunset. I was going to do something very different. . . . I was going to do something that made a difference."
Berardino's quest is just one example -- albeit the most dramatic -- in a region that has produced or been home to several intriguing second (or third) acts. Some of the professional makeovers have their roots in the explosion of private equity, which both creates high-level jobs for some just as quickly as it takes them away for others. Michael D. Capellas, former chief executive of MCI, will lead First Data after its $26 billion buyout by Kohlberg Kravis Roberts is complete. On the other side of the equation is Thomas Carr, who walked away as chief executive of CarrAmerica Realty after the commercial real estate firm was bought by Blackstone Group for $5.6 billion last year. Carr is now a partner at Federal Capital Partners, a District real estate investment and development firm.
William Jews, who was replaced last year as chief executive of health insurer CareFirst, has turned up as a board member of Camden Learning in Baltimore. Mark Everson, who for years has floated between business and government, has gone from running the Internal Revenue Service to running the American Red Cross. He said he quickly learned that it's easier to raise money at the IRS.
Some of the moves seem a little curious. An accountant running a biotech company? Okay, try this one: Joseph Redling, the former chairman and chief executive of AOL International, just last week started his new job as president and chief operating officer of NutriSystem, the weight-loss company. But dig a little deeper and the moves seem to make sense. If there's one thing scientists seem to know little about, it's running a business. And, as NutriSystem officials pointed out in announcing Redling's new job, they were attracted to him for his "extensive operating and marketing experience in large scale, direct-to-consumer businesses."
Behind many of these moves are tales of soul-searching and r?sum? assessments, all in effort to re-determine what one has to offer the world of business, which can be distrustful and unwelcoming to executives looking for second chances or new careers in different industries. "The market tends to be very conservative," said John W. Franklin Jr., who previously ran the District office of executive search firm Russell Reynolds Associates and is now on his own new act as a private executive coach. "Boards are very unimaginative, and Sarbanes-Oxley has only made it worse. It's all risk management from a board's point of view."
For Carr, the experience began with a bit of whiplash as his family's company was sold to Blackstone, a New York private-equity firm.
"The company had not been in play for long periods of time, and I had no intentions of leaving the business," he said. "This all came quite suddenly, and as a result of that I didn't have a plan." He added: "One thing I knew going into it was that it was impossible to overestimate the personal impact the change would have. I knew a lot of people who had sold businesses for whom this ended up being a major life change."
Carr began working with Franklin, who engineered a lengthy examination of his strengths and weaknesses. Together they came up with three job options: run a public company that wasn't in real estate, run a nonprofit organization or return to real estate.
Carr didn't think running a non-real estate company would be right for him, noting that it would "take a major commitment to make people understand that my skills were transferable." And though he has served on nonprofit boards, he didn't think, at this point in his life, that he was ready to run one. "I felt I could be more helpful as a board member than an employee," he said. "I am Type A. I am profit-motivated. It's how I keep score. I didn't believe I was altruistic enough to make that step at this point in my life."
So Carr settled on going back to real estate. And then he had to do something he hadn't done in a while: network. Franklin has found that to be a difficult chore for many executives who have been out of the networking game and have gotten used to people coming to them. "Some of them are willing to dive back in," he said. "Some aren't very good at it. I've taken people to networking sessions and had them follow me around, posing as a friend, just to introduce them to the fundamentals of networking."
The first contacts Carr had were with people who wanted him to put together national investment programs in real estate. "I've bought hundreds of office buildings, so it was logical of people to think of me that way," he said. But Carr wanted to recommit himself to the D.C. area, so he focused locally and eventually landed at Federal Capital Partners.
For Berardino, the experience was more of a stumbling one, in that he fell into it. At an event at Fairfield University, his alma mater, a friend of Gallo's mentioned to Berardino that the scientist was working on new vaccine technology and that Berardino could probably help on the business side. "I wasn't sure of what I was doing or what I wanted to do," Berardino said. But he decided to travel to Baltimore to visit Gallo's lab anyway.
"I wasn't paying attention to the AIDS epidemic," Berardino said. "It was not high on my radar screen. But you spend a day at the [lab] and you start thinking through the implications. It was absolutely staggering." Berardino didn't raise his hand immediately to offer to help. He wasn't comfortable with the idea yet.
But Berardino continued talking with Gallo, who persuaded him to join the nascent company's board. That was in 2004. A year later, Berardino said, "the board looked at me and said, 'You seem to like this. Why don't you just do this?' " And so Berardino became chief executive of Profectus Biosciences. The firm's major investors didn't think twice about hiring him and whether he would fit culturally.
"You had this world-class executive," said Baltimore real estate developer Stewart Greenebaum, one of the firm's biggest investors. "He makes no claims to being scientifically enlightened, but the one thing we had at the company was plenty of scientists. We don't lack in scientists. In other words, do I need another scientist or is this not a business? We have plenty of guys that can put things on the wall that I don't understand. At least Joe puts things on the wall that I understand as far as economics and as far as not running out of money."
Greenebaum added, "If you have a good mind, you have a good mind."
Berardino tends to avoid the labs. Why? "Because I'm dangerous," he said, another reminder that he is, after all, an accountant. But he feels like he is thriving in his second act. And yet he is still trying to understand how his 30-year career at Arthur Andersen evaporated so quickly, leading to this second act. At Profectus, he's in a place he never would have imagined, as he puts it, "in 30 or even a zillion years."
He continued: "It takes years and years for you to really understand a major death in the family or a loss of our business. What I will say is that it is nice doing something where you walk into a board meeting and it's a question of how many lives we are impacting."