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Silicon Valley Scramble

SAN FRANCISCO

Computer whiz Robert Andrews doesn't hold a job for long. That's part of what has made him a Silicon Valley success story.

Over the past 17 years, Andrews has worked on computer networking technology for 21 companies. He had recently emerged as a rising star at Netscape Communications Corp. -- until a few weeks ago, when he quit to become a senior executive at a new Internet start-up called 280.

Elsewhere in the United States, people may still cherish the idea of a long career with a single employer. But in Silicon Valley, people embark on new jobs with the enthusiasm of Elizabeth Taylor heading for the altar. And as venture capital continues to pump into the Valley, the normally brisk job market has turned into a frenzied dance.

"I've been in the [executive] search business for 15 years," said David Mather, who heads the Cupertino office of Christian & Timers Inc. "The pace is unlike anything we've ever seen."

The rate at which people swap jobs here is more than material for a Doonesbury comic strip. The job change culture plays a powerful role in accelerating the development of new technology, helping the region and enriching individuals. But it also can slow down companies, which must spend heavily to hire and retain talent.

Silicon Valley's perpetual-motion job machine could foreshadow similar changes in the Washington area, traditionally a place where loyalty and longevity count. The technology boom in Northern Virginia is fueling a new cycle of start-up ventures, spin-offs -- and rapid job shifts.

"This is a very risk-averse region," said Ray Pelletier, executive director of the Northern Virginia Technology Council. Traditionally, the style of Washington area companies has been shaped by the interactions with the government, he said. Reliability is a virtue. Delivering a smoothly working product is the goal. Rapid-fire change, especially in personnel, sends up warning flags.

"You don't have people who are risk-takers, you have people who are managers," Pelletier said.

Those values fade, however, in a commercial world where getting a product to market first matters more than meeting government specifications. As a result, "there's a whole new dynamic being created in this region that's happened in the last 24 to 30 months," Pelletier said.

Silicon Valley is intimately acquainted with the roller coaster ride of start-ups. Since David Packard and Bill Hewlett started their company in a Palo Alto garage in 1939, the Valley has been a crowded hothouse of new ventures. People start companies just a few blocks from the place they once worked. New ventures fill up office spaces vacated by their faltering, older brethren.

Take one Silicon Valley example: The building in which local legend says that John Sculley, then chairman of Apple Computer Inc., fired the company's co-founder, Steve Jobs, is now the office of JavaSoft, a spinoff from Sun Microsystems Corp.

That physical proximity means that people can switch employers without disrupting the rest of their lives. "People joke that you can change jobs without changing car pools," said AnnaLee Saxenian, a professor at the University of California at Berkeley and author of "Regional Advantage: Culture and Competition in Silicon Valley and Route 128."

"It's better to think about Silicon Valley as a region, rather than as independent firms," she said. "Some people say they wake up thinking they work for Silicon Valley. Their loyalty is more to advancing technology or to the region than it is to any individual firm."

Atri Chatterjee agrees. He's been at Netscape, his fifth company, for more than two years and plans to stay -- at least for a while. "I think I can have fun doing this for several years," he said. At the same time, he thinks of his career as "sort of like a chess game -- you're always looking at what do I do after this?"

"I think about Silicon Valley as a large company with lots of different divisions," Chatterjee said. "In the old days, if you worked for IBM, you could move from one division to another. Here we've got lots of corporate entities, but from a technology perspective, you can think of it as different divisions." As a result, "a lot of cross-pollination goes on."

That intense shoptalk -- luncheon chatter about what companies and technologies are hot and which ones are dogs -- means that flawed ideas get tossed out as regularly as the evening trash, said Richard Hagberg, who heads a consulting group in Foster City that works with companies to improve internal management.

Where the Action Is

Such intellectual triage doesn't guarantee success, but "it's like speeding up the survival-of-the-fittest ethic," Hagberg said. "If there are exciting new technologies, people gravitate to them."

When people migrate from one opportunity to the next, "learning happens more rapidly," Saxenian said. "They learn as a community, not just about technology . . . but about organizations. People [and individual firms] often fail in Silicon Valley, but a collective learning process that goes on" ultimately means the whole community gets smarter, she said.

Migrating from company to company is easier, moreover, when people maintain close ties with former colleagues. For instance, in the early 1990s, Chatterjee worked for an ill-fated start-up called Go Corp., with a guy named Mike Homer. Several years later, Chatterjee met up again with Homer, who had just joined Netscape. "We started talking about the kinds of things he [Homer] wanted to do [at Netscape] and one thing led to another, and I wound up working with him," Chatterjee recalled.

"What I found is that the group of people I've seen at the top of the pyramid is smaller and smaller," said Andrews, who recently left Netscape. "Everybody knows everybody."

Even so, when joining the most recent start-up, "I did do a resume," Andrews said. "It's still a formality."

Individuals clearly aim to profit when they job-hop. "There's an element of greed," said Mark Bonheim, an attorney with Wilson, Sonsini, Goodrich & Rosati in Palo Alto. "People want to hit a rising star to stock options, get a lot of money and retire."

Hot Technologies

But job switches also involve a constant search for hot technology, Bonheim said. And they provide new opportunities to learn and, eventually, to run your own show.

When Sam Klepper was in business school, he worked briefly at Procter & Gamble Co. on the Pampers diapers account. There, he recalls working hard to eke out profits in a well-established market. Last October, he joined WebTV, which is building technology that turns television sets into tools for surfing the Internet and handling electronic mail. "It's an opportunity to create a new category" of consumer goods, he said.

Klepper also had done stints at Intuit Inc. and, most recently, at a small CD-ROM maker called Books That Work. After he quit his job as vice president of marketing at Books That Work last July, Klepper considered jobs with several companies, including ones that dangled fancy titles and high salaries before him. He settled on becoming director of product marketing with WebTV, drawn by the opportunity and the quality of the management team. That decision proved wise. Since he joined WebTV in October, several of the other companies that offered him jobs have either folded or laid off people. WebTV, in contrast, recently received a buyout offer of more than $425 million from Microsoft Corp.

Those close brushes with faltering companies have not unnerved Klepper, however. "It's like we're trapeze acrobats and there's an invisible net below us," he said. "There are so many opportunities, it feels like you can go for it. If it doesn't work out there are backup plans, because there are more companies out there."

Not only does that invisible net of contacts and opportunities ensure that those who fail will rise again -- it also helps make failure almost a sort of rite of passage in the Valley.

For instance, a few years ago, much of the Valley was excited about the possibility of building small computers that could recognize handwriting. Chatterjee and Homer met at one of the most promising companies trying to build one -- a firm called Go. After a few years, Go flamed out. "I took a tax write-off [to cover] the upfront money I paid to buy the stock," Chatterjee recalled. "Now it's pretty funny, but at the time I was kind of depressed." So he moved on.

`Damaged Goods'?

Company failures can become a black mark if people don't jump fast enough, suggested Frank Casanova, a former Apple employee who just joined MetaCreations as vice president for research and design.

"You have to be proud of what you do," he said. For years, he loved to tell people that he worked for Apple. But over the past year, that feeling faded. At conferences, "people would look at my badge and say, `You're still at Apple?' That hurt. Those people [were] looking at me like I was damaged goods. They were losing respect for me because [they thought] I wasn't making the right career decisions."

Jerry Kaplan, now head of OnSale Inc. (and formerly chief executive at Go) believes that the people in most demand in the Valley are looking for more than just dollars. "People have broadened their concept of compensation [to include] the potential of the company and softer benefits such as the interest of the job, bragging rights of `I work for . . . ', the quality of the people." And, of course, stock options. "Every one of our employees is also an investor in the company," he added.

When Robert Andrews, who had been "Webmaster" at Netscape, heard about the ideas percolating at the San Francisco start-up called 280 (as in a local highway), "I thought it was so cool that I didn't want to not be involved," he said. He liked the company's founders. He liked the chance to be back in a tiny start-up, where he could have an affect on just about every part of the company.

And "of course, I got a large portion of the company," Andrews said. He had to -- he had walked away from a generous options package at Netscape.

There are advantages to making so many corporate stops, Andrews contended. "I feel like my knowledge is incredibly broad. When it comes to dealing with computer or technical negotiations, I probably have some kind of experience with relevance."

Andrews said he has learned some key lessons from the three company failures he's seen close up. "It's helped me to understand how important it is to [carefully] pick your collaborators and friends," he said.

Less Loyalty

Such entrepreneurs view traditional notions of corporate loyalty with skepticism.

"I felt like a loyal person at Intuit. I like the idea of loyalty, but it makes less and less sense these days," Klepper said.

Companies will lay people off or shut down altogether "in the flick of an Excel spreadsheet," Casanova said. "I stayed at Apple for nine years. I'll never stay at another company for that long," he added.

"All you have to do is watch some number of your friends become rich and you look at your situation and -- even if you're comfortable with your job -- you have to decide if you're going to be comfortable with your life," Casanova said. Even companies that hand out as much as 10 percent in annual raises can't match the jackpot winnings of those who work for successful start-ups.

Although MetaCreations is not a start-up, Casanova took a pay cut in exchange for a compensation package that will reward him richly if the company does well. "My financial success is tied more to my bonus package and how well the stock does," he said. "I'm banking on the future and helping steer MetaCreations."

Yet if the swiftly flowing job market is a boon for individuals and start-ups that are eager to snatch talent, it's tough on established firms. As talented people dart from one glittering opportunity to the next, established firms must work hard to hang onto their people -- and sometimes even to their intellectual property. Competing in this environment means spending money -- boosting people's compensation in cash or through stock options, investing in training to build up loyalty to a firm, and sometimes suing other firms for poaching people or technology.

"Companies whose prospects are dimming tend to lose people regardless of how much they're willing to pay," Kaplan said. "People jump to growth opportunities."

Team Disruptions

But for established companies, managing a now-you-see-them, now-you-don't work force is tough. Speaking as a former manager at Apple, "it's incredibly disruptive to a team when someone gets lured away," Casanova said. "It's not easy to find people. [At Apple] we'd have positions open for a year."

Successful technology companies must devote more resources to coaxing talented people to join or even stay at their companies. "The biggest surprise is what hiring managers need to do to attract people," said Jeff Christian, head of the Christian & Timers executive search company. Boards are approving what once would have been staggering packages of benefits and signing bonuses, he said.

Executives who join a company are routinely receiving bonuses of $50,000, for example, and "in some cases, at the million-dollar-plus level for name people," he said. If talented executives seem tempted to leave when their millions of dollars in stock options vest, companies simply load them up with more options, Christian said.

Hagberg said that a growing number of companies are taking a cue from Hewlett-Packard Co. and working hard to build an attractive corporate culture that keeps people loyal. HP offers security and a chance to learn, said Bruce Hatz, HP's corporate staffing manager. One of the pitches that Hatz uses to recruit engineers fresh out of school: "If you start at HP, you'll have tons of opportunities if you want to leave. But just because you start elsewhere doesn't mean you can get to HP."

The company works hard to live up to its workplace promises. When a project or group folds, employees are offered chances to move elsewhere within HP instead of getting pink slips. As a result, HP is one of the few high-tech firms in the Valley where people are celebrating 10-year and 20-year anniversaries. "We have a retirement plan, which many companies don't have out here," Hatz said.

So how long will Andrews stay with his latest start-up? The fact that he will have a large role in building the company increases the chance that he will stay longer, he said.

At the very least, "I'll take it public, for sure," he said cheerfully.

In a survey of technology ads in 25 newspapers nationwide, the Washington area ranked second or third in the number of listings in several categories.

Percent of ads under "computer" heading:
New York 14% - 16%
Washington 10% - 15%
Chicago 0% - 11%
San Jose 6% - 11%

Percent of ads mentioning "programmer":
New York 15% - 17%
San Jose 11% - 18%
Washington 8% - 14%
Columbus, Ohio 7% - 10%

Percent of ads mentioning "biotechnology":
San Jose 33% - 53%
Washington 10% - 22%
Boston 6% - 20%
New York 3% - 8%

NOTE: The study covered four major categories: biotechnology, "informatics/computer related," computer programming and engineering.

SOURCE: George Mason University's Institute of Public Policy

© Copyright 1997 The Washington Post Company

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