To bolt or stay secure?

Dear Bob,

I have a friend who works for a large, well established, and relatively healthy computer company. He has a long career with this company, and carries a fair amount of respect. His position is as stable as anything is these days in corporate America. While he has experienced career growth and opportunity over the years within the company, he is beginning to think those opportunities are going to disappear. Not the right pedigree.

Along comes another company that is also involved in computers. This company is small, new, innovative, bleeding edge. They need a a “senior” (read that any way you want) guy to take over their software development and have asked him to consider the position. The guy doing it now, the CTO, is moving, along with the other CxOs (headquarters), to the west coast.The software geeks and the rest of the folks are staying on the east coast. He’d be the senior person on the east coast.

This new company is operating on VC money, but has shown in the recent past the ability to attract some heavy players. In fact, the move is part of a new round of funding. The business model makes sense, and there is the potential for real revenue streams.

My friend is excited about the new opportunity, but worried about the stability. He thinks he can almost certainly complete his tour with the company he is with now and retire in 15 years. He also thinks that the new company could fold and/or be acquired by one of the heavy players in the next couple of years and he’d be out, standing in his field….;)

He thinks he should make the situation a no brainer. In other words, he thinks he should make the conditions for accepting the new position so desirable and sensible to him, that accepting the position would be a no brainer. What do you think?

Gratefully,

Cutting bait in Boston

Dear Bait …

I have no definitive advice, just some considerations your friend ought to take into account in making this decision, and in the negotiations should he head for the greener pastures:

* So he’s confident he can stay where he is for 15 years until retirement? Hoo hah! I have bad news: Nobody can predict anything about any company for that period of time. Even large, very stable concerns have imploded in far shorter spans. At best, he can be sure of maybe five years under the best of circumstances.

* If, in his current situation the main barrier is the wrong pedigree, perhaps he should be considering a lateral shift into a similar organization where his pedigree is a better fit. I’m assuming here that the pedigree issue isn’t something that can be remedied – a matter of which schools he went to, that he wasn’t a fraternity member or something like that. Otherwise, take some night classes and get the degree he needs.

* The new venture: From the sound of your letter, I’m guessing job security is important for this dude. If so, he shouldn’t even begin to consider the new venture. This kind of company generally offers sub-standard pay coupled with stock and/or options – as it should; offering lots o’cash at this stage of its evolution would be fiscally imprudent.

In order to pursue this avenue, he needs to be in a position where he can withstand the failure of the new venture (a better than 70% chance) and the time needed to find another position before he should consider it. If it still makes sense, then he should figure out what kind of stock and options he needs to warrant taking the risk. For that, look at where the stock of similar companies currently trades to get a sense of what option strike price and number of shares he’d need.

In any event, there’s no set of circumstances anybody should be willing to offer that would make the new venture opportunity a no-brainer. No matter how it’s structured, it’s going to be risky.

That’s the nature of the beast.

– Bob

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