The trials and tribulations of old-economy executives in new media

Wanted: Experienced high-level executive currently making big bucks in a secure corporate job at prestigious Fortune 500 company. Proven track record of success. Opportunity to work for a lower salary, putting in 100-hour workweeks filled with tremendous stress, at a company that could fail in a year or two.

Welcome to the world of the online executive.

While the trade-offs may seem idiotic to some outside observers, an increasing number of L.A. executives are forsaking the traditional corporate-ladder climb for a plunge off the Internet cliff. And so far, they seem to be loving it.

“I was running a $300 million business for (Germany’s) Bayer, which had facilities all over the world,” said Duff Brace, president of Monrovia-based StayHealthy.com, which offers health information and products over the Web. “However, the speed at which the business moved, if there was a decision to be made, you didn’t have to make it for a month. In this area, you make (a decision) in a day, because if you don’t make it today, you have 20 more decisions piled on your desk. When I made a decision at Bayer, I might not know for a year or two if it was a good one. In this environment, I know in a day.”

Brace has more than two decades of management experience, working for such companies as General Electric Co., Bayer AG and Omron Corp., a Japanese electronic components manufacturer, and has worked in the biotech field as well. He took over the top spot at StayHealthy.com three months ago, and works 12 hours a day, seven days a week. His base pay is considerably less than what he made in the past, but he says the opportunity to help create a company drives him.

Indeed, it is the challenge and excitement of building a company from scratch, coupled with stock options that could make them incredibly rich very quickly, that are luring an

increasing number of seasoned veterans into the online world.

Rigid corporate autocrats need not apply. Flexibility the ability to respond to dramatic change in a heartbeat is an absolute must.

Swirling world

Startups with two employees last summer now have 50, and are hiring five to 10 people a month. Office space quickly expands from 1,000 square feet to 50,000. Business strategies and even core business concepts are developed and then thrown out in favor of better ones in a matter of days.

Internet companies “want (someone with) an entrepreneurial flair, to empower people to do what they have to do and then get out of the way and let them do it,” Brace said. “You have to develop people. They’re the most valuable asset.”

People like Brace are in great demand these days, and can be had for the right price. That price, of course, doesn’t so much involve cash up front, but stock options to exercise once the e-company goes public. Recruitment firms are flooded with requests for qualified executives as well as resumes from professionals with diverse backgrounds looking to get in on the ground floor.

But in return for a chance to build something out of nothing and make out like a bandit in the process, these executives pay a price: time. With often less than two years from inception to initial public offering, there is little rest for the weary. But so far, all signs indicate that the bargain is being viewed by many executives as a reasonable one.

“People are looking for stock options, they’re not looking to make lateral moves,” said Matthew Blake, general manager of the Encino office of Management Recruitment International, which is doing a lot of business marrying qualified executives with Internet companies. “They are willing to work 12 to 15 hours a day for two years to take a company public and cash in the stock options. They go into the role knowing (the hours required), and 75 percent of them are staying. These are people willing to burn the candle at both ends.”

Racing toward IPO

Craig Blue worked for several years at Universal Studios Inc., heading up production, research and strategy for worldwide operations before starting his own consultancy. He now is vice president of marketing for Tokyopop.com, an e-commerce site for Asian pop culture with offices in the Mid-Wilshire district as well as in Tokyo.

The company just graduated from USC’s entrepreneurial incubator, EC2, and is ramping up to go public by the end of the year. Blue’s days start early (even earlier than most, since he is a triathlete and trains every morning), and end late, meeting with prospective clients, discussing business strategies and getting the word out.

“We’re sprinting,” he said. “It’s really tough to have a personal life. But you get to a point where you have the experience to deal, both mentally and physically, with anything thrown at you.”

Like Brace, he is making less in salary than he probably could elsewhere, but having an equity stake in the company serves as additional motivation to see that Tokyopop.com is a success.

The motivation is even greater, of course, for the people who have started the company themselves. Investors in Internet companies usually require that the founders cede authority to professional managers after a certain point, but the ones that last longer as CEOs are those with measurable management experience. Not that it has truly prepared them for their current lives.

“The difference between a normal job and a job on the Internet is night and day,” said Daniel Roisman, president and CEO of Sportspage.com, a Sylmar-based sports Web site backed in part by real estate magnate and L.A. Kings co-owner Ed Roski Jr. “The actual time spent behind a desk or in meetings is insane. This job is 24 hours a day. There is eating and sleeping and all of that goes on, but it goes on in the midst of work.”

Pay cut

Roisman says he’s making about 30 percent of what he was making in his last full year as chief financial officer for a post production company owned by Lexington Commercial Holdings, for which he also oversaw some investments.

Since its launch last May, Roisman’s company has gone from one employee to more than 20 full-timers, and it’s hiring five people a month. Between meetings to discuss strategic alliances, searching for new office space, and attending to various other constant demands, Roisman is among those for whom work is all-consuming.

“It doesn’t stop until midnight,” Roisman said. “I’m not dating. I don’t even have a (pet) fish.”

Because of the speed at which these companies must grow, mistakes are magnified and the disorderliness of the process can be trying on those holding the reins. Adding to the pressure is the fact that investors and competitors are both typically breathing down a startup’s neck.

Personnel is a key area. There is no shortage of people wanting to work for the next Yahoo!, but there is a limited pool of qualified, bright people. Nevertheless, hiring is done at a brisk pace, and executives have to take chances with the people they bring on.

“There are such time pressures for recruitment,” said Robert Eastman, chief operating officer at Esperanto.com, an El Segundo company that is building community Web sites for first- and second-generation Americans with strong ties to their native countries. “The tendency is to want bodies because you have to move fast, but a mistake in hiring is a real problem. Typically, the recruitment cycle may be a week, where in my previous work environment it might have taken three or four weeks.”

Competitive pressure

Because there are any number of companies seeking to establish themselves in any given Internet niche, building a startup often brings pressures to grow faster than the competition. That means making assumptions about future success that are by no means certain, and that can make it difficult for management to keep a sense of equilibrium.

But for now, at least, with so much opportunity and so little resolved in the online world, the possibility of failure is discouraging few people from taking on these jobs.

“It’s like with people in the construction industry,” said executive recruiter Blake. “They can say, ‘When I build it, I can drive by and look at it.’ That’s what these (executives) want, to be able to look at something they’ve built.”

So while burnout remains a possibility in the months and years ahead, the present sacrifices seem worth it.

“You get to the point where you feel on edge and you need to rejuvenate, but there’s not that much time, so you have to work through it,” Sportspage.com’s Roisman said. “This is such an exhilarating experience.”