Running a giant company with thousands of employees and a slot on the Fortune 500 used to be the dream of every bright-eyed business school grad, but times have changed.
Building or running a company and then cashing out to dabble in various deals has become the new goal.
Venture capital firms and incubators are prime destinations for local business leaders, because top executives don't just want to run the major companies of today, they want to help launch the cutting-edge companies of tomorrow.
Dabbling in deals provides a freedom not available to public company executives, who are accountable to shareholders.
"I want to control my own destiny," said Abbott Brown, who recently left his position as senior vice president at publicly traded Global Crossing Ltd. to head his own equity firm, Ridgestone Corp. "I wanted to get back to being closer to the businesses, to be involved with smaller, earlier-stage companies, and to be away from a large corporate environment."
Brown isn't alone. Sky Dayton, founder of Internet service provider EarthLink Network Inc., last year joined with Jake Winebaum, former head of the Buena Vista Internet Group, to form the incubator eCompanies. They have said the incubator structure streamlines administrative processes and frees up time to brainstorm new ideas.
Gordon Binder, chairman and chief executive of Amgen Inc., recently announced he would step down from the company to pursue venture capital investing. Michael Montgomery last fall left his position as president and chief executive of Sega GameWorks to raise money for the Digital Coast Capital venture fund, founded by the Digital Coast Partners investment firm. And Kevin Wall left his post as vice chairman of iXL Enterprises, an Internet strategy consulting company, and co-founded the Shelter Ventures incubator.
Like others, Wall began thinking about entering the investment world after being constantly asked to sit on various companies' boards or become a private investor. "It was my intention that I would go into the business of building an accelerator to help these companies," Wall said.
Instead of jumping into a venture alone, Wall founded Shelter Ventures with Art Bilger, who has a strong investment background, having been a financial advisor and corporate finance executive at Drexel Burnham Lambert.
"The reason that Art and I get along so great is that my talent set is different from his talent set, and they are complementary in the New Economy," Wall said.
Such partnerships between entrepreneurs and venture capitalists can help entrepreneurs avoid pitfalls during the transition from running a company to investing in them. Investing, as any veteran venture capitalist can attest, requires a lot more than a big chunk of change.
"I think (entrepreneurs) have part of the skill set required, which is really important. They understand how to grow a business and have entrepreneurial experience and instincts," said Todd Springer, a partner at venture capital firm Trident Capital Inc. "The flip side is learning how to be a good investor. To be a venture capitalist you need to understand both sides."
Of course, the urge to escape corporate structures isn't the only reason many entrepreneurs end up forming incubators or becoming angel investors. Many have simply made a pile of money with their original ventures, have cashed out thanks to an acquisition or a decision to find more professional management, and now have little else to do with their time and money. And they have the kind of personalities that makes sitting around by the pool unthinkable.
"They don't want to hit the golf course; they've still got the drive to be involved," said Jeff Anderson, managing director at venture capital firm Mellon Ventures Inc.
Those who've taken the plunge agree.
"It gets in your blood. There's a term for it: serial entrepreneur," said David Bohnett, who founded his own venture capital fund after selling his online community, GeoCities, to Yahoo Inc. last May in a $5 billion stock swap.
After receiving numerous business plans and pitches while at Geocities, Bohnett launched Baroda Ventures last June, lured by the appeal of pursuing a variety of entrepreneurial interests.
"It's similar to what consultants and lawyers and even freelance journalists find: the excitement about different environments, new people, learning about different businesses and different market segments," Bohnett said.
Bohnett, Brown and Wall report that they're working long hours to keep up with the pace of their new careers. But it's not just their entrepreneurial drive leading them to eschew lazy days by the pool; current economic factors are at play as well.
Today's technology has changed people's mindsets. Business people are no longer married to the security of working at an established company, and are more willing to take risks.
"We're in a revolution as opposed to an evolution, so that makes it a very dynamic environment to explore new things," Brown said. "The economic period that we're in is one of significant growth."
Such growth doesn't automatically spell success, however, for any investor involved in numerous deals.
If certain investors aren't undertaking sufficient due diligence, it's possible that the venture capital community itself will see a shakeout, just as the dot-com community is beginning to see.
As Anderson said, "We'll see who's around three years from now."
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