[ppi] [ppiindia] Indian Not CEO Material in Silicon Valley

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 The Indian Entrepreneur: Not CEO Material in the
Valley! 

siliconindia staff writer Friday, October 29, 2004 

SAN JOSE: The U.S. may be the land of opportunities.
The Silicon Valley has been called the Valley of
Victories for many?but not for Indians who have been
playing the startup game. In a recent research,
siliconindia reveals some startling facts about the
venture game and CEO-upstaging by investors.

Indians who have founded technology companies?in
hardware, software, or innovative biotech?are in
serious trouble, once they land some venture capital.
In a study of over 62 companies that have secured
funds in various stages?seed, series A, B, and so on?
in the period of June 2003 to June 2004, more than 80
percent do not list the founder as their CEO this
current year. The founder or founders have either gone
on to become board members, playing no active role or
simply awaiting the vesting period to expire; or have
become Chief Technology Officers and vice presidents
of engineering, product development or technologies.
In some devastating incidents, the founders have left
the company in an acrimonious ending.

Leading the replacement trend are companies that have
sought funds from flagship venture companies of the
Valley?Sequoia Capital, Kleiner Perkins, Matrix
Partners, and others. In the most recent of cases,
Pankaj Manglik left Aruba Wireless, this despite a
very strong vote for him as CEO from the investors
when this magazine was featuring him on the cover. The
list continues, including companies like Centrata, CXO
Systems, Cast Iron Systems, Sarvega, Isilon, Telesym,
Encover, Oblix, and a host of others.
 

The research maps some interesting trends:
· CEOs with an MBA or who come with some product
marketing experience tend to last out?startups like
Fieldglass, Virsa Systems, and others have managed to
retain the founders as their CEOs, numbering at a
laughable 8%.
· The series B funding is the Gordian knot?most
founders are levitated to glorious board positions or
CTOs once this round is complete. Many Indian founders
have failed to cut this knot successfully.
· The technology-in-place is another bridge to
cross?founders need to show that they can sell their
technology to customers, or face being replaced by a
sale expert in the CEO chair.
· An overwhelming 95 percent show the new CEO to be a
Caucasian American, who has been a product marketing
lead at a public or private company. Rarely has an
Indian with similar experience become a CEO, though
companies like Zettacore have brought in an Indian to
be the Chief executive recently.

In stark contrast, companies in the service business
that have got some venture fund have been remarkably
successful in retaining the Indian founder as the CEO.
What does this portend for the Indian ?techie? who
aspires to develop that ?hot? technology, and is
seeking funds? ?Beware the venture capital game,? says
a startup veteran who wishes to remain anonymous.
?Unless you have a pedigree of a successful IPO or a
fabulous acquisition, don?t take your CEO position for
granted. You will be in command only till your idea
has become a usable technology?and then you are wholly
dispensable. All those good things you read about
managing a company?values, team spirit, relationships,
and so on are just text-book statements. The investors
will be interested only in ensuring that the
technology sells a million licenses, and mapping their
exit strategies. And yes, Indians are NOT favorites in
the management cadre. We are considered good
?techies,? and no more.?

Silicon India has also found some comparison facts:
· Israeli founders tend to retain their CEO titles,
coming in at a whopping 54% of Israeli-founded
companies still being led by the founders.
· Chinese founded companies do not list highly in
seeking venture funds, and almost 90% of the companies
are still headed by the founders.
· American founders remain CEO or play a very active
role in the company even if an American CEO replaces
them.

?It is our lack of peer networking and support from
the community itself,? says Harvi Sachar, publisher of
Silicon India, and a recent entrepreneur. ?We
frequently have seen pitches from PR firms who begin
with, ?Our client is a technology company, and it was
founded by an Indian?now can we expect some coverage
in your magazine?? Most times, the agency doesn?t even
know what the magazine is about, and is blindly
following the Indian founder?s suggestion. Whereas, if
you notice mainstream media, the agency is only a
paving force, and the CEO personally makes a pitch to
the editorial. It shows our lack of maturity?as
Indians, we tend to play down the importance of
packaging ourselves as savvy, sophisticated business
heads. How far is that going to get you??

Silicon India has recently formed a CEO Forum, where
it is inviting CEOs of Indian origin in the U.S. to
informal networking sessions, where they could meet,
share ideas and information, and play support roles to
their businesses.



  


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