LATERAL MOVES
Dozens of top managers
have moved from established companies into startups.
How are they faring
How are they faring
Ritu Khanna, 39 joined online
insurance seller policybazaar.com in December 2014. Much to her surprise what
she was doing on day one was different from what she was hired for. In the
three months gap between quitting the country's largest business services
player Genpact and joining online insurance startup Policybazaar.com her role
had changed.Recalling those days, she says, “that's what startups are all
about--they can grow 2x to 3x even before you know.“
From being hired to develop the
sales organization she was doing customer experience & supplier operations
integration on her first day.
Quite unlike the way it was at HCL,
GE and Genpact where she put in a total of 14 years before joining the startup.
“You have to be flexible to change orientation and be prepared for the unknown.
Else you are not startup material,“ says Khanna, an engineer and IIM Calcutta
MBA. Khanna is among the growing tribe of professionals leaving their
comfortable jobs to walk into startups.
Last fortnight Vivek Patankar quit
as head of financial planning & analytics at Unilever London to sign up
with Snapdeal.com as vice president, finance, in Delhi. While last week Idi S
Murthy joined Snapdeal as senior VP , marketing from GlaxoSmithKline where he
was regional director, marketing based in Africa, spearheading GSK's portfolio
in 44 countries.
In January Harshvardhan S Chauhan,
quit his job at Godrej to join ShopClues.com as associate director, categories.
At Godrej he handled business P&L and brand marketing strategy for Rs 3,600
crore portfolio.
This trickle of lateral hires is
turning into a flood with many like Khanna, Chauhan and Patankar leaving their
well paying jobs at global companies like Citibank and Unilever for startups
like TinyOwl and UrbanLadder, transported into an uncertain future and stock
options worth only on paper as companies are not listed.
When Chauhan left Godrej to join
ShopClues he got his parents to office on the first day. Says Radhika Aggarwal,
cofounder, ShopClues, “that was important to ensure he was not working for a
shack on the road.“
Startups launch their uncertain
journey with just the founders and even friends filling in technology and
product development roles. But as the startup grows there's a need for an
organization areas -HR finance, marketing technology , business development and
so on. “With no existing pool to tap in the e-commerce space, we have to scan
the whole landscape for talent,“ says Aggarwal.
Adds Alok Bansal, co-founder &
CFO, Policybazaar.com, “ As the startup starts to scale, there's a need for
experienced people or lateral hires as they understand process and scale.“
Importing Talent
Besides the lack of talent available
within ecommerce and the internet sector, fresh hires from campus are no good
as companies need the experience and exposure of large companies combined with
the fire-in-the-belly of a young recruit to take up positions.
Says Rishi Das, CEO, CareerNet, a
Bangalore-based recruitment firm, “The startup story is all about imported
talent.You don't see startups on campuses as don't see startups on campuses as
they need experienced hands.“ According to CareerNet about 25,000 were hired by
new internet companies in 2014 (less than 5,000 were campus hires) and this
will increase in 2015 as funding has grown two fold since last year.
Das believes if a startup is at
Series A funding it won't have a big brand name and if it needs an operations
head they will go in for project managers in large companies and make them head
of operations. A sales manager in a large multinational could be hired as
business development head.
While fancier designation are a
carrot to draw experienced talent to unknown startups, a feeling of hitting a
dead end makes the decision easier. Says Khanna, “there's lot of inertia in
large companies.They are rule oriented and top driven.In startups it can be
bottom up.“ Besides Khanna wanted to be part of a growth story and saw the
startup as a place to unleash her entrepreneurial spirits as well. Says Khanna,
“I wanted to put my skin in the game -be as responsible for growth as the
founders.“ Adds Prithvi Raj Tejavath, 32, vice president, category management,
UrbanLadder.com, “at large companies there's little risk taking. I needed
freedom and fast pace of work and that got me to Urban Ladder.“
Tejavath worked at Coca-Cola and
Diageo before joining the furniture startup.
For Ranjan Aggarwal, head analytics,
Lenskart the shift from American Express helped him get out of a single task
into multiple areas at the eyewear startup. “Startups provide the opportunity
to try out different hats and give room to take responsibility outside the job
description,“ says Aggarwal. On the other hand Aakratee Vajpai, head HR at
Lenskart where she moved from Airtel, the shift provides “an opportunity to
create the founding blocks“ that will help the company scale. For Sharad Khise,
head of production at the less than a year old personal care division of Soothe
Healthcare the move from Kimberly Clark was prompted as the startup offered a
`step up role with reasonable salary hike'. Says Khise, “it's an open door
policy . I can walk up to the managing director's cabin or whatsapp him even in
the night and I'll get a response.“
The compensation is no less
attractive. An executive from Unilever might have to take a 5% cut or at most
get a 5% increment„ but will get stock options valued at say Rs 1 crore today .
If the startup does well this could balloon to Rs 8 crore to 10 crore in just
three to four years, making the risk worth taking. Says Das, “wealth creation
opportunity without taking the risk of starting a company is also attracting
laterals to startups.“
The Downside
While the upside is huge if the
startup goes through multiple rounds of funding, getting a better valuation
with each round, laterals may run into culture and adaptability issues. Says K
Sudarshan, managing partner, EMA International, “If you carry a Citi or
Unilever card it gives easy access to lot of places. Besides you are used to
business class travel, five star hotel stays and support staff in
office.Startup is unlikely to offer such perks.That needs huge mental
adjustment.“
Besides, the wealth creation
vehicle, stock options, are worthless unless funding keeps happening or the
startup eventually lists. “The downside can be cruel,“ he adds.
For a mid career manager moving from
ITC, Tata Motors, Amex the shift could mean moving from a cabin to an open area
apart from putting in long and unsocial hours at the startup. “Still people do
join startups as they might have reached a dead end or want to test their own
skills,“ adds Sudarshan.
Tejavath agree there are risks, “but
at the end of the journey there are gains as you hit milestones.“ Adds Khanna,
“We are yet to see the landing but I believe it's a risk worth taking.“
Apart from giving up cabin to sit in
the open, risks include lack of clarity on roles, the problem of running into
the `the founders club' where the founder is always right and management style
could be perception driven. Explains Das, “someone staying till midnight in
office is perceived to be working more than another person working 9 to 6pm
while the latter might be delivering more.“
A bigger problem at startups is that
the lateral hire could be superseded. According to CareerNet half of the
lateral hires are unable to scale up themselves and hence leave or are
superseded. Startup organization structures also change as it grows say 4x to
8x and from 100 employees to 2,000 employees. Says a head hunter who wished not
to be named, “we have seen that happen at Snapdeal, Myntra, Flipkart and others
where employees either left as they were superseded or grudgingly accepted a
new head, waiting for stock options to vest.“ Says Sudarshan, “to avoid being
superseded you need to keep pace with the organisation's goal. You need to
believe in the startup story and be aware of the risks involved before joining
it.“
At fashion e-tailer Myntra, Neeraj
Seth who joined as CMO from Nestle quit in 15 months. “His case was different
as he had a clause inbuilt in his appointment letter to vest his options in
under two years. Every lateral hire may not get all terms in his or her favour
but be careful of what you sign on and see the exit route upfront in case it
doesn't work out,“ says the head hunter quoted earlier.
A Win-Win Case
Though not all lateral hire stories
will end up as forgettable moves. Several 30-year old executives at traditional
companies see merit in joining startups as this is where they will get the best
digital experience.
Says Das, “A 30-year old in a
traditional company will be irrelevant in less than a decade if he does not
have digital experience.“ Today in the US Wal-Mart insists on digital retail
experience for its new recruits.
In future 70% sales of brick and
mortar companies could also come from online. “An employee with no startup
experience will stare at a dead end if he sticks to his job at the traditional
company. On the other hand switching to a startup today will make him more
sought after even by a Unilever or Amex or Wal-Mart if he wants to return,“
adds Das. Even if the stock options don't pay off, the spell at a startup will
still come handy.shelley.singh@timesgroup.com (With inputs from Shonali Advani)
Shelley Singh ET12MAY15
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