Private Equity - The Job of Choice?

It used to be that the ultimate career goal was the CEO job at a Fortune 100 company.

And it's generally the best way to get invited to join Augusta National too.

And if you really made it, you might get invited to join the administration and go to the White House.

But these days, it seems that people are leaving those jobs aside and heading to private equity instead.

In the past week, I've read three stories that made this realization hit home

1 - Colin Powell, former Secretary of State and Chairman of the Joint Cheif of Staff of the US Military joins Kleiner Perkins as a special limited partner.

2 - Sandy Weill, former Chairman and CEO, of Citibank wants to leave Citi early to start a buyout firm.

3 - John Joyce, head of IBM's Services Group, which represents over half of IBM's revenues, gets off the CEO track to join Silver Lake Partners, a technology buyout firm.

It seems that private equity and venture capital is the career of choice these days.

So when are the invitations to join Augusta going to start coming our way?  :)

Comments

[scott p.]

My friend's dad, who was CEO of DHR (stock symbol, won't say company name) and Black & Decker left to start a venture fund, just to back up your case. I won't mention his name, because I don't know if his fund is "out" yet or not.

[Jason]

Love the fact that everyone wants to be in the buy and invest business, but no one wants to be in the build business.

Makes it better for the few folks who actually like to build things!

[PlanMaestro]

no VCs, no PEs, No Augusta, crippled managers in family firms... It sucks to be from Latin America

[Vijaychandran]

Hello please...

Vivek paul WIPRO ceo left the campany and join some i banking firm.. He is among 100 ceos in the world..

www.vcvijay.blogspot.com

[Danny Boy]

It was great time for Vivek to leave Wipro -- he had created boatloads of value for investors and shareholders alike ever since his GE days.

Rule #1: Always get out on top - a la Seinfeld + Jordan....

[Vijaychandran]

Dear Mr Fred

I am sorry about that. I am a great fan of ur blog and its in my blogrolls,, I read it everyday.. I will surely take care that I leave a link next time

Thanks
Vijay

[Vijay]

Vivek Paul Leaves Wipro
June 30, 2005

Wipro announced that after six successful years at Wipro, Mr. Vivek Paul is moving on to play a significant role in the technology and life sciences space, by becoming a Partner at the Texas Pacific Group, a leading private investment firm. Wipro also introduced the leadership team that will drive the next phase of growth.

[Dinesh Vadhia]

It was not long ago that VC's started bailing out from sitting on the boards of public companies. Some VC's even wrote lengthy pieces why there were doing this. Why? Something to do with a little act called Sarbannes-Oxley, which basically, as a board member, puts a gun at your head and a hole in your pocket, if you don't know what's going on at the company you are supposed to be overseeing. If you don't ask the right questions and listen to just the CEO, then checkout what happened at Enron, WorldCom, Tyco etc. etc.

In the good (or bad?) old days, after becoming luminaries, the luminaries from industry, government, academia etc. would be invited to become board members of leading public companies. This was good and helped industry move forward, and in the process they could make a small fortune.

The picture today is different. So, why do today's luminaries such as Powell, Weill, Joyce, Paul and many others shun seats on the boards of public companies? Because, they don't want to take the cane (on their polished luminous ass) or burn a big hole in their pockets because of SOX.

Dinesh

[Mike]

The invites to Augusta will come if VCs and their buyout brethern start sending deals to Stephens Inc. in Arkansas.

[aardvark]

I have done VC and it is no great job.

1. Yes, the cash is good--but less than a successful entrepreneur. What VCs like is that the salary--hence lifestyle--is secure.

2. Most individual VCs have no real power. Any deal they want to do needs approval of the partnership. That involves politics.

3. For 99% of VCs, VC is a commodity business, no matter what their expensive web sites say. Most VCs really only offer cash, whatever they claim.

4. Sure VCs get to sit on boards, but that gives them a single vote, maybe two. And yes, they have rights under the shareholder agreement. But really, the true power of VCs vis-a-vis portfolio companies is their ability to withhold future funding. VCs on boards tend to suffer CEO-envy, and spend far too much time meddling, talking strategy, plotting to fire the CEO, and so on, and so on.

So VC is a job where you cannot make a deal on your own, you have limited say in the activities of your investees (cuz other VCs want a say in them too), and you make less than the entrepreneurs. The deals you make--meaning participating prefs and bridge loan financing deals--are dullsville cookie-cutter vanilla Finance 101 deals that, speaking personally, put me to sleep.

And yet somehow with all this many VCs manage to be arrogant and glory-hog. Amazing.

Managing money is banal and coarse. Building a real company with values and great products is art. I have done both: I know.

[i'm with aardvark]

Nice post aardvark. Are you hiring currently? Sounds like you'd be fun to work with.

[Mark Lachance]

In your research on Sandy Weill, have you ever come across a complete history of his days at Commercial Credit Corp? Do you have any ideas on where I may find this?

[PrivateEquityKing]

Hi guys.. to raise some capital for our company, we have decided to sell one of our
top level domains.

www.PrivateEquityKing.com

is now up for sale. Please check out the website for more information.

[Aseem Giri, Author of "Imposters at the Gate"]

If you are interested in reading some 'case' situations in private equity, which can be helpful for your interviews, might I suggest "Imposters at the Gate: A Novel about Private Equity" by Aseem K. Giri. Reviewers have described it as a "Monkey Business" (the book about investment banking) for Private Equity. Most find it an entertaining read. It is available on amazon.com and barnesandnoble.com.

[Aseem Giri, Author of "Imposters at the Gate"]

I know I am late joining here, but I couldn't agree more with aardvark's comments. My book, "Imposters at the Gate" has that viewpoint as a central theme. I too left a private equity job to be a builder of businesses. And I have never been happier. aardvark, shoot me an e-mail sometime, I'd love to be in touch with you ([email protected]).