Pre-IPO Startups a Big Lure for Executives

Susan Hall

Palo Alto Networks, a security software company that's considering an initial public offering, has hired away VeriSign CEO Mark McLaughlin and plans to hire 300 people, Bloomberg reports.


It says the company competes with the likes of Check Point Software Technologies and Cisco, producing a new kind of firewall that determines whether Internet traffic is allowed based on the application that generated it.


A Wall Street Journal piece, meanwhile, uses that move as an example of the talent lure for companies nearing an IPO. It points to executives at established public companies that have been lured by startups such as Yelp, Zynga and Bazaarvoice. With compensation packages heavy on stock awards and options, the siren song of a potentially hefty payday is pretty sweet.


According to the article:

John Schappert, Zynga's new chief operating officer, made more than $10 million during the 2010 fiscal year in the same post at [Electronic Arts], according to a regulatory filing. EA has around $3.6 billion in annual revenue, while Zynga reported annual revenue of $597 million in a pre-IPO regulatory filing. But Zynga is expected to go public with a valuation around $20 billion, nearly three times EA's market capitalization.

But not every IPO will be as wildly successful as that of LinkedIn. The article quotes Rick Devine, a recruiter at Devine Capital Partners, saying:

You're playing career lottery basically.

It also quotes Rob Krolik, the new Yelp CFO, saying:

The way I look at it, the worst case is that [the company] doesn't become significantly bigger. That's OK because the experience that you gain you can take somewhere else.

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