Exit Strategies for Corporate Dropouts

Ready to leave the company fold but don't want the door to hit you on the way out? Here's a guide to making a graceful exit.

"I'm 40 years old, and I've worked in corporate America since I was 21," says Lisa Ellerton, who had climbed her way up through the insurance business until she was the worldwide operations leader for Royal & SunAlliance. One day, Ellerton asked her sister and her sister's friends why they didn't ever take time for themselves to go to the gym. The Orange County, California, denizens were all looking for something that was convenient but that didn't make them feel guilty for leaving their kids for the StairMaster.

And just like that, Ms. "Super Corporate America" began to drop out. Ellerton left Manhattan for Manhattan Beach, trading in her power suits for PowerBars. She began planning a fitness studio, catering to executives in the morning and evenings and to stay-at-home parents and their kids in between.

In doing so, she joined the ranks of those who ditched the corporate life in favor of their own startup. Dropping out connotes '60s-ish notions of Timothy Leary and Easy Rider, but it's not quite that simple and doesn't come in convenient pill form. Making the transition from glass buildings, 401(k)s, and dental plans to a much more unpredictable but potentially more rewarding life involves planning, finesse, and a little luck. By the time Ellerton's first studio opens this summer, it will have been nearly three years since she envisioned it, most of that time spent working for the Man.

Tune in to ideas around you

Breaking out of the corporate grind starts with an idea, and the good news is that ideas abound in the work environment. Jason Finger and Paul Appelbaum's company started with a growling stomach. The two law-school buddies were regularly toiling away in their respective first-year associates' jobs and debating the merits of chicken lo mein versus pepperoni pizza when comparing the takeout options near their midtown Manhattan offices. Looking at the jumble of menus in their desks, and the hassle of remembering which client to bill, the two stumbled on the idea that would become SeamlessWeb Professional Solutions, an online food-delivery service for law firms, bankers, and so forth.

"We understood who the clients were, we understood who the users were," Finger says. During the cold January when he and Appelbaum were completing their plans, he couldn't help but smile every time an associate complained about venturing outside in the cold and rain for lunch, "because I knew that we could help people out with a real problem."

It was confidence in this idea — or chutzpah — that led Finger, just five months into his first job out of law school and $100,000 in debt, to leave a career in law behind. "A lot of entrepreneurs actually get their ideas for their business while working at a company," says Herminia Ibarra, a professor of organizational behavior at INSEAD and author of Working Identity: Unconventional Strategies for Reinventing Your Career (Harvard Business School Press, 2003). "They see a need that's not met." Finger has long since paid off his student loans — and SeamlessWeb's 2004 revenue hit $50 million.

Take an idea out the door with you

Sometimes your corporate overlord hands you an exit strategy that's better than any severance package. Terry Moloney and Doug Dyer developed an idea for their employer that turned into their escape pod. Dyer, the vice president of wireless for Warner Bros. Online, hired Moloney to come up with content for the latest generation of high-speed, high-bandwidth mobile phones. "We thought, 'Why not put together a film concept that lends itself to small chunks?' " says Moloney. While the brass didn't express much interest, Moloney and Dyer didn't want their idea of original video content for mobile devices to die. Warner Bros. "wasn't playing in that space," says Moloney. "We decided, 'Let's just start this company.' " The two took their final bows at Warner in December, "and sort of took the concept with us," he says, starting MoPho last January. Opportunities for cherry-picking abound — assuming, that is, that you know the difference between an orphaned idea and industrial espionage — in the tech world, pharmaceuticals, and even consumer products. What would be a mere single for a big company can be a startup's home run.

Work nine to five — then from five to two

Once you decide to make a move, there's inevitably a pause before you can follow your muse. Corporate dropouts concede that one of the most difficult things is to maintain the same level of enthusiasm for the job you're about to leave as the venture you're about to start. The little things, such as staying a bit later to finish a project or going out for drinks with coworkers, tend to fall by the wayside. Ian and Shep Murray, brothers who left the worlds of public relations and advertising to start a whimsical clothing company called Vineyard Vines, admit that clock-watching became the norm. "You work your job from nine to six, and all you want is for six o'clock to come so you can work on your business," he says. "That's when our day began."

Of course, it's not unnatural for achievers to wonder if they can pull off doing both the day job and the dream indefinitely. "Can we enjoy the security of six-figure-plus law-firm jobs and start a business on the side?" Finger asked himself. Ultimately, though, he realized that "the only way things get done is if you give it 100%. And if we tried to balance working at the law firm and the business, neither one would get a fair shake."

Corporate dropouts forget that the relationships they've built are part of an entire career story that they take with them. It's important they speak with their employer when going through the transition.

Turn on the warning lights

Dropouts also need to manage their exits carefully. "They sort of forget that these relationships they've built, the positions they've held, are part of an entire career story that they take with them," says Lisa MacKenzie, who left what was then Cunningham Communication in 1993 to start her own marketing firm. "So it's incredibly important for them to have a conversation with their employer when they're going through the transition."

Graceful exits aren't just a matter of honor — or even of keeping doors open. They're good business. MoPho's Dyer keeps in touch with the people he used to work with because, he admits, his company could be using Warner Bros. content in the future. Plus, he adds, "You don't want to mess with the 900-pound gorilla." SeamlessWeb's Finger gave his law firm ample warning before he left, fully aware that his fledgling business idea depended on 900-pound gorillas like his employer as clients. Finger first presented his business plan to a senior partner as a friend's idea. Three months later, he again broached the subject, adding that he was thinking of leaving the firm. The soft sell worked, and he was able to circulate the plan in the firm, which ultimately became a beta client. In fact, the partner's initial enthusiasm was "one of the impetuses for us going through with it," says Finger.

Coworkers are a constituency that must be managed as well. Ellerton was already well into her fitness-club plan when she took a job with Arch Insurance Group in October 2003 to help overhaul its IT infrastructure, a post she accepted with the understanding that she planned to leave in a year's time to pursue her idea. But Ellerton "didn't advertise [her short horizon] within the company," she says. "I didn't offer it upfront, because what I was doing in the company was not incredibly popular." She knew that if she were viewed as a short-termer, her work might have been met with more resistance. "I still treat it today as if I'll be here for a career," she says.

Who are you?

Dropping out brings with it trepidation — and not just with finances. "There's very much the identity that goes along with being part of a corporation, and that's a little scary to give up and wear workout clothes all day," says Ellerton. That's why it helps to have a partner. While Ellerton will be doing her yoga alone, SeamlessWeb's Finger and Appelbaum, MoPho's Dyer and Moloney, and the Murray brothers of Vineyard Vines all made tandem leaps. In the weeks leading up to their departure, Shep Murray would call Ian several times a day pretending he'd quit. When Shep actually gave notice, Ian understandably didn't believe him. When Shep finally did, though, Ian went straight to his boss and did the same. For the brothers, scraping by, even failing at their own thing, was no worse than toiling in quiet desperation. Says Ian: "There's always going to be a job out there if you're coherent and can put a sentence together."

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