THE SEASONED STARTUP

When Sunil Kanchi ’06 quit a good job — during the depths of the recession, no less — to launch Kanchi Technologies in 2009, his employers were more than a little surprised. But for Kanchi, who had been successful in both purchasing and selling outsourced engineering services, the timing was perfect.

“Having seen it from both sides, I found a big gap in what customers wanted and what the suppliers were providing,” he says. “So we came up with this co-sourcing model that was a lot more flexible, transparent, adaptive, focused on innovation and [required] less hand-holding from the customer.”

After parting ways with Cisco Systems during a workforce reduction in 2011, Doug Silverstein ’96 realized it was a blessing in disguise. Rather than find a new job, he started Cypress Consulting, a marketing content firm. Now, Cisco is one of his clients. “I had strong and bold ideas,” he says, “but others at Cisco were hesitant to be risk takers.”

Whether by choice or a visit to human resources, many midcareer professionals are leaving their jobs. Leaving their industries, however, is another matter. Not only are specialists staying, they are launching their own businesses, using their experience to identify challenges and develop solutions.

That is a particularly useful skill in an unstable economy, says Linda Darragh, executive director of the Kellogg Innovation and Entrepreneurship Initiative and a globally recognized leader in entrepreneurship education. And it has businesses urging entrepreneurs to come back into the fold.

“They know the industries; they know where the problems are,” Darragh says. “Their expertise in actually growing a business, that entrepreneurial aspect of it, is really in demand for the corporate innovation labs.”

That has been the case for Susan Brazer ’88, CEO of LionShare Media. LionShare has remained active for the past 17 years, changing from digital-television distribution to working with startups to commercialize mobile-media platforms and applications.

But every now and then, Brazer goes internal, having accepted senior executive positions with Nokia, Virgin Mobile USA and Viacom in the past. “They appreciate executives who have an understanding of large-scale organizations and their growth requirements and challenges while also being actively engaged in the greater global innovation ecosystem,” she says.

Developing that kind of adaptability is crucial for entrepreneurs, says Dick Seesel ’78, a former senior vice president with the retailer Kohl’s. After joining the company in 1982, Seesel helped grow it from 18 to 750 stores and develop new departments and brand partnerships. In 2006, he left to launch Retailing In Focus, which targeted small retailers and vendors that worked with big, midtier retailers and needed strategic direction from someone with Seesel’s experience.

Working at Retailing In Focus allowed Seesel to stay connected to the retail industry while serving on the board of his kids’ high school and teaching a retailing class at the University of Wisconsin- Milwaukee. And after receiving a lymphoma diagnosis in 2009, he took most of the year off for treatment and recovery. “That gave me some pause about how to approach what I was doing professionally,” he says.

He shifted gears, consulting for clients in equity research and money management. The change has both grown his business and expanded his industry knowledge. “What I’ve been doing really gives me more of a 30,000-foot view of the retail industry and other retailers and developing trends and developing strategies,” Seesel says. “It’s fun to be able to do that, especially as you get farther away from your own day-to-day skill set as a manager. And I’m probably busier now than I was the first couple of years.”

But that flexibility needs to extend beyond the business plan, says Joe Dwyer, adjunct lecturer at Kellogg and partner at Digital Intent, a firm that creates and grows digital businesses. Many midcareer entrepreneurs fail to realize they no longer have the same support and infrastructure they had at their old jobs. “The notion that you’re going to come out and then start from scratch to create a business with the same behaviors is, I think, one of the biggest problems,” Dwyer said. “It results in untold sorrow.”

When Jeff Hayes ’88 started Koan Health last year, one of his biggest challenges was learning how to manage parts of his new company that had been handled by in-house experts. He turned to his own network to bring in accountants, lawyers and HR professionals on a temporary basis. Using new technology, Hayes handled administrative functions, built his own website and worked on brand imaging. “It’s really amazing how good the technology is to support small businesses,” he says. “I really didn’t have that visibility in how much you can do things a little differently and save a bunch of money.”

While essential, being flexible isn’t enough, says Darragh. Entrepreneurs need to keep close contact with their clients, especially when emerging technologies and a still tumultuous economy can lead to new opportunities for growth.

Before Kanchi left his job, he spoke to his existing customers, many of whom had no money to spend but no shortage of needs. Trying to do everything in-house wasn’t an option anymore. They had to keep their balance sheets light and rely more on partners and contract resources to achieve that. Kanchi’s model offered a solution.

Those conversations reassured Kanchi that the time was right to move forward. If only the banks were as understanding.

Changes in the financial industry left Kanchi without the funding he expected. Frustrated, he sat down with his wife and parents and, as a last resort, asked for a loan. They offered him their retirement fund, and his wife agreed to invest both his 401(k) and their savings. There was one condition: He had three years to make it work.

But even with the added pressure, he still felt that he was making the right decision. “Yes, there was a sense of tingling fear but overall, my thinking was, ‘I’m going to go start something great and it’s going to take off,’” Kanchi says.

As the recession waned, those customers came back to Kanchi, who has since grown his company to include offices in Germany and India. And when the Milwaukee Business Journal named him among its top “40 Under 40” businessmen this past March, Kanchi was certain he made the right choice.

“The C-level executives I talked to gave me the confidence that once the recession was done, they would actually depend more on third-party partners,” he says. “That gave me the confidence to take the plunge. And we’ve been able to grow.”