CEO SHORTAGE HAS ECONOMISTS WORRIED.

Byline: Dereck Andrade Staff Writer

The Southland's burgeoning biotech, high-tech and medical science industries may be falling woefully short of the mark for leadership by their top-ranking executives.

It's considered a serious chink in their business plans, experts say, a problem that could prevent them from taking the step from lively start- up firms, driven by millions of dollars in venture capital, to the next level: center-stage on Wall Street with potentially lucrative initial public offerings.

``I think it's a real problem,'' said David Baltimore, president of Caltech in Pasadena, which has been credited with helping to launch many of the area's high-tech and biotech incubators.

``The problem most of these young entrepreneurs are having . . . is the basic experience to run a company,'' he said.

Baltimore said it now takes a ``different kind of experience and mind-set'' to run a high-tech company in Southern California than it did a decade ago.

``An older sort of person now needs to come in the latter stages of a company's development,'' said Baltimore, a Nobel Prize winner. ``It really is a matter of judgment in each individual circumstance,'' he said, admitting that it is sometimes hard to ``wrestle the control away'' from an entrepreneur once he is entrenched at the top of an organization.

Caltech is about to embark on a land-lease speculative deal for a biotech incubator near Pasadena's Huntington Memorial Hospital in two weeks, the first of its kind by a major U.S. university, according to Pasadena city officials.

While Caltech's Baltimore and Pasadena business development officials declined to discuss the specifics, it shows a continued commitment of academia to assist the brightest minds in developing new technology, but also to support them on a financial level by acting as a lease guarantor.

And while many economists agree there is a push to create a biotech corridor from Caltech eastward along the path of the Foothill Freeway (Interstate 210) toward Claremont, a nagging question remains: Is there a shortage of qualified leaders to fill the region's future mahogany-laden board rooms?

``There will be lost opportunities if they can't,'' predicted Jack Kyser, chief economist with the Los Angeles County Economic Development Corp. ``If that happens, then you'll lose the tax base which would have been generated by that company if they relocate out of Southern California.''

The biotech corridor would connect Pasadena and the Jet Propulsion Laboratory with the City of Hope National Medical Center in Duarte, past Cal Poly Pomona, which is attempting to develop its own biotech campus, ending at the Claremont Colleges on the edge of the San Bernardino County line.

But Kyser worries the corridor would be hard-pressed to compete with the region's ``Tech Coast'' and Northern California's Silicon Valley region if future executive leadership issues are not addressed by business incubators.

At the University of Southern California, Steven Sample, the school's president, said young entrepreneurs often have a great idea but often ``damn the torpedoes and go full-steam ahead'' without proper leadership skills.

``Young people need to be taught how to be successful business leaders,'' said Sample. ``One of the fundamentals of universities such as USC is to bridge the `grayhairs' with the young people,'' he said. ``Older and more experienced people need to be brought into contact with these young people who may lack . . . the experience.''

Even nonprofit, community-based leadership programs in Long Beach, Pasadena and the San Fernando Valley are recognizing the importance of educating professionals who may become tomorrow's high-tech leaders.

``Although it may be more threatening to have someone with more experience than yours come in-house, our program helps go beyond that point, and that's where leadership skills come through,'' said Greg Apodaca, executive director of Leadership Pasadena, an organization that offers intensive networking opportunities for its members.

Surprisingly, the concern is being addressed not only by some of the nation's top academic institutions but by the high-tech businesses themselves.

It's an acknowledgment that, for the first time, reveals that many of the 20- and 30-year-olds whose brainpower spawned the companies in the early 1990s may now not have the proper leadership skills to take the firms to a more secure business level in 2000 and beyond.

The Los Angeles Regional Technology Alliance at USC's Annenberg School Incubator Project works with many of Southern California's high-tech start-ups in Los Angeles, Orange, northern San Diego, Santa Barbara and Ventura counties - the Tech Coast - to take them to that ``next level.''

``Certainly the team that founds a company is not going to lead it to an IPO,'' admitted Cliff Numark, the Alliance's chief operating officer, who plans to step down from that position in the next few weeks to head San Diego's technology alliance, an area many consider a hotbed for biotech firms.

``Everyone on a start-up team is prefaced by one term: interim,'' said Numark. ``That's reality.''

David Glickman, the 34-year old CEO of Los Angeles-based TelePacific Communications, a privately held hybrid Internet firm, is another 30-something executive who is stepping aside to make room for one of those ``gray-haired'' executives.

``We need someone with the gray hairs to take it to the next level,'' said Glickman in a telephone interview while on vacation in Buenos Aires, Argentina.

He was 28 when he started TelePacific's subsidiary, Justice Technology Corp. in Culver City.

While TelePacific's Glickman thought he had the right stuff to lure new leadership in a $30 million CEO compensation package - $1 million cash over the first two years with a hefty stock-option - it hasn't been so easy attracting a candidate.

``Basically, we've found difficulty finding the perfect fit,'' said Glickman. ``I've been told by our headhunters that there are 400 CEO searches in California alone right now.'' Executive recruiters put that number closer to 600 statewide.

But firms like TelePacific are hungry for senior leadership, especially when the company has raised $80 million of a targeted $500 million in new venture capital.

``I have found that if you were a successful CEO, COO or CFO, you have a helluva lot of job offers right now,'' said Glickman. ``But it's best for our company to have someone come in who has run a publicly traded company. For us, we can risk going with me, or lower the risk of someone who has done it all before.''

Jon P. Goodman, a Ph.D. at USC and director of the school's Annenberg Center Incubator Project, dubbed ``EC2,'' said the lack of leadership at many of Southern California's tech companies is not a localized phenomenon.

``Leadership skills are lacking all over America,'' said Goodman, whose book, ``Leading with Knowledge'' (Sage Publishing; 1999) also addresses leadership issues in the business community.

``You can't create leadership skills,'' said Goodman, a leading authority on new-venture management. Goodman said leadership is the ``function of having the right stuff,'' requiring the consensus of those being led.

``You don't get a 12-year-old managing a company and then emerging as this brilliant leader,'' Goodman said. ``In today's new economy and new businesses, you don't come in say, `Hello, I'm your new leader.' You need the commitment of the followers. Leaders are not appointed or annointed.''