THE BEST CEO YOU'VE NEVER HEARD OF

Mike Hodges is money. He's the first guy you should turn to when the game is on the line and the last guy you should ever bet against. For five years he's jumped between interim CEO roles at optical start-ups needing focus during hazy early stages. He has delivered everywhere he's landed. Now, after signing on as CEO at MEMX, Hodges' long search for the perfect opportunity has finally come to an end.

There's a surfboard in the lobby at MEMX. It's the first thing you see upon entering the reception area of the company's headquarters in Sunnyvale, Calif. Yellow at the tip against the floor, the board's color changes gradually to lime green, then darker green as it creeps vertically up its length. But with the blindingly bright yellow wall that serves as the board's backdrop, it matches the room's color scheme perfectly and isn't nearly as intrusive as a 6-foot surfboard in a lobby could be.

The surfboard was the first big purchase MEMX's new president and CEO Mike Hodges made after landing his inaugural electrical engineering job 28 years ago. As a sport, surfing is as much about patience and timing as getting up on the board. Waiting for the perfect wave — your wave — and recognizing which opportunity to seize is crucial. Sometimes your wave comes as soon as you paddle out. Other times you wait. Sometimes it doesn't come at all.

As a California native with 40 years of surfing experience, Hodges has developed an acute sense of which waves are worth riding and which he should let pass. For the past five years, Hodges has worked as a Lone Ranger — an interim CEO who injects start-ups with early-stage guidance or turns around small companies battling to survive. Since 1996 he's accepted operational roles at no fewer than nine companies, and he's good — damn good — at his job. A blend of technical expertise, business savvy and overall affability have earned him the respect of his peers and golden boy status among a number of venture capital firms that recruit Hodges to protect their investments.

THE CAREER TRAJECTORY  OF MIKE HODGES 1988-1989 Thermea (Palo Alto, Calif.): President, CEO and chairman 1990-1992 Cygnet Systems (San Jose): President, CEO and chairman 1992-1996 Biometric Imaging (Mt. View, Calif.): President and CEO 1996-1998 Institutional Venture Partners (Menlo Park, Calif): Venture consultant January 1999-February 2000 Tellium (Oceanport, N.J.): Interim President, CEO and chairman February 2000-June 2000 Bandwidth9 (Fremont, Calif.): Interim president and CEO June 2000-January 2001 Onetta (San Jose): Interim president and CEO May 2001-August 2001 Silvan Networks (Mt. View, Calif.): Interim president and CEO August 2001-Present MEMX (Sunnyvale, Calif. and Albuquerque, N.M.): President, CEO and chairman

Now, after a string of successful short-term leadership positions — among them tenures at Tellium, Bandwidth9, Onetta and Silvan Networks — Hodges claims he's sticking with micro-electromechanical systems start-up MEMX for good. “For a while I was a walk-on player, in a sense, and got to play with a bunch of great athletes,” he said. “But having spent so much of my life on the field, I decided it was much more fun to be a player.”

Hodges speaks in sports analogies regularly. The habit hints at a competitive streak that has no doubt benefited his academic and business pursuits. It also speaks to his athleticism: As a lifelong resident of Palo Alto, Calif., proximity to the Pacific and an active lifestyle have kept mind and body fit. At 52, Hodges embodies the casual zeitgeist of Northern California, packaging youthful good looks and chiseled physique in Hawaiian shirt and tennis shoe attire.

When asked why he is qualified to run a business, Hodges has a stock answer for every company he's signed on with: “I've made more mistakes than all of you put together.” He understands that CEOs don't have to be the smartest in the company, and he never pretends to know more than the founders. His talent is spotting great technologies, shaping a successful business plan around them and communicating the company vision.

“What I like about being with small companies is having control over your destiny,” Hodges said. “If I'm in a situation where I don't come to work for a week and no one notices, what's the use of getting up and driving through traffic?”

Technological breakthroughs often come from young innovators who know the technology inside and out but lack the experience to make their ideas commercially viable. The interim CEO trend, therefore, has emerged as a way to build basic infrastructure or help start-ups focus during critical early growth stages. Between 1997 and 2000, when hundreds of companies cropped up across Silicon Valley, the CEO talent pool was shallow — more companies existed than people able to run them, and seasoned leadership was hard to come by. Start-up businesses were too green and unrefined to attract high-caliber talent, and as a result, companies either cast inexperienced entrepreneurs in CEO roles or sputtered during long CEO searches.

Rather than gamble their investment on the leadership of technologists, venture capital firms such as Sequoia Capital and Accel Partners turned to a select few interim CEOs for operational support while conducting searches for permanent leadership. Pairing an experienced CEO with the start-up team on a short-term basis was a simple solution that protected their investments and helped new companies find their footing more quickly.

Now, as more venture firms hire entrepreneurs to temporarily guide new companies, VCs are evolving into one-stop shops for furnishing corporate infrastructure. With start-ups able to find funding, management and a board of directors under the same roof, the risks to all parties involved are significantly reduced. Founders without CEO experience are not faced with responsibilities they're ill-prepared to handle, and VCs have more control over how the businesses they're funding are run.

“There's a lot more realization that some operational experience can really help the firm and the investment,” said Jim Flach, partner for Accel. “We've seen a lot of entrepreneurs and experienced managers get into the investment business, and it's a recognition of how valuable it is.” Flach said that in optical networking, Accel trusts no more than 10 or 15 people for early stage CEO-ships.

Both Sequoia and Accel have Mike Hodges' contact information on file.

Although Hodges' reputation and track record would allow him to act in interim roles for the rest of his career, he realized his passion for optical switching, the potential of the company and his interest in revisiting a full-time CEO lifestyle would be enough to keep him at MEMX long-term.

As Sequoia considered backing MEMX, the firm asked Hodges to fly to Albuquerque, N.M. — where MEMX is also based — to meet with the budding company and assess its product and prospects. Earlier this year, the core MEMX team spun out of Albuquerque's Sandia National Laboratories, where they'd dedicated the past 10 years and $100 million researching MEMS — microscopic mechanical components no bigger than a grain of sand that are batch-fabricated onto a single silicon wafer. The work they did at Sandia was groundbreaking but largely academic. MEMX was forged to commercialize MEMS technology by producing optical switches. But the company had no illusions about its need for a top-flight CEO. MEMX Co-founder and Chief Technology Officer Paul McWhorter said that immediately after meeting Hodges, he was the company's first choice.

“He's just as comfortable talking about budgets, spreadsheets and revenue projections as he is talking about photons and quantum effects.”

The admiration was mutual. Although Hodges' reputation and track record would allow him to act in interim roles for the rest of his career, he realized his passion for optical switching, the potential of the company and his interest in revisiting a full-time CEO lifestyle would be enough to keep him at MEMX long-term. A typically harsh technology critic who is not easily impressed, Hodges said the company's level of expertise blew him away. That, and they drive really cool cars: “MEMX has the only [chief technology officer] who drives a Hummer,” Hodges said. “How can you turn down a guy who picks you up at the airport in a Hummer?”

Hodges' credentials speak for themselves. After earning his undergraduate and graduate degrees in electrical engineering from the University of California, Berkeley, he spent 14 years at Spectra-Physics before its hostile takeover by Swiss mega-firm Ciba-Geigy in 1987. Reluctant to become just another cog in a massive corporate machine, Hodges left his post as division president before the ink on the deal was dry.

Over the next decade, Hodges followed his intellectual curiosity to the engineering side of medicine, working to solve technical issues in cancer therapy and AIDS research. He founded Thermea in 1988 and was president and CEO of Institutional Venture Partners-funded Biometric Imaging from 1992 to 1996. But bureaucratic headaches left him frustrated: “You had no visibility as to when [the FDA] may make a decision,” Hodges said. “You were held hostage to something that's completely out of your control.”

In order to spend more time with his wife of 27 years, Marta, and their three daughters, Hodges accepted a venture consultant position at Institutional Venture Partners in 1996 and began working interim positions full time. His family hit a rough spot around that time, requiring that he be home more often; interim CEO-ships allowed him to work three days a week without committing to the 24/7 life of a full-time CEO. “When I had an emergency at home, I could leave and not feel guilty about it.”

By 1998, after several interim jobs, Hodges' intellectual curiosity flared again, this time sending him in search of an optical switching opportunity. Then Accel called about a start-up it was funding: Oceanport, N.J.-based Tellium. Despite boundless potential, the company was sinking fast, and Accel needed Hodges to steady the situation. It was the optical switching opportunity he was waiting for, and even though accepting would separate him from his family, he agreed to take the position and commute every two weeks from California to New Jersey.

In late 1998, companies such as Cisco Systems, JDS Uniphase and Lucent Technologies were buying dozens of optical start-ups and paying handsomely for them. Although Tellium — at that time still in its first nine months of operation — had no intention of being acquired, the company later decided to capitalize on the market craze and packaged itself for sale.

But Tellium's bid for acquisition went begging: When Hodges arrived in early 1999, the young company was fresh off its most recent of three soured acquisitions when a deal for as much as $500 million fell apart. Although a “For Sale” sign remained in the window, Tellium was beginning to look like damaged goods, and its bargaining strength waned. Confidence inside and outside the company was crippled, and disillusioned staff threatened to leave.

“When [Hodges] came, it was pretty much in turmoil,” said Tellium Co-founder and Chief Technical Officer Krishna Bala. “The company would not have lasted.”

Hodges first determined that if Tellium was to survive, it had to decide what it wanted to be when it grew up. The engineering team was as talented as any Hodges had seen, but despite technical expertise, they were scientists with no experience running a business. The company's 70 employees were spread across 19 projects — covering a portfolio that included cross-connects, wave division multiplexing, long-haul, short-haul and metro optics — and lack of focus was running Tellium into the ground.

Hodges decided to direct the company's efforts on optical switching and cancel all other projects. The decision was met with mixed reactions. Cheers went up in Tellium's optical switching camp, but others who had dedicated 80-plus hours a week for the past year on now-scrapped projects felt defeated. The move required additional justification since Tellium was furthest along in WDM and very close to securing a $20 million contract with a major carrier for its WDM technology. The company was essentially walking away from $20 million in exchange for nothing, and Hodges — believing optical switching was the technology with the most potential — needed to convince doubters the move would differentiate Tellium from its competition and benefit the entire company in the long run.

But a re-energized Tellium soon emerged. Employees whose projects were canceled were repositioned to lead the cross-connect team, and although no one knew where the company was headed for sure, all worked toward completing the optical switching product. In a matter of months, Tellium landed a $250 million contract with Dynegy (then Extant) and secured $78 million in two funding rounds. The once-multiproduct start-up with early aspirations of selling itself off now had investment bankers saying it was ready to go public.

“We were working really hard, had our noses to the grindstone and looked up one day and said, ‘Really?’” Hodges said. “It wasn't really our idea [to go public], and we were thrilled to hear that, but we didn't go out searching for them. They found us.”

With an IPO imminent, Hodges was ready to return home for good. An assignment he thought would last just half a year had stretched to 13 months and earned him more than 120,000 frequent flyer miles. He had saved Tellium from going under, but he also hadn't been home on a weeknight for more than a year and missed plenty — including his youngest daughter's first date and his middle daughter's junior prom. And even when he was home every other weekend, he was never truly there. “I don't think I ever relaxed that whole year,” Hodges said. “I never got down to a grounded state because I was always a couple hours away from getting back on the plane again.”

The full-time CEO job was his if he wanted it, but with his family on the West Coast and Tellium strong enough to attract a high-caliber permanent CEO, it was time to move on. “He had his ‘real-life’ family tugging him on one side and his professional-life family tugging him on the other,” said current Tellium Chairman and CEO Harry Carr, who ran Lucent's data division before Hodges recruited him. “If Mike had been able to make a commitment to be here physically on the East Coast and wanted to run the company, the board would've given him that opportunity.”

For Hodges, the departure was bittersweet. “When I got on the plane the last time to leave Tellium, I felt I was leaving a little bit of my soul behind,” he said. “It was kind of like emerging from a tough football game that you've finally won.”

Almost immediately upon returning home, Hodges moved on to tunable laser company Bandwidth9 for three months before shifting to optical amplifier start-up and Sequoia venture Onetta in June 2000. Although Onetta Co-founder and Chief Technology Officer Yan Sun didn't recognize Hodges' name at the time, he seemed to remember a recent phone conversation with former Bell Labs colleague Krishna Bala in which Bala recounted someone nursing his moribund start-up Tellium back to health.

Sequoia brought Hodges in to set up internal procedures and recruit staff, including a permanent CEO — and the founders were happy to receive the help. Realizing Onetta hadn't made enough progress to attract an experienced CEO, short-term guidance seemed prudent. Interim support would also save Onetta from many of the same mistakes the founders observed in Silicon Valley as the market returned to old-school thinking of cash conservation and sharp focus — all things no one paid any attention to just two years earlier.

“Start-ups can afford fewer and fewer mistakes,” said Robert MacDonald, co-founder and vice president of product management for Onetta. “We witnessed it from the outside and decided not to get stuck in that trap.”

In six months, Hodges grew the company from 16 to 85 people and recruited current President, Chairman and CEO Dennis Barsema. But as with Tellium, leaving Onetta was difficult for Hodges because of the work he'd put in and because of the strong relationships he'd established with his colleagues.

“Even though you know from the start that there is going to be a time you're going to leave, it's still a hard thing to do,” Barsema said. “There's a sense of satisfaction you get from taking a company from start-up through IPO or acquisition that you can't get from being an acting chief executive, so I think that's a large part of why Mike's doing what he's doing.”

With the MEMX CEO job, Hodges' journeyman days are over. He is ready to settle into a company he can help build without concerns of handing over the controls. The physical disconnect from his family he suffered while with Tellium — and the mental disconnect that comes from having “interim” in your title — are past. Hodges has experienced enough change. At least for a while.

“The advantage of having done this is that I've been involved in so many telecom companies, and I have a very good perspective on a lot of stuff,” Hodges said. “But as an interim CEO, you're everybody's uncle and nobody's father. You're always a little bit removed, and I missed being part of a team.”

One last sports analogy: It's like Hodges has caught the perfect wave, and this time he's riding it all the way home.