Linuxcare has lost its second senior executive in two weeks, a key departure that creates a potentially serious roadblock to the company's delayed initial public offering plans.
Chief information officer Doug Nassaur, 33, resigned yesterday from Linuxcare, a provider of Linux consulting services and technical support, less than two weeks after the departure of former chief executive Fernand Sarrat, 49.
In an interview today, Pat Lambs, head of Linuxcare's office of the CEO, said the two resignations were completely unrelated.
Sources familiar with the management changes, however, said the departures were linked by a common cause: a three-way disagreement among the company's top managers. The company founders disagreed with Nassaur over the software used to run the Linuxcare operation, and both the founders and Nassaur disagreed with Sarrat, sources said.
The result was a contentious split that left no one happy--in particular the company's board of directors, whose eyes were trained on the IPO "road show," during which Linuxcare executives described their business to potential IPO investors.
Growing pains at start-ups aren't unusual, particularly when outside managers are brought in to take over the company from founders. But the difficulties at Linuxcare are compounded by the pessimistic stock market and the steady decline of stock in Linux companies such as Caldera Systems, Red Hat, VA Linux Systems and Andover.Net.
As with Sarrat's resignation, Lambs declined to say why Nassaur left. She said the company's board was not involved in his departure.
Reached for comment at his home, Sarrat said only that he left "for personal reasons to take care of issues at home that I need to attend to."
Linuxcare's IPO is delayed, not canceled, said Lambs, who added that it won't take place until searches for a new CEO and CIO are finished. No interviews have been conducted, though Lambs has been evaluating CIO candidates. Ted Schlein, chairman of Linuxcare's board and a
partner at venture capital firm Kleiner Perkins Caufield and Byers, is leading the CEO search, Lambs said.
The IPO schedule is dependent on two factors, Lambs said: "The market conditions, and when our bankers feel this is the proper move. We need to fill the CEO position prior to doing that."
But she insisted that the company is still under sound management. "Yes, there are roadblocks, and yes, we will get over them," she said.
The disagreement within Linuxcare centered on what type of software to use as the foundation for its support operation, sources said. The debate was whether this software should be open-source--freely available for anyone to modify and use, as is the case with Linux itself. The founders--Art Tyde, Dave Sifry and David LaDuke--are open-source advocates.
The company will use its own software, called "Sorcerer," for running the operation, Lambs said. "That infrastructure is up and running now," she said. It is used at Linuxcare computer centers run by Digital Island in New York, London, Hong Kong and San Jose, Calif.
Though Linuxcare will provide the Securities and Exchange Commission with an amended filing stemming from the IPO
delay, it won't describe the reasons for the executive changes, Lambs said.