Microsoft Vice President Packs His Bags -- Siegelman To Join Pre- Eminent High-Tech Venture-Capital Firm

One year ago, he was standing onstage at a California conference center, wooing thousands of prospective partners to the unborn Microsoft Network and touting the service as the next great "community" of computer users.

Today, Microsoft Vice President Russell Siegelman is heading back to California - this time for good. Siegelman, 34, is leaving Microsoft after seven years there, including three years heading up MSN, as The Microsoft Network is now known.

Siegelman will become a partner with the high-tech industry's pre-eminent venture-capital firm, Kleiner Perkins Caufield & Byers. Reporting to the firm's Menlo Park, Calif., headquarters Sept. 1, he will lead investments in Internet and online companies, as well as those specializing in corporate computing.

Siegelman said he would like to start his own company and considers Kleiner Perkins a good training ground for that. When he joined Microsoft right out of business school, he said, he didn't expect to stay beyond two years. The company, Siegelman added, tried to keep him when he announced his intentions to leave.

Departures are rare at Microsoft, a company known for holding onto employees with "golden handcuffs" - generous stock options and bonuses. It's likely Siegelman is a millionaire thanks to his years at Microsoft.

But his past several months at the company have been checkered, as MSN, which he conceived and formed into a one million-subscriber online service, has shifted strategies and angered partners.

In April, Siegelman left his MSN position and took an interim job helping launch Slate, the online magazine edited by journalist Michael Kinsley. He said then that he was looking for new challenges within the company and would know in "a few weeks" what his next post would be. At the time, observers speculated that Siegelman might have been pushed aside, although he and the company denied that.

Microsoft spokesman Dean Katz said Siegelman has "done a lot of great things here, and we wish him well."

What is known is that Siegelman sat in a hot seat during at least the past two years, trying to head MSN as a private online service during a time when the company - and the world - was directing itself more toward the global, largely free Internet computer network. Microsoft recently began switching much of MSN's content toward the Internet and giving it away for free, abandoning many of the partners who had signed on to provide information for the private service for a fee.

Mark Mooradian, an online analyst with Jupiter Communications in New York, said that in the past few weeks he got vague and varying answers every time he asked what Siegelman was doing for Microsoft.

"He was put in an incredibly difficult position," Mooradian said.

He characterized the Kleiner Perkins job as a very good landing, pointing out that the 24-year-old Bay Area venture firm has helped form companies such as Sun Microsystems, America Online and Compaq Computer Corp. The firm's partners often sit on corporate boards.

"It's almost like what talent agencies are in the entertainment world," he said. "They control many of the large workings of the industry."

Kleiner Perkins partner Doug Mackenzie, who attended Harvard Business School with Siegelman, said he contacted Siegelman about two months ago. "Russ obviously has a pretty incredible set of experiences," including MSN, Slate and corporate software, Mackenzie said.