Suddenly, The Suits Are Jumping From Bricks To Clicks
There goes another one. On Sept. 24, Mary Alice Taylor, a Federal Express Corp. senior vice-president, became the latest high-ranking exec to abandon the security of a conventional corporation for the unstructured, but potentially lucrative, future in the New Economy. Taylor will become chairman and CEO of Homegrocer.com Inc. in Kirkland, Wash., a year-old online grocery delivery operation that serves Seattle, Portland, and southern California regions. "It's certainly not for the base salary, but rather to be part of changing the way business is done in the future," Taylor says. "I learned a long time ago that when opportunities get offered you have to be willing to stretch and go for them."
Every week brings another such defection to the dot.coms. In June, Amazon.com added a president from Black & Decker, and in early September, it followed up with a CFO from Delta Air Lines and a chief logistics officer from AlliedSignal. Priceline.com landed a president from the senior ranks of AT&T. Nike's vice-president for global sales is trading in his swoosh to become president of an infant online sporting- goods retailer called Fogdog Sports. Says John T. Thompson, vice-chairman of search firm Heidrick & Struggles International Inc.: "I've never seen small emerging companies compete so effectively with top corporations for talent--and win."
Given the paper millionaires--and even billionaires--being created overnight with Internet initial public offerings, it's no surprise that executives are often more than willing to take the risk. The more intriguing question is why these new-thinking, improvisational Internet companies are so eager to bring in people who have spent careers clawing their way up through the Byzantine byways of Corporate America.
Is the dot.com revolution already over? No, it's just getting more intense. With prices of Net stocks swinging wildly and companies under increasing pressure from skeptical investors, dot.com enterprises--even those that haven't gone public yet--must start proving that profitability is more than just a theoretical goal. As a result, "there's a demand for more experienced management earlier in the life cycle of these companies than we saw even a year or two ago," says Timothy Haley, a partner at venture-capital firm Institutional Venture Partners in Menlo Park, Calif.
BRAND-BUILDING. What dot.com boards and investors want most at this stage is brand-building expertise since most of the billions pouring into Net companies is then flowing out in massive marketing efforts. When it comes to managing multimillion-dollar marketing budgets and building brands from scratch, the Net generation's much touted instincts and vision only go so far. "Next to no one who grew up in the Internet economy has any experience managing the kind of money that's available now for marketing," says Joseph P. Kennedy, 39, who left Saturn Corp. in March to spearhead E-Loan Inc.'s marketing effort.
Still, there are risks for the young companies that inject fortysomethings into their bloodstreams. To reduce the risk of a cultural mismatch, Net execs have come up with some simple tests to separate the truly agile from the merely greedy. Janina Pawlowski, 39, E-loan's president and COO, says a crucial test is how people respond to a job offer. When negotiations dragged on for three weeks with one corporate exec, Pawlowski finally rescinded the offer. "This guy was so risk-averse," she says.
By contrast, Kennedy took a salary cut when he left Saturn and managed to relocate from Tennessee to Silicon Valley in just a matter of weeks. "When someone picks up his family and moves rapidly, you think: `O.K., this is a person able to make quick decisions,"' Pawlowski concludes. Meanwhile, Amazon President Joseph Galli, recruited in June from Black & Decker, says he seeks big-company executives who are "able to operate in an environment of ambiguity." He also wants those who speak their minds and are unafraid to ruffle feathers.
Despite their increasing need for talent, Net companies can afford to be picky. Amazon.com is inundated with 15,000 unsolicited resumes every week, although its latest high-profile hires--Warren C. Jenson from Delta as CFO and Jeffrey A. Wilke from AlliedSignal as chief logistics officer--weren't selected from that pile. Amazon sought them out, needing their familiarity with financial controls and big-company distribution systems to expand beyond its book-selling operation.
All this "corporate think" is as new to online enterprises as the free-wheeling Net atmosphere is for Galli and his Old Economy cohorts. And as Web operations expand, the challenge for the dot.coms will be to make sure that their clicks don't turn to bricks as the suits move in.