VOYAGE TO THE NEW ECONOMY


Executives are leaving the security of big companies for the
Internet economy. Should you sign up for the journey? What can you
expect once you arrive at your destination? Or have you already
missed the boat?
Until March 1999, Shaun Holliday knew exactly what he wanted in
life. At 41, he was a fast-track executive at the Guinness brewery
division of Britain's giant Diageo conglomerate, overseeing more
than 3,300 people and hoping to become a big-company CEO someday.
When Holliday was a teenager, his father had nudged him in that
direction, encouraging him to get an MBA and then to work for a
major chemical company. In his first few jobs after business
school, Holliday found mentors at Booz, Allen & Hamilton and at
Frito-Lay Inc. -- mentors who also pointed him toward a classic,
big-company career.
But in the midst of a Colorado snowboarding trip -- without
telling his bosses, his mentors, or his father -- Holliday strayed
from the trails to attend a meeting, arranged by a high-profile
headhunter and venture capitalist, with a casually dressed 28-
year-old bursting with big ideas. His name was Andrew Busey. He
was the cofounder of living.com, an Austin-based company that
planned to sell furniture online. The three-month-old company had
no revenue, barely a dozen employees, and no chance of turning a
profit anytime soon. Nonetheless, Busey believed that living.com
could transform furniture shopping into a faster, easier, and more
efficient experience for everyone. All he needed, Busey said, was
the right CEO.
As the two men talked over breakfast, Holliday's initial
skepticism began to melt away. This was a remarkable opportunity,
he told himself. It might be a once-in-a-lifetime chance. Yes,
there was a risk that Busey's vision was just a mirage -- and that
living.com might not make it. But that sense of danger was
exhilarating. "I could have played it safe," Holliday recalls. He
could have stayed on the career track that he had chosen two
decades earlier. But, he thought, wouldn't he regret, 30 years
later, having turned down the chance to be a pioneer in the
Internet era?
When the men parted four hours later, Holliday knew what his next
step would be. He hadn't quite said yes to Busey's overtures, but
he was headed that way. That afternoon, he asked his wife how she
would feel about leaving Ireland and moving to Texas. Two months
later, he informed his boss at Diageo that he was about to walk
away from an enviable career to see instead what he could do at a
brash Internet startup. Then, in September 1999, Holliday began
his new job. Standing on a tattered gray chair in an office
corridor, addressing the few dozen onlookers who constituted his
entire workforce, he explained why he had left Guinness and why he
believed that together they could make living.com a great company.
It was the first day of his voyage to an uncharted land.
Across the United States, thousands of executives are making a
similar voyage. They are abandoning prized jobs at famous
companies, walking out of corner offices at the likes of Avon,
Goldman Sachs, IBM, Knight Ridder, and leading law firms and
consulting shops. In doing so, they are jettisoning career
assumptions and personal values that were cherished a generation
ago -- being part of a mighty, entrenched, time-tested corporation
-- for something utterly different. The new goal: to prove your
merits at an Internet-oriented startup with no real assets or
heritage but with huge ambitions.
The phenomenon has become so big, so rapid, and so relentless that
it's the business world's equivalent of past Great Migrations.
Indeed, many of the people who make this dramatic career leap
invoke metaphors from history -- of Puritans crossing the Atlantic
four centuries ago to make a new life in the New World, of
millions of immigrants streaming to the United States 100 years
ago and gazing in nervous wonder at the site of the Statue of
Liberty. In a prophetic 1996 essay, Tom Ashbrook, then an editor
at the "Boston Globe," explained his decision to embark on a new
career helping to build HomePortfolio.com by declaring: "Some part
of the urge to jump feels almost genetic, a seed of history and
blood just waiting for the climate that calls it up. In all my
life, I never felt closer to the experience of immigrant forebears
than I do now. They sailed from old world to new. Now it's my
turn."
The voyage is not always metaphorical. For hundreds of thousands
of people from countries such as Israel, Russia, and Taiwan,
migration to the new economy is a literal description of their
plane flights and ocean crossings to Seattle and Silicon Valley.
For the current fiscal year, Congress has authorized 115,000 H1-B
visas, which are awarded chiefly to high-technology experts who
aren't U.S. citizens. That is nearly double the quota of a few
years ago, yet it still isn't enough. This year's batch of visas
was exhausted in less than six months. Now efforts are under way
to raise the quota to up to 195,000 visas. For these new
immigrants, Starbucks may be a more appropriate symbol of America
than the Statue of Liberty, but the voyage to a New World is just
as awe-inspiring, just as nerve-wracking, as it was 100 years ago.
Big-company executives are heading to the online economy with a
wide range of motivations and expectations. They see a big, open,
uncharted land of opportunity -- and wonder what it might be like
to live there. They like the idea, intrinsic to the Internet
economy, of being able to have an impact on the world around them
-- of launching products and services used by millions of
customers -- without having to be part of the vast, impersonal,
insular bureaucracies. They hunger for less routine, fewer
meetings, and more energy and excitement in their day-to-day work
lives. And to be sure, they read tales of quick riches and
overnight fame.
For all of the excitement, though, the modern-day Great Migration
can be a harrowing experience -- even if it doesn't involve
stormy, monthlong journeys on packet ships. Thanks to this
spring's NASDAQ meltdown, the finances of many Internet companies
-- even big-name companies -- seem decidedly less secure than they
did just a few months ago. And the reality of life in the dotcom
world has lost some of its early romance: Is it all that desirable
to give up your car service, your personal assistant, and first-
class air travel -- not to mention a collection of seasoned
colleagues who know their way around an industry -- to work at a
desk fashioned from a door and to call staff meetings in which the
average age of attendees is 28? It's no wonder that more than a
few big-company executives have looked across the gulf that
separates their current world from the Internet economy,
considered several offers from well-funded startups -- and decided
to stay put.
Yet it's impossible to obscure the Internet economy's continuous
pull. In the new economy, "there's a talent shortage at almost
every level," says David Beirne, a venture capitalist at Benchmark
Capital, in Menlo Park, California. Beirne spends much of every
week helping Benchmark recruit top-management talent into its
portfolio companies. ( In fact, he was the one who helped
introduce Shaun Holliday to Andrew Busey. ) A few years ago,
prying candidates out of big companies was a dauntingly difficult
challenge, he says. Now the chance to be part of "the next
Amazon" or "the next eBay" is enticing enough that practically
every established company has been poached at least once...
For those who are considering whether to set sail for the Internet
economy, the Great Migration raises a collection of rich,
important questions: Should you make the voyage? What do you want
to achieve once you arrive at your destination? Do you know what
life will be like there? Are you prepared for stormy weather?
Are You Prepared for Stormy Weather?
It's 11:30 AM, and living.com CEO Shaun Holliday is about to get
his third surprise of the morning. That's typical of his new life
-- a life in which 300 employees are building an online furniture,
gardening, and home-decorating store, improvising feverishly as
they go along. First Holliday learned that version five of
living.com's Web site was due to launch in 24 hours, with some
crucial elements in different places than he expected. Then his
merchandising chief told him that efforts to include Waterford
crystal on the site had stalled -- and that his help was needed to
get the plan back on track.
But the morning's most startling moment comes when Holliday stops
to chat with living.com's team of Web writers and asks what they
are working on. At first, they cover all of the things that he
expects: new copy to promote gardening supplies, perky
descriptions of sofas and the like. But then, with an impish grin,
Web writer Roger Munford confesses that he has been creating the
latest installment of "Dead Men Don't Decorate," an elaborate
Raymond Chandler spoof in which a slinky female detective chases
furniture counterfeiters. No one asked Holliday or anyone else in
senior management for permission to launch the story; the writers
just decided to sneak it into an unnoticed corner of the
"magazine" section of living.com's Web site.
Another CEO might have fired the rogue writers on the spot -- or
at least asked them in ultra-intimidating tones to justify this
use of time and resources. But Holliday just smiles. "Ah, you
writers!" he says. He lets them carry on with their mischief and
heads back to his office for a strategy session with his chief
financial officer.
Such adventures are all part of running a Web business -- and
perhaps even part of what attracted Holliday to living.com in the
first place. "I love change. I love chaos. I love ambiguity," he
says. "As soon as the road is clear, I need to do something
different. Even if I'm looking at a golden path, I get bored." He
pauses for a moment and then whispers, "I have a history of
this."
In 10 months on the job, Holliday has surrounded himself with
other big-company refugees who also came looking for excitement.
His chief marketing officer, Janet Mitchell, used to work at
Duracell. His financial officer, Jay Shreiner, was at Kellogg Co.
His chief Web officer, John Clendening, arrived from First Union
Corp. And his head of merchandising, Helaine Suval, was recruited
from Avon.
To Holliday's delight, wooing top talent to a small, unprofitable
Austin company has proven to be far easier than he had predicted.
He managed to pry human-relations chief Peter McCue, for example,
out of a top job at Motorola with just one phone call. "I had been
trying for years to get Peter to come work for me at Guinness,"
Holliday says. "I couldn't quite land him. But in living.com, he
saw an opportunity to create a model company for the 21st century.
We had the outlines of a deal within an hour of our first
conversation." In some cases, Holliday acknowledges, he is helped
by a public belief that there isn't much time left. If people want
to make a big splash in the Internet economy, he suggests, they
had better get started now, before most of the best jobs are taken
and most of the industry-defining companies are fully staffed.
From the start, Holliday and his team have made decisiveness one
of their cardinal virtues. Job candidates typically are given a
week or less to decide whether they want to work at living.com. At
many Web-team meetings, managers begin by "time-boxing" a
decision. They give themselves a 30- or 90-minute period to decide
what to do, agreeing to make some decision -- any decision --
before that interval expires. Staff debates become terse and even
caustic, but that's just fine. Even junior employees are allowed
to interrupt a long-winded speaker with a two-word epithet -- "Rat
hole!" -- when they believe that time is being wasted.
"Speed matters in this business," says John Clendening, 37,
living.com's chief Web officer. "We've learned to focus enough on
what's right" -- even if more time and more data could lead to a
more finely crafted alternative weeks later. Better to take some
action fast and recalibrate later than to let precious time tick
away.
The belief that change -- and decisiveness -- can be good for
their own sakes harkens back, in some ways, to the popular beliefs
of the mid-19th century, when westward migration was at its peak.
Social commentator Horace Greeley, who popularized the phrase "Go
West, young man," wrote in 1871: "Most men are by migration
rendered more energetic and aspiring; thrown among strangers, they
feel the necessity of exertion as they never felt it before.
Needing almost everything and obliged to rely wholly on
themselves, they work in their new homes as they never did in
their old, and the consequences are soon visible all around
them."
But such enthusiastic commitment to change always sounds a little
better from a distance than it does up close. On the whole, people
crossing the Atlantic or populating the American West in the 19th
century did find a better life. But during any given week, they
might be battling hunger, disease, flooding, or a thousand other
problems, big and small. In much the same way, the pioneers of the
Web economy aren't always cushioned from the shocks of the wider
world -- or from human temperament.
Shaun Holliday says that he sees the bumpier side of this
migration in two ways. First, he acknowledges that knitting
together a harmonious team is tougher than expected. In some ways,
it's as if he has thrown together dozens of total strangers for a
long ocean or train journey. And even if they want to work
together, they aren't quite sure how to pitch in without seeming
either too pushy or too timid. In the most immediate flash point,
Holliday is already refereeing tensions between his merchandisers
and his Web-development team. The merchandisers have big, bold
ideas about how items should be displayed on the Web site. The Web
developers must balance such requests with dozens of other demands
on their time. They want each major upgrade to be carried out with
military precision, so that it doesn't crash the site or impair
performance by overburdening living.com's data servers.
Holliday's other challenge is thornier still. When he joined
living.com, financial markets were enchanted by companies like
his. Even before the closely held company launched its Web site,
living.com was able to raise nearly $40 million of venture capital
on terms that valued the business at approximately $300 million.
In March, Holliday was able to talk about extremely ambitious
financial goals for the company to meet by 2003: $1 billion in
sales, $100 million in operating profits, and a $10 billion stock-
market valuation.
Now, with Internet stocks having been pummeled this past spring,
the stock-market goal seems highly optimistic. In May, bowing to
tougher circumstances, Holliday and his team of directors approved
a belt-tightening program that, among other things, reduces the
number of executives reporting directly to Holliday. Such pruning
changes the career paths of some recent recruits, but Holliday
defends the move as the best way to position living.com properly
in today's harsher environment.
Rank-and-file employees are mindful that times have changed, and
their concerns surface quickly. At a recent staff lunch, Holliday
asked a dozen living.com employees what was on their minds. The
first question came from a recruiter who joined living.com in late
1999. "There was a Forrester Research report that came out
recently," she began. "It said that many electronic-commerce
companies might run out of cash. My grandmother saw a newspaper
article about that report, and she called me to say, 'Girl, you'd
better leave that company. Dotcom isn't good anymore.' So what am
I supposed to tell my grandmother?"
Holliday took a swallow of his soda and did his best to calm her.
"I do think that there has been a permanent shift in the way that
many of these companies are going to be valued," he said. "There
was a huge flood of cash that went into e-commerce companies last
year, almost indiscriminately. There will be significant fallout,
and this will be a hard year for us in some ways. But the good
news is that we're already the industry leader in our category.
There might be just two to three companies left playing in every
category, but that's good for us. It's going to be survival of the
fittest, and companies like Amazon, priceline.com, and living.com
will do well.
"Someday, when we look back on this year," Holliday declared with
conviction, "we will remember it as the most important and the
most successful year in our company's history."


by George Anders, Fast Company.

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