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Home >The New Ecosystem of Business

Media | Press Releases | Founders | Media Kit

The New Ecosystem of Business

Moderator Polly LaBarre: The premise of this discussion is that we've arrived at an inflection point in the new economy. Think of it as the Next Phase. Here's a possible description of what we see: The economy has shifted from the glory of the startup, to the power and experience of the big, traditional company. From investments that funded whatever was the hot idea of the moment, to financing tested ideas for growth and for the long term. From the furious effort to attract talent, to the hard work of keeping talent and keeping people happy in companies. To test this description, and to answer some key questions about this Next Phase, Fast Company has brought together 17 thought leaders and experienced new-economy business people. Here's what we want to know: What are you doing differently, what are your strategies, what is your thinking going into the Next Phase?

Mark H. Goldstein: In just the last three weeks our resume flow of super-talented people has increased between 200% and 300%. Everyone who came to the Bay Area to join a dotcom -- even the titans of their industries -- now are starting to second-guess themselves. Many are beginning to make themselves available to more secure companies, seeking refuge at a company that might have a floor. At BlueLight.com, we have a floor: We are Kmart's e-commerce company, so our worst-case scenario is to become a part of Kmart again.

Paul Saffo: You have to credit the founders of Silicon Valley with making a key strategic decision: Most buildings in Silicon Valley are no more than two stories high, and they're surrounded by grass. So when the market dropped, everybody jumped, sprained their ankles, took the day off from work, and said, Gee, I should really change companies.

This simple fact is just the latest chapter in the Valley's long history. New industries are constantly emerging from the rubble; people are sadder but wiser and, fortunately, still just as visionary as ever. So I think this is the start of another big wave.

Helen K. Whelan: Working at a large company today is still a kiss of death for your career. I think if you want to be a paper pusher, and you're really into process, you want to work at a big company.

My prediction is that history will note that the start of CNN's demise was when Time Warner bought it. I was there at the start. We first pitched the idea of a TV network to Ted Turner when he was coming out of the bathroom. He gave us approval within a week. Six months later, we had created a TV network. You can't do that today. What we were able to do at MyPrimeTime.com was to create television programming and to create a Web site. We're into our third revision of the site, and it hasn't even been up for one year. At CNN, we did a redesign, but it took us three years to get to that point. So to me, market-shmarket! I think living your life, and having a very robust life, is about pursuing your dreams, starting your own company, or working for a company you are passion about.

Mark H. Goldstein: I think all the excitement is in the startup. Everyone has opted to be in the Bay Area to have an impact, and we're creating more of an impact more quickly.

Kmart explicitly decided to set a new company up in San Francisco to take advantage of the Internet, rather than start it in Troy, Michigan. Now we have approximately 200 people moving super-quickly, acting like a startup, which is what we are. We all have equity in the company, and everyone comes from a startup. But philosophically it's all about, how can we make change, how can we have an impact?

Maybe it was my few years at Apple working for Steve Jobs that taught me to make a difference, to make change happen. That's still such a big part of the culture here, and it's what makes it so much fun.

Moderator Polly LaBarre: What are the other things that are important for winning?

Mark H. Goldstein: I think at this point the two critical factors are leverage and choke points. If you don't have a choke point, or if you're not a key distributor, key buyer, or key seller in any industry today, you can't necessarily create something from scratch. You need to get the sponsorship of somebody else who can exercise that kind of leverage or operate as a kind of choke point to make something happen.

Moderator George Anders: If you're a startup, does that mean you need a big-company partner?

Helen K. Whelan: You need larger companies to support you, but if you want to get something done, look at the model set by smaller companies. The massive number of people and the massive egos involved at large companies mean that you just can't get things done there. Bigger companies are better at supporting people like us -- letting us do it, rather than trying to do it themselves. They get in their own way all the time.

Alan Naumann: Here's what differentiates the larger companies who get it: It comes down to individual leadership.

I was in a series of meetings today where the big battle was between one leader who was making an aggressive play in adopting e-commerce technologies, and another leader who wanted to go slow, study it, and be ready by March. There was an enormous difference between the two.

Take John Chambers of Cisco Systems. I heard him speak just recently, and it's clear that he's a leader with a clear direction who has embraced the Web aggressively over a couple of years. I think it's going to come down to that same leadership element for all of us.

In big companies right now it's coming down to individual leadership. Some people are using the barriers of the Web as a proof point for not going very quickly. I think that's a fundamental mistake that some big companies are going to make.

Jon Nordmark: I think it is important to be able to partner with a big company, but you have to operate with a kind of small-company mentality. I worked for Samsonite. I tried a couple of times to get them to move, because my job was to run 20 different distribution channels, and I saw the Internet as a channel that was going to be huge, the biggest in the world, and I still couldn't get them to move.

We run eBags a lot like a large company, but we're incredibly nimble in our decision making and in our deployment of capital.

Rich Lawson: The offline players are now realizing they need to undergo a sea change in how they think, and that there's a universe of companies growing up to provide services to help them.

Look at what Accel Partners and Kohlberg Kravis Roberts & Co. have recently done in forming Accel-KKR Internet Co. It was a corporate charter to turbo-charge offline companies online.

Ron Ricci: To use the language of Silicon Valley, I think that "dreaming" is a scalable idea.

A lot of the comments about dreams so far have been about our own personal self-satisfaction and achievement -- about some level of self-actualization toward the dreams that each of us may have. But when you work in the right company with the right kind of leadership with the right kind of inspiration, that dream can also be about influencing and changing the way that the world actually works. If you have the right inspiring leader who sets the right clear vision, a dream can be a scalable idea. It can let you change not only what happens here in this 50-mile area, but also what happens in the lives of millions of people around the world. For us, this next phase means that we are no longer involved with the "what" of the Internet economy -- we are now in the "how." The most important question that we get every time someone visits our campus is, How do I do it? Going forward, the companies that help other companies with the "how" are going to be the companies that win. We've got to remember, something like 80% or 85% of our economy is not engaged in the Internet yet, and that's just in the United States.

The most important factor that is keeping big companies from being Internet companies is how they transition their culture. Talking to top management is the easy conversation. The hard conversation is when top management leaves the room, and you've got 5,000, or 40,000, or 50,000 employees who are used to doing something the same way they've been doing it for 20 or 30 years.

Culture is all about getting that group of people to move in the same direction. People need a lot of hand-holding. I think that's really the challenge of the "how" -- to help companies understand how to transform their cultures so that they can do some of the things that they are dreaming about.

Regis McKenna: The speed at which a big company or a small company achieves success is part of an illusion -- or delusion -- that goes on. Building an infrastructure takes a lot more time than we think. An instant infrastructure doesn't occur. That's the biggest lesson we can learn from the dotcom phenomena: You can't change it overnight.

If you look at Amazon.com, eBay, AOL, they're not technology companies, they're application companies. Dell spends less than 2% on R&D. It's a distributor. All of this makes the task much harder. You've got to ask, Where is the technology moving, and who are the key players that I can adopt and grab? And you've got to ask, How do I build an infrastructure?

We're going to see this phenomenon go through lots and lots of phases over the next 10 or 15 years until we see business models and profit models emerge. They're not here yet.

Moderator Polly LaBarre: The comment "dreaming is scalable" is a very alluring notion, but it seems to be bumping up against a pretty hard reality.

Laurie Coots: We're going to see an interesting evolution of the relationship between those who invent and those who execute. Over the past 18 months, we've seen the assumption that, because I invent, I now have to be a company, and I have to grow and get bigger.

What I see happening is a kind of an inverse of a parasitic relationship: People invent something, and then rather than trying to get bigger or trying to do it themselves, become the idea factories for the larger companies. At the same time, there will be people who are really good at getting inventions into the pipeline, and they will be part of the equation. What's going to happen is the formation of a wonderful new kind of ecosystem of cooperation and helpfulness that will allow people to do what they do best.

Paul Saffo: It is a radical outsourcing of R&D -- moving R&D off the book and putting it onto the books of the people who arguably know how to do it: venture capitalists. The old saying goes: Venture capitalists sleep like babies. They sleep for two hours, wake up, cry, sleep for another two hours. That's what's happening.

Mark H. Goldstein: What we've seen in the last few years is what I would call sloppy entrepreneurship -- people have gotten money for ideas that were good but weren't genuinely unique.

I think this current correction is going to separate the wheat from the chaff, and we will be able to focus on entrepreneurs who are great, who focus on execution, and who are able to win. The market isn't going to allow all the "me-toos."

Regis McKenna: I once pointed the same thing out to Bob Noyce, who invented the integrated circuit and who was one of the founders of Intel and Fairchild Semiconductor International Inc. I said, "You know, a lot of companies in the Valley fail." He said, "Maybe not enough fail." I said, "What do you mean by that?" He said, "Well, whenever you fail it means that you're trying new things."

The most marvelous thing about our economy is that all these trials are going on, and a lot of people are participating in moving the technology forward. There is an environmental learning process that goes on, almost a geographic history, that continues to recapitulate itself here in the Valley.



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