Bob Whyte did the dotcom dance?not once, but twice. In 1999, he left his solid CIO job at DirectTV for the chief technology officer spot at PayMyBills.com, an online bill-paying service for consumers, whose business model caught his imagination. He jumped just eight months later to land as chief operating officer for TimeBuy.com, a service for media advertising buyers. Then came a disagreement with the chairman on company direction. Whyte resigned. (The company eventually went belly-up.)
It was November 2000. And after a tumultuous year-plus as a dotcom executive, Whyte wasn’t looking for more startup scintillation. “The end of that [period] was like a death. All of the stages, from denial through anger to acceptance, applied,” says Whyte, now 42. “I knew after what I’d been through personally and what it put my wife through, I didn’t want to go that direction again for a while.”
That direction, as returnees from the Internet startup front have seen, wasn’t always fun and certainly wasn’t a clear path to glory. But it also wasn’t a bust. Whyte, along with four other prodigal CIOs profiled here, brought back business insights and management strategies that they learned during their dotcom days to the terra firma of corporate America and state government.
For Whyte, the homecoming meant three months of job hunting before signing on as CIO and senior vice president of operations at SAP Portals, a subsidiary of ERP vendor SAP AG. He brought his recent past with him; he demanded to report to his division’s CEO and to be included in strategy discussions. To accelerate action-taking, he says he empowers his staff to make decisions so that his IT managers, for example, don’t have to get his sign-offs for purchases.
Whyte and other CIOs returning to traditional businesses found that the ground had shifted. “When I left, I assumed startups were the only ventures that could adopt new, cutting-edge ideas,” Whyte says. “But in the time I was out, the Global 1000 realized that they would need to change. Projects get going faster and move much more quickly than they did three years ago.”
Here’s what four other CIOs found on their journeys back from dotcom adventures.
There’s Plenty of E-Business to Do in the Old Establishment
For Phillip Windley, the transition from the Internet world to government appointee was counterintuitive. Compared with serving as CIO for the state of Utah, he says his last two jobs were buttoned-down portraits of stability, albeit fast-paced. It is state government that he finds full of possibilities.
Windley was vice president of product development for Excite@Home’s (At Home Corp.) e-business applications group, where he directed 125 engineers, product managers and operations folks who built the broadband provider’s payment gateways, e-commerce systems, online cash registers and shopping carts. Before that, he served as CTO at iMall, an online shopping destination, which Excite@Home acquired in mid-2000. Those roles put him in a comfortable position. “I knew what we were going to do every day,” Windley says. “Government is a totally different thing. You deal with [state] agencies and the legislature and putting together plans for [a new set of online government services]. It brings up new ideas and new challenges almost every day.”
Windley, 43, serves as Gov. Mike Leavitt’s lead IT executive for a $7 billion state bureaucracy that has 20,000 employees, approximately 250 offices and more than 25 agencies. Windley and his team are working on organizing a central framework?essentially an ASP for state agencies?that agencies can use to bring their services online, from driver’s license renewals to food stamp applications. This framework, to be managed from one central location, calls for security provisions and the ability to conduct transactions.
If that sounds like e-commerce, then it shouldn’t be surprising to hear Windley talk about applying lessons from his time at Internet startups. First, product management: The e-government initiative calls for the same kinds of marketing, sales, pricing and customer service functions as his work at Excite@Home. Second comes the quick delivery, modified for state government needs. “A lot of dotcoms rushed to build large-scale systems quickly that could handle 100,000 users before they even had 1,000,” he says. “I’m trying to move a bit more carefully now by building smaller prototypes to learn where we need to go and then moving with some deliberation.”
Leavitt says he was specifically looking for someone with a startup background and entrepreneurial attitude to fill the state CIO post. Leavitt recalls a presentation Windley made to the Utah state cabinet just weeks after he started. “He described how a clearly defined sense of branding of government services was necessary,” Leavitt says. “This wasn’t hypothetical to him. He demonstrated the power of a strong brand to each agency.”
Bring Back What You Saw Living on the Technology Edge
When Scott Dinsdale became CTO at an Internet startup in 1999, he had already spent years in the music industry. He served as CTO and CIO at BMG Entertainment from 1995 to 1999 (this after cofounding a financial data services company in the mid-1980s). Following BMG, Dinsdale did his version of the dotcom odyssey at FirstLook.com, a provider of streaming movie and video game trailers and videos.
If he took on the role of an upstart during the Internet boom, Dinsdale, 43, is now an establishment figure. Since the spring, he’s served as executive vice president for digital strategy with the Motion Picture Association of America (MPAA). His mission is to help the movie industry fend off any Napster-like challenges.
“Because of digital technologies, the [movie] industry is undergoing a fundamental change in every phase?from creation to production through distribution. And I worried about whether these guys got it,” Dinsdale says. But while he observed the music industry’s initial slowness in dealing with the file-sharing Napster music network, the MPAA is not resting easy. So it’s his job to figure out how some new challenger might approach the world of digital movies and uncover any weaknesses in the existing technology.
“When you’re with a startup, you’re trying to build something where it hasn’t existed before,” he says. “You have this attitude of insurgency that says, I don’t care how big or smug they are or that their profits are 10 times my venture funding. You just go after them and look for their Achilles’ heel.” Dinsdale believes that his experience will help the movie industry’s members “better prepare themselves for where potential threats are likely to come from.”
It helps that Dinsdale knows about technology and how startups work, says Motion Picture Association President and CEO Jack Valenti. “We were looking for someone who knew how the cyberspace world operates and what the future might hold,” Valenti says. “Scott understands the cyberspace world and is articulate enough to explain it to nonexperts while at the same time being credible and respected by the technical experts in our companies.”
Slow and Steady Wins the Profits Race
John Hnanicek has spent much of his IT career in retail. He was senior vice president of IT at OfficeMax and the CIO at video store chain Hollywood Entertainment. So you might say it was a logical step, rather than a cliffside leap, when he took his version of the dotcom voyage. The landing still hurt, though. As CIO for eToys.com, Hnanicek saw that startup’s dreams burn up like so many millions of capital when it went bust in February. (KBkids.com bought what was left.)
As eToys closed up shop, Hnanicek began looking for a position that had growth potential but wasn’t out of line with realities of the business world. “A lot of good business models got money and then proceeded to grow and invest at a pace that couldn’t be sustained,” he says. He believes that eToys.com could have been successful with lower ambitions.
Hnanicek, 37, is now president and COO at Paciolan, a 21-year-old software company in Irvine, Calif., that provides turnkey ticketing systems to colleges, arenas and other entertainment venues. Its systems sell more than 100 million tickets per year, he says.
The opportunity is clear: Offer new online ticketing capabilities that will allow Paciolan’s customers to mine their own ticketing data and build stronger customer relationships. In Hnanicek’s first month on the job, CEO Jane Kleinberger says, he realigned the company to focus on e-commerce. He laid off some workers, brought in new ones to focus on e-commerce project management and improved productivity, Kleinberger says. “With his background he understands the opportunities, new technology and possible pitfalls we may face.”
Hnanicek says he also has set up cross-functional teams (a dotcom staple) to bring perspective to decisions and make sure the company has adaptable contingency plans. And with the eToys.com experience still fresh, Hnanicek says it’s important that Paciolan stays self-reliant. “You can’t assume the capital markets will be there for you when you need them. The best thing is to raise money once, have a clear path to profitability, get there and access money on your own terms,” he says. Kleinberger says Hnanicek has infused the company with fresh energy. “We needed someone who had been out there in the emerging world and could bring some new ideas to a well-grounded company,” she says.
entrepreneurs err. Leaders Admit iT.
John Puckett was in denial. It was May 19, 2000, and Puckett, the CIO of Internet toy retailer ToySmart, had just given a talk to business students about his company’s business model and future plans. As he finished, his cell phone rang. A moment later, he listened to company officers explain that ToySmart would cease operating?that day. “Every employee believed that we had moved mountains and built a world-class company,” Puckett recalls.
Puckett, 56, now faces another urgent challenge. As vice president of business development at Polaroid, he works on helping the struggling photography company identify new lines of business. The urgency comes as Cambridge, Mass.-based Polaroid tries to turn itself around; as of August it had announced a debt restructuring and warned it would miss some loan payments.
Puckett’s new role calls for spotting opportunities and acting on them quickly. He says a dotcom background helps him win colleagues’ support in pursuing this goal. “[People] expect you to be different and will tolerate more of your different ideas,” he says.
Puckett says he has used this credibility cache to promote a spirit where Polaroid people are not afraid to take risks and make mistakes. “In a dotcom, people more readily say, ’I did it,’ because they learn that by not doing so they’re wasting everyone’s time trying to figure out what caused a certain problem,” he says. “As long as we’re all learning from each other’s experiences we come out ahead. That’s the nature of the beast when you’re moving so quickly?you have to do it that way.”
At ToySmart, Puckett’s team watched with some terror how quickly site traffic was building and realized that they had to figure out how to handle Christmas retail traffic without overspending on infrastructure. “We calculated risk with a limited amount of information, and even though we weren’t kamikaze or stupid we took more risks than a traditional corporation would.” It worked: The IT team applied smart network switches that directed traffic efficiently, and the Web store handled its traffic spikes. “It took us two weeks what it would take corporate America a year to do,” Puckett says.
Gary T. DiCamillo, Polaroid’s chairman and CEO, says that Puckett’s attitude has been an asset. “John brings a fresh perspective to Polaroid. He shows a bias toward action that engenders an entrepreneurial spirit in those who work with him,” DiCamillo says. In the spring, for example, Puckett finalized a strategic alliance with a company called Active Photo to develop a wireless application for digital imaging. “He could not have completed [this deal] if he had been focused on the potential for failure,” DiCamillo says.
Puckett says the tumultuous dotcom ride was worth it: “I learned more in one year at ToySmart than I learned in the previous six years in corporate America.”