"The dog will sniff you now."
The disconcerting message on the office welcome mat was the first thing to greet Vince Barriero when he showed up for his first day of work. It was 7:30 a.m. The only other employee in at the time had brought along a large white dog named Lilly. As more workers ambled in, wearing jeans and khakis, Barriero had the gnawing feeling that he'd be the only person wearing a sports coat, button-down shirt, dress slacks and dress shoes. Just after 9am, the office manager led him to his cubicle (the first cubicle he'd ever had in his 20-year career), gave him his laptop and logged him on to the network. More than 100 unread e-mails awaited him-and he had barely begun his second hour on the job. "My first thought," says Barriero, "was, 'I can't type fast enough to answer all these e-mails.'" Welcome to the world of a CIO at a Web commerce startup. It's a workplace that the gray-bearded Barriero, 50, joined this spring, when he swapped a plush office with a gleaming wooden desk at Kendall-Jackson Winery for a cramped cube at Tavolo, which recently changed its name from Digital Chef. Barriero's choice is not unusual. Many seasoned CIOs are eager to trade the comforts of an old-economy company for the risks-and possibly stratospheric rewards-of an Internet-economy company. Yet not every CIO has what it takes to make the move.
Got What It Takes?
Ask Robin Reed to describe the ideal candidate for a CIO position at a Web commerce startup, and she offers this one-line answer: "A person who can put an engine in a car when it's moving down the road at 200 miles per hour." Reed should know. As founder of The Reed Group, a San Francisco-based recruiting practice that specialises in Internet executives for pre-IPO companies, she has placed CIOs and top IS executives in more than 20 Internet-related posts, including that of CIO at Amazon.com Reed's clients are often VC-backed Web commerce startups that plan on getting big fast. Their business models call for large numbers of transactions or a multinational scope. So they want CIOs who have experience with real-time, 24/7, high-transaction systems, the kind that let a financial services giant move billions of dollars around the globe or make a Fortune 500 retailer's supply chain hum. They also want CIOs who have been instrumental to their businesses' success. Barriero's resume, for example, includes an eight-year stint as CIO of The Sharper Image.
"He created the infrastructure that made on-demand direct marketing happen seamlessly, and he made customers believe that they were being taken care of by The Sharper Image," says Reed, who recruited Barriero for the Tavolo post. "If he can do that in a physical distribution model, he brings a wealth of understanding about not just technology, but about customer relationships and customer relationship systems."
Reed has placed several CIOs from traditional company backgrounds into Web startup CIO jobs; CIOs with prior catalogue experience (such as Barriero), retail experience or financial experience are the most attractive candidates. And Philip Schneidermeyer, a CIO practice leader in the Stamford, Conn., office of recruiter Korn/Ferry International, says his clients have become more realistic about the prospects of hiring a high-level executive who has substantial Web startup experience. "[Those kinds of executives] are all locked up with stock options...and it's too expensive for companies to try to unlock them," Schneidermeyer says.
Beyond the resume, recruiters say, a CIO candidate has to show that he or she has the right temperament to move at Internet time. Schneidermeyer wants to be sure candidates can handle fast-paced development. The time lines at a Web commerce startup are so much shorter than at an established company that they don't allow for as much quality-assurance testing, because any delay in rolling out a new system or feature means a missed revenue opportunity. Reed tries to suss out whether a CIO is intellectually agile and able to operate in an unstructured environment, to take risks and to be open-minded. He or she should also believe that a company's technology strategy belongs at the board level. During an interview, the questions a candidate asks can be as revealing as the answers they give. "They [should] challenge us with their own questions and thinking about IT in our new digital economy," Reed says. "If they glaze over, they're out of it."
What kind of CIO would not be a good fit at a Web commerce startup? Anyone who views his or her job as an internally focused business function that supports the business's other internal functions, according to Ron Shevlin, a senior analyst with Cambridge, Mass.-based Forrester Research. Startup CIOs must have experience focusing on customers and external partners, and they need to be technology architects-skills that don't necessarily go hand in hand with a 30-year career spent "crawling your way to the top of the IT chart at a Fortune 500 company," Shevlin says. "A Web startup needs someone who understands what 24/7 infrastructure really looks like-not someone who understands how to play organisational politics to increase IT funding by 7 per cent every year," he says. True, big-league CIO hires can help bring startups credibility and cash. But Shevlin predicts that there will be CIO shakeouts at startups that have hired experienced technology bureaucrats when what they really need are experienced technology strategists.
Money Isn't Everything
Why do CIOs even want to leave their comfortable corporate jobs for the uncertainty and long hours of a startup? One reason is that they want a chance to become the next Internet millionaires. True, there's no guarantee that a given Web commerce startup will go public, or if it does, that its stock will rocket to amazonian heights. But for CIOs like Barriero, whose kids are grown and out of the house, the time is right to take a career gamble. "You can't win unless you buy a ticket," Barriero says, "even though you know the odds are terrible." Schneidermeyer notes that CIOs should be prepared to take a pay cut if they move to a Web commerce startup (as any CIO would expect if he or she were to make a dramatic change from one industry to another). Reed says most of the Web commerce startup CIO jobs she fills offer base salaries of about $200,000 with stock options to offset the lower salaries; CIOs can get far more equity (and a correspondingly lower salary) if a company is at the whiteboard phase than if it is already up and running.
Yet the chance to hit it big with stock options or an equity stake is not the only reason CIOs are drawn to Web commerce startups. Some want to gain Web and e-commerce experience so that their skills do not become obsolete. "Anyone in IT is concerned that they may become a dinosaur," Barriero says. And by gaining those skills at a startup, CIOs put themselves on the line for an e-commerce effort, more so than they would at a traditional company that has an extranet for taking orders from distributors or a limited online store on its Web site. "Here, the Web site is the company," says Tatiana Dins, who left a five-year IS executive career at Sun Microsystems to become vice president of engineering and CIO of Food.com , an online food takeout and delivery service.
Other CIOs simply want the challenges that go along with a newly formed, fast-moving company. Ron Johnson, for example, spent much of the past 15 years working at six different startups within Bell Atlantic , including its cellular and Internet service provider businesses. Throughout his Bell career, he has been able to start at ground zero and develop the mission-critical systems needed to launch a new business and the IT infrastructure to keep it going. But about a year-and-a-half ago, when he became fully vested in his Bell stock options and medical benefits, he decided he wanted a bigger challenge. "I had a good job and still a good career at Bell Atlantic," says Johnson, who left Bell Atlantic to become CIO at 24/7 Media , a global online advertising and direct marketing network. "But I always wanted to try it outside and see how I would do without a safety net.
Outside the Safety Net
What do these CIOs find once they leave behind the safety net for the startup cubicle? On Barriero's opening day, his panic over receiving 100-plus e-mail messages quickly subsided when he realised that the messages had accumulated over two weeks in anticipation of his arrival. Still, he felt that everything around him was happening with a greater sense of urgency than he'd experienced in past jobs: His coworkers walked faster, responded to e-mails more quickly and didn't waste time on coffee breaks or long lunches. Tavolo's Web site was already live before Barriero arrived as its first CIO (the company had already had a CTO, who was replaced by a vice president of engineering). But Barriero still had a big job cut out for him, since everything that happened after a customer placed an order-order processing, inventory control, fulfillment, warehousing-had yet to be perfected. Certainly, any CIO who takes on a new job expects to find that the infrastructure needs improvements. Still, there's a difference at a startup. "In an existing business, there's a foundation," Barriero says. "Here, we're still building the foundation."
When Dins came to Food.com in September 1998, she was surprised to find that she had to deal with legacy systems. Food.com had been running for about two years before she joined the company. Its Web site was functional, but it had been built at a time when Food.com was mostly working on pizza takeout orders. The company had since expanded its network of affiliated restaurants, and the site was not as scalable or flexible as it needed to be for it to integrate with multiple partners and add new features.
"In the beginning, they didn't have much money," says Dins. "They weren't trying to make it the most flexible, because that was not the goal. The goal was time to market." Unfortunately for Dins, most of the original developers had moved on, and she was left with the task of upgrading a site that was short on documentation.
At 24/7 Media, Johnson says, his biggest challenge came from the company's rapid growth. In December 1998, it was serving a billion ads a month; by the following May, it was serving 2 billion ads a month. Johnson notes that at a fast-growing company a CIO can make many improvements. The challenge is culling out the most important areas and giving them immediate attention. For example, when he started in December 1998, he lost a few weeks getting on the right track to correct a scalability problem in one system; in an established company, a few weeks wouldn't much matter, but in an Internet company, every day is precious, Johnson says.
This fast-paced growth can also mean that staffing, which is a crisis in most IT organisations, is even more difficult. "In an established company," says Barriero, "you may have a little less pressure to get staff and get systems in." CIOs cope with the staffing crunch by hiring people with related experience and retraining them or by outsourcing. But outsourcing can make a CIO's job much harder, notes Rich Secor, CIO and vice president of IS at SmarterKids.com, which outsources hosting, fulfilment and credit card transaction processing. Given that SmarterKids.com adds features to its site every week, Secor finds he has to struggle to get his outsourcers to move at the speed his business demands. "We can't go and touch the machines [at the hosting company] and administer them in person," he says.
Advice from the Newly Dug Trenches
By his eighth week on the job, Barriero had traded in his dress slacks for khakis to fit in better with his company's casual, dog-friendly atmosphere (he hasn't yet made the move to blue jeans). His advice to CIOs considering a similar startup move: Decide whether you are energised by the thought of learning a new industry and a new way of doing business. "If they are looking for a challenge," Barriero says, "it is certainly a challenge." Johnson advises his peers to make sure they have support from their families before making the move, since without it, the uncertainty, long hours and increased stress of working at a startup could take a toll. Dins' advice is more basic than that: "Just be prepared for any surprises."
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