Like e-tailing before it, b-to-b dot-com stocks are crashing back to reality. And with that crash comes another sobering reality: It’s becoming much tougher to entice first-class executives to b-to-b companies without the carrot of high-flying stock options.
For b-to-b marketplaces, the job is even tougher. These new-age constructs offer candidates the chance to help overhaul how industries do business. But because what they are trying to do is so innovative and complex, it requires executives with deep vertical industry knowledge plus the ability to move at Internet speed.
Not surprisingly, such candidates can be hard to come by.
"The market [for top executives] is very difficult right now,” said Tim Stojka, former CEO of Commerx Inc. Stojka resigned as CEO earlier this fall and led the company on a broad search for a replacement. Last week, the operator of private e-markets decided to promote from within, naming David O’Meara, formerly its VP-corporate development, to the CEO post.
"It’s much harder than it was eight months ago, when the stock market was much more aggressive and b-to-b was much more in favor than today," said Rudy Puryear,
|HELP WANTED: EXECS WITH VERTICAL INDUSTRY KNOWLEDGE, INTERNET SPEED, ABILITY TO OUTMANEUVER ADVERSARIES|
Puryear himself made a very visible "dot-com jump," joining Lante from a top slot at Andersen Consulting. As an Internet-centric company, Lante is dealing with hiring issues of its own.
Earlier this month, Lante slashed 19% of its workforce; at the same time it launched a broad employee retention program including benefits enhancements, equity grants and an option exchange program to keep key executives on board.
Yet even as it restructures, Lante last week was able to land a key recruit, hiring Glenn Yeffeth as chief strategy officer. Yeffeth joined from Diamond Technology Partners Inc., another Internet consulting company.
Although compensation issues may have changed—for instance, do you offer a candidate equity or cash?—the larger issue of building a company that smart people want to work for has not, Puryear said. "What attracts people to Lante is that they can do leading-edge work with extremely great clients, and, in the course of that, increase their own personal marketability. We may have to tweak our incentive and compensation structure, but ultimately people have to buy into that vision."
Indeed, the wild card in the b-to-b hiring game is the suddenly tight-fisted financial markets. The crash of the Nasdaq index and the closing up of many dot-coms—just beginning in the b-to-b ranks—has people "running like lemmings" looking for more substantial career opportunities, said Yaarit Silverstone, interim CEO of Omnexus Corp., a marketplace for the plastics industry.
"These are nice, smart people. But they’ve seen the writing on the wall" that their jump to a startup dot-com isn’t going to pan out, Silverstone said, adding that larger employers, including industry-sponsored marketplaces, are happy to have these folks back in the fold.
Silverstone came to Omnexus from Andersen Consulting, and she is helping the marketplace—co-owned by BASF Corp., Bayer AG, Dow Chemical Co., DuPont and Ticona—find a full-time CEO. Omnexus has offered a candidate the job and is waiting to wrap up the deal, Silverstone said.
Interestingly, Omnexus hasn’t looked for a plastics industry veteran to lead its company. With five of the largest plastics companies as its owner, it has all the industry knowledge it needs. In a show of neutrality, Onmexus has also decided not to take a CEO from any of the five owner companies. So the perfect CEO will have a strong industrial background, have led an IPO or turnaround project and been responsible for profit and loss in a large, globally oriented company, Silverstone said.
There aren’t many execs that fit such a first-class bill. That may be the reason why many large e-marketplaces, most notably the Covisint L.L.C. auto e-market, have had such a difficult time finding a CEO.
Covisint has, however, made some progress in naming top-tier executives in recent weeks. Not surprisingly for the somewhat insular auto industry, Covisint’s recently hired sales chief Jacqui Dedo has a deep auto industry background, making the move from auto supplier Robert Bosch Corp.
Indeed, e-marketplaces are taking a variety of approaches to landing key hires.
In many cases, adding an industry veteran to a fledging e-market can be a real feather in the cap. For instance, in October, chemicals e-marketplace ChemConnect Inc. named former BP Amoco plc executive John Robinson as its new CEO. Robinson, a group VP at BP Amoco, replaced then-CEO John Beasley who helped start ChemConnect but did not have a chemicals industry background.
But other times, e-marketplace CEOs come on board with an outsider’s point of view. For instance, airlines marketplace Aeroxchange.com tapped Edith Kelly-Green, former VP-strategic sourcing supply for Federal Express Corp., as its CEO. In another example, MetalSpectrum named Alan Turfe, formerly of General Motors Co., to head its metals exchange. Turfe also helped get Covisint off-the-ground.
In the end, an e-marketplace CEO’s most important skills may be political. CEOs need "the ability to navigate across all of these different players" that share ownership stakes in a particular e-market, Lante’s Puryear said.