Slowly, the pressure began to mount on Wolfe: the company's needs demanded that he open his tight fists. Some employees clamored for a formal professional-development program, and others complained that internal computer systems were due for an upgrade.
But it was recruiting that was most critical to sustaining growth. In computer consulting, you either recruit or perish. As Austin had developed into a high-tech mecca the stakes were raised to sniff out topflight high-tech talent. Nevertheless, Wolfe resisted hiring a full-time recruiter, opting instead to save the money and oversee the task himself with the help of his existing staff.
By this time, the Sterling spending habits--or lack thereof--had become a major point of contention. "You've got to spend something to get something," says Leslie Martinich, who joined the company as director of team resources in October 1994. "Chip was just way too risk averse."
Martinich, who now works for Compaq, says she actually found the company's policies less than ideal for her. Because most of her job as director of team resources involved work that was not billable to clients, she felt pressured to keep her hours to a minimum. "Since I wasn't billing to a client, they would have been happy if I could have finished my job in 20 hours," she says. Even Gilmore admits that the company had probably become "overly cautious" with its money.
But Wolfe simply didn't have the dollars to burn. Lopping off 50% of the company's profits for the bonus pool didn't leave much for reinvestment. Whether he wanted to or not, Wolfe had to begin revising his business strategy. The question was how to do it without disturbing the unique work schedules that had become a staple of the organization.
So in 1994, Wolfe reluctantly recalibrated the bonus and profit-sharing plan, creating a tiered system that favored longer-term employees. Other decisions, however, would call for more radical changes.
Sterling had identified new and potentially highly lucrative markets, particularly in computer-integrated manufacturing. Unfortunately, much of that work couldn't be found in Austin. If Wolfe wanted a piece of the action, he would put his commitment to the optional-travel clause--and a significant part of the 9-to-5 culture--to the test.
After long consideration, discussion, and companywide meetings, Wolfe began to commit to out-of-town engagements. He took it upon himself to make sure that the staff was comfortable with the move, but it wasn't necessarily an easy transition.
"Travel was not mandatory," says Wolfe, "but I was often trying to make deals with people to get them to go on the road."
"We Were Not Able to Take on New Projects..."
The increased travel that became necessary in the competitive environment not only strained Sterling's 9-to-5 culture but also underscored a need for new offices and new recruits outside Austin. Expansion, Wolfe knew, was not without risk. "I actually had access to capital through my bank," says Wolfe, "but I was fearful that if the economy hit a bumpy stretch and I had spent my reserves, then I could be in trouble."
Wolfe's fear of expansion hovered over the company's strategic planning, creating ripples in its new-business development. "We were painfully and regretfully informing some clients that we were not able to take on new projects," he recalls.
In spite of his concerns, Wolfe knew that Sterling needed to identify new avenues of growth, pronto. Austin was growing more competitive by the minute, and the cost to stay competitive was rising just as fast. Given the company's reputation, its low turnover, and its low internal costs, Wolfe was fairly confident that he could lure outside investors. But he was loath to give up equity to a group of outsiders whose only objective would be to maximize profits. So instead he noodled around with another idea: to diversify the company into software products, such as sophisticated logistics systems. "If you win in product, you win big," explains Wolfe.
He began to sketch out ways to accommodate the typically arduous product cycles. For example, he imagined that product-side employees might be required to take a one-month sabbatical after particularly long cycles. "I'm convinced my model can work with any business," says Wolfe.
But his idea was greeted with some strong objections from the ranks. Patricia Yockey, a technical consultant who had been recruited from IBM, where she developed software products, questioned whether Sterling was inviting trouble into the company. "Product development can introduce a frenzied sort of work ethic," says Yockey, who feared that the round-the-clock ethos would infiltrate Sterling's culture. In the end, Wolfe abandoned the idea.
Just when it seemed as if the conflicts couldn't grow any worse, Wolfe's mental and physical health suddenly began to deteriorate. He developed a nagging cough and felt perpetually exhausted--a tremendous irony for a man who had set up a company specifically to alleviate the work-and-life stress that comes from working long hours. "It was as if I couldn't recharge my batteries," says Wolfe, who was later diagnosed with chronic-fatigue syndrome. The onus to conjure up a scheme to grow the company and still maintain the 9-to-5 culture was more than he could take. Wolfe wanted out, and he couldn't hold on for much longer.
Although he had largely turned over the reins to Haney, who had become president in 1993, Wolfe's net worth was almost entirely tied to Sterling. And he began to obsess over ways to extract his wealth, endlessly enumerating the pros and cons of each avenue on scrap paper and seeking the advice of colleagues, friends, and family.
But nothing seemed to satisfy all his demands: employee stock ownership involved risks he wasn't prepared to take, a public offering would have taken at least four more years of hard work, and a leveraged buyout was out of reach for his consultants. (Wolfe went so far as to E-mail all the company's staff members, asking them what they would be willing to spend on the company: the answer came back at about $1 million. "A million is nice," says Wolfe, "but it wasn't going to change my life, and I still would have had most of my assets tied up in Sterling.")
