Web design firm USWeb/CKS grew at an astonishing rate by gobbling up existing businesses. Now it's using technology to keep its far-flung components all working together.
USWeb/CKS got big really fast by gulping down existing companies. Now it's using technology to prevent indigestion
The mortality rate for Web-design shops these days isn't much better than that for prime-time series on the networks. So I was somewhat surprised to hear the founders of USWeb/CKS describing their company's survival as a given rather than a goal. Indeed, the three-year-old business harbors ambitions far loftier than merely staying the distance: it fully expects to become the General Electric of the Internet.
Sound like bravado? Not so, say the facts. Prior to its December 1998 merger with the interactive-marketing firm CKS Group, USWeb Corp. generated $73 million in revenues in nine months. The merger increased those revenues to more than a quarter of a billion dollars. USWeb already had more than 1,200 employees working in 44 locations. The merger gave it more than 1,850 employees in 60 locations. As for clients, the company's starry roster includes the "dot com" divisions of NBC, Levi Strauss, and Apple.
USWeb/CKS is built upon the premise that corporate Web projects are becoming great big complicated affairs, requiring a single vendor that offers everything from the soup of strategy to the nuts of maintenance. The company consults with midsize and large businesses that are trying to find their Internet selves, and then assists them with marketing, branding, and technology. "Whatever it takes to launch a new business, a new initiative, a new division on the Internet, USWeb/CKS can help with every aspect of it," says Sheldon Laube, the start-up's energetic cofounder, executive vice-president, and chief technology officer.
Laube came to the premerger USWeb via what he calls "a very twisted, strange path." Displaying an early entrepreneurial bent, he started several small businesses while he was still in college. Then, in 1986, a computerized financial-planning tool he was selling attracted the admiring gaze of Big Sixer Price Waterhouse. Price Waterhouse acquired the company, and Laube came on board as head of technology. Ten years of suit-and-tiedom were followed by a stint as chief technology officer for networking company Novell, where he met Joe Firmage and Toby Corey, the cohatchers of the original USWeb. The three launched the company at the end of 1995, raised $14 million in venture backing, and went public in December 1997.
Happy as he was to be free of corporate shackles, Laube was anything but a scale bigot. He expected that USWeb's customers would want it to handle all things Web related. And he knew they would demand stability. That meant USWeb would have to be big. And because curtains were already being drawn across the window of opportunity, it would have to get big fast.
Lacking the time to grow USWeb by sips--one employee at a time--the founders decided to grow it by gulps. Their strategy was to enlist existing Web-design shops as affiliates--they wouldn't be owned by the company but would operate under the USWeb banner. "If you hire an entire company, you buy teams of people that already know how to work with each other," says Laube. "So they're immediately effective." For each new customer that signed on, USWeb would create a full palette of expertise by cobbling together a team of affiliates. The affiliates would be paid in full for their services and pass along a percentage to the parent company. USWeb, meanwhile, would supply administrative support and a steady stream of new business.
Substantial marketing dollars bought the company's name some marquee value, and by mid 1997 it had the capital and cash flow to start buying its affiliates outright. Laube compares USWeb's acquisitions to the Borg in Star Trek. "You get assimilated into the collective, and the collective grows through your uniqueness, and we all expand because of that."
As a result of its acquisitions, USWeb was soon looking very virtual indeed. By the end of 1997, the company had 87 people in its Santa Clara, Calif., headquarters, managing more than 1,000 employees in previously autonomous units that diverged from one another in style, culture, and geography. I asked Laube how the company prevented that seemingly unwieldy setup from devolving into competitive fiefdoms. The strategy he outlined is a delicate balance between all-for-one and all-for-all, with technology providing mortar for the cracks.
USWeb/CKS provides strong shared structures--one name, one network, one training program--while allowing each office "tremendous entrepreneurial latitude to respond to the business opportunities wherever they are, as they see them," says Laube. Compensation favors cooperation: an office will receive a larger reward for landing and servicing a client if another office participated. The company's compensation plan even incorporates metrics for determining how much of an office's work is done solo and how much is done with corporate partners.
But it's tough to stitch together a multiskilled project team when you don't know what your colleagues actually do. Like many virtual companies, USWeb/CKS has a workforce whose members seldom, if ever, meet face-to-face. So it relies on technology--on Internet technology, no surprise--to let everyone know what resources are available. The company has an extensive Windows NT-based intranet, dubbed USWeb/CKS Central, that in addition to the usual administrivia also houses an electronic-skills map. That system "allows you to find out the expertise of any staff member anywhere in the world," explains Laube. "So if you want to know who's an expert in NT in banking, in 20 or 30 seconds it can give you the names of 20 people in the company that have that expertise."
The intranet also serves as a kind of collective memory. An office embarking on a utility-company project that uses SQL server 7.0, for example, can search the system to see if anyone at USWeb/CKS has done something similar, and if so how long it took, what it cost, and what problems arose.
With offices in 22 states and seven countries, USWeb/CKS also uses its intranet for most meetings--what it calls "site calls." And the experience is far richer than simply typing messages back and forth. An early adopter of Microsoft's Net Show, which allows users to broadcast multimedia presentations to an audience connecting over the Internet, USWeb/CKS has customized the product into something it calls USWeb/CKS Presenter. Using Presenter, offices can design presentations in whatever media--audio, video, slides--tickle their fancy. At a preset time, authorized users gather at a designated place on the network where they are led through the presentation. (Presenters can even push documents to viewers at specific points.) If audience members want to comment, they can type messages during the presentation or toss in their two cents by using a real-time audio component or conference line.
Web Presenter has worked so well that the company now deploys it on an external site for client meetings and to rope together analysts during its quarterly financial presentations. It sounded like big-company technology to me, but Laube explained that since the Net Show client is free and the server comes with NT 4.0, almost anyone can do it.
If you ever wanted an example of a company living on Internet time, USWeb/CKS is it. Looking at the organization's record of growth and achievement, it's hard to believe it has been around for just over 1,000 days. And newly arrived CEO Robert Shaw has bold plans for the next couple of hundred, including building a back-office infrastructure, balancing profitability with growth, and identifying future investments. If USWeb/CKS keeps going at this rate, the GE dream doesn't seem far-fetched at all.
William R. Pape was a cofounder of VeriFone Inc., which was sold to Hewlett-Packard in 1997. He was VeriFone's first chief information officer and a senior vice-president. Pape has been operating virtually since 1978.