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Ask leaders what their biggest challenge is, and you get the same answer: finding, attracting, and keeping talented people. Ask talented people what their biggest career challenge is, and you’ll hear the same refrain: finding good people to work with—and to work for.
For Liemandt and Rios, and for everyone in the new enterprises of the free-agent economy, the crucial questions are: What leads them to work together in the first place, and what keeps them together? Here are the six “social glues” of the company of the future.
Money Makes It Mutual
The world is awash in money. Venture capitalists are pouring funds into startups at a ferocious rate. In 1997, for example, venture-capital firms raised $10 billion. That same year, 629 companies went public, with a total valuation of more than $39 billion. The stock market has softened in recent months, but it’s still way up there—making possible a previously unthinkable market for acquisitions and IPOs.
All of this money has had an unavoidable impact on the job market, where money is a powerful motivator. Freshly minted MBAs from leading business schools are commanding a premium from blue-chip consulting firms: Signing bonuses and first-year salaries often run higher than $120,000. And the pay packages that large, successful companies are putting in front of their most talented executives are critical in the rapidly escalating war to keep talent—or to steal it away. Not long ago, in the kind of deal that one usually reads about only in the sports pages, one of Wall Street’s premier stock analysts landed a one-year, $25 million contract—a $15 million increase over his 1997 pay package.
But for most people who are trying to decide which company to join, the name of the game today is stock
options. Chalk it up as another legacy of Microsoft and that company’s now-legendary cadre of millionaires: Across the landscape of the new economy, young, well-educated, talented businesspeople are joining up to get a piece of the action. They’re willing to forgo larger salaries at bigger and better-established firms in favor of stock options in upstarts that may be worth a great deal down the road. The result: Even small, little-known enterprises can compete for top talent. In fact, startups promising high risk and huge gain are winning.
“Obviously, it’s not just compensation that motivates people to come to work here,” says David Stewart, 30, head of human resources at Tripod, a Web company (http://www.tripod.com) based in Williamstown, Massachusetts. “But stock options are a big motivator.” Founded in 1992 by Bo Peabody, then a 19-year-old Williams College student, Tripod launched its site in April 1995. Today the company employs 60 people, produces one of the 10 most heavily trafficked sites on the Web, and boasts more than 2 million members. To keep ahead of the competition, Tripod depends on talent.
Stewart doesn’t have a classic high-tech background. Before coming to western Massachusetts, he was a lawyer in Montreal. He had worked his way through law school in Toronto by doing stand-up comedy at night. In January 1996, his wife, Margaret Gould Stewart, was offered a job as creative director at Tripod. (Now 27, she has risen to become Tripod’s vice president of media and community development.) Stewart recalls that he pulled out a map and tried to locate Williamstown on it. He couldn’t.
His wife accepted Tripod’s offer, and Stewart followed her to Massachusetts. He joined a small law firm in North Adams, about 10 minutes from Tripod. Almost inevitably, Tripod became one of his clients; Stewart saw huge possibilities in the startup, and he wanted in. “Because there was a lot of buzz around the company, people thought, ‘Hey, this stock could be worth something someday,’” Stewart recalls. In August 1997, he decided to take a job in Tripod’s human-resources department—a big career change. The salary at Tripod was a little lower than what he’d been making at the law firm. But the company included a “decent-sized grant package.” If it weren’t for the options, he might not have made the switch. Now, says Stewart, “when you combine salary and options, I make more than I did at the law firm.”
Money played a similar role in bringing Kara Berklich to Tripod as the company’s director of communications. Berklich, now 26, graduated from Williams College in 1994, worked as a consultant in Cleveland for six months, and then returned to Williamstown to join
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Tripod. She knew Bo Peabody from her college days and would have joined up right after graduation—but at that point, Tripod not only couldn’t offer options; it couldn’t even offer a livable salary. When Tripod was able to put together a package that included options, says Berklich, the company suddenly became much more attractive. “You think that eventually those options will become publicly traded stocks, whether through an IPO or through a buyout by a public company,” she says.
Stewart and Berklich bet right. Last February, Tripod was bought by Lycos, one of the contending search engines-cum-Web portals, for $58 million. After the acquisition, Lycos stock rose by some 25 points and reached a high of 107. About six months after the acquisition, Lycos’s stock split. Stewart and Berklich have had their Tripod options converted into Lycos options—an arrangement that will nevertheless bind them to Tripod for some time. “I continue to receive options in the company that continue to vest,” says Berklich. “Lycos remains a really terrific financial opportunity.”