| BUSINESSWEEK ONLINE : MAY 17, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| DIGITAL DISPATCH
Quick, Fed Ex Me an Executive Why startups keep tapping the shipper's alums for talent For all its miracles, Silicon Valley still mostly ranks in the ''don't get it'' category when it comes to customer satisfaction. Aside from increasing customers' exposure to classical music as they rot on tech help lines, companies often display an attitude that drifts between indifference and contempt. But something is afoot that is changing that. Suddenly, the hottest E-commerce companies aren't hiring executives whose war stories involve soldering irons in the garage. Instead, they're snapping up leaders who are devoted to making customers happy. And it's no coincidence that a lot of these folks formerly worked for Federal Express. The list of companies boasting members of the ''absolutely, positively'' gang seems to grow daily. The migration began with James Barksdale, the former FedEx chief operating officer who joined then-fledgling Netscape Communications in 1994 and is now an investor in Internet startups such as HomeGrocer.com. Since then, the list has expanded to include online broker E*Trade, startups Drugstore.com and PlanetRx, and even venerable players such as Apple Computer. One of the most ambitious new E-plays is a Foster City (Calif.) company called Webvan, which plans to offer consumers home delivery of everything from breaded veal cutlets to allergy medicines. There, Mark X. Zaleski, chief operating officer and a former FedEx exec, has recruited an additional half-dozen former FedExers for the service's June launch. Why? Because they're ''people who have learned to satisfy the customer in every way that's ethically possible,'' says Zaleski. GOLD MINE. Venture capitalists and entrepreneurs are looking to these managers to address the new cardinal rule of E-business: It's not about snazzy Web-based order forms, it's about reliable service. Deliver one piece of spoiled food, or Visine instead of Viagra, and customers will demand a refund, never order again, and bad-mouth your service all over the Net. Mayfield Fund venture capitalist Yogen Dalal sees the change as wrenching. ''Retailing has always been considered the grunge industry of Silicon Valley,'' he says. ''Now, selling is the hottest thing, and the culture of companies is about to change.'' The ''grunge'' he's referring to includes back room logistics, warehousing, and shipping. FedExers, says Dalal, ''know how to make the grunge stuff work. They're a gold mine.'' In many cases, Silicon Valley is catching these executives off a ''bounce'' or two, as the venture capitalists say. Many left FedEx one or two jobs ago. E*Trade's Chief Executive Officer Christos Cotsakos and Webvan's Zaleski spent several years at ACNielsen. Tracy Nolan, vice-president of operations at Drugstore.com, previously honchoed a mail order pharmacy for Merck-Medco Managed Care. But the stories they relish invariably involve going the extra mile at FedEx. In Costakos' and Nolan's cases, those early years included stints as frontline couriers. Nolan recalls the day he found himself standing in a huge trash compactor fishing out 50 customer packages a building janitor had accidentally dumped. ''People did stuff like that every day,'' Nolan says. At Drugstore.com, which sells drugs and notions, he has decreed: ''We're going to treat every order like it's for someone in our family.'' David Beirne, the Benchmark Capital partner and headhunter who recruited Barksdale, Cotsakos, and Zaleski to Silicon Valley, believes that ''it's an uncanny time in terms of the skill set Federal Express executives have.'' He thinks they're perfectly suited for the Valley's Internet dynamics, which include ''really fast growth, complex business models, global businesses, and a maniacal focus on the customer.'' Indeed, former FedExers are bringing a lot more than shipping smarts to the E-commerce party. E-time Now, of Mountain View, Calif., for example, is a startup that's all about data. It hopes to match transportation companies' delivery logs with financial institutions' records. The bet: If a bank has more confidence that products were certifiably delivered, they'll offer more attractive lines of credit on receivables to manufacturers and sellers. ''Inside FedEx, you learn that if you're going to do business in the new world, you don't just layer on the 'E,' you have to rejigger business practices,'' says Rohan Champion, E-time Now's CEO. He originally developed the E-time Now business plan for FedEx where he was a vice-president for strategy and business development. But he says FedEx realized that to work, the service needed to be able to access all carriers' records. FedEx gave him the nod to turn the idea into a startup, in which it has no ownership. SWEET MEMORIES. Is the Memphis-based delivery powerhouse concerned about the brain drain? FedEx' turnover rate remains relatively low, and company officials say that, among other moves to keep valued employees, they've opened regional technology centers actually modeled after Silicon Valley-style campuses. Says Judith Estrin, chief information officer at Cisco Systems and a member of the FedEx board: ''Federal Express trains great executives, and they have the bench strength to replace them.'' E*Trade's Cotsakos sure has fond memories of his days at FedEx. ''I cried when I left that company,'' he says, adding that he has imported lots of FedEx processes to sharpen E*Trade. His managers have to check off a daily ''preflight checklist'' and are held accountable for a list of ranked ''horrors'' involving customer-service flubs that demand instant resolution. As several system crashes at E*Trade have attested, even the best intentions can go awry in the burgeoning Web world. But if the attitude of the ex-FedExers takes hold, I'm hopeful I can begin to limit my classical music listening to CDs I've ordered from Amazon. BY JOAN O'C. HAMILTON _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
RELATED ITEMS Quick, Fed Ex Me an Executive TABLE: Ex FedEx Execs in the Valley INTERACT E-Mail to Business Week Online | |||
