SiteSmith (ex. UUNET):
Thanks TM for the email!
Walking Away From WorldCom
By Tish Williams
Senior Writer
8/7/00 12:21 PM ET
URL: thestreet.com
You won't have me to kick around anymore.
In early June, WorldCom (WCOM:Nasdaq) moved its Internet services division's president of three years, Mark Spagnolo, to a position in charge of "special projects." Spagnolo would still report to CEO Bernard Ebbers, but from a lower-profile spot, while up-and-comers would step in to handle UUnet's day-to-day operations.
During his tenure, Spagnolo built UUnet into a $3.5 billion-revenue operation within WorldCom, while UUnet's previous head, John Sidgemore, took the golden escalator up to the telecom empire's vice chairman position. Let's just say it doesn't take a guy running $3.5 billion in revenue long to find the special project he's looking for: By mid-July Spagnolo ascended to the CEO throne at 300-employee Web site operations outsourcer SiteSmith.
From his new start-up digs in Santa Clara, Calif., Spagnolo says, "My move wasn't for any negative reasons. UUnet is a great company with great people. What it's accomplished over the last three, four, five years is mind boggling." Yep, that's during his tenure and nope, he has no reason to spend his spare time stomping sour grapes.
Looking Ahead
Why? Because Spagnolo's tootsies are squarely planted on what we'll call the gilded landing strip of big-company executives. He's not down and out, he's preparing for IPO liftoff. Think Ellen Hancock, who took a risky path from stiff IBM (IBM:NYSE) to swift Exodus (EXDS:Nasdaq). Think Joseph Nacchio, who gave AT&T (T:NYSE) the cold shoulder and walked straight into Qwest's (Q:NYSE) hot streak.
Now, it's up to Spagnolo to prove he's got the stuff.
SiteSmith started life with two venture capital rounds worth $25 million from Bedrock Capital, ComVentures and Weiss Peck & Greer Venture Partners under its belt when it had Heidrick and Struggles (HSII:Nasdaq) scouring for CEO material. Since signing Spagnolo, SiteSmith blew the ink dry on a $26.4 million venture round from Dell (DELL:Nasdaq), Comdisco (CDO:NYSE) and its original backers. With more than $50 million in its kitty, this cat is in heat. Spagnolo is what SiteSmith needs to wow Wall Street and go public. No plans have been announced, of course.
While Exodus' data centers host Web servers and Marc Andreessen's LoudCloud handles back-end technology for commerce sites, SiteSmith is prepared to handle corporate Web operations from creation to every day maintenance. SiteSmith has snagged 110 customers in the scant few months since its October 1999 beginnings. But Spagnolo will have to prove that this niche has staying power. "We know the Web hosting opportunity. I'm not so sure about the opportunity for site operations," says Courtney Munroe, who looks at Web hosting for IDC, which hasn't done consulting for SiteSmith. Nothing like the chance to prove your own star power.
Solid Background
Spagnolo inherits a polished package from founders Treb Ryan, Marv Tseu and Dan Rasmussen. They honed their data paces at the executive levels of companies such as GlobalCenter -- you know, that little beauty Leo Hindrey at Global Crossing (GBLX:Nasdaq) was trying to sell to Exodus. Spagnolo already has the goods to sell, he just needs to develop the processes -- no sweat for a guy who not only grew UUnet, but served 24 years in Electronic Data Systems (EDS:NYSE) pinstripes.
"I have lots of experience from EDS in dealing with big, complex global customers; outsourcing and what that entails; and delivering excellent service," Spagnolo says. "And the one thing I learned from my UUnet days is scalability. I really understand what it will take to scale SiteSmith from a people standpoint, process, revenue and bandwidth standpoint."
As an example of a SiteSmith customer, About.com (BOUT:Nasdaq) hired SiteSmith to build and run a West Coast version of its Web servers. Rather than rent space, staff up a West Coast group and build on its own, About.com handed over the project to SiteSmith.
Valerie O'Connell, managing director of enterprise management of Aberdeen Group, interviewed 20 CIOs and CEOs in March to find out their Web outsourcing needs. "Then I talked with seven of SiteSmith's customers, and I was blown away by the connection between what dot-com CEOs are looking for in the outsourcing of operations and what SiteSmith's customers were experiencing." (O'Connell has done consulting for the startup.)
Before the hoedown can begin, however, IDC's Munroe warns that, as usual, this Internet startup will have to fend off the traditional players -- systems integration biggies like EDS and pals. "Service providers are working to get into this area. They're preparing a portfolio to respond," he says. "The next 12 to 18 months will be a crucial period, a proving period. SiteSmith has to show end users it can provide superior monitoring and management of these sites. "
Hmm ... prove a business concept, build a market and woo Wall Street. Should be a piece of cake, no? |
