VerticalNet CEO wants to follow AOL's
footsteps
By Rachel Konrad
Staff Writer, CNET News.com
August 15, 2000, 1:15 p.m. PT
VAIL, Colo.--In his first public remarks since a management
restructuring in late July, VerticalNet chairman Mark Walsh
showered praise on the company's new CEO--former Amazon.com
president Joe Galli. He also introduced yet another online commerce acronym: S2B.
"Joe and I have made a pact," Walsh told analysts gathered at the Pacific Crest 2000
e.conference. "If we can mimic what Steve Case and Gerald Levin have done for AOL,
we'll be
very happy cats."
Assuming their proposed merger is completed, AOL chief executive
Steve Case would become chairman of AOL Time Warner, while
Time Warner chief executive Gerald Levin would become CEO.
Case, who founded and nurtured what would eventually become the
world's largest Internet access provider, would focus on strategy
while Levin would handle day-to-day operations.
Walsh beamed with pride when he spoke of his
company's newest executive. He boasted that
VerticalNet didn't use a headhunter to lure Galli.
During his 13-month stint at Amazon, Galli
earned $102,266 in 1999 and received a $2.9
million signing bonus, $100,000 for signing a
noncompetition agreement, and $31,568 in
moving expenses. Despite the cash, Walsh said he didn't need to evangelize too much to
get
Galli to jump from a business-to-consumer company to one focused on
business-to-consumer
transactions.
"He was like, 'I love you guys.' And I was like, 'You're pretty cool,'" Walsh said of his
first
meeting with Galli--a secret rendezvous that was set up by a friend of a friend. "He was
forged
in the cauldron--in a good way--of Amazon, which is the leading edge of transactions and
how
you create stickiness."
Galli's stock options at Amazon were essentially worthless when he left because the
depressed shares were trading below the strike price. It's unclear whether Galli faces a
similar
challenge at VerticalNet, which, along with virtually all publicly traded
business-to-business
companies, has seen its stock price plummet since the beginning of the second quarter.
VerticalNet shares currently trade at about $44,
less than a third of the company's 52-week high of
$148.37. The stock is down nearly 47 percent
since the first of the year.
But Walsh--and several analysts--are bullish on
VerticalNet. Although Walsh doesn't imagine that
VerticalNet stock will trade at the "surreal" levels
of January and February, he noted that the stock
is roughly 16 times higher than its split-adjusted
IPO price.
Walsh has taken his new role as VerticalNet
ambassador to heart. He flew to Vail from the
Democratic National Convention in Los Angeles, where he mingled with Barbara
Streisand and
friends at the singer's Malibu estate. Next, he plans a tour of the companies that
VerticalNet
has recently acquired or partnered with, including British Telecommunications, Internet
Capital
Group, Softbank, Microsoft and dozens of small- and medium-sized clients who buy and
sell
products on VerticalNet's Web sites.
In addition to pressing more flesh, Walsh hopes to sell VerticalNet to analysts, many of
whom
have difficulty understanding exactly what the company does. VerticalNet, which
operates sites
ranging from solidwaste.com to foodonline.com, often falls off the business-to-business
coverage lists at institutional investment firms because it has branched out into a variety
of
different product sectors.
"VerticalNet's story sometimes has more facets than a wedding ring," Walsh said,
eliciting
laughs from a room of about two dozen analysts. "It's complicated, and we know that."
Walsh didn't necessarily simplify VerticalNet's message when he introduced a new
acronym
today to describe the company: S2B, or supplier to business. Walsh said he dislikes the
B2B
moniker because it implies a cadre of large companies that use the Internet to demand
volume
discounts from smaller suppliers. Business-to-business marketplaces typically focus on
driving
down procurement costs rather than forging relationships with suppliers, he said.
Pacific Crest senior research analyst Steve Lidberg, who rates VerticalNet "buy," didn't
necessarily like the new acronym but agreed that VerticalNet helps empower suppliers.
"They have definitely taken a different approach in targeting the B2B marketplace,"
Lidberg
said. "They're much more supplier-centered than Ariba or Commerce One…We
continue to see
VerticalNet's strategy really ramping up scale by helping small and medium businesses
bring
their business online." |
