Power Partners

The early Internet economy involved startups that vowed to render corporate "dinosaurs" obsolete. Today, the most ambitious online players are those dinosaurs. The future belongs to partnerships. Wells Fargo is inventing the future with young dotcoms.

Name: Wells Fargo & Co.
Headquarters: San Francisco
Date Founded: 1852, to help finance the California gold rush
Aspiration: "We're reinventing the bank around the Internet." —Clyde Ostler, group executive vice president of Internet services

By rights, a fierce culture clash should be taking place inside the bare-bones conference room. Four senior bankers from the venerable Wells Fargo & Co. are huddled around a tiny Formica table in an office in San Francisco's South of Market (SoMa) district. Joining them is a 34-year-old consultant from Scient Corp., a sassy Internet-strategy boutique that was founded just three years ago. The walls are lined with cheap plastic chairs — part of a bohemian decorating scheme that extends across an open-loft floor sprinkled with beanbag chairs, desks on rollers, and even a pool table.

But the men and women from Wells Fargo aren't bristling at this funky decor. They seem right at home amid the informality of a place where almost everyone wears blue jeans to work. In barely 30 minutes, they race through an ambitious schedule for launching dozens of financial services on the Internet over the next year.

It's no wonder that the bankers feel comfortable: This is their home. Since May, part of Wells Fargo's Internet-banking team has been based at 160 Spear Street. This part of town attracts Web developers, graphic artists, and e-commerce startups. Most banks consider themselves adventurous if they have a few automated-teller machines in the area. But from the moment that Steve Ellis, 46, who runs Wells Fargo's Internet-banking team for big-business customers, took charge of the group last year, he knew that he wanted his 70-person team to be based here.

"I wanted this place to feel like a dotcom," he explains. "Or maybe four or five dotcoms, all at once." For Ellis, moving into a SoMa office was the first step to breaking down the traditional barriers that have made banks slow to innovate. People in his group don't compete for turf or for bigger offices: They scramble for the chance to be part of the coolest projects. When one initiative is finished, they simply roll their desks to a new area and start something new.

What is especially striking about Wells Fargo's push to embrace the Web is how much work is being done in close partnership with Internet startups. These young allies bring ingenuity and urgency beyond what the big bank could create on its own. Yet Wells Fargo, with its 148-year heritage and $222 billion in assets, provides vital strengths that a dotcom couldn't conjure up. Not only is Wells Fargo chock-full of banking expertise and a history of relationships with financial regulators, but it also enjoys a time-tested brand name.

Welcome to the future of the Internet economy. The early romance of the Web involved hard-charging startups that vowed to remake entire industries and send corporate "dinosaurs" to the graveyard. But this spring's collapse of the NASDAQ index has toned down a lot of that belligerent rhetoric. More important, even the most ambitious Internet rebels have come to realize that if they want to reach millions of potential users, they need help from the big guys.

Meanwhile, the dinosaurs have decided that they need not become extinct. Today's highest-profile Web initiatives often are located inside big corporations. Rather than smother innovation with in-house bureaucracy, these pragmatic companies are taking pointers from the new mind-sets, the new practices, and the new energy levels of the startup world. Step inside such diverse companies as Ford Motor Co., Hewlett-Packard, and ups, and you'll find veteran managers teaming up with Internet startups. The result is the corporate equivalent of a Hollywood "buddy" movie: Early squabbles and outright farcical moments are plentiful. But they give way to sturdy partnerships that help both sides overcome what could otherwise become huge problems.

This fusion of old and new is especially noticeable at Wells Fargo, which started out in 1852 as one of the banks that helped finance the California gold rush. Stagecoach imagery still abounds in Wells Fargo's lobbies and on employee business cards. But Wells Fargo has become the nation's leader in online consumer banking — with nearly 2 million account holders using the Web — and now it is trying to build up similar online success in its corporate-banking businesses. "We're reinventing the bank around the Internet,'' says Clyde Ostler, 53, Wells Fargo's group executive vice president of Internet services.

In fact, the Internet lets Wells Fargo expand its mission breathtakingly far. Anyone who opens a Web browser and types in "www.wellsfargo.com" will end up at what is clearly a bank's home page. But as Wells Fargo enlists the right business partners, that Web site can become a stronghold for almost any activity in which money changes hands. It can turn into a shopping mall for small companies. It can become a payroll service, a Web-hosting company, a car-buying guide, even an HR department that helps visitors choose a health plan.

Wells Fargo is sprinting into each of these new areas, as well as many others. As of July, it had 178 Web-related projects under way, plus another 111 that it plans to begin in the future. That furious pace of activity is beyond the in-house capacity of even the 1,200-person squad that Ostler now directs. So he tells his team of bankers, "Move beyond the thinking that we need to own each line of code that we use. There are a lot of dotcoms that have created all sorts of things. Figure out what you need, and then snap in that Lego piece."

To see what happens when the stagecoach meets the Web, it helps to look at three of the bank's projects in detail. One involves an ambitious attempt to reshape much of corporate banking. Another involves the pairing of Wells Fargo with one of the funkiest Net companies around: eBay. The third is a foray into wireless banking — an area so new that no one really knows just what will ultimately succeed.

In each case, bankers are discovering how to function in Internet time. They are making decisions faster, letting go of old-fashioned hierarchies, and improvising as they go along. Meanwhile, people from the dotcom world are learning the value of having a famous partner — and the importance of stepping carefully when it comes to anything that might affect customers' willingness to let someone else handle their money.

Bankers in Blue Jeans

For years, Steve Ellis had been known within Wells Fargo as a talented maverick. He was a senior vice president who wore a small diamond earring and who abandoned suits for casual clothes years before the rest of his colleagues did. His résumé included not just an MBA from the University of Oregon but also a 21-year side job as the owner of a tavern in Portland, Oregon.

In the spring of 1999, Ellis decided to bet his career on an idea. He had been at Wells for 12 years, specializing in corporate banking, and he had successfully helped manage areas ranging from problem real-estate loans to cash-management and treasury operations. He could see that the Internet was starting to reshape the world of finance. In April, at a bankers conference in Atlanta, Ellis heard Scott McNealy, chairman and CEO of Sun Microsystems, give an electrifying presentation about the online economy.

"I got Internet religion,'' Ellis recalls. "I came home and pulled five people off their jobs. Then we brought in an Internet consulting firm and drafted a high-level strategic plan about how Wells Fargo should organize around the Internet channel."

Before long, Ellis began circulating his brash and almost-taunting views in a white paper. He contended that Wells Fargo needed to create a powerful Internet team for wholesale banking that cut across business lines. It needed to rethink the basic ways that it worked with customers. And it needed to move fast. As his crusade gathered momentum, Ellis was asked to present his ideas to Wells Fargo commercial- and corporate-banking executives at a company off-site. It was a make-or-break moment for him, and, just before he went onstage, he learned that a surprise guest was in the audience: Richard Kovacevich, president and CEO of the entire bank.

The blunt talk paid off. Wells Fargo's top brass decided that Ellis was onto something big — and that he was the man to make it happen.

Wasting no time in his new job, Ellis decided that Wells Fargo needed to create an electronic-procurement service as fast as possible. The service would let corporate customers run purchasing departments online. Wells Fargo would collect small commissions on the transactions — but, more important, the bank would establish the Wells Fargo site as a vital part of its customers' workday.

There was just one problem. Because of anxiety about possible Y2K-related computer snags, regulators had told banks that they couldn't do massive software upgrades after September 15, 1999. That was less than two months away. The solution, Ellis decided, was to find the fastest, smartest Silicon Valley startup that knew how to do e-procurement. That led him to RightWorks, a San Jose-based company founded in 1996 by Vani Kola, 36, an engineer from India. Ellis and his colleagues told Kola that if her team could deliver the entire e-procurement framework before the Y2K cutoff date, they would give RightWorks the Wells Fargo contract.

"They gave us just six weeks," Kola recalls. "But Wells Fargo was sharp. Instead of making us deliver everything before they would touch it, we became part of the company team. We had five people working on-site. We were in almost 24-hour email contact. And we got the job done about two hours before the drop-dead date."

More projects have followed in rapid succession. In order to build an Internet-based currency exchange for corporate customers, for example, Wells Fargo brought in OOP Inc., a Chesapeake, Virginia-based company that specializes in object-oriented programming — a fast-track way of creating software. Wells Fargo could have tried to run the entire project internally, acknowledges Greg Shaurette, 38, an OOP principal. "But even a big bank like Wells Fargo might not have enough time and expertise to staff up for this," he says. "With us, it's a matter of 'been there, done that.'"

As tech-savvy startups help Wells Fargo move to the Web, it's becoming startlingly clear that a lot of routine banking can be done faster and cheaper on the Net. "A lot of customers' questions about wire transfers or interest rates are being handled by highly paid people,'' Ostler observes. "There's no reason for bank officers to be fielding calls from customers asking, 'Did the wire transfer go out?' We hope that with the Internet, we can do in one step what now takes two or three rounds."

Initially, Ellis's group worked in traditional banking offices in downtown San Francisco. Even there, though, Ellis set a casual but intense pace — coming to the office in blue jeans most days, but starting work at 7 AM and frequently putting in 12-hour or longer days. Then, in May, Ellis's team moved to SoMa.

Putting desks on rollers isn't just an attempt to look cool, says Danny Peltz, 32, a senior vice president who is part of Ellis's team. It helps bankers to assemble the right-sized team for a project and then to disband within minutes of completing a task. Similarly, the office's open layout means that people can overhear snippets of others' conversations — and can jump in with helpful ideas. As Peltz puts it, "It's nobody's space, and it's everybody's space."

And since bosses aren't isolated from workers, he adds, the big, open workspace becomes a brainstorming bazaar. Gone for good is the silo mentality that has traditionally plagued many banks, where people in different departments battle for control of projects, do little to help one another, and guard knowledge jealously.

Ellis's team is rolling out its most ambitious project yet: the Commercial Electronic Office, or CEO. This amounts to a Web-based version of all of the services that a sizable corporate customer would need. Plans call for new versions of the CEO to be launched every 60 to 90 days, expanding the services offered in the initial summer version. Right now, only 3% of Wells Fargo's 30,000 middle-market business customers do any major banking online. Ellis says that he would like to see that percentage rise to 10% or more by the end of the year.

In order to bring so many services to market quickly, Wells Fargo must not only work with startup partners; it must also redefine how to work fast. At a recent strategy meeting, Ellis looked at the time estimates for version two of the CEO and asked, "Are these business days, or are we counting weekends too?" His subordinates smiled. "Calendar days," said Peltz. "We work weekends," msaid another banker.

That all-out hustle is contagious. Another team is developing a purchasing service aimed at small firms, which don't want all of the features that are built into Ellis's large-company offering. In early June, Wendy Quast, 34, Wells Fargo's VP of business Internet services, still had not signed a contract with her startup partner on the project, San Mateo, California-based PointSpeed Inc. But that didn't stop her from holding almost-daily meetings with PointSpeed's team, fine-tuning the look of their jointly developed Web site, and drafting marketing plans for a launch. "We don't want to slow things down by waiting for lawyers,'' Quast says. "We'll get a contract signed in due course. But there's no sense in sitting still until all of the legal details are worked out."

At times, Wells Fargo bankers manage to outdo even their dotcom buddies in terms of round-the-clock passion for doing business on the Internet. Last winter, Scient consultant Gary Braitman, 36, joined a group of Wells Fargo bankers at a Lake Tahoe ski resort for a strategic review. One afternoon, Braitman was riding a chairlift with Ellis. The ski resort was engulfed by a blizzard, and ferociously high winds were battering the chairlift. Within minutes, many runs would shut down because of dangerous conditions.

None of that mattered to Ellis. He leaned over to Braitman, exuberantly described a possible new Internet-banking service, and shouted in the gale, "Do you think that would be an extension of what we're doing, or a true innovation play?"

"I don't care," Braitman muttered. "I just want to get off this mountain in one piece."

Seeing the Web Through eBay's Eyes

What happens when two CEOs announce a daring idea for a joint project — and then leave the hard work of implementation to a few frontline managers? That's a make-or-break challenge for any alliance. It gets even tougher in an Internet alliance, when one partner has more than a century of tradition built around trust, while the other is 5 years old and says that its core value is "fun."

Michelle Banaugh and Janet Crane can smile now. In March, Wells Fargo CEO Richard Kovacevich and eBay CEO Meg Whitman announced a project to create all sorts of ways for consumers to move money over the Internet. Almost immediately, the baton was passed to Banaugh, 39, and Crane, 46, who became chief managers at Wells Fargo and eBay, respectively, in charge of making the new payment system actually happen. Gradually, the two women figured out how to get their teams to work together and how to create a reliable service on the Internet. They pack- aged their offerings under the catchy, 18-month-old name Billpoint and devised a plan to take the mass-consumer market by storm.

But it wasn't always easy. Take, for example, something as simple as employee-security issues. Wells Fargo security officials proposed that all eBay employees working on Billpoint submit to standard banking scrutiny. "Fine," said their eBay counterparts, not quite aware of what they had just agreed to. Within days, the Wells Fargo security team started drafting forms asking everyone on the Billpoint project to undergo background checks that would be forwarded to the FBI.

Sputters of disbelief ensued. FBI-level inspection might be appropriate for bank tellers, but not for the freewheeling eBay culture. People who worked at eBay shared a libertarian ethos that made them instantly opposed to having any authority vet their personal lives. Besides, at least one of eBay's young executives had been arrested in a college protest. He might not pass an FBI background check.

The moment that Banaugh heard about eBay's shock over the request, she realized that the security issue had been handled poorly. What Wells Fargo needed was the ability to assure the Office of the Comptroller of the Currency (OCC) that everyone performing banking functions had undergone a review. The answer: Banking functions would be performed only by Wells Fargo employees, who had already been checked out.

As other friction points arose, though, Banaugh proved that she was no pushover. The two companies started out with different ideas about how to do quality assurance on software. In eBay's world, quality-assurance reviewers worked alongside the developers themselves in what often became a cordial, chatty environment with changes being made on the fly. In Wells Fargo's world, QA was always done at a different location, usually by seasoned inspectors who pounced on mistakes and took sometimes two weeks to review a program.

Says Banaugh: "We told eBay, 'There is going to be formal QA on this project, and it will be done off-site.'" At the same time, though, she told her inspectors to pick up the pace, so that they wouldn't slow down the rest of the project. "This isn't two-week quality assurance," she remembers saying. "Let's turn things around in four hours."

As Wells Fargo and eBay got to know each other, they were united by a belief that if they made all the right moves with Billpoint, they might have a sensationally appealing service. As fast as Internet usage was growing, there wasn't yet a widely embraced way to transfer cash online for person-to-person transactions. Plenty of companies had ambitions in this area, but Wells Fargo and eBay hoped that they could become the market leader — before a competitor beat them to it.

On the eBay side, Janet Crane was especially attuned to the potential of the alliance. She had joined eBay in late 1999 after more than a decade in financial services, including a stint at Mondex, a smart-card company. She regarded other startups — most notably the PayPal service — as Billpoint's keenest competition. As CEO of Billpoint, Crane was in the best position to make the partnership work.

The Wells Fargo name alone "helps us gain credibility with customers," Crane explained to people on the eBay side of the team. People who might not trust eBay with their money would be willing to use a new financial service if Wells Fargo's reputation stood behind it. And Wells Fargo brings more than just a nameplate, Crane observed. The bank "has an incredible number of people who can be brought in to help with almost any technical question."

Billpoint wants to be seen as a safe, reliable way to combine the best features of credit cards and personal checks into an Internet transaction that can be completed in two minutes or less. People wanting to make a payment would share their card numbers with Billpoint, which would keep their data secret. Billpoint would then reroute the money into the right person's checking account, collecting a small fee for its services.

A pilot version of Billpoint had already taken shape in late 1999, before Wells Fargo entered the picture. But eBay officials realized that to operate Billpoint in a mass market, they needed expertise in credit review, payment authorization, and large-scale transaction management. Those weren't core eBay skills; they were what banks did. Since Wells Fargo had already helped eBay process some routine credit-card business, the bank quickly emerged as the logical partner.

Wells Fargo cemented the close alliance in February by putting up an undisclosed amount of money to buy a 35% stake in Billpoint. The other 65% remained in eBay's hands.

As the alliance has moved forward, Wells Fargo has focused on keeping Billpoint's banking underpinnings running smoothly. "We do a whole lot of things that the Internet needs," says Clyde Ostler. "Take something like keeping databases on deadbeats who pass bad checks. That takes time to build up, and it's one of our traditional strengths."

But Wells Fargo is a bit more tentative — and a lot more inclined to learn from eBay — when it comes to marketing the Billpoint service. There's an institutional memory within Wells Fargo of some consumer-banking initiatives in the mid-1990s that never attracted many users, despite the bank's belief that it was onto something big.

"You've got to know how to make public adoption happen," Banaugh says. The magic touch, she suspects, is eBay. After all, in its first five years, eBay attracted more than 10 million registered users — a growth rate uncommon in the banking industry.

On a recent Friday, Banaugh and Billpoint marketing chief Ann Ruckstuhl, 37, meet at eBay's offices to talk about ways to woo the public. Wells Fargo brings the classic tools of financial marketing. Some 2.5 million Wells Fargo customers are due to get Billpoint leaflets in one of their next monthly statements. For all of June, Wells Fargo's California ATMs displayed a Billpoint-related message, and the Wells Fargo Web site included a Billpoint ad.

That's valuable, Ruckstuhl says, but eBay wants to add some more playful approaches too. What about online contests with $500 cash prizes? "You always want to make it fun," Ruckstuhl says. "In the end, eBay is about the thrill of the hunt."

Gradually, Wells Fargo executives are learning to see Internet marketing through eBay's eyes. At Wells Fargo, Banaugh says, the preferred way to handle customer-service issues is by phone. The bank goes to great lengths to publicize its toll-free numbers. But eBay prefers an email-centered approach. "We usually handle things 70% by phone and 30% by email," Banaugh says. "But with Billpoint, it's 1% by phone and 99% by email. If you visit the site, you really have to hunt for the 800-number. That was eBay's preference."

Fortunately for both companies, early signs show that Billpoint is rapidly winning public acceptance. By early July, Billpoint had attracted more than 20% of the seller base at eBay and was adding thousands of users a day. By the end of the year, Wells Fargo and eBay officials say, they will be making Billpoint technology available to all shoppers — including people who aren't trading on eBay.

As a small sign of public acceptance, eBay's Ruckstuhl interrupted one meeting to describe her latest online adventure. "I was bidding on eBay for a glow-in-the-dark Beanie Baby for my children's school," she said. "I ended up the winning bidder at $9.95. So I emailed the seller, asking him if he would let me pay by electronic check," a new Billpoint service that lets people draw money directly out of their checking accounts and transfer it electronically.

"He emailed me back," Ruckstuhl gleefully recalled, "and told me, 'I'll offer you as many ways to pay as possible. If one of them sticks, fine.'"

Imagining the Future: Banking on Wireless

Pamela Reed, 43, has been a pioneer for a long time. In 1993, she was a marketing specialist for a savings-and-loan association owned by Ford Motor Co. when a friend excitedly urged her to check out the Internet. She bought a modem for her Apple computer, opened an account with a tiny Internet-service provider — and was enthralled. A few weeks later, she went to one of the first nonacademic-user group meetings in San Francisco.

"I wore makeup to the meeting," Reed sheepishly recalls. "I was horribly overdressed." But the more she discovered about the Internet's potential, the more she came to believe that this was where her next career would lie. In 1994, she joined Bank of America and negotiated an early alliance with America Online that made it easy for Bank of America customers to check their balances and to transfer funds from a desktop computer. Then, last year, when her boss jumped to Wells Fargo, Reed quickly made the same move.

Now she is leading Wells Fargo's efforts in one of Internet banking's most beguiling — and most bewildering — areas: letting consumers bank via wireless Internet connections to cell-phones, handheld computers, and other small devices. No one has any firm idea how big of a market this might eventually become. It's possible that it might never take off in the United States. Yet there are enough glimmers of encouragement that Wells Fargo and many other big banks believe that they would be negligent if they didn't make some serious attempts to master this exotic new form of personal finance.

For now, even the best prototypes of wireless banking are slow, cumbersome, and severely limited. Something as rudimentary as holding a cell-phone and typing in "www.wfwireless.com" requires 42 keystrokes — an ordeal that hardly encourages frequent use.

Sheer geometry makes it impossible, for now, to come up with a more elegant approach. Even the biggest cell-phone display screens are just 11 lines deep and less than 2 inches wide. More typically, cell-phone displays are just 6 lines deep. That amounts to less than 1% of the effective display space on a PC monitor, and it forces users to scroll down constantly for even the simplest tasks.

Nonetheless, when Wells Fargo asked online-banking customers who own a cell-phone or a PDA if they would like to be part of a pilot study of wireless banking, some 80% of respondents said yes. "We need to be sure that we're doing a good job with these early adopters of new technologies," Reed says. "We don't ever want them to feel that they have to go elsewhere to try out the latest and greatest."

Making things even more challenging, the underlying technology of wireless commerce is in tremendous flux, and no one is quite sure which format will win. All kinds of global companies — such as Ericsson, Motorola, Nokia, Samsung, and more — use different hardware and software for each model of cell-phone. Wireless-application protocols are still being thrashed out, with rival groups championing rival ideas. While data-transmission speeds are slow now, they're expected to get faster — but the timeline isn't clear. And even the wavelengths used for transmissions could evolve.

"We don't want to be trying to pick winners from day one," says Cathy Graeber, 47, Reed's boss and executive vice president in charge of overall consumer Internet initiatives at Wells Fargo. "We'd much rather partner with someone who can negotiate with everyone and come up with solutions that work on multiple platforms."

That partner is 724 Solutions Inc., a 3-year-old Toronto-based company that specializes in wireless banking. It made its mark early on by helping Bank of Montreal develop its version of cell-phone banking, and it is now doing the same for Wells Fargo and several other giant U.S. banks. According to Greg Wolfond, 39, chairman and CEO of 724 Solutions, his company is clearing the way for Wells Fargo to offer wireless Internet banking via 11 types of cell-phones, as well as via the Palm VII handheld digital assistant.

Carrying out such a project involves an enormous amount of coordination among software engineers, regulators, marketing departments, and others. That's part of Reed's job, and she brings classic big-company project-management skills to the table. Every Tuesday at 1 PM, she holds a conference call with the 724 Solutions team, making sure that deadlines are being met and figuring out how to keep small delays from becoming big ones.

On a recent Tuesday, Reed flips through a project-overview chart with 447 distinct tasks. "Is call coding going to be completed this week?" she asks. "Yes," a voice assures her. When there's an unexpected delay, Reed doesn't rip into the dawdler; she just presses him or her for a new schedule and makes sure that follow-up tasks aren't left in limbo. It's unglamorous work, but it's the difference between carrying out a big project within a few weeks of the original schedule — and watching deadlines slip catastrophically far away.

After the schedule review, Tim Farr, a top technical consultant to Wells Fargo, brings in a Sprint PCS cell-phone and a Palm VII device — two of the first devices to be fully capable of secured Internet banking. As he goes through the demonstration, Reed and her colleagues do their best to sound upbeat about the cell-phone. But its tiny screen has a hard time keeping pace with their requests. By contrast, the Palm VII's screen — slightly bigger than a business card — looks wonderfully spacious and complete.

Before long, even Reed is indulging in the favorite pastime of a technology enthusiast: imagining what the next machine could do. "The display is monochrome for now," she says. "But soon there will be a color version. We should check with 724 Solutions and make sure they can get the Wells Fargo logo in red and yellow."

Wells Fargo has a history of betting on raw technologies — and then staying with them as they steadily get better. As far back as 1989, Wells Fargo offered consumers a primitive version of online banking, conducted through the Prodigy dial-up service. Bank executives remember it as a "very clunky" beginning, full of long, typed commands on text-heavy pages that lacked any graphics. But it was a start.

By 1995, Wells Fargo had a more appealing version of Internet home banking. Refinements followed steadily every few months. By 1998, Wells Fargo had more than 1 million Internet customers for home banking — more than any other U.S. bank. That total now tops 1.9 million — a full 23% of all Wells Fargo checking-account holders. By most tallies, Wells Fargo has a larger percentage of its retail account holders online than any other major bank.

In wireless Internet banking, though, Wells Fargo is playing catch-up. Canadian, European, and Japanese banks are far ahead of their U.S. counterparts. Even in California, Bank of America has moved faster to enable account-balance checks via a Palm VII.

In a race to market, Reed says, it's often an advantage to have a small and focused partner like 724 Solutions to negotiate with telecommunications companies. That way, a few crucial issues can be dealt with quickly. If Wells Fargo were handling all talks with companies such as AT&T and Sprint, she concedes, "we could end up saying, 'We want to be your strategic partner, and here are 28 ways that we could work together.' Eight years later, you'd still be negotiating."

That said, Wells Fargo assumes the lead role in dealing with regulators. Take something like the standard boilerplate disclosures that certain money-market accounts aren't federally insured. Those can be thousands of words long, and banks know how to present them on paper, or on a personal computer. But if cell-phone users had to scroll through such an endless disclaimer, their batteries would go dead — and their monthly bills would top $100 — before they could do any real banking.

After some detailed talks with the OCC earlier this year, Wells Fargo was given clearance to test its wireless-banking pilot program on current customers without having to post such detailed warnings. "We try to take the high road and think about what a sensible regulatory approach would be, rather than turning it into something adversarial," says Reed. Wells Fargo is able to do that, she says, because it has established a constructive working relationship with regulators over many decades. If a startup tried to draft its own rules, it wouldn't fare nearly as well.

George Anders (ganders@fastcompany.com), a Fast Company senior editor, is based in Silicon Valley. Contact Steve Ellis or Clyde Ostler by email (groverw@wellsfargo.com), or visit Wells Fargo & Co. on the Web (www.wellsfargo.com).

Sidebar: Partnerships That Prosper

When it comes to creating the future of the Internet economy, two heads really are better than one. As big companies and Internet upstarts try to conquer the Web together, culture-blending exercises are nice, but after the last slice of pizza has been eaten and the final Foosball goal has been scored, lots of hard work remains. Here are four rules that Wells Fargo has learned can make all the difference between getting such alliances right — and wishing that you'd never bookmarked a partner's site.

  1. Pick up your chairs and move into each other's world. Teamwork happens slowly, and it requires intense communication at every step. That's unlikely to occur if two teams work in separate offices governed by separate cultures. When Wells Fargo wanted an online business-procurement system in a hurry, its partnership with RightWorks clicked because key employees from both companies worked side by side at Wells Fargo's offices.
  2. Take chances on almost everything — except your reputation. It's thrilling to see how Web-based upstarts break the rules to launch products fast. But big companies sometimes must be the sober-minded grown-ups in the relationship. Wells Fargo delegates a lot to its startup allies, for example, but the bank commands talks with regulators. Similarly, human faces aren't shown on the bank's Web site, because of concern about possible gender or racial stereotyping. That irks some startups, but it prevents embarrassments from occurring. In June, when a neighborhood guide for home hunters included some racially charged language, Wells Fargo quickly removed the guide from the site.
  3. Manage deadlines so that little snags don't become disasters. The optimism of young partners is inspiring and contagious — but it's hardly a recipe for realistic scheduling. Big-company backers are often needed to set deadlines and to offer project-management expertise, making sure that things stay on track. Inexperienced managers may shout when things go off course. At Wells Fargo, project-management veterans stay calm and figure out how to keep one small team's troubles from snarling up everyone else's progress.
  4. Let a startup partner keep you in step with a fast-changing world. Big companies may excel at coming up with a long-term strategy, but they aren't nearly so nimble at reacting to sudden market changes. Acknowledging that schism, many alliances let a smaller partner control those parts of the plan that are most susceptible to fine-tuning. In working with more than a dozen makers of cell-phones and handheld computers, for example, Wells Fargo lets a much smaller company, 724 Solutions, figure out what technology to use — or overhaul — as wireless banking continues to evolve.

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