Built to Scale

It's a familiar saga in dotcomland. Startup gets funding. Startup grows fast. Startup grows really fast. Startup's founders, lacking experience, can't fathom the complexities of a bigger business. Systems that had been slapped together creak, then crash. The sheer volume of work far outweighs the inflow of new talent.

Chaos reigns. Startup implodes.

Now consider the approach taken by Netigy Corp., a little-known e-commerce-services provider that wants to become a big company. Very, very big. Very, very fast. Of course, aspirations are cheap. What's compelling about Netigy is how its leaders think about hypergrowth: If you want to be a big company, they say, act like one from the start.

Based in San Jose, California, Netigy may have fewer than 650 employees now, but it invests and hires as if it has 30 times that many. Netigy CEO Gary Moore, formerly a top executive at EDS, doesn't merely hope to have 20,000 employees in five years -- his strategy depends on it. And every big decision that's made at Netigy supports his vision. The way he's building the company, jokes Moore, 50, is "either very gutsy or very stupid."

Originally called Enterprise Networking Systems Inc. (ENS), the company began as a network integrator but has reinvented itself as an e-infrastructure architect. In essence, Netigy aims to design solutions to the kinds of problems that plague Web sites with inadequate infrastructure. Such sites, overwhelmed by traffic, slow down or crash. They can't perform glitch-free transactions. "It's like buying a bullet train and running it on an old track," says Chris Williams, 40, Netigy's chief marketing officer.

Netigy wants to dominate its market -- to become the next great global service provider. And that has meant moving faster than anyone else. Moore arrived as CEO in August 1999, when the company was still known as ENS. By January of this year, he had assembled an executive team. By March, ENS had changed its name to Netigy. By June, the company was scheduled to launch systems to manage accounting, knowledge, and sales -- systems that are sophisticated enough to be the envy of any blue-chip company. A fast start, indeed.

But more than fast, the company was smart. Moore didn't hire just any executives to run the show. He recruited a management team that knows how to build a powerhouse fast, because its members have done it before -- at EDS as well as at Arthur Andersen, Charles Schwab, Sun Microsystems, and Western Digital Corp.

These top executives understand that scaling up an organization doesn't just magically happen. Scale happens because a staff has abundant talent and drive, because infrastructure is robust, and because there is enough money to be able to get things accomplished. It happens because a company does an extraordinary amount of planning up front. "Companies hit a growth ceiling because they haven't thought things through," says Will Clark, 46, president and COO of Netigy. "We have."

Consider Netigy's org chart, designed primarily by Jeff Rushton, 38, senior VP of operations and devoted "process junkie." Its chart outlines in specific detail who does what, who reports to whom, and which metrics affect what compensation -- for Netigy's current employees as well as for those who are expected to join the company in months or years ahead. Compared with a standard skeletal org chart, Netigy's chart reads like an encyclopedia. "I came from a big company, and we didn't have this level of thought or detail," says Duston Williams, 42, the former finance chief at Western Digital and the current CFO at Netigy. The chart ensures that each employee is contributing to the kinds of company-wide goals that drive growth: gross revenue, profit margin, work backlog, customer satisfaction, and market leadership.

The next step is to make sure that everyone in the organization understands the company's big-picture strategy as well as its more immediate particulars -- and how these two ideas are connected. Rushton, who has worked at large multinational companies and on his own as a consultant, has seen plenty of organizations stumble from a lack of clarity in executing a business model. "Growth problems almost always go back to employees not understanding fundamental things about a company's strategy or about how their role fits into that strategy," he says. "You have to spend time getting those parts right." For Netigy, that means incorporating its methodology into an intranet site -- and conducting an extensive road show to educate its staff in the field.

It's still early, but so far Moore's build-to-scale strategy has the markings of success. The privately held company doesn't release revenue figures, but executives boast that quarterly revenue has doubled for two consecutive periods. Fifteen of its deals with customers have amounted to more than $200,000 each -- more than any previous deal -- with four of those topping $1 million. An even more tangible measure of growth was the rise in the number of Netigy's employees: 500 new people over a six-month period. In addition to its London office, it plans to open offices in Asia, Australia, and Europe later this year.

Gutsy or stupid? For Netigy, hypergrowth is simply the only viable path. "We could have accepted being a nice little 500-person operation, but I certainly didn't sign up for that future," says Clark, another eds alumnus. "We're trying to become the market leader. This is a race."