Voyage to the New Economy

Within weeks after the downbeat Stanford excursion, Laub, Stowe, and their colleague Brian Krim, 28, had persuaded Bain's 40 San Francisco-based partners to make the "Internet challenge" the main topic of their office's annual off-site in July. And in a stunning reversal of form, the three young men were told that they could run most of the meeting, while partners listened. So at the elegant Auberge du Soleil resort, in California's Napa wine country, the junior consultants got their chance to shake up the old order -- while managing director Steve Ellis helped them devise solutions.

They began the meeting by asking, "Why do talented people come to work at Bain?" Fundamentally, they said, recruits join because they think that the consulting firm offers extraordinary learning opportunities. They think that learning will translate into "career compression" -- the belief that two years at Bain equals five years in the industry and that any ambitious person can accomplish more, faster, at Bain than on the outside. Ultimately, that is supposed to translate, too, into superior pay packages. But Internet startups are suddenly shaking apart that relationship, they said, by creating a new learning-and-career channel that seems to be moving even faster than Bain does.

But Bain could get back in the game, they contended. It could give young consultants greater chances to work with startups, instead of dealing only with giant, old-economy clients. It could negotiate more actively to take part of its fee in startup equity, rather than insisting that small companies pay in cash for Bain's services. And Bain could give younger employees who were below the partner level a chance to share in that equity pool. If things went well, that stock-participation package might be worth as much as $1 million per consultant over four or five years. It might not match the bonanzas at the most spectacular Internet startups, such as eBay, but it could be very competitive with the realistic prospects at 80% to 90% of all startups.

Within eight months, all of those changes were implemented -- not just at Bain's San Francisco office but at the entire firm worldwide. And to the delight of both Bain's older partners and its younger rebels, the company's rising stars began to see the consulting firm as the right place to stay, even if Web-based companies kept wooing them.

"There was a time when I asked myself, What am I missing by not making the jump to an Internet company?" Krim says. "Am I stupid? Or am I just too risk-averse?" Lately, though, Krim feels better about staying at a long-established consulting firm. The progress reports from Web-minded friends haven't been nearly so upbeat lately. Some of them are struggling hard to raise more money amid serious losses. In other cases, companies that were supposed to have filed their IPO registration statements by now are many months behind schedule and haven't even launched their Web sites yet.

Meanwhile, says Krim, "I'm building experience. I'm working on everything from a dotcom's business plan to the reorganization of a multibillion-dollar company. I'm not stuck holding a single lottery ticket with a label that reads, 'I hope it works out in four years.' "What's more, he says, at Bain he hasn't had to move bookcases, string phone wire, or endure other indignities of getting a startup under way. "If you're stuck doing that at a startup,"he says, "you probably didn't raise enough money."

Do You Thrive on Change?

Karla Walsh didn't like change at first. In the late 1980s, she actually thought that she might stay forever at MCI Communications, where she worked as a Chicago-based marketing manager, pitching cheaper long-distance phone service to the public. "It was a great opportunity," remembers Walsh, 36. "Great people, great product, and all of this room to invent the rules as we went along. "But over the next 10 years, she switched cities three times and employers twice, moving to Phoenix, Los Angeles, and San Francisco on behalf of first Citicorp and then the American Automobile Association (AAA). Those moves weren't her idea. They were made necessary as her husband got a series of partner-track promotions -- and transfers -- at his consulting firm. But as Walsh packed her belongings into one moving van after another, she discovered something unexpected about herself.

"I realized that I could thrive in organizations with significant change," she says. "After being plucked out of all of these positions, you get to be pretty good at reinventing yourself. "In a way, it was almost fun. Learn a new industry's jargon. Mine through customer data in fresh ways. Promote a different brand every few years. Change stopped frightening her. Instead, she became refreshed and outright enticed by it.