Power Partners

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.