'The Internet Is Going to Change Wall Street as We Know it.'

A Q&A session follows Maillet's PowerPoint presentation about LabMorgan's structure and strategy. A few of the twentysomethings express skepticism about Morgan's foray into the world of the dotcoms. Hasn't NASDAQ turned its back on Internet startups like the ones that LabMorgan is trying to gestate? Didn't Morgan get burned by its involvement with the failed online clothing retailer boo.com?

Maillet compliments the analysts-to-be on their sharp questions, then counters. "This isn't a shift away from what we are to something that's trendy," he says. "What is every dotcom trying to do? They're trying to build a client base, build a brand, raise capital, develop market expertise. We have all that. We're not trying to build all that. We're just trying to recontextualize it for a new environment." If Morgan can bring the power of Internet innovation to its existing businesses, if it can reach clients it has never reached before, and if it can create new trading tools and online marketplaces, then LabMorgan will have fulfilled its purpose. "A company with a '.com' at the end of its name, or an 'e-' at the beginning, a press release, and some vaporware does not a business make," Maillet continues. "J.P. Morgan has the strength -- if we can transform ourselves."

Free Minds, Strong Bonds

Both Maillet and Miller are determined to make sure that LabMorgan maintains strong links with the rest of J.P. Morgan's business units. They're quick to correct anyone who suggests that LabMorgan is any kind of satellite. "We could have set up this operation in a loft in Chelsea," says Miller, "but it wouldn't influence the company, our clients, or the market's perception of us. At the end of the day, we want to be a big asset to the company."

For Miller, the goal was to adopt some of the cultural traits of a Chelsea-based startup without having to move to Chelsea. The dress code at LabMorgan is unofficially more casual than at the rest of the company. Sodas are readily available. And Nick Rohatyn is one of the few team members whose office has a door. There are, of course, no titles on the vertically oriented business cards, and LabMorgan employees are less concerned with hierarchy than are other parts of the company. "We believe that the value is in people's ideas, not in the stripes on their arm," says Miller.

By the end of this year, LabMorgan will take up two floors, which Miller has helped design, atop the company's headquarters tower at 60 Wall Street. Walls will be almost nonexistent, giving everyone at LabMorgan equally spectacular views of the Statue of Liberty downtown and of the Empire State Building uptown. A wireless local-area network will enable team members to have network access anywhere they go. Cordless phones that can be taken anywhere will make sure those team members don't miss important calls while they're in the middle of a huddle with coworkers.

Miller envisions the contrast between the walls of glossy, milled wood that visitors see now when they emerge from the elevators and the techno-decor of LabMorgan's new location: the hanging stairways; the glass-walled, octagonal meeting rooms; the flat-panel displays in the reception area that will flash reminders of Morgan's history of innovation. This is, after all, the company that bankrolled the first transatlantic undersea cable and, later, Thomas Edison's Electric Illuminating Co.

Despite the atmospheric differences, the LabMorgan crew goes to great lengths to link LabMorgan's work to that of the company. "We've built a ton of connectivity between us and the rest of the firm," says Rohatyn. "We've made nearly 200 presentations to the businesses in 145 days. We never forget that the central mission here is to transform the firm." On that afternoon in early August, Rohatyn would conduct a town-hall meeting with a group of colleagues at 60 Wall Street. Maillet, after giving the presentation to the analyst trainees, would take the train to Delaware to hold a series of town-hall meetings at Morgan's third-largest location.

One way that LabMorgan makes sure that its interests are aligned with those of the firm's four other divisions is to allow those divisions to invest, whenever possible, in the companies that LabMorgan produces. "The majority have co-investments, so people from the other businesses attend board meetings," says Maillet. For example, Cygnifi, a derivatives-pricing and risk-management service, got its start in J.P. Morgan's derivatives department, with support from the firm's markets division. "We took 20 people from the derivatives-pricing group to get it started, which was difficult, but Morgan is invested in its paying off," Miller says. "Cygnifi can serve J.P. Morgan's internal needs, and it can also serve other customers. We have excellent market share with derivatives, but we think that this will help expand the pie. And the risk-reward equation is pretty balanced in the mind of the business manager."