What's Next for the Net?

Roger S. Siboni, CEO and President, E.piphany Inc.: There has been more capital in Silicon Valley in the past five years than I've seen in any previous cycle. And my experience goes all the way back to 1985, when there were big booms happening in venture capital and companies were proliferating.

A lot of bad things can happen when there's too much capital. Too many companies are formed, and there is too much hubris. Silicon Valley has gotten a bad name because of the arrogance that has prevailed during the past couple of years. Too many companies were started with people who were fresh out of school and who didn't have any notion of how to build a company. Now the well for management talent is really tapped out.

The push toward profitability is just another way of saying that only the strong survive. We're going to see a lot of companies struggle, and the next three or four quarters are going to be very challenging. If you think that stock prices are low now, just wait.

Things are going to get very tricky. There is going to be a consolidation, and people are going to rush to buy companies. There are going to be a lot of bad companies on the market as well as some jewels. There is going to be an incredible premium in Silicon Valley for companies and organizations that can find a way to navigate through this shakeout.

People Power

What's next for talent?

Roger Siboni: Growing our company from 100 people to 1,000 people was hard, but we're looking to be a survivor. We'll need to be 2,000 strong next year, and we'll have to keep growing from there. The question is How do we recruit? Do we try to hire people one at a time? Or do we buy companies? We actually bought a company in order to get 20 engineers. We threw away the product, but we wanted the engineers. We told those 20 engineers, Your product is nice; it's interesting, but now you work here.

Lynne Waldera, CEO and President, InMomentum Inc.: My firm recently compared the cultures of the best, fastest-growing Internet companies with those of companies that were struggling. We saw behavior from big, successful companies that was remarkably similar to that of small startup companies.

For example, Cisco Systems has been able to maintain a frugal value system even though the company is an execution machine. Some 90% of the employees that we talked to -- mind you, Cisco had 35,000 employees at last count -- said that they understood very clearly what the company's vision and direction were and how they personally contributed to them. Cisco is a company that has grown rapidly through acquisition, and that's an amazing feat that takes incredible leadership and focus.

Nirav Tolia: Every problem that we've talked about -- whether it's the difference in leadership styles between a company that's successful and one that's not, or VCs who haven't actually built companies, or entrepreneurs who have been sloppy -- goes back to people. The real challenge, and this is not a new one, is all about people.

Lynne Waldera: What we found in our study was that companies that have soft and fuzzy behaviors (companies that make their employees feel like owners and make them feel connected to the visions and values of the company) were growing at 141%. The companies without these behaviors were growing at 10%. Those "nice things" ultimately produce dramatically different economic results.

These very strong cultures also enable employees to execute their ideas. In some companies, there are internal-funding mechanisms that allow employees to act on innovative ideas. In this next phase, that's what's going to enable companies to retain their best talent. Smart, passionate people won't have to go to some venture-capital fund with their business plan. They'll be able to get their plan funded internally.

Alan Naumann: We adopted eight leadership values for our company and put every new hire through a two-and-a-half-day workshop on how to be more of a leader than an employee.

A fascinating thing has come up during the past two or three months. In the past quarter alone, we've hired and trained 70 people, and some of those people have started saying, Hey, I'm a leader, but my manager isn't keeping up. There has been a groundswell in the employee base. People are saying, I feel empowered, but either train my manager to deal with this problem, or get him the hell out of my way. Now besides creating leaders and creating a set of common values, we also have to invest quickly in management development. We have a lot of first-time managers or managers who have been promoted to levels that they haven't been at before without a big safety net around them.