How Do Fast Companies Work Now?

David Pecaut is a born salesman. Everyone says that about him, whether in admiration, deprecation, or both. It's not so much that he's smart -- although like most Boston Consulting Group alumni, he is that. At 45, Pecaut radiates boyish enthusiasm. He infects others with a sense of possibility. He knows how to spin a yarn.

When he was about 10, his younger brother recalls, Pecaut cadged seed capital from his Sioux City, Iowa neighbors to produce a battle-action movie. Today, he canvasses CEOs of the world's largest corporations. Here is his pitch: In the early days of Internet-driven transformation, companies came to appreciate the disruptive power of speed. A generation of well-funded startups demonstrated that they could collapse the horizons of invention and collect new customers faster than ever before. It wasn't the big companies that would eat the small; it was the fast that would eat the slow.

Fast-forward five years. The Internet remains a singular lever for strategic transformation, a force with the power to reorder entire industries. But winning, companies have learned, is about more than speed. It's about momentum -- mass times velocity. "The next chapter," Pecaut predicts, "will be defined by large companies that have big offline businesses and leading market positions. The question becomes, How do we take advantage of new technologies and put them together with legacy assets in ways that are powerful?"

His answer: Find a partner that can apply Internet-era urgency to the creation of new, high-impact ventures. The right partner? Why, that would be Pecaut's company, iFormation Group.

If you are the CEO of a huge corporation who is trying to sort through the promises and perils of the new economy -- a leader who is grounded enough to appreciate the power of brick-and-mortar assets but open-minded enough to recognize that there are radically new ways to play the game -- Pecaut offers a seductive tale. You like this guy with the grin and the tousled hair. Pecaut, you think, just might have it right. Or maybe not.

New Blood From Blue Bloods

It is 9 AM on a Monday in midtown Manhattan and time for iFormation's weekly all-hands meeting. Twenty executives pack into a modest conference room. Another dozen join in by phone from Hong Kong, London, and various airports. Pecaut, just in from his home in Toronto, fiddles with his BlackBerry email device.

This is what the second chapter of the Internet revolution looks like. Imagine a company started by the best-connected investment bank in the world, by what is perhaps the top management-consulting firm, and by one of the preeminent venture-capital firms. Give it $300 million to play with -- and then set it loose to reinvent big business.

It's a tantalizing formula. IFormation was founded in June 2000 by Goldman Sachs Group, the Boston Consulting Group, and General Atlantic Partners LLC. They had arrived at the same conclusion more or less at the same time: Many of their biggest corporate clients owned assets that, given fresh capital and free-thinking management, could become new, powerful, independent businesses. "Our shared belief was that incumbents were going to be the driving force in the disruption to come," says Gene Sykes, a Goldman managing director.

IFormation would build companies to weld a startup's change-the-game energy to the muscle of a corporate giant. They would start out with actual brands and customers and a pile of operating capital. They would be big. But they would also be nimble. Pecaut imagined an eventual portfolio of 15 or so such investments: Big companies would supply the foundational assets in exchange for equity, and iFormation would kick in cash and management. These investments could be pure carve outs, where a company's asset is simply turned into a freestanding business. Or they could be consortiums of multiple partners set up to address a technology-enabled market, with iFormation building the business and acting as independent broker.

In a sense, iFormation is the 21st-century incarnation of the leveraged-buyout firms that reordered business in the 1980s. But there is one huge difference: Leveraged-buyout firms were financial engineers. Pecaut and his colleagues think of themselves as new-economy innovators. "Leveraged-buyout firms created value mostly by restructuring costs," says Peter Maillet, who joined iFormation in March from J.P. Morgan Chase & Co. "What we're doing is largely about using technology to create new revenues."

This new blood is being supplied by blue bloods. Between Goldman, BCG, and General Atlantic, iFormation enjoys high-level introductions at hundreds of global corporations. Its professionals tap the industry and technology expertise of Goldman's analysts and BCG's consultants to help evaluate and structure deals. They tap money connections too: Among a list of investors that iFormation was pursuing for Site59, a packaged-travel Web site that it inherited from BCG, more than half came from leads supplied by the three partners.