How Do Fast Companies Work Now?

Trudeau didn't know the payments business. So after inking a 60-day exclusive letter of intent with First Data, he met with Jeff Sloane, a Goldman banker who covers the industry, and with BCG partner Nick Viner, an expert in wireless payments technologies. Together, they mapped out what the enterprise might look like -- and what it might be worth. By last October, they had arrived at terms: IFormation would pay $135 million for a 25% interest in the new business, called eOne Global. For its contributed assets, First Data would take the remaining 75%.

Staglin, it was agreed, would run eOne as president and CEO. IFormation moved quickly to help him build his organization. Annie Austin, iFormation's internal director of recruiting, stepped in as eOne's interim human-resources chief. Soon, she had hired executives from American Express, Dell, and Novell to fill key posts. Caroline Watteeuw, the managing director of technology at iFormation, became eOne's temporary CIO.

Trudeau, for his part, continued to map out eOne's future. In January, eOne purchased the payments-processing division of govWorks.com, a battered startup whose technology nicely complemented that of CashTax. EOne negotiated a $20 million investment in SurePay from VeriSign Inc., which markets security-infrastructure services, and secured a key partnership with online marketplace provider Commerce One Inc.

Now Trudeau is building out eOne's third leg: a foray into wireless payments systems. It is a potentially huge opportunity, although it's also insanely competitive. In the United States, eOne hopes to partner with wireless carriers or financial institutions to develop systems that would allow consumers to pay for purchases through their cell phones and other devices. In Europe, where First Data's merchant network isn't as pervasive, the company imagines selling payments-processing solutions to wireless service providers.

It is a dauntingly complex and challenging strategy that Trudeau expects to launch by this fall. Within weeks, he hopes to nail down eOne's wireless partners. Soon after, he'll hire key executives to run the new operation. The furious pace pleases Staglin, who knows that it wouldn't have been possible if eOne was still lodged inside First Data. "This is very fast," he says. "It's like attaching a speedboat to a battleship.

"What we're creating here," Staglin continues, "is an organization built around nimbleness, speed of action, and disruptive technologies. But we're using an existing infrastructure, and that's tough to compete with. That's the yin and the yang."

New Models to Create Value

If David Pecaut succeeds -- if his deal pipeline finally bears fruit, if those transactions yield viable companies, if those enterprises grow and flourish, and if the capital markets someday return from their ice age -- iFormation will comprise a dozen or more holdings that are similar to eOne. At any one time, perhaps a third of its investments will require intensive hands-on management. Another third, though operationally developed, will still need capital. A few will be mature enough to harvest.

If all of those things happen, iFormation will have graduated from provocative abstraction to defining business model. And the company will have started to answer one of the defining questions of the next phase of the new economy: How do leaders build companies in a business environment that keeps remaking itself?

"The transition from industrial economy to information economy has massive implications for how value is constructed and held," Peter Maillet observes. "CEOs have been forced to understand the essence of what their companies are good at -- what really drives value. When someone buys my stock, what are they really buying? In more and more companies, you can isolate a narrowly defined set of best-in-class skills."

The evidence for Maillet's argument lies at the heart of iFormation. After all, its founding partners, Goldman, BCG, and General Atlantic, have done to themselves exactly what iFormation proposes doing to others. "In a funny way, those companies have deconstructed themselves," Pecaut says. "They have admitted that there's an opportunity here that leverages their legacy assets, but it's something that they can't get at alone."

In other words, Goldman, BCG, and General Atlantic, three of the most successful entities in the business universe, are reinventing themselves. The reinvention is nascent and modest, surely: For all three, after all, iFormation is an unaccustomed venture into uncertainty. Beyond the sheer financial risk, the firms are exposing their relationships and their reputations.

Why? Because they grasp the power of strategic leverage. Because the potential payoff is so huge. Because together, speedboats and battleships just might rule the seas.

Keith H. Hammonds (khammonds@fastcompany.com) is a Fast Company senior editor based in New York. Contact David Pecaut by email (david.pecaut@iformationgroup.com).