The great Web "brain drain"

Is the Net sucking up corporate America's best and brightest -- or just its greediest?

Scott Rosenberg
June 11, 1999 8:00PM (UTC)

"Moneyline" host Lou Dobbs leaves CNN to join! Disney Web honcho Jake Winebaum leaves Mouseland to head up a new venture firm called Ecompanies! And one by one, Microsoft execs are leaving their posts to ponder start-up opportunities from the safe haven of their stock riches.

Will the last person to leave corporate America for the Net please turn out the lights?


This week's headlines -- like the Wall Street Journal's Wednesday lead story, "As Web Riches Beckon, Disney Ranks Become a Poacher's Paradise" -- have made it sound like the ranks of big U.S. companies are being decimated by the online boom. But is there really a brain drain to the Web? Where exactly are the brains in this picture, anyway?

Dobbs, whose "Moneyline" is a big hit for CNN and who had been president of CNNfn, may well have a blast running the new outer-space information site But the site doesn't exactly "leverage" Dobbs' "personal brand" in the field of financial journalism. And his departure seems more the result of a personal feud with CNN president Rick Kaplan than any kind of profound conversion to the Net religion. One thing the Internet industry indubitably provides media veterans is a safe haven to run to in the event of a corporate falling-out: There's always a site somewhere that needs a CEO.

Winebaum is leaving Disney, according to the Journal and other reports, because he wants to run his own company -- and because he covets the big equity stakes only available in Internet start-up-land. All true, no doubt. But it's also true that he leaves Disney at the very moment that it's finally admitting the flaws in its misconceived strategy. The concept of aggregating all of the megacorporation's Web properties under a single umbrella site with a new name doesn't seem to be working any better for Disney than it did for Time Warner with Pathfinder.


Similarly, the most prominent defection in the recent wave of departures from Microsoft is that of Nathan Myhrvold, the company's chief technology officer and Bill Gates' advanced-technology guru. Myhrvold's "leave of absence" is to allow him to pursue a bunch of "personal interests."

At first glance you might think, gee, this has got to hurt the company, to be losing such a key figure. Then again, Myhrvold is the man at Microsoft whose job was to foresee things like the rise of the Internet -- and he blew that in a big way. No doubt he is, as widely reported, brilliant. But it's hard to see what Microsoft will lose with his departure -- other than the occasional thumb-sucking white-paper memo that can be strategically leaked to the New Yorker.

Of course, there's no question that the lure of fast riches in newborn Net companies is sucking some talent from the ranks of traditional companies into the so-called New Economy. But Myhrvold and the other Microsoft execs who've left in droves of late certainly aren't chasing equity; their stock holdings are already ample enough to fund the purchase of private jets and personal islands. And Disney was presumably not paying Winebaum starvation wages.


What's happening in the Net job economy today isn't ultimately driven by money, but rather by what you might call the big-company bullshit factor.

The bullshit factor is, simply, a level of stupidity, bureaucracy, short-sightedness and paralysis that seems to vary in direct proportion to the size of an organization. (You could also call it the cluelessness quotient.) It's nothing new, of course; but the Internet's speed and tendency to flatten hierarchical communications have made the cluelessness increasingly visible. When big companies go on the Net, levels of bullshit that previously remained safely ensconced in closed meetings and boardrooms -- where no one feels comfortable exposing the emperor's new clothes -- are suddenly revealed to the world.


This is simultaneously hilarious to watch and disheartening to be a part of (as the creators of the Cluetrain Manifesto have amusingly outlined). Young, smart people who have a choice -- and today this particularly means software engineers -- will instinctively shun the large organization for the small-company environment. There, they will work long hours and trade high salaries for stock stakes that could be worth a fortune -- and could be worth nothing. But they will not have to spend half their lives in meaningless meetings and watch helplessly as projects and ideas disappear into the corporate maw, never to be seen again.

Now here's the catch: All these smart young people filling out the ranks of small companies look over their shoulders, and what do they see? That long queue of executives and managers from the "big, dumb companies" -- the very people they hoped to escape! -- heading their way.

I have no doubt that there are plenty of execs in the Fortune 500 who would have a lot to offer a small company. I've never met Jake Winebaum, and for all I know his new "venture capital incubator" Ecompanies will mint a bevy of valuable infant start-ups. But the skills Winebaum and others in his shoes have honed in boardrooms at Disney-sized outfits are unlikely to matter in the Net marketplace.


The Internet's biggest impact on business is to put front-line staff much more directly in touch with customers. Feedback from the Net is ferocious, immediate and impossible to ignore. Good managers at small Net companies know this in their bones -- while at the big companies they're still scratching their heads and wondering, "What are we supposed to do with all that e-mail?" As a result, the good managers at the big companies who "get" the Net gradually get frustrated with the roadblocks they face, and steadily defect -- leaving their big company even more out of touch with what's happening online.

Are the executives who are now bailing out of big media and technology companies for Net start-up-land in this group? Are they frustrated Net-savvy managers who've finally had enough? Or are they clueless corporate insiders who covet a fat wad of stock options in any old Internet "play" that will have them?

Probably, there are some of both. The trouble lies in telling them apart.


If you're working at a Net start-up and you see one of these people heading your way, how can you know what you're dealing with? Try sending him some e-mail. Watch to see whether she can connect her laptop to the Net. Or see if he's changed the default home page on his browser.

These litmus tests may not be foolproof. But they'll give you a fighting chance of telling whether you're dealing with a real Internet savant or an opportunistic corporate carpetbagger.

Scott Rosenberg

Salon co-founder Scott Rosenberg is director of He is the author of "Say Everything" and Dreaming in Code and blogs at

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