Razorfish swims against the stream

Razorfish swims against the stream
By Kim Girard
Staff Writer, CNET NEWS.COM

Jeff Dachis' digital media company in New York's Silicon Alley is full of fish.

Although the moniker is just a nickname for Razorfish's 1,300 employees, chief executive Dachis is somewhat of a shark, running a company that was an early mover in a market now swimming with me-too IPOs. Since quitting a job as a waiter at a hip Tribeca diner, Dachis has built a firm worth more than $4 billion, boasting big-name clients such as Schwab, CBS, NBC and high-speed Net access firm Road Runner. And what's more, the firm is profitable, grabbing some $2.1 million during the first nine months of 1999.

Dachis is one of seven siblings, many of whom also are entrepreneurs. Launching Razorfish in 1995 with childhood friend Craig Kanarick was more about destiny and passion than a calculated business plan. "It willed into existence by sheer force," he contended.

Like many sharks, Dachis has a sharp bite. His character alternates from braggart to cheerleader to savvy businessman. Although he quips that his company's success so far has only brought him paper wealth, he does point out one big purchase he has made: a house for his mom in Arizona.

Jonathan Nelson, a Dachis acquaintance who heads interactive agency Organic Online, describes him as a forceful, opinionated man whose company happens to be known for throwing great parties.

"He's really opinionated, super intense, a snappy dresser, fearless," Nelson said.

Despite Dachis' confidence, critics are questioning whether Razorfish can retain its culture amid rapid growth--since November alone, Razorfish has acquired TSDesign, I-Cube, Lee Hunt Associates and Sweden's Qb International. The CEO maintains that all his acquisitions have been strategic, and that Razorfish will remain cohesive under one brand and one name.

Dachis recently spoke to CNET News.com about the future of the Internet, his company and his place in digital history.

CNET News.com: You run a so-called digital services company. There's been recent criticism that your niche is becoming more like the fast food industry--there's so much business to be had and everyone is taking on so much that what's being delivered has become a commodity. Can you comment?
I don't agree. You can go to "McWeb" or whatever, but that's not what we deliver. We're the haute cuisine in a premier custom solution shop every time. You can't box innovation. You can't put boundaries around inventing and reinventing the world. It doesn't work like that--and if it does, you become a commodity. So all of those guys will become a commodity and we will continue to be the premier service provider that we are.

What do you think sets Razorfish apart from competitors? Most Net services companies are often lumped together in the same group, yet firms still tend to maintain a different expertise.
There are absolute distinctions between our company and everyone else. One is we're global. More than 40 percent of our revenue comes out of Europe and seven of our 11 offices are in Europe. There isn't another company in the States that has the European coverage that we do. It gives us an advantage when it comes to wireless and other activities that are going on in Europe.

The second is our service offering: a complete end-to-end solution. We have the most complex technology integration skills that exist in the services space. There isn't anybody who has stronger technology skills than we do or the depth and scale to deliver these technology solutions. On top of that we have the most creative individuals on the planet coupled with complex strategists, so you really have a skill set that's above and beyond the caliber of any of the other companies out there. And on top of that we're delivering those skill sets through platforms that aren't available from any other companies--like wireless. We have the largest wireless lab in the world. We're a founding member of the WAP (wireless application protocol) forum. We're partnered with Nokia and Ericsson building wireless applications. None of our competitors can say that. None of them. We also have broadband capabilities. We've done more broadband work than any of our competitors or all of them combined.

Recently Whittman-Hart agreed to merge with USWeb/CKS, a deal that surprised the industry and caused a lot of speculation. Do you think it was a smart move by both companies?
No. For USWeb, that was a way for (USWeb president) Bob Shaw to punch his ticket out and cash in. USWeb has always been sort of a bad amalgamation of slapped-together companies with no brand and no culture and no specificity in the way they do business--an aggregation of revenue financially architected to get the founders liquid on the stock.

It isn't something that is passionate. It isn't a group of people that's all about the creation of the digital future. They're not user-focused. It looks good on paper from the stock market's perspective, but it isn't about strategy.

NEXT: Being a big fish among many breeds

Being a big fish among many breeds

With your some dozen purchases, why is Razorfish any different from your rivals that go on acquisition binges and wind up being called a roll-up?
All of (our acquisitions) are strategic. Every single deal we've done has been to add a skill set or to add a specific talent level that we weren't able to hire. It's all about hire or acquire, and I don't really care which way we do it but we need the talent.

And I still contend that in the end, we (have an) organic growth strategy. We have one brand. We have one leader. We have one product, one focus. We have one vision. There aren't multiple brands. There aren't multiple structures. It's one structure and one way of doing business. We're not trying to pretend we're something else. We've always been doing what we've been doing.

I don't buy into the whole acquisition roll-up component. You know you see a bunch of bankers trying to get into the services business. They're not passionate about the creation of the digital future. They're not focused on making the world change. They're focused on making money. We make a lot of money. But the passion and where we're going is what this company is all about.

Speaking of money, you've made a lot. Has it changed you at all?
I haven't cashed in, so it's paper money. We've done really well and I'm the same guy I was five years ago. I still live in my one-bedroom apartment. I walk to work. My life isn't all that different. I still put my shoes on one at a time.

I don't have an extravagant lifestyle. We didn't get in this to get super-mega-wealthy and then go ride around the world on a yacht. We got in this because we like to do it. I like coming in to work everyday. I love making digital media that changes peoples' lives. I love moving Schwab from 12 in the Gomez rankings to number one. I love building Road Runner's cable modem service. I love re-engineering what NBC online is going to look like. I love redesigning the "Go" logo.

Do you fear losing your company culture as the place grows?
No. Our culture is only going to get stronger as we get bigger. It's not going to be diluted. It's going to get tighter and faster and stronger as we continue to bring in the kind of people--the innovators, the insane, crazy people who love to make this stuff happen. I used to talk to my people about creating the dream team. Now that we're doing that we've got this dream team of people and the energy is scary. It's so focused.

What's the biggest job you didn't get that you really wanted to do?
I don't know--we don't lose very often. When we want it bad enough and it's perfect for us we're going to hammer it. I'm not going to concede any losses.

How's business at Razorfish Studios, your corporate division that focuses on digital media and entertainment?
It's a completely separate company owned by the senior executives--myself being the major holder. It's absolutely a serious business, and you'll probably see a lot of activity this year with Razorfish. It's been the place where we've been able to have fun. But it's a different business. It's a content business that we keep separate.

Can you talk about your expansion in the broadband market?
Making rich media is absolutely one of our crucial skill sets. When AOL Time Warner is distributed over cable modems, the experience has to be much richer than what you experience on the 14.4 modem.

We create the brand identity for all the major television networks and a lot of the show packaging that goes on say (the sitcom) "Friends" or NBC or MSNBC, Court TV or PBS or ESPN's X-Games--all the graphic identity. The way those shows look and the way those shows will be translated onto PCs, TVs, and PalmPilots and cell phones--we'll be responsible for that.

How did the recent acquisitions of systems integrator I-Cube and interactive agency Spray go?
Done. We have 90-day integration plans.

Did people leave after the acquisitions?
No one left when we acquired them. We don't have people leave. This is a company where people stay. They're all still here because we have the kind of culture that creates people who want to innovate, that want to change the world, and it's a place where people want to work. We're a talent magnet. We draw talent here. We're not losing people, we're turning away people.

When you look five years down the road, could you name your top five competitors?
Who is going to be up there with Razorfish? I think Sapient might make it. Maybe. I'll argue we're six or seven generations ahead of any of our competitors. Companies we may bump into? Maybe IBM. I don't think Scient or Viant. They have serious strategic flaws right now. So does Proxicom. So does Cysive and Agency.com.