Chairman Mark Walsh showers praise on the company's new CEO, former Amazon.com president Joe Galli, and introduces yet another online commerce acronym, S2B.
"Joe and I have made a pact," Walsh told analysts gathered at the Pacific Crest 2000 e.conference. "If we can mimic what Steve Case and Gerald Levin have done for AOL, we'll be very happy cats."
Assuming their proposed merger is completed, AOL chief executive Steve Case would become chairman of AOL Time Warner, while Time Warner chief executive Gerald Levin would become CEO. Case, who founded and nurtured what would eventually become the world's largest Internet access provider, would focus on strategy while Levin would handle day-to-day operations.
Walsh beamed with pride when he spoke of his company's newest executive. He boasted that VerticalNet didn't use a headhunter to lure Galli.
During his 13-month stint at Amazon, Galli earned $102,266 in 1999 and received a $2.9 million signing bonus, $100,000 for signing a noncompetition agreement, and $31,568 in moving expenses. Despite the cash, Walsh said he didn't need to evangelize too much to get Galli to jump from a business-to-consumer company to one focused on business-to-consumer transactions.
"He was like, 'I love you guys.' And I was like, 'You're pretty cool,'" Walsh said of his first meeting with Galli--a secret rendezvous that was set up by a friend of a friend. "He was forged in the cauldron--in a good way--of Amazon, which is the leading edge of transactions and how you create stickiness."
Galli's stock options at Amazon were essentially worthless when he left because the depressed shares were trading below the strike price. It's unclear whether Galli faces a similar challenge at VerticalNet, which, along with virtually all publicly traded business-to-business companies, has seen its stock price plummet since the beginning of the second quarter.
VerticalNet shares currently trade at about $44, less than a third of the company's 52-week high of $148.37. The stock is down nearly 47 percent since the first of the year.
But Walsh--and several analysts--are bullish on VerticalNet. Although Walsh doesn't imagine that VerticalNet stock will trade at the "surreal" levels of January and February, he noted that the stock is roughly 16 times higher than its split-adjusted IPO price.
Walsh has taken his new role as VerticalNet ambassador to heart. He flew to Vail from the Democratic National Convention in Los Angeles, where he mingled with Barbara Streisand and friends at the singer's Malibu estate. Next, he plans a tour of the companies that VerticalNet has recently acquired or partnered with, including British Telecommunications, Internet Capital Group, Softbank, Microsoft and dozens of small- and medium-sized clients who buy and sell products on VerticalNet's Web sites.
In addition to pressing more flesh, Walsh hopes to sell VerticalNet to analysts, many of whom have difficulty understanding exactly what the company does. VerticalNet, which operates sites ranging from solidwaste.com to foodonline.com, often falls off the business-to-business coverage lists at institutional investment firms because it has branched out into a variety of different product sectors.
"VerticalNet's story sometimes has more facets than a wedding ring," Walsh said, eliciting laughs from a room of about two dozen analysts. "It's complicated, and we know that."
Walsh didn't necessarily simplify VerticalNet's message when he introduced a new acronym today to describe the company: S2B, or supplier to business. Walsh said he dislikes the B2B moniker because it implies a cadre of large companies that use the Internet to demand volume discounts from smaller suppliers. Business-to-business marketplaces typically focus on driving down procurement costs rather than forging relationships with suppliers, he said.
Pacific Crest senior research analyst Steve Lidberg, who rates VerticalNet "buy," didn't necessarily like the new acronym but agreed that VerticalNet helps empower suppliers.
"They have definitely taken a different approach in targeting the B2B marketplace," Lidberg said. "They're much more supplier-centered than Ariba or Commerce One?We continue to see VerticalNet's strategy really ramping up scale by helping small and medium businesses bring their business online."