Academic journal article Journal of Accountancy

The Allure of the Internet Start-Up

Academic journal article Journal of Accountancy

The Allure of the Internet Start-Up

Article excerpt

A dot-com finance career can offer many rewards for the right kind of CPA, but are the risks worth taking?

Like the founders of gold rush towns that rose from dusty plateaus in the Old West, Internet start-up companies are creating new cyberspace communities from the ground up. Some of today's smartest CPAs are building the financial foundations for these virtual enterprises and, in the process, are devising new ways to manage corporate finance. In the pioneer tradition, they make deals and decisions without hesitation. They change business practices and directions as often as they change socks and, instead of sweating over profitability, they concentrate on market share and acquisitions.

On the rare occasions when these adrenaline-charged CPAs pause to chat, they speak the language of the Internet, comparing notes on "unique visitors" (those coming to a particular site for the first time) and "stickiness" (a measure of how long visitors linger before moving on to another site).

Having come to dot-com companies with ideas and aspirations that outstrip possibilities at the traditional jobs they've cast off, these CPAs are in it for the adventure of working in a fast-paced and ever-changing environment. They want to be part of something big, to construct something never built before. And they want stock options.

But those who have successfully pursued such prizes say they come at a price. Aspiring dot-com CPAs therefore must have realistic expectations and not only know, but be willing and able to do, whatever is necessary to achieve their goals. And while the experienced recommend doing considerable research to identify potentially suitable industries and employers, they also say a good share of self-knowledge is essential.

THE DOT-COM ACUMEN: INNOVATE AND CREATE

"Internet start-ups offer a dynamic environment," says CPA Carolyn Aver, former executive vice-president and CFO of USWeb/CKS, an Internet professional services company that recently merged with Whittman-Hart, a provider of e-business consulting services, to become marchFirst, which devises marketing strategies for e-commerce Web sites. On sabbatical with more than a decade of Internet finance experience under her belt, Aver is a typical dot-com success story. After spending two years with USWeb/CKS and successfully negotiating the terms of its merger, Aver left the company in April 2000 and, with a bundle of stock options under her arm, hit the road for a well-earned break from the frenetic pace of her high-tech/finance career.

"People joke about `Internet time,'" Aver says, alluding to the sense of urgency pervading the culture of Web start-ups. "But I'm here to tell you it's real. Instead of attending 10 committee meetings to make a decision, you can go to lunch with a peer and implement a plan that afternoon."

Paul Kothari agrees. "The dot-com world is exciting," says the cofounder and CFO of Redwood Communications, an April 2000 start-up that invests in fledgling technology companies and offers guidance on the fine points of business, marketing and finance. "The competitive landscape changes radically on a day-to-day basis," he says. "We're making deals at: a furious pace."

Kothari, who previously was CFO at TheStreet.com, is no stranger to fast-paced negotiations in the dot-com world. He had spearheaded an alliance in which TheStreet.com, shortly before its IPO, sold a $15 million equity stake to the New York Times Co. and the two organizations rushed to create a joint newsroom serving their online and print publications. At Redwood, Kothari is constantly looking for a stake in new technology companies and admits the deal-making pace hasn't slowed one bit. "We have to make fast decisions all the time," he says, "because the competition wants to buy into the same early-stage companies we do."

Recognition of the need to act quickly is part of an emerging new finance mind-set, borne of the fast-paced start-up world, in which a finance team's business acumen is measured by its ability to innovate and create. …

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