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Change or die in Net economy: Filipowski

CHICAGO--In another era, industry veteran Andrew "Flip" Filipowski might have said, "Go west, young man."But in a keynote address at the Comdex Spring 2000 trade show here today, Filipowski, CEO and "Vision Master" at divine interVentures, a Chicago-based venture capital firm, urged companies and investors to embrace a new frontier -- the Internet -- and the inevitable changes this frontier brings.

CHICAGO--In another era, industry veteran Andrew "Flip" Filipowski might have said, "Go west, young man."

But in a keynote address at the Comdex Spring 2000 trade show here today, Filipowski, CEO and "Vision Master" at divine interVentures, a Chicago-based venture capital firm, urged companies and investors to embrace a new frontier -- the Internet -- and the inevitable changes this frontier brings.

The Internet "has impacted the way human beings relate to their careers, the way investors relate to the stock market and how customers relate to companies," said Filipowski.

He urged all companies to adapt to these changes by taking risks and by spinning out companies to take advantage of new modes of doing business.

The Chicago Tribune Co. is one venerable company that has adapted to changes in technology, Filipowski observed. In its 150-year history it has bought a radio station, got into TV and spun out Internet properties to keep up with the times.

By launching these ventures, it has managed to "at least have the gene pool of the original company survive," Filipowski said.

Because of the Internet and the success of Internet companies, today more and more employees want to work for companies that have a focused product or service offering so they can feel that their efforts have a direct effect on the success of the organization. They also want to share in that success in a way that they couldn't at a large, diversified company, Filipowski said.

By way of example, he said that New York financial services giant Morgan Stanley has seen the number of Harvard Business School students attending its recruiting sessions drop to 20 last year from 400 only two years ago.

Investors are acting in the same way, Filipowski said. Instead of looking at established, diversified companies with predictable earnings, many investors are acting like venture capitalists and putting their money into companies that are innovators in a relatively narrow business.

"Investors like investing in the same atomic unit that employees want to work for," he said. "Imagine the enthusiasm for investing in McDonald's China versus investing in the total McDonald's, which includes operations in the United States that may be perceived as having slower growth potential."

Like President Clinton in his Comdex keynote yesterday, Filipowski warned that those gaining wealth through the Internet must also make sure that everyone can take part.

"To bypass participating in the Internet economy is suicidal," he said. "It is also suicidal to let any group bypass the Internet economy."

Embrace change

Companies that don't adapt to new technological inflection points, such as the Internet, could be doomed to the dustbin. Changes in technology -- and the resulting changes in society -- are so rapid nowadays that Filipowski posited that the dominant software giant today, Microsoft Corp., could become all but irrelevant within 15 years.

To back up that assertion, Filipowski asked the audience to name the top software company 15 years ago. After getting responses like Ashton-Tate and MSA, he pointed out that the largest independent software firm in 1985 was Cullinet Software Inc. That company was consigned to the history books years ago.

"Fifteen years was all it took to make irrelevant nearly all of the top 10 software giants," Filipowski said. "If it happened in the last 15 years, it can happen again."

Filipowski brings plenty of experience to seeing companies grow, change and go away. Last year, he sold Platinum Software International Inc., a systems management developer he had founded 12 years earlier, to Computer Associates International Inc. for about $3.5 billion. In the '70s he was an executive at Cullinet, the now-defunct software giant.

But Filipowski, far from looking back on those companies wistfully, encouraged the Comdex audience to look forward and meet change happily.

"Nothing will bring back the good old days," he said. Spinning out new companies to take on new technologies "is an incredibly rejuvenating process."