W: What are three ways that leadership in e-businesses differ from leadership in traditional bricks and mortar businesses?

EG: First of all, I think that the biggest differentiator is that you have more money at a time. The people that carve out their space in electronic business, first in the marketplace, they gain first advantage. That’s the first thing. The second thing is that any business is really going to become more of a clicks and mortar type of scenario where there’s a combination of physical and virtual. The AOL Time/Warner merger is just another manifestation of this, but you can also see evidence in the fact that WalMart’s doing WalMart.com based in the Silicon Valley, and Amazon is spending all the money their raising on convertible debt issues, on physical infrastructure. I think you see more and more of that. Schwab is a great example of that in financial services. I think that the third piece of leadership in electronic business is that every single one of these value chains is going to have an immense amount of opportunity for rethinking and restructuring, and in fact we’re going to see a very different landscape. So the people that can go in there and analyze and understand where the value chain is broken, whether their in different companies or within industries. It changes the way we’ve done business in the last couple of years.

W: What do you see as the necessary qualities of a successful leader in the Internet economy?

EG: The characteristics of a successful leader in the Internet economy, I think, revolves around the ability to see the big picture real well and execute upon market opportunities that come about, and the ability to mobilize a team and garner resources to go after a kind of vision. The people that have been most successful in the Internet economy are first movers that have a great vision and they know how to mobilize a team around that and get all the necessary capital and resources they need in order to carve out a stake in that market.

W: Given some of those capabilities, how or where have you yourself been able to develop and acquire those qualities?

EG: I don’t think that they’ve been developed professionally by anybody other than myself. I think the common trait you find in entrepreneurs is that we’re good at certain things and we know what we’re good at, and that’s what we do. It’s nothing you can be taught. Most people – no disrespect to the academic community – most people that teach entrepreneurship in many cases have never started a business in their life and they’re looking at it from the outside and they don’t really understand what it takes to do it. They’ve never done it on their own account, taken risks. It’s not something that can be taught, I don’t think. I think you can teach a person what it takes to start a business, how to get insurance benefits and everything else, but when it comes down to having a vision and passion and how you build a business, it’s something you can’t be taught. It’s more of a personality characteristic than a business competency. It develops more or less on one’s own. I can’t point to any great mentor who taught me to be an entrepreneur.

W: Going forward, what criterion would you use to measure success, leadership and your company’s success.

EG: First of all, economic results, I think the first measure what are the economic results for your company and your client. The second thing I look at is your colleague retention, satisfaction, and organization. The next thing I look for is how you’re positioned in the market and are you getting the respect in the market that makes you into a market leader? Certain companies have more respect than others and it’s reflected in the valuation.

W: As a leader, what are your three top priorities in order of importance and why?

EG: If you have vision, ambition and integrity, people will follow you.  You’re not a leader unless you know somebody’s following you. I personally focused on strategic vision, recruiting and team building, selling, and evangelizing what we’re doing. But what I don’t handle operational issues, I hate them. I’m not an operator.

W: What tools do you find necessary or useful when seeking to motivate individuals to follow your vision?

EG: There’s nothing better than shared ownership. Everybody who works for our company is a stockholder. I think you have to have a shared vision. People have to buy into the vision of the company, then they have to have the incentive measurement and reward systems to make what they’re doing fit with the company goals. Finally, is that they want to do interesting things and they want to progress their careers. We have a very good career development capabilities. People have to have the incentive measurement and reward systems that keep them with the company, but what they want at the end of the day is to learn, to do exciting work, and feel like their career is progressing to have an increasingly better life or opportunity.

W: How do you compensate your employees?

EG: We don’t talk about that. It’s a combination of cash, stock, bonuses.

W: How did you build your leadership team?

EG: I knew a lot of people. I had networks in business. Then we did some point searches, word of mouth factor. I would say there’s nothing really fixed in a formula of how we did it. One thing I happen to be gifted with is the ability to build teams, so we’ve had the lowest attrition rate of our industry, and had no attrition rate with the orgininal team.

W: How do you integrate new people?

EG: We do it in two ways. First of all, everybody in the company goes to [a program for a week] after they come into the company, [and] they get an understanding of what we do and how we do it. Then they go on to further training, whether they’re a college hire or an experienced hire. For college hires that’s a month. For experienced hires it might be two weeks. We spend millions and millions of dollars on special development programs in the company. As a result it gives us the competitive advantage because we’re an intellectual property business and our ability to compete is predicated on the ability of our people to be breakthrough thinking. So they go to all these learning and development opportunities they can. So one of the things that we owe them, our responsibility to our people is to make sure that they learn, and by the same token we have to do that to be competitive and to get our competition.

W: What kind of culture exists at your company? How did you establish it and why did you institute this particular type of culture?

EG: Well, first of all, I think culture is the most important thing in any company, and the greatest companies in the world all have strong cultures, whether it’s General Electric or Microsoft, or other great companies. The first thing I did was set up a set of values for the company. I had our colleagues review those and rewrite those based on their thoughts as well. So from day one we had a vision statement for the company as far as what the culture was, what the values of the company was, and people were expected to live by those. If they didn’t want to sign up for them or they didn’t want to live by them, they weren’t right for the company. So you build an environment where people are highly motivated and self-selecting with respect to certain types of criteria, their belief system and the way they work. I think that’s the most important thing you can do as a leader for a company is set up a great culture, a value system for the company. It’s everywhere in our company. It’s very, very much a part of the fabric of how we go about running a business. One of the things we do – it’s not on paper but it’s one of the rules that we have in interview screening – is that there’s no assholes allowed. Literally, that’s what we tell people in training. I don’t care how talented somebody is, if they’re an asshole we don’t want them. People laugh about it because they think it’s having a good sense of humor but we’re dead serious. If it’s somebody that you don’t want to go out and have dinner with or if it’s somebody that has such an ego that they denigrate other people then we don’t want them. Life’s too short and you have to have fun when you’re working. We’ve instituted this type of thinking in the company and as a result we’ve built a successful environment which is supportive and not fractionalized. We as a company have a culture where we win as a team and lose as a team. We don’t have finger pointing, we don’t have turf wars, we keep politics to a minimum because none of us on the leadership team by any means will put up with politics, and we set up a straight meritocracy.

W: How do you lead in a fast growth environment?

EG: Remember the difference between leading and managing. Leading is based on vision and getting people to buy into what the mission of the company is and to internalize that themselves so that they can, in turn, lead other people. Managing in a fast growth environment is a completely different ball of wax. That’s where you have to have the processes and the operation structures for growth and the objectives of the company. So there’s a combination of that. One is that you always have to be a vanguard of the values and the vision of the company, and on the next token you have to have operational excellence that you’re fulfilling. Make sure your colleagues and make sure you’re running the company in a manner that’s going to yield the proper type of economic results in the business. I went to this leadership course that I heard was pretty good and it really was on management. I had a big schism there with these guys because I said, "You guys don’t even understand what leadership means." They gave everybody personality tests that were more or less tactically based on how you deal on day to day basis with people, which is valuable to know, but that’s not what leadership is. The instructors of the course, these are all psychologists. They had never started a business on their own, and they structured the course. They were idolizing somebody who was one of the past graduates, and now he’s worth $1.2 million in market. And I looked at them thinking, "Gee, I’ve done about $7 million". We had a very big difference on the definition of leadership. I tend to agree more with Drucker and their definitions of leadership which are more qualitative and focus more on how you motivate groups and how you build teams, how you set up value systems, and how you get the best out of people, motivate them. That’s leadership. Management is a different thing. The people that you want to hit your radar are people that have good vision as to where they think the world is going and buy into that. They are extremely ambitious and move very fast towards realizing the vision. You can trust them. But most importantly, they’re people focused and they understand you can’t do anything without building great teams. So the focus on teams overrides any individual focus in the organization, even though you need people to contribute individually to the greatest of their capabilities. The attitude is you all win together, you all lose together. There’s a big talent shortage in the dot com companies, and so people who are leaders of the company are a lot of retread and a lot of people who have no idea how to lead an organization into a new market where all the variables are unknown like someone like Amazon did.

V: I think that’s a very good model that people take for granted because it’s overused.

EG: They had first move advantage and they executed it. That’s another one. You can point out the companies that have been really successful over a period of time and have established complete leadership positions in their category, and I think a lot of people don’t know what to look for there. Some kid that’s 22 or 23 years old comes up with a great idea but they have no idea how to manage people and they have no idea how to run an enterprise. They might know what they know real well, but they don’t really want to open up and bring a professional manager in so they can focus on their strength. I personally don’t like to manage so both the companies I started I brought professional managers in. It served me quite well. It’s still focused around the people and the business and to me there’s nothing more important than your people and how you place those people to get the maximum results out of them. Andy Grove is really good at it. I know Andy. He’s a maniac. He’s the hardest guy to work for in the Silicon Valley just about. But what Andy knew how to do is he knew how to place people into positions where he could turn a B+ player into an A- player. That’s how he built Intel. He understood how to place people into places where they were going to thrive and he understood how to bring out the best in people that weren’t necessarily A players, because you can’t build a company of 10,000 people with all A players. Microsoft is a very different kind of culture, combative. It’s very much predicated on brain power. There’s teamwork within the individual groups but not between the groups in many cases. What you have there is an aristocracy of brain, or a perceived aristocracy of brains and people that are pretty motivated to win. It’s very much a winning based culture. So every culture is different. Cisco is customer centric about culture that where the biggest breach that you could ever make at Cisco is not having the customer’s interest in mind first. Chambers will fire anybody that doesn’t have the customer’s interest first over their interest. What they’ve been able to do is they have a customer-centric culture, but what they’ve been able to do is get people to buy into that because they’re on the winning team.