By Kim Hart
Washington Post Staff Writer
Monday, December 18, 2006
When Chris Marentis joined America Online Inc. 10 years ago, the fledgling Internet empire was growing at a frenzied pace. As senior vice president of business development, he worked 60-hour weeks and spent holidays closing multimillion-dollar deals. He held strategy meetings by trading instant messages while his family slept.
But when the company's management changed, so did the working environment. Momentum slowed, and office politics overshadowed innovation. A number of executives were pressured to leave, some were fired and some just decided to go. Marentis left in 2004, and recently, like many of his colleagues, launched an Internet start-up, rekindling the excitement of AOL's early years.
At least two dozen AOL alumni have used their Internet know-how to start companies, helping fuel a dot-com resurgence in the region. Former executives are forging businesses centered on the nation's fastest-growing Internet phone service, a college social network that's trying to be the next Facebook, a popular job listings site and other products.
The former AOLers have become the darlings of local venture capitalists. Three of the region's largest venture capital deals in the past six months involved companies led by people with AOL on their résumés. The collection of businesses is creating an ecosystem that some say could one day give lasting permanence to the region's Web industry, much like the way long-distance giant MCI helped establish the local telecom industry and Marriott Corp. made Washington a focal point for hospitality companies.
"When you bring in talent with this kind of expertise, that can really turbocharge a company," said Philip L. Bronner, a partner with the investment firm Novak Biddle Venture Partners. "New investment in the wireless and consumer Internet areas is really changing this region. Add talent, and that really allows you to create interesting companies."
Novak Biddle recruited Marentis to be chief executive of an Arlington start-up that was launched last month. It invested $1 million in the new company, Clearspring Technologies Inc., which syndicates scoreboards, video clips and other content for blogs and Web sites. Former AOL board member Miles Gilburne is a key investor.
Marentis said he agreed to take the helm of Clearspring because he longed for the entrepreneurial spirit that had lured him to AOL a decade ago. Some of his former colleagues are joining similar ventures, either as investors or managers. Many cited the experience they gained at AOL in adjusting to fast changes in corporate culture and the technology landscape.
"We all had to take a collective breath and recoup after all the changes that happened at AOL," Marentis said. "The Web is changing so dramatically right now, creating another huge opportunity for entrepreneurs, much like the Web of the mid-'90s that drove us to AOL in the first place."
The exodus of top managers from AOL has been underway for several years. One wave left after the online giant merged with Time Warner in 2001, and corporate cultures clashed as finances soured. Another group departed more recently as AOL shifted from a subscription service to a free one supported by online advertisers. Just last week, four top executives announced plans to leave the company, days before new chief executive Randy Falco was expected to announce a major restructuring at the top. Much of the brain trust that was part of AOL's formative years has moved on; former chairman Steve Case has started Revolution, a District firm focused on health care and resorts.
Many of the new dot-com start-ups play to the skills of AOLers who cut their teeth on building an Internet service for the masses. The success of YouTube and MySpace prompted several to launch sites capitalizing on consumer-generated content.
For example, William Raduchel, former chief technology officer, is chief executive of Ruckus Network, which runs an online entertainment site for college students. Todd Forest, former vice president of media networks, joined Market10, a classified ad site for jobs. And Bob Smith, who was AOL's general manager of community program operations, founded iBelong Networks, which produces online community networks.
Adam Lehman was senior vice president at AOL for seven years before he left in 2002 to begin his own investment fund, Rock Ridge Ventures in Bethesda. His first investment was in a company called Wondir Inc., a community-based search engine started by two former AOL technology executives that was later bought by Case's Revolution.
"It really speaks to the growing ecosystem of entrepreneurship and partnership of the AOL network," said Lehman, who has also invested in another start-up connected with his former employer. "It's becoming more like the West Coast companies that have spawned a lot of other ventures."
That ecosystem is making it easier for people like Lisa Hook to find opportunities locally, instead of uprooting the family to tech hotbeds such as Silicon Valley or New York. The former president of AOL's wireless and broadband unit is now chief executive of SunRocket, a Vienna-based Internet phone service provider that has received $80 million in venture capital funding. The Time Warner merger was a turning point for her.
"I thought to myself, 'I can stay here and keep doing the same thing, or I can find new challenges,' " said Hook, who retired in 2004.
In July, two of her former co-workers joined FreeWebs Corp., a Silver Spring start-up that helps people build Web sites, just as it received $11 million in funding from local venture capital firms.
Rick Robinson, who was AOL's vice president of member experience, joined the company and recruited Andrea Spiegel, then vice president of audience programming operations, to jump aboard. Both had grown frustrated by AOL's lethargic pace when implementing new ideas. The departure of numerous managers left gaps in the staff. AOL, they felt, was losing touch with its core customers.
"I wanted to be somewhere that was very nimble and where I was able to express ideas and try things out in an atmosphere that was like AOL 10 years ago," Robinson said.
An AOL spokesman said the company is proud of its record.
"AOL has always attracted some of the best and brightest people in the industry, but we're also proud to have served as an incubator in training scores of executives who have gone on to start and lead other companies," said Andrew Weinstein, a company spokesman.
AOL no doubt will keep a close eye on its alumni, said Mark Frantz of RedShift Ventures, which has invested in a start-up that involves a former AOL executive. "We've finally unlocked AOL," he said. "It's hard to say why the talent is coming loose now -- whether it's driven by pink slips and falling stock prices -- but it's a talent pool that needs to be tapped into."