The Briefing

Virtualis Systems was the poster company for high-tech startups an Internet service provider and Web hosting company founded in a garage by a twentysomething engineering school dropout and staffed with eager computer geeks only too happy to burn the midnight oil in exchange for an easy-going environment with a direct link to decision-making. So when Allegiance Telecom Inc., a $285 million, publicly held telecommunications provider, acquired Virtualis late last year, the corporate culture changed virtually overnight. Virtualis’ 80-odd employees would no longer be marching into management to get instant decisions. Virtualis COO James Segil spoke to staff reporter Shelly Garcia about leading an entrepreneurial startup through the transition to a corporate division. “We had quite a roller coaster ride through our VC funding stage. So there was an overwhelming sense of relief when we knew we were being acquired. People were relieved to know they were going to have strong financial backing. They had worked very hard making a startup turn into a real business, and the acquisition has given validity to their hard work. So there was a sense of pride, and there was also a good deal of apprehension. A lot of people were scared of the bureaucracy and red tape. They were concerned about whether we would be able to operate as a standalone unit. “One of the things we said early on is everyone had to realize there was going to be a mind shift. Don’t fight it. Accept it and make it work for you. If you learn the system and the way things work and become part of it, you can make it work to your advantage. “(Another issue is) how do you motivate (employees) to continue to remain entrepreneurial and innovate within the context of a big company? I think one of the things we did is separate things into bite-size pieces. Someone says, ‘Our site can be much more effective at closing orders. I want to redesign the site.’ That’s a huge endeavor that’s going to need approval from everyone and their father. But instead, if you say, we can change the order page, I don’t have to worry about running that up the flagpole. “You have to tow the party line. And for good reason. If you don’t have confidence in your parent company and the management team there, then your people aren’t going to have confidence in you. It all ties together.”