An evening at an Economic Club of Chicago black-tie dinner is, for the uninitiated, like watching another tribe’s ritual.
A hush falls when a roll call begins of chief executives seated on a brightly lit dais in a hotel ballroom. Looking on, some 1,200 attendees thumb programs that list alphabetically, in tiny print, everyone’s name and table number–useful for networking between courses.
The 73-year-old club’s signature event hasn’t changed in decades, but the invitation list is changing. The exclusive organization is recruiting members from upstart businesses for whom black attire comes in two styles–Polo or T-shirt–and whose companies’ sales are rounding errors on the financial statements of Fortune 500 corporations.
Like other established leadership groups, the Economic Club is being forced to rethink its membership guidelines and programs to recognize the economy’s radical tilt toward a burgeoning sector that’s wielding an outsized impact on the stock market. In turn, high-tech entrepreneurs are only too happy to don formal attire if it means access to a powerful crowd of potential customers and mentors.
“This is how all business is done,” says Mark Tebbe, chairman of Lante Corp., a fast-growing publicly traded Internet consultancy, who was invited into the club last year. “For me, it’s a great way to meet people.”
Yet the transition is not without pain. The challenge is keeping a sense of an elite group while including people who, it is hoped, may one day take seats with the CEOs on the dais. The risk is, some of their companies might not survive long enough for them to attend the season’s four black-tie dinners.
John Rau, former chief executive of Chicago Title & Trust Co. (now part of Fidelity National Financial Inc.) and an adviser to several Internet start-ups, likens the club’s outreach to high-tech entrepreneurs to its push in prior decades to recruit women and minorities, though without the moral imperative.
“There’s a new diversity element,” Rau says, “and it’s the young entrepreneur.”
At the Executives’ Club of Chicago, where about one-third of its 1,750 members are from the technology sector, the club’s new economy agenda is even more explicit.
“We want to build bridges between the established business community and the Internet and high-tech community,” says President and CEO Kaarina Koskenalusta.
The club recently recruited Click Commerce Inc. CEO Michael W. Ferro Jr., 34, as a director–the youngest board member in its history. Ferro’s software company reported scant sales of about $10 million last year–it’s on track to more than double that amount this year–yet the combined value of its stock is $1 billion. That’s not far off the value of such century-old companies as Peoples Energy Corp., with a market capitalization of $1.2 billion.
Keeping step in an entrepreneurial age isn’t easy for organizations established when fortunes were made or lost over decades rather than months. Success was measured by one’s trajectory on an organizational chart rather than one’s ability to spin out a new public company.
Yet there’s no debate about the need to recognize up-and-comers in a sector of the economy that’s reshaping industries and whipsawing markets. Technology companies contributed about 8 percent of the gross national product in the last 12 months, but they make up about one-third of the value of the Standard & Poor’s 500 Index, the benchmark for professional investors. That’s up from 22 percent a year ago.
There’s also less of a divide between the leaders of “clicks” and “bricks” than new economy rhetoric suggests. Executives from mainstream companies have been investing in, and in some cases advising, Internet companies for years.
Some are running online enterprises, including John F. Sandner, special adviser to the Chicago Mercantile Exchange, who is chairman and CEO of Freedrive Inc., a start-up that offers free data storage via the Internet.
The Economic Club’s vice chairman is Rodney Goldstein, managing partner of Frontenac Co., a venture capital firm whose investments include companies such as Lante.
“There’s an extraordinary melding of the new and old economy interests in all of these” organizations, says attorney Mark L. Gordon of Gordon & Glickson, who chairs a 2-year-old committee at the Economic Club charged with recruiting members from telecommunications and information technology firms.
It’s not much of a stretch socially or professionally for the club to reach out to entrepreneurs such as Alison L. Chung, president of 3-year-old technology consulting firm TeamWerks Inc.
Chung, who was chief information officer at law firm Jenner & Block for nine years before starting TeamWerks, was recruited by a fellow Wellesley College alumnus, Peoples Energy Vice President Desiree Rogers.
Says Chung, “I had personally known quite a few people at the Economics Club, and they were people I admired.”
Still, the cultural differences between most start-ups and many old-line firms are undeniable, and they’re reflected in networking styles.
Tebbe belongs to a group called Orbis, founded by Divine Interventures Inc. CEO Andrew “Flip” Filipowski and others as an idea-sharing forum for Internet executives.
So far, Orbis’ meetings have been intimate gatherings of about 50 CEOs and guests at upscale restaurants. The evening’s buzz was less about attending a power event than about hustle and hunger to succeed.
“A lot more cards get exchanged at Orbis,” says Tebbe. “There’s a lot more notes and follow-up items. The Economic Club is more like a checking-in: `Why don’t you have your secretary call mine?’ At Orbis, you’ve got people whipping out Palm Pilots: `How about lunch next Thursday?”‘
At a West Loop watering hole called Drink, a popular venue for high-tech networking, finding someone in the barnlike, densely packed space requires sharp elbows and a voice that carries over the din of a live band.
Nonetheless, the Executives’ Club’s Koskenalusta was among hundreds of people who lined up around the block to get into Drink for the Chicago kick-off of First Tuesday, a London-based, for-profit global forum to bring together entrepreneurs, venture capitalists and service providers.
“I find them extremely stimulating,” Koskenalusta says of such events.
It’s no surprise that leaders of both communities are crossing over.
“Both sides have skin in the game,” says Peter Crist, Korn/Ferry International vice chairman. “There’s no stronger incentive.”
For their part, entrepreneurs know that old-line clubs offer introductions to important customers as well as powerful role models.
Says Tebbe, who was recruited by Goldstein to the Economic Club: “It consists of people who’ve arrived, the core leaders of Chicago’s traditional businesses. I’m in awe of some of them.”
Ferro didn’t hesitate when asked to join the Executives’ Club’s board, even though he rarely had made time for such organizations while starting Click Commerce.
“There’s a lot I can learn from the blue-chip CEO’s,” Ferro says. “They’re the people who most young executives hope to match up to.”
Then, of course, there’s the kick of meeting the club’s business-celebrity speakers such as Viacom Inc.’s Sumner Redstone.
“You’re like, `Wow, he’s one of the most powerful people in the world and here I am talking to him,'” Ferro says.
His crowd will have arrived when another generation wants to rub their shoulders.
