B2B marketplaces struggle to find top guns

The business-to-business marketplace industry is undergoing seismic changes, and potential senior executives once dazzled by the allure of Internet dollars are staying at or returning to their old-economy jobs.

That's the consensus of industry experts on the heels of last week's departure of VerticalNet CEO Joseph Galli, who will take a similar position at Newell Rubbermaid, a firm that produces storage containers, cleaning products and cookware.

"There's a general shortage of senior management in the e-business area . . . because there's a lot of paranoia that's driving the market down," says Michael Handley, an analyst at Giga Information Group. "If I was senior talent sitting in a brick-and-mortar, and I was taking a look at what's going on with dot-coms, I know I wouldn't be willing to take that risk now."

Not everyone is that cautious, of course. Last week, energy marketplace TradeRanger named Claire Farley its CEO, while plastics marketplace Omnexus named Peter Dunning to the same position.

The most-talked-about CEO vacancy is at Covisint, which has yet to name a chief executive since debuting last summer. Members of the auto exchange formed by Ford, DaimlerChrysler and General Motors last year announced a few deadlines for a CEO coronation only to see those dates pass.

Analysts say Covisint's CEO search is facing myriad problems.

"The [exchange's] power is shared between three companies that are fierce competitors," says Glenn Gow, CEO of Crimson Consulting. There are also technology issues, specifically about how to protect confidential information among the partners. "Who would want to be the CEO? It's nearly an impossible job," Gow says.

Covisint spokesman Tom Hill says the auto exchange "has come close a couple of times" to naming a CEO, but finding a technology-savvy candidate who is familiar with the industry is "a tall order."

Even among the marketplaces with leaders in place, "there are those that are lacking qualified top executives," Gow maintains, although he declines to cite examples.

Part of the problem is senior executives don't understand aspects of business-to-business marketplaces, especially collaborative commerce, analysts say.

This has marketplaces choosing candidates who are either entrenched in their particular industry or in the general Internet technology world. Mark Walsh, VerticalNet's chairman, says marketplaces by default are choosing candidates from the industry they serve. "It's human nature" because they speak the same language, he says.

Analysts say executives will watch the Internet shakeout and ready their resumes for the survivors.

"We peaked and it was a glorious peak, but it's like a bad acid trip now," says Vernon Keenan, an analyst at Keenan Vision. "We need to all chill."