*The Not Quite Rise of WiredEmpire

In the wake of e-mail technology firm WiredEmpire’s demise, a picture is emerging of a great little product that no one could agree on how to sell.

There certainly has been the expected postmortem finger-pointing since parent company Marketing Services Group Inc. announced last week that it has suspended WiredEmpire’s operations. But no one bad-mouths the technology.

“We could segment a database of millions of records in under five seconds,” said one former employee wishing to remain anonymous.

So what was the problem? Several former executives blame a leadership gap that they say began when MSGi president Ed Mullen resigned in February. Mullen was also CEO of WiredEmpire, which has been without an official CEO since he left.

And coincidental to Mullen’s departure or not, MSGi’s stock has plummeted from its 52-week high in mid-February of $29.50, and last week had risen from an open of $2.56 to $2.90. Its 52-week low was $2.25.

Meanwhile, with no official CEO, sources said, WiredEmpire lacked coherent marketing, resulting in a series of fruitless strategy meetings during its waning months.

“We went many months without a CEO or someone responsible for putting people on the same page,” conceded Jonathan Robbins, a former senior sales executive at WiredEmpire.

The decision to shutter the firm on Sept. 25 eliminated all 53 jobs and left, among other things, a WiredEmpire booth standing stripped and empty on the last day of the DMA net.marketing Conference & Exhibition in Boston. MSGi apparently did not tell employees at the show until the last minute.

A piece of paper with a hand-drawn tombstone was left on the booth’s main table in reference to the company’s downfall, apparently illustrating at least one former WiredEmpire employee’s feelings. “R.I.P. 9-25-00. Those who never take a shot have no chance to score,” the note read. The company’s signage had been taken down, and only a few information kits remained behind a table at the booth.

In the months after Mullen left, WiredEmpire suffered a string of key defections, including the vice president of sales and human resources director. Mullen, who is now chairman of the board at FinancialWeb, Needham, MA, was reportedly out of the country last week and could not be reached for comment.

Jeremy Barbera, chairman/CEO of MSGi, New York, conceded that there were major defections but denied that WiredEmpire’s demise was because of a lack of leadership. He blamed Wall Street’s current impatience with unprofitable companies.

“The viability of the business itself was not there,” he said. “If we believed it could attain even break-even status within the next fiscal year, we would have kept it going.”

Barbera also said he does not believe having a CEO on site day to day would have made a difference.

“Leadership gap is a convenient excuse to use,” he said. “I was there two to three days a week up until Stephen [Killeen] came, and then Stephen was there most of the time, and he’s run companies as large as $600 million.”

Killeen, by Barbera’s reckoning, signed on from AltaVista as president of MSGi about 3 1/2 months ago, making him de facto CEO of WiredEmpire.

Barbera also said WiredEmpire drew executives with dollar signs in their eyes because of its rumored pre-IPO status. Once it was clear the firm would not go public, they jumped ship to other pre-IPO firms.

“In Burlington, [MA, where WiredEmpire is based] the competition is on the same floor. It’s a recruiter’s dream,” Barbera said.

However, the company’s technology developers were apparently loyal to the product to the tune of just one defection since the beginning of the year.

“We kept the core group together because they believed in their business,” Barbera said. “Those who jumped never believed in it to begin with.”

However, one former WiredEmpire executive said his defection was not out of greed, but out of necessity.

“I took a pay cut to work there with the understanding that there would be some options I could exercise in a relatively short time, and was operating in the red,” he said on the condition of anonymity. “Once the IPO went out the window, I couldn’t afford to stay there anymore.”

As for the open CEO position, Barbera said he searched but could not find one with the passion the business needed.

“What I have found in my experience in having bought 12 or 14 companies is that a bad CEO is going to destroy the business in 10 out of 10 cases,” Barbera said. “And having had Mullen’s departure, it was critical that the right one be put in there.”

Barbera would not comment on the conditions under which Mullen left.

Among the firm’s clients were well-known names such as ZDNet, RoadRunnerSport, EDS, Levi Strauss and Discount Tire Direct.

In the end, WiredEmpire’s demise may have simply come down to its product — technology that by all accounts did its job well, but for which there was seemingly no market as long as it was sold on its own.

“We were trying to force a beautifully designed square peg into a round hole,” said one source on the condition of anonymity.

“There was an excellent assemblage of people pulled together by Ed Mullen, and the technology was good, but the offering was too narrow,” said Paul Knight, former vice president of sales at WiredEmpire who left shortly after Mullen.

A number of the firm’s former executives said WiredEmpire’s technology is more suited to be part of a full set of customer relationship management tools.

Indeed, near the end of the company’s run, there was reportedly talk of selling the product to agencies that in turn would offer it as part of a full-service package, a strategy that Knight — now on the client side — believes might have worked.

“I think early on if they’d have gone exclusively for channel sales as opposed to end-user sales, they might still be around,” said Knight, who works in Peabody, MA, as director of e-business at VerticalNet Exchanges, a division of business-to-business technology firm VerticalNet, Horsham, PA. “Now that I’m on the other side of the fence, I can see why we were having trouble as a sales team.”

MSGi is looking for a buyer for WiredEmpire’s product. The company has agreed to maintain client contracts for 60 days while it helps them make the transition to another vendor.

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