On Oct. 30, Kevin Ryan, chief executive officer of AlleyCorp, was changing into his Halloween costume in a taxi, zooming from midtown to the East Village. He was heading to a Halloween party for Gilt Groupe, one of six companies contained under the AlleyCorp umbrella; his costume, a Karl Lagerfeld getup, couldn’t have been more appropriate. The e-commerce site, launched last November, works like an online luxury sample sale: Mr. Ryan’s staff buys goodies at a discount from the likes of Diane von Furstenberg, Marc Jacobs and the real Mr. Lagerfeld, among others, and sells them on Gilt.com with up to 70 percent slashed off the retail price to their members. Mr. Ryan, 45, has a tall, thin frame topped with curls of salt-and-pepper hair. With his black jacket and dark sunglasses … voilà! He is fashion icon Mr. Lagerfeld (sans white pony tail).
Mr. Ryan is also an icon in the New York technology community. That same night, he had earlier attended a party at the W Hotel at Lexington and 50th Street to celebrate the Silicon Alley 100, a list of the most influential movers and shakers in the city’s digital and tech community. He helped assemble the list as co-founder and chairman of the digital business news site Silicon Alley Insider, which hosted the party along with the Founders Club, which brings together start-up CEOs and financiers. Mr. Ryan wasn’t eligible to be on the list, but if he had been, he may have snagged one of the top spots, snug among Fred Wilson, New York’s prominent venture capitalist, and Barry Diller, the Hollywood studio honcho turned Internet media mogul.
Mr. Ryan is best known as the former CEO of DoubleClick, the modest web start-up that morphed into the largest online ad-serving company in the world. In July 2005, the company was sold to the private-equity firm of Hellman & Friedman LLC for $1.1 billion. Google bought it last year for $3.1 billion, nearly double the size of their payout for YouTube.
For the past three years, Mr. Ryan and AlleyCorp’s chairman Dwight Merriman, who was a co-founder of DoubleClick, have been building six companies under the AlleyCorp umbrella. Besides Gilt Groupe and Silicon Alley Insider, there’s Clusterstock, another news site (currently in beta form under the Silicon Alley Media branch) that covers the financial markets and is lead by former shamed Internet analyst Henry Blodget; Music Nation, a kind of YouTube for unsigned and independent musicians; Panther Express, which delivers high-quality Internet content on 425 media, entertainment, technology, gaming, news and Web 2.0 companies on servers around the world (Livejournal and the Obama campaign are just two of their clients); ShopWiki, a search engine that crawls online shopping sites, indexes deals and allows users to review the goods; and 10gen, a new platform designed to help developers build quick and easy Web applications. Mr. Ryan estimates that the companies will generate about $50 million in revenue this year.
Mr. Ryan and Mr. Merriman have found success by thinking up tech companies that take advantage of other industries headquartered in New York, from fashion and finance to media and Madison Avenue. Their AlleyCorp is an Internet incubator among various industries.
Last Friday, Mr. Ryan was sitting in a conference room at AlleyCorp’s headquarters on West 20th Street (each room is labeled as a New York neighborhood; we were sitting in “Wall Street”). It was Halloween, so candy and bags of Fun Dip were strewn haphazardly on the tops of cubicle walls, and fake spider webs stretched across the walls. Developers wore witch hats. Outside the conference room, there was a live, hairy spider in a glass case. His name was Charles.
Mr. Ryan doesn’t have his own office, just a desk at a cubicle among his 150 workers, where he has framed pictures of his three kids (they live on the Upper East Side). A copy of Inc. magazine sat by his keyboard.
Mr. Ryan was born in Milwaukee and grew up outside of Cleveland. His father worked for Caterpillar, the manufacturer of construction and industrial equipment, and his family traveled a lot. He spent first and second grade in Rome and spent half of his childhood in Geneva (which motivated him to later serve on the board of Human Rights Watch). He moved to New York in 1985, after graduating from Yale, and spent some years on Wall Street as an investment banker with Prudential Investment Corporation. He went to business school in France and had a brief stint working for EuroDisney.
Mr. Ryan speaks rapidly, in breathless, perfect sentences. Mr. Ryan seems well rehearsed in his rundown of AlleyCorp’s development, probably because he has repeated it so many times to prominent New Yorkers.
That morning, he had breakfast with a European venture capitalist to brainstorm about new companies. He had lunch with a former high-level employee from The Wall Street Journal to mine new ideas for Silicon Alley Insider. The day before, he had met with the head of MTV’s digital division to discuss the music industry. He also chatted up John Caplan, CEO of Ford Models, at the Silicon Alley 100 party. At the Gilt bash, Mr. Ryan was “on the dance floor until 1:30 in the morning,” he said.
Mr. Ryan first saw the potential of the Internet in … the Dilbert Zone. In 1995, Mr. Ryan was working as senior vice president of business and finance at United Media when he launched Dilbert.com, an online hub for comic strips about the rotund office worker with Office Space-like musings. It would become the most popular and profitable comic-strip site on the Web. “We started to realize we had this very successful advertising-supported, commerce-enabled Web site,” Mr. Ryan explained. “I thought, this is the most fundamental business trend I’m going to see in my lifetime. … We had tens of thousands of people coming to the site [that utilized] all the things that are great about the Internet. We can sell things. This is going to happen all across the industry. It’ll happen for information, news, everything. So I’m going to start a company.”
And that company turned out to be DoubleClick. Mr. Ryan was looking to start an online advertising company similar to DoubleClick, which was founded by Mr. Merriman and Kevin O’Connor. But he decided to join their team as chief financial officer when he realized they would crush the competition. DoubleClick was one of the first tech companies to build its reputation in New York; it was successful because of its proximity to Madison Avenue and its big-name clients, including Coca-Cola, Motorola, L’Oreal, Visa and Microsoft. In 1996, Mr. Ryan took over Mr. O’Connor’s day-to-day duties as CEO and faced the challenge of rebuilding the company after Wall Street crumbled under the Internet bubble burst in 2000.
“I spent the next three years really downsizing the company,” Mr. Ryan said. He cut his staff in half and rearranged management. “It’s especially hard because two years ago, you couldn’t imagine what it was like to work at DoubleClick, because everyone seems like a genius, you think the CEO’s a genius, everything is going well. And then everything comes crashing down.” They watched companies drop from their client list on a daily basis.
But Mr. Ryan started crunching the numbers. Seventy percent of their clients went under. However, 80 percent of their competitors fell off, too. “We picked up an equivalent of 30 or 40 percent of the business from them,” he explained. They cut their costs in half and earned 70 percent of their previous revenues. “You do that math, and all of a sudden, we came out, by 2004, with this enormously profitable company that had a hugely dominant position in what we did.” Even during hopeless times, Mr. Ryan and DoubleClick had good numbers.
The company also provided fertile ground for young New Yorkers to build their tech expertise and move on to sprout other businesses and snag other jobs in the city. “The thing I feel best about actually is that more companies in New York are willing to hire DoubleClick people than almost any company. A lot of the people [on the Silicon Alley 100] worked at DoubleClick. My CFO is now the CFO of Oracle. My head of HR is now HR for Cisco. So we get people who can clearly work at a company many times the size of us.”
It should be no surprise that Mr. Ryan is an evangelist for the New York tech community.
Despite the current economic slowdown, he thinks the city’s tech community will do just fine, simply because it’s New York.
“Obviously, we’re going into a downturn, so everyone’s going to get hurt. That goes without saying,” he said. “But New York, when you think of the Internet sector, the ad industry is here and will continue to be here, and that’s a big advantage. The fashion industry is here, and will continue to be here. Wall Street, same thing. Music industry, split between here and L.A. The Internet sector is here to stay.” Sounds like Mr. Ryan and AlleyCorp are, too.