IVillage's Carpenter Gets Candid

SAN FRANCISCO (05/05/2000) - Boring. Candice Carpenter wants you to know that the state of her company, iVillage, a women's Web site, is boring. As in, it's executing. As in, it's scaling to profitability. As in, it's exactly where she wants it to be.

Never mind that within the past few weeks iVillage announced its COO is quitting and that it is bringing in a board member to serve as president. Or that the CFO, one of several people who have overseen iVillage's finances since its launch five years ago, is also leaving. And never mind that the company's stock, which began sliding well before the recent rout in the market, remains stuck at about $10 a share, far below its peak of $130.

Or that all of this has fed rumors that there is friction in the upper ranks, and that people may have tried to force Carpenter out. Among the many traits attributed to Carpenter is her ability to tell a compelling story. It is Carpenter, 48, who is credited with attracting large sums of money to iVillage from investors including America Online, Intel and Kleiner Perkins Caufield & Byers. One of the first true personalities to emerge from the Web's business culture, chronicled for her pink Versace suits as well as for her hard-charging style, she now finds herself in midstory, facing new and challenging plot twists. At this point in the story, boring is what is called for.

The question is, can Carpenter pull it off? The company's management changes, of course, have generated far more intrigue than boredom. However much Carpenter likes to say all Net companies have high turnover, iVillage is widely - if only anecdotally - viewed as standing out from the pack. The departure of two top executives within one week won't improve that image. Officially, their departures are just coincidence; the addition of a new president had been planned for some time. Still, speculation has swirled inside and outside the company, with most of it, not surprisingly, centered on its CEO. "There [were] lots of theories going around," says one employee about whether the departures resulted from any tensions with Carpenter.

"The stars were aligned for the rumors to fly." John Glascott, the company's senior VP for sponsorships, says, "I look at the timing - there's no way around that it looks bad." But as for the murmurs of a palace coup, he adds: "I'm in senior management, and I never heard boo." Now online for four years, the offerings of iVillage, based in New York's Flatiron district, range from a quiz measuring a woman's sexiness and a program for reducing her debt to a slew of message boards about everything from breast cancer to breakups.

The company attracted 5.8 million unique visitors in March, placing it 35th in Web rankings, one above competitor Women.com, according to research firm Media Metrix. Carpenter says it was her idea to bring in a president, a move she compares to the hiring of Bob Pittman at AOL. "We hadn't added much bandwidth for a couple years," she notes. "Starting in December, I felt, 'You know, I think we're there.'" She cites a spike in revenues from the third to fourth quarters of last year - from close to $11 million to about $19 million - as well as iVillage's first joint venture, with personal-products manufacturer Unilever. A separate company formed by the venture will create a comprehensive beauty site that will be available through iVillage. What's more, the company is developing its audio and broadband strategies and its reach overseas.

"It was your basic no-brainer, with all that stuff going on," says Carpenter, who speaks in what she describes as a "little voice" - quick and sometimes breathy. Even sitting at a table in her office, surrounded by drawings by her two young daughters, she emits a certain nervous energy, her foot tapping under the table, a finger occasionally twirling a lock of hair. She is touchy about talk of behind-the-scenes power plays. A week before the high-profile resignations hit the news, a local trade publication, the Silicon Alley Daily, reported that high-level executives at the company had gone to board members, threatening to leave if Carpenter didn't. Publication of the story, according to Carpenter, was the worst thing to happen to her in the past six months. "It was so inaccurate [in] the way people interact with the board," she says.

"Here we are at this great moment, and here it kind of gets portrayed in sensational [terms]." Then two senior people quit. But both Allison Abraham and Craig Monaghan deny that Carpenter is the reason they're leaving. However, Monaghan acknowledges he and Carpenter sometimes clashed. He felt the organization would be strained by handling two acquisitions around the time of its initial public offering, for instance; she did not. Carpenter won out, but Monaghan now says it was the right thing to do. "She has to be given credit for what she's built here," he adds. As for himself, he says he got "too big a job" as finance chief with AutoNation, a Fortune 100 company, not to take it.

Abraham left to become president of LifeMinders in Virginia. She cites family reasons for her departure, and she too praises Carpenter, calling her the "boss who has taught me the most." Though some say the CEO keeps tight reins on access to the board, Abraham says there was an open dialogue about management changes. "Some of [the board members'] concerns are whether people are tired," she explains. One board member calls Carpenter "a very tough manager" whose style can be controversial. "Do people complain sometimes that we're going too fast? Absolutely," he says. "Her weakness is that while she's driving, the organization is trying to keep up with her . . . and people get stretched." But the board member also credits Carpenter as a visionary. "If we thought that her management style was a liability," he says, "we would be addressing it differently." Yet some suggest that the new president, Doug McCormick - who served as CEO of the Lifetime cable channel from 1995 to 1999 - might better position the company for a merger or acquisition, because he could be seen as a less controversial figure entering negotiations with a potential media partner.

He will oversee day-to-day operations, and Carpenter will focus more on strategy.

Carpenter recruited McCormick to the board. "I wouldn't be the best day-to-day manager of the company," says Carpenter. "There's no question I'm pretty intense." Certainly Carpenter evokes intense feelings. "Candice is great or your worst nightmare, depending," says one person who has worked with her. She has both avid defenders and detractors; she is resented because of all the attention she gets, even by those who can't stop talking about her. IVillage's image is equally controversial. In the last 18 months, three ex-employees sued the company, claiming Carpenter lured them to iVillage with false promises; one said he learned he was losing his job only after he had been replaced - by someone he had earlier tried to recruit. (The suits were settled in March.) Carpenter is praised for seeing ahead of the curve, for being a very smart marketer. No one disputes that she is demanding and competitive. "One thing we loved about her is she'd do whatever it takes," says one ex-employee. She began iVillage, along with cofounders Nancy Evans and Robert Levitan, while working as a consultant for AOL; previously, she headed up Q2, the higher-end channel of QVC, Barry Diller's home shopping channel.

She also was president of Time Inc.'s Time Life Video and Television division.

Earlier in her career she worked at American Express, but says it didn't suit her because it's "a very slow, traditional company." Carpenter, a former Outward Bound instructor and avid athlete, once said that tennis wasn't her game because it put her to sleep. She sets high goals, saying her years in the mountains convinced her that people can usually go further than they think. She can yell, and if she's angry at you, "you will feel it coming off your skin," according to one ex-employee. She wants very much to win. With her quiet voice, Carpenter is not a charismatic speaker, but she is compelling; at a recent speech she was introduced as someone who "could have sold meat to a farmer."

"She is a remarkable evangelist," says one ex-employee who saw her give pitches to investors. "She's someone who makes you feel like you want to jump aboard her vision."

She recruits aggressively - she once showed up at an executive's new job and offered him a lift home, during which she and cofounder Evans persuaded him to come to iVillage. But Carpenter can also be manipulative, people who know her say. As much as she can make someone feel close to her, she can make people feel used, or in and out of her inner circle seemingly overnight. A joke among a handful of iVillagers, recalls one woman, was "iVillage.com: Where only one citizen really matters." Some stories about her or the company seem apocryphal; one has it that after a reorganization, people found out they were fired if their names weren't on the new org chart. "That's ridiculous," says Carpenter.

Both men and women feel Carpenter is regarded more harshly than a man would be.

Of course, her critics would say she is simply more difficult; other female CEOs don't have the same image problems as Carpenter. But she also stands out.

As one industry watcher puts it, she's not just a woman, but a sexy woman. She told Women's Wear Daily that she preferred to wear pink when meeting with VCs because "they want us to look creative." She is a single mother who says she is not a feminist and thinks men are "fabulous." "When there's an attractive woman involved, people want to make something more scandalous," says Cynthia Schmae, a former employee. "If she were older and ugly and had five kids and was fat, it wouldn't happen." Carpenter adds she believes gender bias is involved. She says she is proud of her ability to make tough decisions and had no choice but to be demanding while trying to keep the company alive. "Without her leadership skills, we wouldn't have gone public," says Carol Velez, a four-year iVillage veteran.

Carpenter also acknowledges that iVillage has gone through intense periods of growth - it now has 420 employees - that posed a strain, saying one of her few regrets is not moving to a better office space sooner. She insists that even ex-employees she let go write her and say thanks for the experience. The claim strains credibility, but Carpenter knows how to tell a story. "Would [investors] like to turn me in for a mushier model? They would say no," she says. "I could go down the list of great CEOs; I'd be shocked if you couldn't find some significant minority of people who said they were difficult. It is not a job designed [for those who want] to be most popular."

Whatever the reasons, it is a fact that iVillage is short on goodwill. That could make it harder to weather any missteps. The company was once a poster child for the wild ride of Net stocks; on the day of its IPO, its shares soared past the $24 offering price to close at $82, and subsequently climbed even higher. Now, Carpenter talks ruefully about how iVillage has become, unfairly in her view, the poster child for turnover. Its stock price has been so hammered that the recent industrywide slide may, in a perverse way, have offered good news: finally, more company in the disappointing-stock department.

She gets defensive over the press' focus on what she calls "my traits," instead of on the stats she says tell the story of iVillage's success.

"It's the fact that we have so many metrics, not just one," Carpenter says testily, citing, for example, iVillage's revenue per thousand pageviews, which in fact leads the industry. "And you know, if the CEO isn't responsible for that, who the hell is?" But in the current environment, revenue per thousand pageviews is less conspicuous than red ink. If the company has done well at raising money, it also has been good at spending it. Its losses in 1999 topped those in '98, though the company attributes a significant portion to amortization related to acquisitions. It also said last year that it would spend $28.5 million on a marketing campaign. "It was a bold move," according to one employee. "It was the smartest thing we did. We landed numerous multiyear sponsorships."

But, the employee adds, "that's when the stock price changed. That's when the feeling out there changed." In the last quarter, iVillage's revenues reached $20.8 million, triple the amount of the same period a year earlier. Losses were $25.2 million, also higher than the $17.6 million a year earlier, but lower than expected. "The performance of the company in the last year has been really underappreciated by investors," says Jordan Rohan, an analyst with Wit SoundView. "It's moving strongly toward profitability; costs are under control."

But Rohan adds he is "nervous" over word of two executives leaving in so short a time. What's more, he questions iVillage's reach, skeptical that most women want to get their content from a women's site. "I just don't know how much patience the market has for companies that aren't profitable now." With $93 million in the bank, iVillage targets profitability for the middle of 2001. "We have a media model," Carpenter says. "It's a five- to seven-year model. Always has been, always will be. The Internet really didn't change that very much."

Her favorite word, it seems, is not profits but brand, something that seems to inspire worship among iVillagers.

Carpenter says the iVillage brand - which she boasts is the only women's brand in the Net's top 20, according to an industry index - will be further leveraged in a range of arenas, from TV to print. But even a bullish board member acknowledges the company is "still in growth mode, and we need to start showing the market that there is a path to profitability." Talk of possible mergers with other companies is in the air; according to the Wall Street Journal, iVillage executives have been in talks with NBC and Cable System's Rainbow Holdings. Another name making the rounds is prime competitor Women.com. The two obviously share a market, though they also have their differences. IVillage says it offers more community, as well as tools for women to, say, reduce their debt.

For its part, Women.com CEO Marleen McDaniel calls herself "Candice's polar opposite," saying iVillage has spent far more on marketing. McDaniel also suggests that her management team has been more stable. (Neither she nor Carpenter would comment on possible merger talks. Carpenter would only say "we have lots of discussions with lots of media companies. So does everyone else.") How long will Carpenter stay at iVillage? She says she is happy to be there and has no plans to scale back her duties, though she believes "it makes sense over time that Internet CEOs evolve into chairmen." Some observers say she is waiting for the chance to make a graceful exit - and, of course, get a good exit package. Carpenter is not the type to leave on any but her own terms, nor to let a little turmoil set her back. She is, attest those who know her, a survivor.

Prickly as she can seem when her often-positive press turns sour, she says she is resilient, and never expected that being in the Net business was a trip to the beach. One thing she learned from the mountains, she says, was the unglamorous side to being a leader. "If everyone's sick, it's the leader who digs the latrine. If everyone's tired, it's the leader who takes extra weight in their pack . . . In real life, being a leader means you take the hardest hits."

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