Still, in many ways Mr. Nisenholtz felt constrained by the limitation of working for a large company. He recalls:
We weren’t where we needed to be from a performance perspective. We didn’t have the resources we needed to create the necessary infrastructure to get there. But when one works for a big company, you sort of recognize the art of the possible. Given that it was going to cost a lot of money to do what needed to be done, I just didn’t think it was possible in 1997’
The boom in the Nasdaq market and the separation of NYTD from the newspaper organization altered budgetary constraints dramatically. Heavy spending was encouraged by Wall Street and competitors appeared to be making rapid progress.
NYTD invested aggressively in creating a world-class IT infrastructure dedicated to interactive media, one that had substantially different requirements than the IT systems that supported the newspaper operation. Mr. Meyer reflected on the build-out:
NYTimes.com runs on an IT infrastructure that is very different from the newspaper’s Building it required developing new expertise. Because our projects are much smaller in terms of capital required than newspaper projects, it would have been difficult to get them prioritized if we were part of the newspaper. Being separate allowed us to move faster. At the same time, being part of The New York Times Company allowed us to take advantage of the better pricing that the corporation is able to get from vendors.
NYTD developed a bottom-up approach to budgeting. Though most solid ideas for new projects were generated by experienced executives and journalists, ideas for new content and new features were encouraged from throughout the organization. To help generated ideas NYTD constantly reviewed usage data for its website but also encouraged thinking independent of this data. This was meant to ensure ideas were generated that could attract potential customers, not just existing ones.
Promising ideas were assigned to product managers, who developed mini-business plans based on cross-functional input. The plans were then evaluated by the senior executive team, using a combination of loose net-present-value analyses and experienced judgment.
Because of the rapidly changing nature of the Internet market, budgets and forecasts had the potential to change rapidly and were updated monthly. There was lot of guesswork involved, particularly in projecting revenues. The process was still coordinated with the corporate budgeting process, and financial targets were set at the corporate level. However, corporate budgets were based on expectations of much smaller variability and were revised at much longer intervals.
For a while, the rate at which NYTD could invest in new projects was constrained by its ability to hire and train new people. The senior executive team prioritized amongst the proposals that had been submitted.
In late 2000 and early 2001, however, financial resources once again became the primary constraint. Wall Street, in a shockingly rapid change in perspective, started evaluating dotcoms based more on profitability than on revenue growth. Anticipating the pressures this would create, Mr. Nisenholtz initiated conversations with the Company about the possibility of layoffs. Subsequently, the Company made a series of incremental cuts to NYTD’s budget. Two painful rounds of layoff followed in January and in April. As a result, many existing features that were not drawing significant user attention were discontinued.
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