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Hanging out in the hub

Any parent can tell you it's impossible to keep a toddler in clothes that fit. Most tykes outgrow clothing in months, if not weeks.

 
CNET News.com Newsmakers
August 20, 1998, Bob Davis
Hanging out in the hub
By Randy Weston
Staff Writer, CNET NEWS.COM

WALTHAM, Massachusetts--Any parent can tell you it's impossible to keep a toddler in clothes that fit. Most tykes outgrow clothing in months, if not weeks.

The same goes for See related profile: 
Lycos focus: Eyeballs, not image new companies. Just ask Robert Davis, chief executive and president of three-year-old Internet start-up Lycos.

The tot of a company outgrew three offices in the past two years as it expanded from less than 100 employees in 1996 to more than 345 this past July.

Now settled in Waltham, Massachusetts, along Lycos is not a destination where you get information and get out.
It's a destination where you get information and hang out. Route 128, Lycos is feeling growing pains yet again and anticipates another move in the near future.

Much of that growth is from acquisitions. Davis's company has shelled out millions to buy such companies as WhoWhere, Tripod, Angelfire, and MailCity in its attempt to position itself as one of the top players in the market. Lycos is betting almost everything it has on gathering the largest audience share it can. For in the Internet content game, the player with the most eyes wins.

Lycos is heading toward that end. It now has the fourth-largest Web site viewership in the world behind America Online, Yahoo, and Microsoft. As Davis likes to point out, Lycos is only 100,000 registered users behind the mighty Microsoft.

But those competing in the portal market only have a short window of opportunity. Analysts predict the market is due for a shakeout and consolidation. The result: Only a handful of players will make it.

In an interview at his current headquarters, Davis explains Lycos's strategy for success--a plan that includes such attention-getters and marketing techniques as employees painting their cars with Lycos logos, sponsoring NASCAR driver Matt Kenseth, and plastering its brand anywhere that will help make it a household name.

News.com: How do you define a portal?
Davis: Portal is not a term we really use around here. Portal implies an exit or entry point, which isn't what we are. We are more of a hub. That's the term we use. Lycos is not a destination where you get information and get out. It's a destination where you get information and hang out.

How are you trying to position Lycos in the marketplace?
We see ourselves as one of a very small number of portals or hubs. Analysts keep saying the portal market is going to consolidate. I say it already has been for the past three years. A few years ago there were 300 search [engines] and directories out there. Now there are 200. There is only going to be a very small number of key brands and Lycos is positioned to be one of them. We are the youngest of the top three--Yahoo, Excite, and ourselves--but we have come a long way in establishing our position as the second player. We are also the least financed of the companies in this space. We started with only $2 million in venture money put in and have only had one round. We have done a lot with very little. We see only two companies ahead of us now, Yahoo and AOL.

NEXT: Well, color me Lycos!

 

  Stats
Age: 42

Claim to fame: Lycos's first employee, joining at its inception in June 1995.

Education: Northeastern University, M.B.A. from Babson College.

Previous stops: Marketing and executive postitions at GE, Wang Labs, and Cambex.

Concurrent career: Coaching son's Little League team.

Other activities: Serves on the board of PlanetAll, the Boston Chamber of Commerce, and the Massachusetts Interactive Media Council.

Plans for Lycos: Making it the Time Warner of the Internet.

 
CNET News.com Newsmakers
August 20, 1998, Bob Davis
Well, color me Lycos!

Some industry pundits say the portal companies are to the Internet as the television networks are to the airwaves. If that is so, what network is Lycos most similar too?
We're not the WB by any means. We are one of the leading networks. No one else can lay claim that they own two of the top ten Web sites. We can with Lycos and Tripod.

On that same note, as television and the Internet become more closely related, the networks appear to be eyeing their Internet brethren as ways into the market. Disney struck a deal with Infoseek and NBC took control of Snap. Any concern that the television networks are going to take control of this market?
What the networks have proved is they are not successful on the Web. Look at NBC Interactive. I don't think it is the case here, that because you have a media asset, you can translate that into a Web audience.

How has being on the East Coast, while your competitors are in the Silicon Valley, hurt or helped you?
It has been a bit of double-edge sword. Where it has helped us in a significant way is in employee development and growth. We are the largest Internet company in the Northeast and if you don't count AOL as an Internet company, which I don't, then we are the largest in the East. We always have openings in the company not because of attrition but because of growth [and lack of raiding by competitors]. As it relates to deal flow, I'm talking about partnerships, it takes more work because the preponderance of companies are in the [Silicon] Valley. So we need to keep a strong presence out there. But for the audience, it doesn't matter. Ninety percent of the people coming to our site don't know where we are located. I read Sports Illustrated, but I don't know where it is produced.

What are your plans for Tripod, the Web community site you bought earlier this year?
Tripod is a valuable property. It is a separate brand. We are committed to keeping it an individual brand but see great opportunity to leverage the We advertise on every form of media. We even sponsor a NASCAR driver. relationship between Lycos and Tripod. Tripod provides a great sense of participation by users of the Web. It's an overused clich?, but Tripod fosters a sense of community. It is not a community, but a collection of communities, the same as the United States is not a community. What might be a community, however, is a parent group in Oshkosh or kayaking enthusiasts in San Francisco.

Where is your revenue coming from and what kind of growth do you expect?
Our revenue comes from advertising and commerce. As of April, we have 1,100 brands advertising on Lycos or [who] are commerce partners through us, like Barnes and Noble, AT&T, and CDNow. For the commerce partners, we get a piece of the transaction and we get fees for the real estate on our pages. By year's end, the fiscal year ending in July, we will be a $52 million to $53 million company. It is estimated that next year we will be a $100 million plus company. While all of our competitors have had their share of holds now and then, 12 investment analysts rate us buy or strong buy.

How do you gather "eyes," the audience for your site?
Word of mouse mostly, through participating sites, and we brand ourself aggressively. We advertise on every form of media. We do television, radio, major print publications. We even sponsor a NASCAR driven by Matt Kenseth. That has been tremendously successful. You can turn on a NASCAR race and see our logo.

Stock cars aren't the only place to see the Lycos logo. Walking through the parking lot there were a number of cars painted with the Lycos label.
You won't see many corporations where the people that work there are ready to paint their cars the corporate colors. We offered to pay for the decals and the paint if people wanted to do it. We had 33 people take us up on the deal. You can't beat brand recognition. It's like the Nike swoosh. Your brand is your marquee value.

What are you doing internationally?
We have a 50-50 deal with Bertelsmann, one of the largest media companies in Europe. Lycos is now in 11 European countries with local language and local vendors. In Japan, we have a joint venture with Sumitomo Corporation, one of the largest media companies in Japan, and IIJ, Japan's largest Internet service provider. In Korea, we have a deal with LG Electronics, the second largest company in the country.

What markets are still untapped?
Internationally, the market lags North America by a year to three years in terms of usage. We still see much of the United States as untapped. We are still looking at a fraction of the people accessing the Internet and most are doing it from work, not home. The concept of portable Internet, with personal communication devices and so on, is untapped and a great opportunity. The majority of growth is still ahead of the market. We are no longer in the embryonic, stage but we are still a young child as it relates to maturity of the market.

Last question, where did the name Lycos come from?
It was invented by the scientist who came up with the technology for our product. It was originally lycosidae, or wolf spider, which hunts at night. In the early days of the Web, indexing took place after hours because of Net congestion and network backbone lags.