Brand builder

Lycos chief executive Bob Davis argues that Yahoo's single-brand strategy is the Web star's Achilles' heel.

By Scott Kirsner

Jan 24, 2000 | Bob Davis has the persistent and unembarrassed lock-stare of a skilled salesman, who will not once in the course of a conversation offer you the opportunity to say no. The chief executive of Lycos manages to be relaxed and intense at the same time, lounging on a sofa in his Waltham, Mass., office, surrounded by trophies representing successful acquisitions and investments -- pristine baseball caps from Tripod, Wired Digital, PlanetAll.

Davis, a native of Boston's working-class Dorchester neighborhood, began his career as a salesman for General Electric before moving on to Wang Laboratories, where he hawked minicomputers to big companies. In 1995, Davis was hired by venture capital firm CMGI @ventures to shepherd to market a Web search technology developed at Carnegie Mellon University.

Davis, Employee No. 1 at Lycos, had never even used e-mail before taking the job, but he quickly acclimated to the emerging world of the Web and began building the Lycos organization, with a strong focus on ad sales. Ten months later, he and CMGI had taken Lycos public, in what was at the time the fastest NASDAQ initial offering in history.

Beginning in January 1998, Lycos kicked off an acquisition spree to expand its reach -- the percentage of the total Internet audience that visits the site -- by purchasing Tripod, a college-oriented online community. After acquisitions of sites like WhoWhere, MailCity, Quote.com and Gamesville, Lycos' reach stands at 45.1 percent (compared to Yahoo's 64.7 percent), and its collection of properties attracts about 30 million visitors a month, putting it behind only America Online, Yahoo and Microsoft.

How do you define Lycos' strategy, circa January 2000?

Our goal in life is to be the most visited online destination in the world. The way we go about accomplishing that is by building a highly differentiated network. You think about where Lycos was two years ago, and we were one of many. We had a search engine, and that was our claim to fame. We were very ill-funded. Lycos had $1.25 million of total working capital, ever, prior to going public [in 1996].

We knew what we had to do. For us, job No. 1 was to establish [audience] reach. And we had a maniacal passion to building reach. It was the only way we could break from the pack. And it was also available, and I didn't believe it would be available for very long.

So we went out and built it. We put ourselves in the pack, as one of the leaders. You have Microsoft and AOL and Yahoo and us. Beyond us, it's a long way off to someone who has reach and really matters.

In April of last year, you pulled ahead of Yahoo. But when you look at the numbers now, they're ahead, and you're ranked fourth. What happened?

Well, Yahoo went off and acquired GeoCities and Broadcast.com.

When you walk into this building, there's a big newspaper article taped to the reception desk that says "Lycos beats Yahoo." Is there some danger in fixating on them, in that you make it a Coke vs. Pepsi thing?

Well, both Coke and Pepsi are pretty good companies. We want to be Coke. We've acquired tremendous amounts of reach. It never hurts to have more, but reach is less the objective now. Where we have a lot of opportunity now is to keep users in the site longer.

When people talk about branding, they talk about two models. There's the Lycos model, of keeping brands like Wired Digital and WhoWhere and Tripod, and the Yahoo model, of acquiring companies and then renaming them Yahoo mail and Yahoo stock quotes and Yahoo homepages. Do you think that your approach is still a valid way to go?

I think it's the only way to go. A multibrand model dominates traditional media. Look at the leaders. Disney operates maybe 30 brands. Time Warner operates probably 60 brands. All of the leading media companies operate a number of products. Why? Because [you] can take individual interest types, segment them -- either demographically or by interest -- and package that and sell it to an advertiser.

A [single] brand eventually saturates. It can't continue to build. I believe very strongly that that is Yahoo's Achilles' heel. They're a great company. They've executed in the marketplace extremely well. But sooner or later, a mono brand just doesn't work. It can't stand for everything for everybody.

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