Searching for success

Robert Davis would love it if the business "lifecycle" for Lycos, Inc. lasted a year. Even six months would be a luxury. <br><br>But in the supercharged world of Web-based companies, the "next best thing"

Monday, April 3rd 2000, 12:00 am

By: News On 6

Robert Davis would love it if the business "lifecycle" for Lycos, Inc. lasted a year. Even six months would be a luxury.

But in the supercharged world of Web-based companies, the "next best thing" usually lasts only three months.

"We need to adapt our services precisely and as rapidly as possible in order to stay competitive," said Davis, a founder, president and chief executive officer of the Waltham, Mass.-based Internet services company.

Founded in June 1995, Lycos was one of the first "search engines" on the Internet, designed to let users find information quickly and easily despite the vastness of the electronic research network.

Then, as services such as electronic mail and electronic commerce became more popular, the company grew its Lycos.com Internet navigational tool into the Lycos Network, providing a variety of services. They range from personal Web pages and electronic calendars to financial quote services and the ability to find and purchase products online using a special Lycos Mastercard.

The Lycos Network was built largely by acquisitions of sites such as Quote.com (investment information) and Gamesvilles.com (interactive entertainment). It has created international alliances with other media services companies so users in Latin America, Canada, Europe and Asia have easy access to its network.

It's closest competitor is Yahoo!, Inc., based in Santa Clara, Calif. And like Yahoo, Lycos is still independently owned, though in 1999, Lycos announced a merger with USA Networks, owner of several cable television channels. That deal, however, fell through soon after it was announced.

In April 1996, Lycos, Inc. went public and is traded on the Nasdaq exchange. The stock closed yesterday at $69.1875, down $2.4375.

About three-quarters of Lycos's revenues are derived from advertising. The rest comes from e-commerce agreements with companies such as Barnes & Noble and AT&T, and licensing agreements with Microsoft and Bertelsmann, a German media company.

Despite increasing revenues each year, like many fast-growing Internet companies it has yet to turn a profit. In 1999, it posted annual revenues of $136 million and a net loss of $52 million.

Davis, 43, joined General Electric after graduation from Northwestern University. He went on to sales and marketing positions at Wang Laboratories. He arrived at the Lowell, Mass., company in 1982, when it was one of the dominant computer systems manufacturers.

He left the more-traditional business world in 1992 to join another computer start-up before becoming Lycos's first employee in June 1995.

The much-less-structured environment of a swift-moving start-up is "radically different" from more established companies, he said.

"The Internet and its subsequent developments have redefined the speed at which we should act," he said.

Another new phenomenon to be capitalized upon is the technology that enables Web companies to customize offerings to virtually all of its customers.

In 1998, Lycos began a marketing campaign using a Black Labrador retriever dog and the words "Go Get It," to help create brand awareness. Not only was it quite successful in advertising that Lycos users could go anywhere or find anything they needed, said Davis, it has come to symbolize the company's key goal.

"In the real world, a dog is your best friend, it will be there for you, it will go anywhere for you. We are trying to establish that sense of loyalty with Internet users," he said.

The latest Lycos strategy to help achieve that goal is to offer free Internet service.

Many computer experts point out that fax machines did not achieve their ultimate value until millions of businesses and individuals owned their own machines. That is probably the case for Internet service companies like Lycos.

"With free access we are moving to expand the number of people using basic Internet services, because the more users there are, the more people there are to use our network," said Davis.