You'd need a pretty big black book to catalogue the Web's millions and millions of addresses - it's a good thing there's Lycos. The man responsible is Michael Mauldin, who developed the technology for the Lycos search engine while he was a researcher at Carnegie Mellon's center for Machine Translation. A year later, in 1995, Microsoft and the Library Corp. licensed the technology and in June of that year CMG@Ventures took hold of the exclusive rights to it. Lycos, Inc. was formed and Robert Davis was named president and CEO. In April 1996 the company went public with a $177 million IPO.

Not like the rest

Sound like your normal Silicon Valley Internet story? Not quite. Unlike its major search engine-driven web counterparts, which are all headquartered on the West Coast, Lycos makes its home in chilly Waltham, Massachusetts. And unlike its flashy competitors, Lycos is marked by efficiency (what some might even call frugality) and an emphasis on the bottom line. This strategy hasn't hurt the firm's traffic, though - Lycos lags behind Microsoft by only 100,000 in monthly page views.

Sniffing out surfers

Lycos has used a variety of strategies to keep surfers visiting its pages, including acquisitions. In 1996 the company acquired Point Communications, the publisher of Point Reviews; you might recognize its "Top 5% Web Site" icon, which appears on many web pages. In 1998, the company bought Wired Digital, acquiring Wired's online magazine, HotWired, and its search engine, HotBot. Also in 1998, the company acquired Tripod, a site which boasts the largest number of home page builders, with 3.2 million members. The company believes that its focus on communities, which keep surfers at a site rather than sending them elsewhere, gives it a strategic edge over its competitors. And of course, Lycos is not willing to be left out of the advertising game - the company unveiled a $25 million advertising campaign in 1998 featuring a black labrador called Lycos who loves to "go get it."

Reaching out for deals

While its competitors were making mega-deals, Lycos was slow to join the merger craze. But it didn't suffer for its conservatism. In 1996, Lycos secured its status among the top four web search companies when it closed a deal with Netscape guaranteeing it 700 million referrals a year from the Netscape site. The company also cut a deal German media giant Bertelsmann to create Lycos web sites in Europe. And through a deal with AT&T WorldNet, Lycos introduced its own Internet access service, Lycos Web.

Buying up the competition

In 1998, the company purchased several hot Internet properties, including WhoWhere, Tripod, and Angelfire. The latter two allow users to build their own homepages. By December of 1998, 65,000 new users were signing up with Lycos through these sites each day. Lycos became the second-most visited portal on the Internet, and boasts the largest online community at that point with 5 million members. In 1999, the company claimed nearly half of all Internet traffic.

New and old media meet...

In February 1999, Lycos announced an $18 billion deal with USA Networks that would combine Lycos with a number of USA's online properties, including TicketMaster-CitySearch Online and the Home Shopping Network. The combined entity was to be potentially the largest e-commerce business in the world, and the only global portal site with local content, auctions, and a direct commerce business.

... and then part ways

The merger was not to be, however. Soon after it was announced, Lycos's stock price plunged more than 25 percent. Shareholders were passionately opposed to the deal, contending that USA undervalued Lycos's stock. David Wetherall, CEO of CMGI Inc., Lycos's biggest shareholder, quit the Lycos board and began seeking a higher bid. Finally, in May 1999, the two companies decided to scrap the deal. Though they will not be merging, the companies have agreed to promote each other through joint marketing agreements.

Jumping on the broadbandwagon

As use of high-speed Internet access becomes more widespread, Lycos is joining its rivals in preparing streaming media programming. In 1999 it created a new division, the Multimedia Products Group, to launch its upcoming broadband services. The company will launch its first project, Lycos Radio Network, with the help of Web broadcast syndicator Westwind Media.

An empire in the works

In 1999, Lycos introduced LycoShop, a hassle-free approach to e-commerce comprised of hundreds of vendors including BarnesandNoble.com, CDNow, and The Gap. Applying the "Power of One" concept, shoppers need only submit their personal information once before placing an order at member stores.

Lycos also announced that it would form Lycos Ventures, a $70 million venture capital fund, to invest in Internet startups in hopes they would bear fruit in the form of content, technology, or services. Adding to Lycos's $10 million investment is Microsoft co-founder Paul Allen's Vulcan Ventures.

Gaming

In November 1999 Lycos acquired Gamesville.com for $207 million in stock. Lycos said it would incorporate Gamesville's games into its network which includes the Lycos portal site, Tripod, and Hotbot. Gamesville's audience experienced a 300 percent increase last year, showing that online games are a viable means to reach web surfers.

Give and take in the globalization game

In a blockbuster three-way deal in May 2000, Spanish Internet group Terra Networks SA agreed to buy Lycos in a stock deal worth $12.5 billion, in the process creating one of the world's largest Internet companies with operations in 37 countries. Acquiring Lycos gives Terra Networks access to the more than 30 million Hispanics in the United States and helps it compete in the Asian and European markets. Lycos, in turn, gains Spanish-language content and wider access to Latin America, where Terra is one of the region's biggest Internet providers. The combined company will be called Terra Lycos Inc. Juan Villalonga, who is chairman of both Telefonica and Terra, will head the merged Lycos-Terra. Robert Davis, currently Lycos president and chief executive, will be the chief executive.

As part of the agreement, German mega-corporation Bertelsmann AG, the third-largest media company in the world, agreed to purchase $1 billion worth of advertising, placement, and integration services from Terra Lycos worldwide over five years. Terra-Lycos, meanwhile, will gain access to Bertelsmann's books, music, television, film, and other media content, on preferred terms. This alliance builds on the existing Lycos-Bertelsmann joint venture in Europe, Lycos Europe, of which Bertelsmann will remain a significant shareholder. The deal is expected to close in the third quarter 2000, after regulatory and shareholder approval.