From: Adam Rifkin -4K (adam@XeNT.ics.uci.edu)
Date: Mon Jan 03 2000 - 23:18:34 PST
Got this from
Interesting insights posted by CMGi's CEO David Wetherell to the Raging
Bull CMGI board. Gotta love a day and age where a company's CEO can
"close the loop" by answering investors' questions in a public forum.
The rest of this FoRKpost is to be read in "the voice of Wetherell"...
On b2b (Business-to-Business)
CMGI has been developing and investing heavily in the B2B sector for
many years. Engage Technologies (ENGA) was conceived five years ago and
started 4 1/2 years ago when I hired Daniel Jaye, the current CTO of
Engage. Navisite (NAVI), NaviNet, Adsmart, and CMGI Solutions are
examples of other B2B companies we have started. More will follow in
@Ventures invested in Silknet (SILK) in 1996 and Chemdex (CMDX) in 1997
while both were essentially business plans. We have a number of other
investments in this area, and we have established @Ventures B2B Fund to
concentrate exclusively in this area. We will deploy a unique approach
here, but I am not able to discuss it at this date.
Vision for CMGi's Future
On the B2C front, CMGI will strive to continue to attract more eyeballs,
keep them for longer periods of time, and target them better than anyone
else. This will be extended to other media as other media connect to the
On the B2B front, CMGI will construct an adaptive commerce platform that
will leverage existing CMGI B2B strengths and new technologies to
follow. Our goal is to establish strong positions as the key technology
services and infrastructure provider in a broad array of verticals.
On the Internet infrastructure front, CMGI will continue to build out
NaviSite, NaviNet and Engage globally in conjunction with other
strategic partners with a goal to provide the most intelligent caching,
hosting and bandwidth solutions for the Internet. New CMGI companies to
be announced will complement this.
CMGI will continue to invest aggressively through @Ventures to better
leverage our growing operating companies.
On Becoming MediaMetrix's #1 Family of Properties
With a combination with Lycos, we could have achieved the goal, but such
a combination does not appear to be in the cards. If you take the sites
where CMGI is the largest shareholder, we are number three or four. Not
On Keeping Track of All of CMGi's Businesses
Attention deficit helps. Seriously though, we have over 3000 great
people at CMGI and our wholly-owned companies and a similar number
across our venture investments. They supply a tremendous amount of
The Internet, especially email, is a big help. I get many emails daily
on Internet news, as well as the fundamental metrics of most of our
companies. Also, the deal flow of over 2000 business plans/month from
@Ventures helps us stay on top of what is coming down the road.
On b2e (Business-to-Employee)
Logitech will be enabling multimedia self-publishing for consumer and
business environments. CMGI is looking to deploy this across a number of
our properties. I cannot speak to CPQ's plans, other than what they have
announced publicly. Here, we are working with them to deliver online
services to the B2E (business to employee) users. MyWay.com, CMGI
Solutions, NaviNet, Engage, Adsmart and NaviSite should all benefit from
this relationship. These services will begin to roll out in the first
half of 2000.
On the Advertising Strategy
It is not our goal to sell everything, but it is our goal to enable
sites to better sell everything through Engage, Adsmart, Flycast,
AdForce, Shopping.com and our newly announced acquisition in Germany,
AdTech. We will work with these services and technologies to continue to
improve upon this objective.
Many new Internet technologies will migrate to the US Internet markets
from outside the US. They already are. Wireless Internet appliances from
Nokia and others are transforming the way we think about and work with
the Web. Also, more and more content, products and services from outside
the US will be made accessible in ways we want to see them in the
language(s) we want them.
On Wholly-Owned Subsidiaries
CMGI has no plans to sell any of its holdings in its wholly-owned
subsidiaries. From time to time, we may be diluted by shares allocated
to employees and strategic partners for one or more of our companies.
On Going Vertical
CMGI is going more and more vertical, while continuing to build
platforms for general Internet purposes. We are doing this fundamentally
in the B2B arena, and in the B2C space, this is why MyWay.com was the
first dynamic-HTML online service. It is highly modularized, and thus,
it is more readily customized and personalized. Any business can put
their name on MyWay and integrate their own online applications into
this. This is happening and CMGI Solutions is helping to deliver the
integration and customization.
By adding Engage beneath MyWay, we are making it adaptive, as well. As
time goes on, we believe most Internet services will adapt automatically
to the way you want to see and use the Internet. We believe we are
leading the way in this area.
It is unlikely CMGI will ever develop hardware, but we are working in
conjunction with others to deliver a better Internet experience for a
variety of environments.
No one e-commerce company can sell everything to everybody, as the
applications and content aggregation necessary to insure optimal
customer satisfaction is too great for any one company to pull off, by
far. This makes for numerous opportunities in vertical markets.
We like to invest in e-commerce companies with proprietary content
and/or products, as well as first mover advantage and strong strategic
partners. This enables better defensibility, differentiation, margins
and appeal to customers. A great example of this is Chemdex. They
started with Genentech as a strategic partner, later brought in a number
of others, had a first mover position in the area of life science
products (a $260B market), and developed strong content and online
applications. In addition, they are now leveraging their position wisely
to buy into other market verticals with their acquisition of Promedix
On Internet Stock Valuations
Mr. Mauboussin's work is interesting, but I'm not sure what to make of
it other than to agree with some of the general conclusions. Statistical
analysis can lead to some interesting observations, not all of which are
true. A few companies are bringing up the overall average market cap of
Web companies, but it is interesting to note the median market cap of a
Web company is only $53mm. I find that encouraging, in that it reveals
there is some discipline, afterall, on behalf of the investment
community when it comes to Internet companies - the point of his
Oncology.com is a work in progress, and eventually, its goal is to be
the most comprehensive source of oncology-related content and community.
This is important work, as it holds the promise to help many individuals
and their families who are suffering. Oncology.com probably fits better
with MyFamily.com than MyWay.com, but both could benefit from the
content and community.
On Operating Revenues
We are comfortable with analysts estimates for the present quarter, but
we will not be putting up the kind of increase seen in the last quarter.
First, we consolidated Altavista for the first time in Q1, and second,
Q2 is typically one of slower growth for us. We will see continued
strong growth in subsequent quarters due to organic growth and
As for profitability from our operating companies, we expect to see one
or more of our subs turn profitable in our FY 2001 (begins August 1,
2000). As we expect to be continue to start new companies every year, it
is difficult to forecast when our companies overall will turn
profitable, as we will be starting companies in future years for which
we cannot forecasts the costs and revenues presently.
On CPM Pricing Models
We are seeing average CPM's rise across all of our related properties.
We expect this to continue over the longer run as we see more rich media
ads made possible by higher bandwidth and as ad targetability improves
due to technologies such as made possible by Engage Technologies.
On Realignment of CMGi's Advertising Companies
Yes [CMGi has something planned]. Stay tuned.
I have always said that Engage has the potential of becoming the most
valuable database in the world, and I still believe that. It is
impossible to predict when that may occur. As for the grand plan, stay
As for legislation, we believe that if legislation is to limit the use
of cookies, it will come down in favor of our anonymous approach, but if
not, there are many applications of Engage Technologies, including
enhanced intelligent caching and managing large numbers of simultaneous
user interactions in an Internet environment with millions of network
browser to only accept cookies with your permission. Also, Engage is
developed to only apply cookies automatically on sites that comply with
TrustE's privacy standards. We do not supply Engage Technologies to porn
or other controversial sites.
DCLK has not developed, to our knowledge, the ability to scalably
collect clicks and anonymous profiles. This is the key differentiation
between the two companies. It is a hard problem to solve. Engage's
technologies are applicable anywhere in the world.
CMGI believes anonymity of profiling is fundamental to insuring
individual privacy, while still allowing for effective targetability.
Since DCLK does not provide this capability, and since it is a hard to
develop software to handle the scalability and speed requirements
demanded by billions of clicks per month (eventually per day), we
believe it is an important competitive advantage.
NaviSite will play a key role in our global data center and caching
project. We will deploy both CPQ and DELL servers. The number of data
centers will vary based on partnerships that we are still working into
On CMGi Solutions
CMGI Solutions will be marketed directly by CMGI Solutions to businesses
and indirectly through strategic partners, such as Compaq, PCCW, and
SII. We are always looking for good people though our HR department.
[CMGI Solutions is] growing organically and through acquisition. We plan
to scale this business quickly.
I have met recently with the CEO of MSGI to review opportunities to
collaborate, and I believe there are many. We will continue to search
for ways to make this more of a strategic relationship.
On Internet Appliances
CMGI and many others will derive significant revenues by orienting their
businesses to better leverage Internet appliances. In our case, we will
repurpose content, ad targeting and delivery, and content caching and
delivery to work efficiently with as many network appliances as
possible. These will include telephones, PDA's, pagers and other
consumer and business appliances.
Thus far, Compaq has provided far more value add as a strategic
investor, but despite "Internet time", the Web is a long song.
On Server Farms
More and more, applications will be hosted and served on sets of servers
(server farms), as PC's over time get displaced by network appliances.
CMGI is working to optimize the serving of these applications on server
farms. Engage Technologies is key to this work.
As announced previously, we are planning to add DSL service through
NaviNet this year. We cannot determine at this time when that may be
free through 1stUp or others. That will depend on a number of other
developments, such as the expansion of Engage Technologies in the
marketplace and the continued decline in DSL.
I do not know the numbers off the top to answer [if NaviNet can handle
10 million ISP users in 2000.] I do know we can handle the scale
necessary to be profitable with NaviNet in this year. As for the second
question, I need to check on what we can say publicly here. I have an
email sent out to determine this. Certainly, we plan to be competitive
with NaviNet, and I suspect VOIP is fundamental to being competitive.
On CMGi's Expansion into Asia
We announced a MOU with Compaq and SII, a venture group run by the
Chinese government, to build a consumer portal for China. In addition,
we have a strategic partnership with Sumitomo in Japan, which has
resulted in Engage Japan and Lycos Japan. Furthermore, we are
establishing @Ventures Asia in conjunction with two partners to be
In September, we exchanged $350mm in CMGI at a basis of about
$84.50/share for $350mm of 1186 HK (PCCW) at a basis of about $6.06 HK.
Since then, we have been working on a number of fronts to advance our
strategic partnership, not just in Asia, but elsewhere, as well. Stay
.sig double play!
I hold the belief that targetted ads *are* content. For example, if I like South Park, a targetted ad that tells me new South Park things are available for my downloading from ThingWorld is content to me because such an advertisement is information to a South Park enthusiast like me. -- http://www.ragingbull.com/mboard/boards.cgi?board=CMGI&read=49525
What is evil anyway? Is there reason to this rhyme? Without evil there could be no good, So it must be good to be evil sometimes. -- Satan, "Up There", from _South Park: Bigger, Longer, and Uncut_
This archive was generated by hypermail 2b29 : Wed Jan 19 2000 - 15:03:02 PST