CIO Steers Terra Lycos in New Direction

By January 2001, it was crystal clear that my company, Terra Lycos, was in trouble. The online advertising market had completely dried up, and the big e-commerce deals were nowhere to be seen. It was definitely time to try something new. You know the adage, “There is no such thing as a free lunch.” Well, we were going to have to start getting people to pay for their food.

The question was, how?

If ever the requirement for a close relationship between the company’s technology and business organization existed, it was now. The future of Terra Lycos was at stake, and we had very little time to come up with some answers. I had seen these types of situations before, and it was easy to see this becoming a political firestorm as accusations flew about who should have seen this coming and who was to blame.

We were, as Chairman and CEO Joaquim Agut put it, “going to have to change the wings while the plane is flying.” And the plane itself was huge. Terra Lycos operates more than 300 products in 43 countries and in 19 languages and has more than 110 million monthly unique visitors. We operate some of the most popular websites in the United States and are the largest Internet access provider for Spain and South America. Our product teams are distributed geographically in nine different countries and communicate in multiple languages. Some of our most respected, long-established products like Tripod and Angelfire, which provide personal Web publishing services, or Lycos and Hotbot’s search services, were struggling to survive. Advertising was not carrying the load, and we realized that we would have to start charging for those products. Fortunately, we had already tested a direct-sales formula that users had shown they were prepared to pay for. So we had a formula that could be applied to our flagship products.

Changing our business model in midair was going to take clear communication and a lot of trust. Both of those were unknown entities in January 2001. Just three months prior, Lycos had been acquired by Terra Networks S.A. of Spain. Management had spent the eight months leading up to the transaction trying to figure out what the two organizations brought to the table and which was going to be in charge once the deal closed. To further complicate matters, the heads of sales, finance, legal and product management all left within weeks of the merger.

Needless to say, the remaining team had its work cut out. The first thing Agut did was set up a strategic management team that spanned the Atlantic. That group, made up of managers from marketing, sales, finance, product management and technology (myself), began meeting face-to-face once a month in different locations around the world, such as Barcelona, Boston, Madrid, Miami, Monterrey (Mexico) and Rio (Brazil). We also met via video conference once a week. The purpose of those meetings was not simply to establish a common set of priorities and debate open issues but to also build relationships and understand the philosophy of the new company. Such partnerships were essential as we moved from a decentralized fiefdom, where each country or region had its own products and technology solutions, to a more cohesive global entity.

I expanded that team building effort into my own domain, forming a Tech Council comprising the leaders of the technology teams from around the world. We bring the team together once per quarter, meeting in far off places such as Mexico, Peru, Spain and back here in the United States. And we also meet via phone weekly. Once again, we have seen tangible improvements in coordination and cooperation on projects. It is much easier to pull a project together when you have broken bread with every member of the team, especially when you need to coax that last extra effort to hit a tough deadline. In a small gesture of my own, I started taking Spanish classes. That went a surprisingly long way in generating goodwill?I was making an effort to communicate with my colleagues, and they appreciated the effort. I still am terrible at the language, but that is now a point of great humor and helps ease the tension.

I am the first to admit that this has been a long and at times painful road. I was out of the country more in the first six months of 2002 than I was at home, a situation that my wife and 7-year-old son were less than thrilled with. On the professional side of the ledger, arriving at a consensus on how to drive our products toward profitability was not easy. Regional priorities for the businesses were different and in some cases conflicting. The business team in Brazil did not necessarily share the opinion that a pay-for-inclusion search product was more important than their new catalog requirement. Lycos Europe wanted to be the deployment headquarters for Matchmaker, but so did Terra Lycos Brazil. We had to resolve countless such conflicts, too many to list here. Product managers soon learned that they would have to furnish a clear ROI before projects got into engineering.

We also had to spend considerable time finalizing some of the new product specs to the point where the “death by a thousand paper cuts” threatened to overwhelm the momentum of the teams. We finally realized that assigning product managers to particular projects regardless of their geographic location was the only way to get those projects off the collective drawing board. That was different from our previous model, which relied on a more decentralized regional process, and it took some getting used to. Then, in the middle of the whole transformation, we had to reduce the workforce by almost 25 percent. In retrospect, that actually focused the teams better, as we were forced to identify only those products that we knew could become best-in-class and cut resources from those that might not. At the time, however, that caused a significant loss of focus, as staff members spent too much time worrying about politics and lobbying for their specific product.

In the past year, we have relaunched almost every strategic product across the network. We have deployed new subscription versions of the flagship websites and tools for those sites, Internet Access, Angelfire, Anti-Virus, Dating, Domain Names, Finance, Mail, Search, Tripod and many more. These products all launched with excellent price performance. Our user community tells us our products are better than the competition, and we have exceeded expectations on revenue and subscribers. The company ended September 2002 with 2.5 million paying subscribers for access, communications and portal services.

We’re still not out of the woods. Last November, we had to lay off 21 percent of our workforce in this country. We are not yet profitable, but we expect to turn the corner in 2003. And we stand ready to meet the future. Putting the customer first, knowing who our partners are and building quality into every product should guide us through.