Microsoft, CMGI and Cisco Systems are just a few of the industry players
we've interviewed. Check out the StockTalk archives.
Does eBay have the best online community? Its VP of Marketing thinks so.
CDnow's CEO tunes in to the company's music destination.
Is Abercrombie & Fitch a high-quality American classic? Get its Investor
Relations Director's perspective.
TMF Interview With GeoCities President and CEO Tom Evans
January 6, 1999
With Yi-Hsin Chang (TMF Puck)
Community website GeoCities (Nasdaq: GCTY) provides its more than 3 million members ("homesteaders") with free e-mail accounts and home pages along with page-building tools. The site comprises more than 40 themed neighborhoods -- ranging from Athens (encompassing education, literature, poetry, and philosophy) to Yosemite (hiking, rafting and the great outdoors) -- plus chats, forums, and shopping.
TMF: First of all, who do you see as your biggest competitors, and what do you think sets GeoCities apart from them?
Evans: I think the biggest competitors in the community space to date are people like Tripod and Angel Fire. I think what sets GeoCities apart is a number of things. First of all, functionality. I think GeoCities is the easiest to navigate, the easiest to use. What we've tried to do is bring tools onto the site that make it easy for anyone to be able to build out a homestead and to have a presence on the Web. But as more people get into publishing homepages, the variety of competitors will come from a lot different areas.
I think what really separates GeoCities from other places, in addition to that, is just scale. I mean, with 3.3 million homesteaders and growing by 11,000 per day, knowing that people can come online and find other people who share that kind of interest as well as visitors finding content on thousands of different subjects is something that gives us a huge leg up.
"What we've tried to do is bring tools onto the site that make it easy for anyone to be able to build out a homestead and to have a presence on the Web."
TMF: Do you consider yourself a portal at all?
Evans: It depends on how you define portal. There are search and navigation portals. There are content portals. We are community destinations. If a portal's just a search engine, no, we're not a search engine. But if a portal's a destination, we certainly are a destination portal.
TMF: Would you say that you are the first site that many people visit when they get on the Web?
Evans: There are a number of people who come directly to GeoCities, but I think there are a lot of people who come to GeoCities from the millions of links, the fishing lines in the water, that come from not only GeoCities being accessed through search engines in a variety of places but also from those individual homesteaders who have built their sites who are out there marketing their site and linking to other sites through a number of different ways, either promoting themselves or getting themselves registered on search engines or being part of Web rings and things like that. So there's lots of different points from which traffic is driven into GeoCities.
TMF: How much time on average do members spend on your site?
Evans: When you look at the traffic numbers into GeoCities, there are tremendous numbers of page views -- there's 50 million-plus page views a day that come to GeoCities. About 90% of those are from visitors -- they're not actually members on the site. But 10% of those are the members who are actually either working on their own pages or trafficking their neighborhoods or engaging in chat or some of the community elements on the site.
The visitors come in and look at around seven to 10 pages on a typical visit. And, as I said, 90% of the traffic to GeoCities comes from those visitors, not members of the site, which is in a way why the site and the community continues to grow because those people come in, they like what they see, they're invited to join the community and to build out and, as I mentioned, over 11,000-12,000 people a day who come in as visitors then become members, become homesteaders and build out their own site on GeoCities.
"We're establishing a pretty aggressive affiliate program so that those people who are homesteading on GeoCities can actually make money off their pages, and we'll be announcing that shortly."
TMF: In late November, you announced plans to introduce a new "brand identity." Could you elaborate on this development?
Evans: One of the things when we started our first ever marketing campaign -- keep in mind that GeoCities has grown the way it's grown organically. It's the quintessential Web story: Build it and they will come. We have never spent any money on marketing and promotion or advertising. And in putting together the first ad campaign, we really thought that the brand needed to be something that was very dynamic, that was very inclusive, that was very inviting.
When we looked at the old logo, we thought it looked a little bit staid, a little bit stodgy, and a little bit cold. So we worked with Landor, who's done work with people like AT&T and Lucent and lots of great and big brands -- Coca-Cola. We worked with them to develop the new GeoCities logo that would be launched concurrent with our first ad campaign, which appeared around the 1st of December. And it was really just a way of introducing the company to the masses of people that did not know anything about GeoCities. But as more people are interested in coming onto the Web, and more people are interested in publishing on the Web or having a virtual presence, we wanted that look, that feel, that logo to be very friendly and inviting.
TMF: Are you seeing any results from that yet?
Evans: We have. We've seen increased traffic to the site. We've seen increased membership -- people who are coming in and building out sites on GeoCities. All the metrics that we look at to monitor our business continue to climb, so we're pretty pleased. We've had some pretty good feedback just anecdotally from the investment community, from the membership community, as well as from visitors from having seen the campaign, having heard about GeoCities and coming to the site, and, as I said, either just traffic to the sites or building out homesteads.
TMF: CMG Information Services (Nasdaq: CMGI) and Softbank Holdings are both major shareholders -- together they own almost 60% of the company. Have you benefited from this in terms of partnerships with sister companies such as Yahoo! (Nasdaq: YHOO) or Lycos (Nasdaq: LCOS)?
Evans: I think in a couple of ways. First of all, they were early investors in GeoCities and, in fact, do also exist on the board [of directors], so they are great counsel and great in terms of tapping into the incredible knowledge that they have about what's going on on the Internet and all the different companies in which they're invested. They don't force us into any relationships, they don't push us toward their held companies versus another company we'd want to do business with. What they do the best is they really broker relationships, and they really make introductions. They allow us access to some of the things that they're thinking about, some of the technologies and companies that they're looking at, and it's a great way of being able to be introduced to a lot of different technologies and companies.
So they've been enormously helpful from a strategic standpoint as well as just from a board standpoint. And to the extent that they're both looked at as very smart money in the Internet space, it certainly gives tremendous credibility to GeoCities. When we went out and did the road show launching the initial public offering in August, there was a tremendous reaction from the investment community that because CMG and Softbank and Flat Iron and Intel and Yahoo! were investors in GeoCities that indeed it was smart money. That gave investors great comfort.
"I think everybody will eventually have a virtual presence. Everybody will have a personal URL."
TMF: How do you plan to expand GeoCities -- by adding more neighborhoods?
Evans: I think there's a number of ways that we're planning on expanding GeoCities. As I said, the membership continues to ramp almost organically. One of the other things that we're going to do very soon is introduce different levels of membership. There are people who come into the GeoCities community who either don't necessarily want to build out a homepage or who want to participate in the community in other ways. We're going to allow levels of membership that aren't just for people that are developing homesteads. So we'll continue to grow in that regard.
We also acquired in September or early October a technology called WebRing from a company called Starseed, and what that allows us to do is they had over 66,000 micro-communities and now over a million websites, about 25% of which are GeoCities websites, but it allows us to spread our tentacles and our tools and utility and some of our marketing into other communities for those people who don't reside on GeoCities. So we're launching initiatives that deal with those micro-communities.
In addition to that, we're establishing a pretty aggressive affiliate program so that those people who are homesteading on GeoCities can actually make money off their pages, and we'll be announcing that shortly. As people move from building out homepages that are really based upon the novelty of being able to build out homepages, which is what the early adapters were really into, I think it's migrating toward utility -- those things you can do using a homepage that are useful -- to what will eventually become a necessity.
I think everybody will eventually have a virtual presence. Everybody will have a site on the Internet where they can be located much the way they either have an address or they have a phone number. I think everybody will have a personal URL and not unlike the way cell phones and pagers evolved from a novelty to a necessity. And as we provide the kind of tools, the kind of templates and the kind of functionality that will be available to people to build out, I think that will continue to increase membership. Membership has always generated traffic for us, and that pays off in revenue flow associated with that.
"I think people go to the Internet now not just to be entertained but to do things."
TMF: Are you looking at other acquisitions?
Evans: We're always out looking for, as I said, those tools, that functionality, those things that we really think are beneficial to our membership base and our visitor base, and are going to continue to grow the revenue of GeoCities. But there's nothing imminent that I'm going to tell you about.
TMF: How is your business going in Japan and elsewhere outside the U.S.?
Evans: We are starting a much more aggressive [campaign]. We hired a VP, International about a month ago, and he is starting to build alliances. GeoCities Japan is doing pretty well. The advertising market in Japan is not terrific, so the revenue growth hasn't been -- for anyone in the online world -- what it was anticipated I think a couple of years ago. GeoCities Japan continues to ramp up in terms of membership. We've got I think the third or fourth most trafficked site in Japan, according to the latest statistics. So we're using that as a model for how we can port the GeoCities business internationally. We've got pretty aggressive plans, some of which you'll see realized in 1999.
TMF: Do you think Internet companies are overvalued?
Evans: The answer to that is no, to be honest. Investors are making bets on who the winners are going to be, and the people that come out of a round of consolidation or a period of mergers and acquisitions -- there will be some very powerful and some extraordinarily valuable companies that come out of the next year or so. I think what investors are doing are betting on who those will be.
It's not unlike the automobile industry right after the turn of the century where there were 40 companies, and they either consolidated or grew to a few very powerful, very large companies. I think that's what investors are betting on right now. Again not unlike the [television] network business where you've got four very large, very powerful, very sustainable, and very important businesses, and investors are just betting on who those will be right now.
TMF: Where do you see GeoCities and the Internet as a whole in five years?
Evans: Wow, what a question. To be honest, I haven't the slightest idea. So much has happened in the past year, but I think what has happened at least in the last year or so is that the Internet has been going from being an area where people surf randomly to a place where people seek, and it's gotten much more specific. There are tools that make that happen.
I think people go to the Internet now not just to be entertained but to do things. They want to find information on a variety of subjects, they want to analyze product they want to buy, they want to do commerce, they want to be satisfied in terms of their needs, and I think the Internet is doing more and more, both in terms of functionality and in terms of the kind of information and the kind of content and the kind of commerce that's available just to make it the Wal-Mart online.
There's just so many potential opportunities that it's hard to say. If I had to guess where it would be in five years, I'm sure it would underestimate how vast and how powerful the Internet is.
TMF: I guess we'll see.
Evans: It's a pretty exciting time. I think what we saw just over the Christmas season was a pretty dramatic piece of evidence of just how quickly the Internet has become a real force in the commerce world, and we think that's going to continue. We think that GeoCities will be benefited by that as well.
TMF: Thank you so much for taking the time to talk to us.
Evans: My pleasure. Happy to do so. Thank you.
Got an idea for StockTalk? Who would you want us to interview and what should we ask? Drop us a note at StockTalk@fool.com.
Fools Wanted: Apply Within.