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Sitespecific

Autor Ryan

Founded: 1995 Co-founders: David Byman and Seth Goldstein Market: Early online marketing shop Status: Nonexistent Critical misstep: Got buried in buyout Note to self: Exiting is not a good exit strategy

Lots of Internet companies lay claim to the “shoulda-coulda” title. SiteSpecific is one of the few ventures that deserve it. SiteSpecific helped bring marketing to the Internet in 1995. As one of the first interactive agencies aimed at showing businesses how to use the Net as a marketing vehicle, many thought it would wind up leading the industry.

Seth Goldstein

As the firm gained brand recognition, so did the need to acquire resources to grow. A buyout deal in 1997 with another growing interactive agency – Cupertino, Calif.-based CKS, which later merged with USWeb in 1998 – strangely wound up burying Site altogether. CEO Goldstein sold the 40-employee firm for a mere $9 million in stock, leaving many to suggest that Goldstein was more skilled as a marketing innovator than he was as either a deal-maker or strategist.

Devils lurked in the details: As much as Site’s brand equity had grown during its two years on the market, the buyout left little thought to preserving this intangible asset. (Quick comparison: After their merger in ’98, USWeb and CKS were to relaunch as Reinvent Communications. When trademark complications got in the way, it simply became USWeb/CKS). Even more damaging was the fact that both parties focused on the wrong details during the buyout: making sure networks interfaced, for example, rather than “preserving Site’s successful corporate culture and business approach,” as Goldstein recalls. Most of the Site staff has since scattered, and Goldstein is now an “entrepreneur in residence” at Flatiron Partners, a New York Internet venture capital firm.

Buyouts are inevitable in today’s ever consolidating marketplace; extinction is not. When dollar signs flash, ideas are a lot harder to wrestle with than systems, and companies that want their acquisitions to make to make a contribution to the bottom line need to pay more attention to what they can’t see than what they can. – Tony Seideman

TIME WARNER’S PATHFINDER
Founded: 1994
Total invested: Estimated $150 million
Market: The Web’s first megamedia site
Status: Slated for deconstruction; it has now slumped off the charts.
Critical misstep: Too many to list
Note to self: When assailing new positions, management must always be first into the breech.

Time Warner launched Pathfinder in October 1994 to dominate the Web. At times it seemed the venture would do just that. But corporate infighting and a twisted rewards system ensured its eventual downfall. Taking advantage of a new medium demands dramatic alterations in corporate values, behavior and culture. This only happens when the guys at the top are willing to lead with a sledgehammer in one hand and a .45 in the other.
Inside:
The Startup Economy
Building the Bulletproof
Eating the Fortune 500 For Launch
Adam R. Dell: Fundamentals
Making Your Pitch
Tax Havens: Go For Broke
Esther Dyson: Market Madness
Lessons of the Lost
1 2
Guy Kawasaki: Why Less Is More

In a sense, Time Warner never got outside of its own head. “There was a kind of Time Inc. publishing philosophy where people were rewarded for being politically astute rather than talented. A lot of people who were not politically astute were never rewarded for things they achieved, and so they took off,” says one Pathfinder veteran.

Synergy is a wonderful buzzword. But to get it something has to give. Executives have to be willing to give up a chunk of their turf, but most corporate apparatchiks would rather go under first. “There was a hell of a lot of internal conflict between executives who had their brands and the corporate entity that wanted to control those brands,” says the anonymous vet. The new brand never took off because the old brands that made it up weren’t willing to support it. Meanwhile, Yahoo! – operating without any of Pathfinder’s hard assets – was already light-years ahead.

Time Warner also made the mistake of counting money spent on Pathfinder as losses rather than as what they were – investments in a new medium. “Their burn rate was much lower than other, competing new media,” says former Pathfinder executive Andrew Susman, now president of Studio One Networks, “but it was positioned as losses rather than as investment.” Corporations can tolerate investments but hate losses. Once Pathfinder got a reputation as a black hole, its fate was sealed. – TS

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