Lycos Europe was founded in 1997 when Lycos signed a joint venture agreement with German group Bertelsmann. Two years later (1999) they opened branches in several cities. In Spain, a delegation was opened that was run by Oscar Sanchez for 4 years, now General Manager for Tech Sales Group.

Bertelsmann group was the content leader in Europe after merging with Lycos - one out of 3 Europeans was a Lycos Europe user. They were overwhelmingly successful and it went public at 24€.

In May 2000, Lycos is bought by Terra Networks (Telefonica) for $12500.

They start buying strategically in Europe. They buy, among others, Swedish ISP Tiscali for 13 million Euros in August 2004, or Spray Network (8 portals in European countries) for 674 million Euros in September 2000, increasing the number of registered users to 8.5 million and 19 million visited pages.

Those were years of incredible success, but the dotcom crisis and bad management brought about its debacle.

At the beginning of 2004, Lycos lays off 100 workers in Europe, leaving 825. In 2005 half of the Spanish staff is laid off. They also offered them to move to other countries, especially Germany.

On the other hand, 34 IT people in France (out of 109) were offered to move to Armenia for 300€ ad 500€ a month - in other words, an offer they could not refuse.

With Telefonica and Bertelsmann group having 32% of Lycos shares (the rest in the free market), they decided to sell their equity share for 200 million Euros (Lycos was worth 10 billion Euros in the market in 2000). Today, Lycos shares are at 0.24€.

After years trying to find a buyer, they have now decided to stop their operations and save face by selling at least their domains and shopping sites.

Former General Manager in Spain perfectly explains the reasons that caused the failure of Lycos Europe. I quote:

“Instead of supporting its subsidiaries with a state-of-the-art technology regarding search engines, management spent their time promoting content with highly qualified and costly programmers and staff. They did not invest in technology or content. R&D was nonexistent. Google took the baton on search engines, and Lycos Europe was never able to find its niche. They wasted money. They wasted money on senseless TV ad campaigns, along with a terrible management, worth of being studied in business school as an example of what not to do.”

“A company cannot have more directors than workers, and this is what happened at Lycos Europe headquarters in Germany. They reached 400 workers, half of them holding a director’s position. I still remember a conference in Palma de Mallorca - of course - where I stood up during a management meeting and, in front of more than 100 directors, I asked how many of them had generated enough sales as to cover their paycheck. Only one stood up.”

I decided to write about Altavista after being contacted by a Failbeta reader, Oliver. In reality, as I mentioned to him, perhaps it is necessary to talk about various search engines which have fallen by the wayside due to the success of the absolute leader, Google. We’ll leave that for later articles. Let’s take a look at the history of this search engine, which was once the largest and most used in the world.

Altavista was created by Louis Monier and Michael Burrows of the company Digital in December 1995. Monier would later work for Google until August 2007, when he left to create the new search engine Cuil. As for Burrows, he later worked for Microsoft and currently works for Google. Google’s success caused an amazing influx of talent from its competitors.

Altavista was hugely successful from the start. It went from receiving 300,000 hits on its first days to 80 million hits a day two years later. In 1996 it became the search provider for Yahoo! and two years later, in 1998, it was bought by Compaq. It was then later bought by Overture in 2003, and this company was in turn bought by Yahoo!. Remarkable.

If we look back a few years we can see what in my opinion was a missed opportunity for various search engines of the time. Before there was a Google Inc. and the Google search engine, when it was only a project of two university students at Stanford, Altavista (and other search engines) rejected the offer of Larry Page and Sergey Brin to provide searches through the use of a revolutionary technology they had developed, PageRank.

It was in March 1998, when Altavista had a 54% share of the world’s searches, that Page and Brin met with Paul Flaherty (architect of Altavista) at a Palo Alto restaurant to offer him access to their new technology for one million dollars. Even though it recognized the superior quality of their new technology, Altavista’s policy of not depending on third parties caused them to reject the offer. The reasons for rejecting it may have seemed logical at the time, and businesses take so many turns that today we could be talking about Altavista as the world’s top search engine and Page and Brin as Altavista employees.

Here we are speaking of Altavista as a search engine. but Altavista has other services with which it has also had problems. This is the case of the flat-rate Internet access the company announced, which was never launched in the UK and which in August 2000 led to the resignation of its general manager.

In 2000, the company’s president (Rod Schorock) left his position, apparently to spend time with his family. What we do know is that the company then acknowledged that the search engine’s hits were plummeting and that the service was not even available. In 2001, it dropped from 14 to 50 in the ranking of most visited websites and laid off 340 workers.

And what has happened to Altavista today? Today’s reality is quite different: the search engine only receives some 250,000 hits a day and uses the search engine of Yahoo!, the same company that, as I told you, once used the Altavista search engine. Ironic.