RealTime IT News

On the Record with Russell Horowitz

Quietly hovering below radar. That appears to be the never-ending story of Web network operator Go2Net . Even with straight five quarters of profitability under its belt and a high profile minority investor in Paul Allen's Vulcan Ventures, Wall Street appears to barely acknowledge its existence.

Go2Net CEO and chairman Russell Horowitz does a good job of hiding his frustration, but it must be bubbling under the surface nonetheless. After all, he has helped steer his company to consistent profitability, while improving operating margins and posting impressive sequential sales growth in the process. To top it all off, Go2Net appears primed for the long haul with a cash hoard now of over $240 million.

However, Go2Net's valuation still pales in comparison to its more high profile rivals like Lycos and ExciteAtHome . Operating performance aside, Go2Net's lack of widespread name recognition amongst investors, and unwillingness to pull the trigger on blockbuster acquisitions, has kept Go2Net's future plans somewhat shrouded in mystery.

We recently caught up with Russ Horowitz to learn more about his long-term plans for Go2Net and his thoughts on Internet company valuations.

ISR: To start out, it would be easy for most people to describe your company as a portal or a network, but what do you really think of Go2Net as today?

Horowitz: Basically, what we are is a diversified Internet network leveraging our branded Web sites, tools and infrastructure services. What that translates to is the opportunity to have critical mass- in terms of our destination Web sites - and because the primary foundation of each of our sites is a proprietary technology - we take those tools and can license them to partners.

ISR: Right. Let's use the example of Silicon Investor and Dogpile, which are both properties in your network. How do they really benefit from being a component of Go2Net?

Horowitz: There are a couple of elements. A number of our businesses I would characterize as ends in themselves and others are a means to an end. In many cases, they are both. For something like Dogpile, it is a tremendous property in its own right. It's a destination site; it's a leader in meta-search that is a highly profitable and rapidly growing property. By being part of Go2Net it gets the benefit of being part of a larger network and the sales and technology infrastructure that we have.

ISR: Okay, so they're benefiting from the shared resources.

Horowitz: At the same time, when we're looking at doing larger revenue related deals with partners, we can expose them through keywords on Dogpile or perhaps a targeted community like investors on Silicon Investor or businesses with Hypermart. So each one works in its own right, but we get greater leverage by having the diversified properties and being able to apply programs with partners to the network, but at the same time targeting these vertical communities.

ISR: Your acquisition strategy has been very different than the typical portals. Most of your deals have been rather small purchases and vertical focused in nature. Why?

Horowitz: We've been very disciplined in how we've built our business both internally and through acquisitions. The primary focus and fundamental element of our business model - and it's what has led to high profitability - where we now have I believe the second highest operating margins in the industry next to Yahoo! - is that all of our businesses have the element of being built on a proprietary technology platform. Our view is this technology driven business model is the ultimate and that's where the Internet offers unique opportunity.

ISR: So profits and the Web can mix?

Horowitz: We've always been a little bit baffled when people ta