The Ultimate Guide to Internet Deals

And the momentum just kept increasing. "I remember calling my wife one night and telling her I had to work late," says Guilfoile, who is now vice president of finance and administration at Lycos. "Around 11 p.m., Bob [Davis] called me and said, 'I want to buy a piece of PlanetAll [an online calendar and contact-management system], and we have to get it done by tomorrow morning. There were other investors who wanted in. Bob liked the concept, could see the value, and said, 'Let's do it,' without much tire kicking. I got an email at midnight with PlanetAll's proposal, and by 3:30 a.m., we had a letter of intent to buy 10% of the company. It was on Bob's desk by 9 a.m., and it had been signed by both parties by 11 a.m. I called my wife when we were done and said, 'Since the last time I talked to you, we bought 10% of a company.' " (Late last year, Amazon.com snapped up all of PlanetAll for $100 million -- which meant that Lycos had parlayed its investment into a $10 million gain.)

Guilfoile, a die-hard baseball fan, has a gray metal locker in his office, along with a photo of himself as a 13-year-old batboy for the Pittsburgh Pirates. To plunge into the world of Internet deals, he had to shed some of his CPA conservatism. "My inclination had always been to beat things to death, to analyze everything to the nth degree," he says. "But in this industry, you'll be swallowed up if you do that."

Guilfoile and Dennis Ciccone, 48, Lycos's vice president of mergers and acquisitions, have developed their own style of doing deals. They work quickly, and they trust their intuition. Last year, Lycos bought five companies -- including Tripod, a popular Web destination for college students, and Wired Digital, the online offshoot of Wired magazine. As a result, the company now reaches nearly as many Internet users -- 49% -- as Yahoo! does, and it has been growing at a faster rate than Yahoo!

"With most of these deals, there's not a lot to hang your hat on in the way of financial analysis," Guilfoile says. "There's no stable earnings growth to project into the future. You're not buying oil wells or factories. You're buying an opportunity, eyeballs, and people. That forces you to become a good reader of a company's people and its culture. You're looking for people who are committed and hard-working, who have the same vision and goals as you do. It's not going to work if you're dealing with people who are looking to check out and who see you as their ticket to retirement. The people you deal with have to be builders. Basically, we rely a lot more on instinct than on facts, because facts just aren't available in most cases."

Lycos is always on the lookout for its next acquisition, its next investment opportunity. And manning the lookout post is Dennis Ciccone's full-time job. Ciccone came to Lycos after that company acquired his company, WiseWire, in April 1998. (That acquisition, which involved a lot of office sleepovers on the part of people from both companies, was completed in just one month.) There's no shortage of work, says Ciccone: "I always have 40 to 60 business plans on my desk, and I'm on the road a few times each month, doing tours of promising young companies."

Ciccone has recently focused on e-commerce companies that are developing shopping bots, tools for building Web storefronts, or software to handle back-end transactions. He relies heavily on input from product managers and engineers at Lycos, who provide him with blueprints of their strategy and who advise him on which technologies Lycos should buy rather than build in-house. "Evaluating technology is important, and it requires a lot of input," he says. "We have to ask, 'Does it work, and will it still work when we plug it into the Lycos network and pour on the hits?' " The e-commerce tour has taken him to Toronto and Amsterdam, as well as various cities in California.

Ciccone looks tired as he leans against a credenza in Guilfoile's office. Because the expectations of Lycos's users change so quickly and because the competitive landscape shifts at an equally fantastic rate, Ciccone's universe of potential acquisitions is nearly infinite. "We're not at a stage where we're comfortable with blowing any one off," he says. "You don't want to miss an opportunity. If people email me, I email them back. If they call, I call them back. I can't afford not to, and usually just one phone call can clarify whether or not there's something there."

Bo Peabody, another executive from an acquired company, operates a sort of deal-making skunk works at Lycos. Peabody, 27, came to Lycos in February 1998, after it acquired Tripod, the Web community that he founded in 1992. Lycos, which paid $58 million for Tripod, has given him free rein to seek out tiny, low-profile Internet companies and to shepherd them through the acquisition process. While Ciccone concentrates on big-ticket deals, Peabody finds companies that Lycos can buy for less than $10 million. Such deals are the kind that competitors tend to overlook.