LookSmart
From Wikipedia, the free encyclopedia
| LookSmart | |
|---|---|
| Type | |
| Founded | 1995 as Homebase |
| Founder | Reader's Digest |
| Headquarters | San Francisco, California,  United States |
| Website | http://looksmart.com |
LookSmart NASDAQ: LOOK is an online advertising and technology company headquartered in San Francisco, California. It owned an internet directory, Wisenut search engine, Furl social bookmarking website, Find Articles premium content search, and Net Nanny desktop parental controls software. It sold most of these assets in the last quarter 2007.
LookSmart was founded by Australian husband and wife Evan Thornley and Tracey Ellery in 1995. They both served as senior executives of Looksmart, but are no longer executives or on the Board of Directors of the company.
While LookSmart was historically a "directory" of websites, relying on both editorial staff and the Zeal community directory, this ended with the closure of Zeal in 2006.
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[edit] Early history
LookSmart was founded in Melbourne in late 1995 (it was originally called Homebase) and was majority-owned by Reader's Digest, who had aspirations to develop a female- and family-friendly portal to supplement their legacy magazine business. After leadership and strategy changes at Reader's Digest, the company was bought back by founders Thornley and Ellery, along with Martin Hosking. During 1997, the company sought venture capital funding, and on several occasions came close to the financial brink. Venture capital funding from Australian and US sources was obtained in 1997 and 1998, and the company relocated its head office to San Francisco.
[edit] Relationship with Microsoft
Recognizing the difficulty of building a consumer-oriented brand, LookSmart built a new strategy around licensing its search directory to a wide range of portals and internet sites. A significant amount of Looksmart's revenue stemmed from a lucrative licensing deal with Microsoft, signed in 1998, to provide directory and listing services.
[edit] Initial Public Offering
LookSmart went public in August 1999, as part of the widespread technology boom in Silicon Valley. Their stock debuted at US$12 per share, and reached a high in excess of US$70 in early 2000. Australian venture capital investors such as the CHAMP group (via their fund Australian Mezzanine Investments) made very strong gains on their pre-IPO investment.
[edit] Effects of the Decline of the Online Advertising Market
The company was hit by the "tech wreck" in 2000. As with the rest of the industry, LookSmart lost a significant number of major advertising customers who went to bankrupt in 2000, and was forced to reduce expenditure and lay off a large number of staff in early 2001 to survive.
Evan Thornley and Tracey Ellery had sold stock after the expiration of the "lock-up" on company officers after the IPO, but suspended their stock sale program in 2000 once the stock price went below the IPO price of US$12. They resumed their stock sale program in 2004.
[edit] 2001 - 2003 - The Microsoft years
After major cost reductions in early 2001, the company chose to focus on its relationship with Microsoft, and in particular, the development of a paid listings business. LookSmart's listings and licensing business, both dominated by a contract with Microsoft, quickly became its major source of revenue. In 2002, the company became profitable.
In mid 2002 Evan Thornley announced his intention to return to Australia and resigned as Chief Executive. At the time, there was division on the Board over the process to appoint a new CEO and as a result 3 directors resigned from the Board in 2002, and new directors were appointed.
In 2002, LookSmart also changed its previous "submit a site" model where businesses could pay a fee to have their site listed in the LookSmart directory, and adopted a pay-per-click model. This led directly to a class-action lawsuit, which was settled in September 2003 by LookSmart offering free clicks to businesses whose websites had been listed under the previous system.
A number of internet companies, including LookSmart, were affected by state and federal government action in the United States against internet gambling sites. All major search engines were involved in an inquiry by the US Attorney-General, and subsequently LookSmart and all other major search engines agreed to cease accepting text advertisements from internet gambling companies.
[edit] New strategies after the end of the Microsoft contract
In late 2003, Microsoft announced that it would not renew its contract with LookSmart, which at the time accounted for over 70% of LookSmart's revenue. As a result of the company's dependence on this revenue, large scale sackings and redundancies occurred, including the closure of all non US operations, all of which were unprofitable.
Furl, founded by Mike Giles in 2003, was purchased by LookSmart in September 2004 [1].
Evan Thornley stood down as Chairman in May 2004 and was replaced by Teresa Dial, a former CEO of Wells Fargo. In May 2005 Evan Thornley and Tracey Ellery announced that they would not stand for re-election to the Board of Directors at the conclusion of their terms in June 2005.
A new US-based CEO, David Hills, was appointed in October 2004, and added several new executives and attempted to diversify LookSmart's revenue streams while still continuing to post losses similar to those from the Thornley era.
On 28 March 2006 it closed the volunteer-built directory Zeal.
In June 2007, Chief Financial Officer resigns to spend more time with his young family. Stays on until a replacement is found.
In July 2007, LookSmart sold their Grub search crawler to Wikia, Inc..[1] for $50,000.
July 26, 2007 CEO David Hills resigns. Company says D. Hills left to start his own business. Board Chairman Ted West assumes interim CEO duties.
Some of the building that houses Looksmart was leased to MySpace in late 2007.[2] The LookSmart sign was removed outside the office on the weekend Dec 15th of 2007 and replaced with a new one.
