Here's a WSJ article on CMGI today
Raging Bull Web Site Gets
Venture Capital From CMG
By JASON ANDERS
THE WALL STREET JOURNAL INTERACTIVE EDITION
The three college students who run the Raging Bull online message forum
have indefinitely postponed their return to school.
CMG Information Services Inc. has taken a
40% stake in the fledgling stock-discussion
Web site the three run, adding it to the
stable of Internet firms it holds an interest in,
including GeoCities and Lycos. CMG owns part or all of more than 25
companies, and has made millions of dollars by selling companies or taking
them public.
Raging Bull is a relative newcomer to the world of financial message
boards, and is still well behind market leaders Yahoo! Finance, Silicon
Investor and Motley Fool. The service went online in September 1997,
run out of a basement in Freehold, N.J., by three students: co-founders
William Martin, 20 years old, and Greg Wright, 21; and Rusty Szurek, 20,
who came on board in February.
Mr. Martin says Raging Bull received inquiries
over the summer from several companies,
including Infoseek, that were interested in
buying the service outright. None would have
let the three retain control of the business. A
spokeswoman for Sunnyvale, Calif., Infoseek
declined to comment.
The call from CMG came in late August, just a week and a half before the
three were to return to college -- Messrs. Martin and Szurek to University
of Virginia, and Mr. Wright to Rutgers University.
"They wanted a business plan. So we pulled an all nighter and wrote one.
We worked about 30 hours straight," says Mr. Martin.
A day after delivering the business plan, he was invited to fly to CMG
headquarters in Andover, Mass., to meet with Chief Executive David S.
Wetherell.
"The meeting was incredible. He told me what CMG was about, and I told
him what our view of the future was. I told him we were at a point where
we didn't want to sell out. It was just too early for anything like that," he
says.
"We really hit it off," says Mr. Wetherell. "We talked about what we have
done to build companies into Web powerhouses, and I asked if Raging
Bull was interested in that."
Later that night, over beer and pizza at Mr.
Wetherell's Andover home, the deal was
done: The three would retain majority control
of Raging Bull, and CMG would bring in a
new chief executive officer to run the company. Raging Bull would also
move into CMG's headquarters in Andover.
CMG declines to say exactly how much money it invested in Raging Bull.
Mr. Martin puts the number between $1 million and $3 million, but
declines to be more specific.
For CMG, the investment is part of a larger plan to develop community
sites on the Web. Mr. Wetherell says he became interested in message
boards in August while on vacation on Martha's Vineyard. He spent a lot
of time exploring online message boards ("My wife is still complaining
about it," he says) and writing to message-board participants. He admits
he knew little about what was available, and hadn't heard of Raging Bull
until he read about it, ironically, on a Yahoo message board.
Mr. Wetherell says he has "dramatic" plans to incorporate technology from
other CMG interests into Raging Bull, and says the site will be able to
profit in ways that its competition cannot. He declines to elaborate.
Mr. Martin says he isn't wasting any time in spending the money. Raging
Bull has made a "substantial" investment in new servers -- Mr. Martin
acknowledges the existing servers had been choked by the influx of new
users. A redesign of the site will be launched soon, along with a flurry of
new features aimed at challenging the competition, including free electronic
mail accounts, real-time stock quotes and original content updated daily.
Raging Bull wrote the software that powers its message boards. Its unique
"ignore" feature, which allows users to filter out posts from other users that
they find irrelevant or annoying, has been a popular selling point.
Still, Raging Bull has a long way to go. It has
been quietly siphoning users from other online
forums, growing to 15,000 users from 5,000
users in the past three months. But it is still
dwarfed by much larger, more established
competitors. The subscription-based Silicon
Investor boasts more than 80,000 registered users, and says it gets about
1.75 million unique visitors each month (users can read messages without
registering). Motley Fool has more than 200,000 registered users.
"There is no doubt in my mind that we can topple the competition," says
Mr. Wetherell. "We will have revenue opportunities that other sites don't.
We can generate traffic to Raging Bull from our other sites. We're
developing things using our proprietary technology to use with Raging
Bull." He declined to elaborate.
CMG has drawn praise from analysts for its string of successful
investments. It bought 80% of Lycos for $2 million in 1995. A year later,
Lycos went public in an initial offering, and today the company has a total
stock-market value of $1.3 billion. CMG has sold much of its stake of
Lycos, but still owns 23%.
CMG recently reported earnings for its fourth quarter ended July 31 of
$31.4 million, or $1.27 a diluted share, compared with a loss of $5 million,
or 26 cents a share, a year ago. The earnings included a $54 million pretax
gain from the sale of some of its Lycos stock, and a $24.3 million pretax
gain on issuance of stock by Lycos.
Mr. Wetherell says he "absolutely" plans to take Raging Bull public in a
few years. Still, he is cautious about drawing any similarities between
Raging Bull and its latest IPO, GeoCities, which raised $81.6 million in its
initial public offering in August. CMG owns 29% of GeoCities.
Meanwhile, as the recent drought in the IPO market shows, rough market
conditions can make it tough to predict when an IPO will come off.
As for the ages of Raging Bull's staff, Mr. Wetherell says he didn't give it a
second thought. "Of all of our investments, this is the single most
enthusiastic group I've run across. I think one of the reasons they went
with us is that we didn't treat them like kids," he says. "I'm not sure age is
so relevant in this market. To some extent, it might be a liability."
Mr. Martin says the deal is still sinking in. "Just a month ago we were
working out of my dad's basement and getting ready to go back to school.
Now we're in the headquarters of a major Internet firm," he says. "It's
pretty unbelievable."
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