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LookSmart owns an internet directory, Wisenut search engine, experimental Grub distributed web-crawling project, FindArticles premium content search and NetNanny desktop parental controls software.
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.
Early history
LookSmart was founded in Melbourne in late 1995, and was originally majority-owned by Readers Digest, who had aspirations to develop a female- and family-friendly portal to supplement their legacy magazine business. After leadership and strategy changes at Readers Digest, the company was bought back by founders Thornley and Ellery. 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.
Relationship with Microsoft
Recognising 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.
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.
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.
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.
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, major personnel and strategy changes were called for, including a significant reduction in staff numbers, and sale of LookSmart's international operations.
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 has since added several new executives and continued to diversify LookSmart's revenue streams.
On 28 March 2006 it closed the volunteer-built directory Zeal.
External links
"LookSmart"