2/4/2021
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`Those Who Tied Fortune to GeoCities Yell Yahoo! All the Way to the Bank - WSJ
`
`This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit
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`Those Who Tied Fortune to GeoCities Yell Yahoo! All
`the Way to the Bank
`
`By Kara SwisherStaff Reporter of The Wall Street Journal
`Jan. 29, 1999 1201 am ET
`
`Last spring, Thomas R. Evans was nervous about leaving his longtime job at the top of a
`powerful Manhattan media company for an Internet start-up near the beaches of
`Southern California. So he talked to his boss, real-estate and publishing tycoon Mort
`Zuckerman.
`
`"I was wondering if this whole Internet thing was real and sustainable," says Mr. Evans,
`then publisher of the Atlantic Monthly and U.S. News & World Report. "I wanted his
`blessing in a way."
`
`Virtual Payoff
`
`Mr. Evans got Mr. Zuckerman's nod -- and a lot more. You know the drill by now (though it
`may not be getting any easier to hear). He became chief executive officer of GeoCities , an
`electronic casbah of about 3.5 million Web sites, and helped lead its initial public offering
`last summer. Then Thursday, Yahoo! Inc. agreed to buy the young company for about $5
`billion in stock. It means the value of Mr. Evans's stock options soared by 65% Thursday to
`a dizzying $200 million.
`
`That's some kind of money for nine months' work. After you're done banging your head
`on a wall, consider that members of the new financial elite in Silicon Valley are being
`created in less time than it takes for a kid to finish his first-grade year. That puts oil, real
`estate and finance magnates to shame. Mr. Zuckerman, for example, spent a lifetime
`building his $1 billion financial empire.
`
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`Asked how he was doing Thursday, Mr. Zuckerman says: "Not as good as Tom Evans."
`
`Mr. Evans, who commutes between GeoCities' Marina Del Rey, Calif., headquarters and his
`home in New Canaan, Conn., is quick to point out the ephemeral nature of his wealth. He
`must wait six years for his options to be fully vested. And his net worth could evaporate if
`Yahoo's highflying stock sinks.
`
`"It does not seem real, because it is not real, because this is based on the long term and is
`dependent on where this whole industry is going," says Mr. Evans, 44 years old. "Anyone
`coming into this industry assumes a certain amount of risk because no one really knows
`how it is all going to turn out."
`
`Litany of Lucre
`
`It has turned out well so far for the new moguls at GeoCities. According to public filings
`the company made last summer, the biggest individual winner is co-founder and
`Chairman David Bohnett, 42, who owns about three million shares outright, now worth
`$367 million, based on Yahoo's closing price Thursday. Mr. Bohnett insists he is
`overlooking that bit of extra money. "I do not see this as a financial event," he says. "And
`we did not start this company with money in mind."
`
`Chief Technical Officer John Rezner, 35, who worked nine years for aerospace company
`McDonnell Douglas Corp. before co-founding GeoCities, holds 827,000 shares worth $103
`million.
`
`The management team that came in with Mr. Evans last year -- taking over from Mr.
`Bohnett to help with the IPO -- is also well-situated. Chief Financial Officer Stephen
`Hansen, 42, who formerly held the same position at Universal Studios Hollywood, has
`options for about 600,000 shares of stock, which would be worth $74.7 million at current
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`prices. Michael Barrett, 36, advertising vice president and former online executive with
`Walt Disney Co., has options for 280,000 shares, worth about $34.9 million.
`
`There are, of course, all kinds of gnashing of teeth over whether the Internet
`entrepreneurs deserve such riches. But obtaining great wealth through luck or artful
`maneuvering is nothing new in American business history. Take the stock manipulators of
`the 1890s and the leveraged-buyout artists of the 1980s. It may be some consolation that
`GeoCities' founders can claim that they developed something that is used by many people.
`In its December Web-traffic report, research firm Media Metrix says the "GeoCities.com"
`Web site ranked third, behind America Online Inc. and Yahoo, with nearly 19 million
`different visitors.
`
`Mr. Bohnett says the company was born from a "passion for giving people a chance to
`speak up." Founded in 1994, GeoCities was one of the first Web-based communities, where
`users post individualized sites to express themselves.
`
`Dubbed "homesteaders," these customers create the bulk of the content on GeoCities.
`Their Web pages are organized into "neighborhoods" of personal interests and hobbies,
`such as personal finance or motorcycles, and monitored by a network of volunteers.
`
`"My goal was to stake out a broader territory and create a community of interests, just in
`the same way Yahoo was helping people find their way around the Web," says Mr. Bohnett,
`who led the company in a variety of top jobs, including chief financial officer, CEO and
`president. "Then we were going to monetize that base of users as the business model
`emerged."
`
`That model for profitability hasn't yet arrived, in part because the company spends
`heavily to increase its market share. Thursday, it announced a net loss for last year of
`$18.2 million on revenue of $18.4 million.
`
`Mr. Evans, a dark-haired man with a preppy demeanor and razor wit, has plenty of
`experience building businesses. He worked his way up in Mr. Zuckerman's organization
`from sales and advertising jobs, and eventually served as president and publisher of
`several magazines.
`
`After being approached several times about new-media positions, Mr. Evans says he
`decided to jump to GeoCities when the importance of the Internet became clear to him. "I
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`think that by the time I really took a look at it, the whole sector had matured and gotten
`really interesting for those of us in the traditional media companies," he says.
`
`While Mr. Evans is loath to discuss the valuations of Internet companies, his former boss
`Mr. Zuckerman doesn't dodge the opportunity to be philosophical about Web mania.
`
`"It's like they said in high school: 'Boys will be boys and girls will be girls,' " Mr.
`Zuckerman says. "I don't want to change anything, I just want to get in on it."
`
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