Trading places
Ex-Lycos chief Bob Davis makes the transition to venture capitalist
By Robert Weisman, Globe Staff | May 10, 2004

LEXINGTON -- Bob Davis, sporting an open maroon shirt and sipping from a cup of coffee, is in all-business mode. He leans forward at a conference table in the Highland Capital Partners office and gazes poker-faced at a document handed to him by Steve Kropper, senior vice president at a start-up called Equinox that wants to lower the cost of brokering home mortgages by doing much of the work overseas.

''So Indian outsourcing is the idea?" Davis asks.

Kropper nods. ''The Indians have a deep understanding of how to break down the process into a small series of steps," he says. ''The cost differential is phenomenal. . . . We have six management types in Irvine, three of us here in Lexington, and 350 people in New Delhi."

Then Kropper, who has come to Highland looking for venture capital, begins to describe the business. As he does, Davis peppers him with questions -- about the company's work flow, financial projections, and competitive advantage. But it's clear Davis is focused also on the absence of the California-based Equinox chief executive.

''Why isn't he here?" Davis deadpans. ''Planes still fly from Irvine to Boston, last I heard."

Kropper explains that he has been deputized to talk to East Coast venture firms on the CEO's behalf, that this is merely a first meeting. Ultimately, the session breaks up without a commitment.

If you're wondering what a 1990s Internet entrepreneur does for a second act in the post-bubble era, Bob Davis makes a good case study. The man who drove Waltham's Lycos Inc. to the fastest IPO in Nasdaq history (nine months from inception to initial public offering) has reinvented himself as a venture capitalist. In that role, he plays shrewd investor, executive coach, financial matchmaker, and grand inquisitor, all rolled into one. And the transition appears to be going more smoothly than many, perhaps even Davis himself, might have imagined.

''I got here and realized how much I didn't know about venture capital," admitted Davis, who joined Highland after selling Lycos to Terra Networks of Spain in 2000. ''I was drinking through a fire hose for many months learning this business. But I found I could create value at a number of companies. It was the opportunity to start a dozen Lycoses. . . . Now I'm a venture capitalist. This is what I enjoy doing."

Dorchester-bred Davis, now 47, has always been known as a young man in a hurry, unusually driven and competitive even by the high-octane standards of the technology industry. His sale of Lycos for $12.5 billion in stock, at the peak of the technology boom, was heralded as one of the best-timed deals of the Internet era. (Lycos is back on the market, expected to fetch just $200 million to $400 million this time.) And three years ago, when Davis signed on as a Highland venture partner after a brief stint running the merged Terra Lycos, many presumed the job would be a hiatus until he could found another company to run.

Daniel J. Nova, the Highland managing general partner, said Davis was honest about not knowing initially what he wanted to do next. But over the past few years, Nova said, he has watched Davis gain satisfaction from helping other entrepreneurs build new companies, often in risky technology markets where they challenge established leaders.

''Bob's always been attracted to good risk-reward ratios," Nova observed. ''He's a gamer. He likes to play the game, and he likes to win." Still, knowing Davis as well as he does, Nova doesn't rule out the possibility Davis could run another company some day -- if it was the right fit.

''If Bob came to us and said, 'I've found the next Google and, by the way, I want to run it,' we wouldn't stand in his way," Nova said.

Nova and Davis go back to 1983 when Davis, then a sales manager at Wang Laboratories Inc., hired Nova to sell word processors. A dozen years later, Nova, then a Harvard MBA with the venture arm of CMGI Inc., acquired the Lycos technology, developed by research scientist Michael ''Fuzzy" Mauldin at Carnegie Mellon University in Pittsburgh, and tapped Davis to run the start-up Internet company. ''At the time, he didn't know much about the Internet," Nova recalled.

Davis wasn't deterred by that limitation, nor was he overly awed by the Web-crawling technology at the heart of the company. He recognized that his task would be selling the Lycos portal concept to the millions of computer users then gravitating to the World Wide Web.

''He didn't have too much respect for the technology because he knew that was only one part of the company," said Mauldin, who spent a year as Lycos's chief technology officer under Davis and continued to hold shares in the company after he stepped aside. ''Bob was quite happy to go out and acquire related companies that had good technology, and find good people who could do what I could do better. He wasn't a scientist; he was a salesman. But he made me very rich."

One example of Davis's salesmanship took place in the summer of 1996 when he and Nova were dining at a hotel restaurant along Interstate 495. A patron at the bar was wearing a dark green T-shirt emblazoned with the words ''You let up, you lose." Nova, suggesting the message summed up Davis's philosophy at Lycos, challenged him to persuade the man to part with the shirt. ''I bet him $20 that he couldn't talk the T-shirt off the guy's back," Nova recalled. ''Within 10 minutes, Bob was back at our table wearing the shirt. . . . Today he has that shirt up in his office."

In his new life as a venture capitalist, Davis, who shifts easily from business to back-slapping mode, is clear about his priorities in sizing up investment prospects: ''people, market opportunity, and products, in that order." He is quick to offer counsel to the chief executives of the Highland-backed companies, especially four -- Navic Networks, Performix Technologies Inc., Quigo Technologies Inc., and Turbine Entertainment Software Corp. -- on whose boards he sits.

''I like to bounce ideas off him," said Michael Yavonditte, chief executive of Quigo Technologies Inc., a New York start-up that is vying with Google Inc. in the market for contextual advertising in Internet search. ''He's a no-nonsense guy. He has his views on certain things, and if he feels strongly about something, he'll let you know."

Davis acknowledges having to check his aggressiveness at the door sometimes and restrain himself from micromanaging managers. ''I often have to bite my lip and step back and remember that I'm an investor," he conceded. ''I'm not running this company."

Tough talk on hiring It's lunch hour as Davis arrives at Turbine Entertainment in Westwood, but the only thing he's eating is leftover Easter chocolates from a bowl at the reception desk. As usual, Davis is in a hurry. Turbine, a leader in the fast-growing massively multiplayer online gaming space, is one of Davis's ''portfolio" companies. And he's come to talk with Jeffrey Anderson, its chief executive, about some pressing matters.
Striding down a corridor, greeting a few 20-something employees dressed down in the style of Hollywood or Silicon Valley, Davis enters a conference room and hands Anderson, Turbine's laid-back CEO with shaved head and goatee, four Red Sox tickets for distribution to a reward-worthy employee. Davis then gets down to business, asking about some key hires Turbine is about to make.

''How did that go?" Davis inquires about an interview Anderson recently conducted with a promising candidate.

''Very bright guy," Anderson says without hesitation. ''His experience and background in the sector are spot on."

But as the conversation moves along, it emerges that the promising candidate lives out of state and may be reluctant to relocate. He's proposed commuting to Massachusetts for three months.

''No chance," Davis says. ''We had this problem at Lycos. At some point, you've just got to cut your losses and move on."

Next they talk about overseas distribution of Turbine's game titles, such as the acclaimed ''Asheron's Call" and its sequels. Anderson says some Chinese companies are interested in marketing it.

Davis seems at once interested and skeptical. ''Do we hurt ourselves in any way by focusing over there?" he asks.

''I don't think it's a distraction," Anderson says. ''We can, and have to be, right in the core competencies of translation."

Davis appears satisfied. And within an hour of arriving, he's out the door, heading to his next appointment.
Urban roots Ask anyone who's known him for a while, and they'll tell you Davis got his drive growing up in Dorchester as the youngest of four children. It was a tough neighborhood, and both his parents died by the time he was 20. ''He knows life is short," said Nova. ''His mantra has always been 'seize the day.' "
Davis, who graduated from Northeastern University and got a master's degree from Babson College, met his future wife Rita when he was putting himself through college working at the Star Market in Hyde Park. (They have three children and homes in a western suburb and on Cape Cod.)

He also played softball and became friendly with a group of Star Market co-workers, many of whom he socializes with till this day.

''He was the person who was in charge of the front end, the cash register," said Pat Crossen, now a deputy superintendent at the Boston Police Department. ''I was back in the meat room."

While some venture capitalists like to boast of having the busiest jobs in the world, Crossen said he thinks Davis has slowed down a bit compared to his pace while running Lycos.

Back then, Crossen recalled, when the Hyde Park gang would gather on the Cape in the summer, Davis was being constantly interrupted by phone calls.

''Just the other day, he called me from his kid's soccer game," Crossen said. ''A few years ago, he wouldn't have had time for that."

Robert Weisman can be reached at weisman@globe.com.