Looking for consensus on the topic of Internet portals? It's easy. Just start with the term itself: nobody seems to like it.
"The first time I heard the word I was appalled," says Mickey Butts of the The Industry Standard.
"I've never been a fan of the term," says Ian Morris (HBS MBA '95) of Microsoft's MSN.
"'Destination' is the word I like to use," says Ron Sege of Lycos (HBS MBA '83), "because a portal implies something you go through very quickly, and that's not a model for generating revenue or making money, which is something we're all going to have to do."
Terminology aside, what's in store for these broad-based sites that, in Butts' words, provide "search, content, services, personalization, transactions, everything but the kitchen sink"?
At the Cyberposium panel "The Future of Portals in a Broadband World," Sege, Morris and moderator Butts were joined by Yahoo!'s Elizabeth Collet (HBS MBA '96) and iVillage's Lisa Chen (HBS MBA '98), to answer this and other questions about the portal and its close cousin the vortal (or vertical portal) in the current and coming Internet space.
"Users are by and large interested in a wide variety of content and services," said Collet, Director of E-Commerce Business Development at Yahoo!. "The role of the portal is to recognize that 80-20 rule. We are the aggregation that ties together the best of what other people are doing. That role of providing that thin layer of aggregation is still something that's very valuable and that users look for."
"General purpose portals are very much alive and well," agreed Sege, Executive Vice President in charge of development, marketing, product management and operations at Lycos, "but there aren't going to be that many of them as we move forward."
"There's still a need for a place for folks to go and start their Internet experience," he said. "At the same time, there's a growing gap between the have destinations and the have-nots. It's very difficult to maintain a general purpose destination."
Portals to Vortals and Back Again
Instead, said Sege, sites like Lycos, in order to maintain growth, will have to increasingly verticalize. "We have to deepen our content, deepen our commerce, deepen our services," he said, while warning of the importance of carefully selecting those areas where they can best add value: "There's a tendency on the Internet in general and with general purpose portals in particular to boil the ocean, to try to do too many things at once and spread your resources way too thin."
By selecting carefully, he said, "we end up with a much more effective vertical destination within our broad horizontal destination."
But if portals are going vertical, while continuing to serve a wide, horizontal, general interest swath, where does that leave the vortals (or "vertical portals" or "hubs" or "special interest niches")?
"The flip side of that is it's going to push the verticals to add more than they add today," said Morris, who now leads MSN's HomeAdvisor site after several years with MSN itself. "These hub sites are really going to have to deliver solutions. They're going to have to deliver very deep sustainable marketplaces in each niche or the MSNs, the Yahoos, the Lycoses and so on will be able to replicate them. I think that's just a fact of life."
iVillage's Chen agreed. "As a specialized vortal, we aren't competing with Yahoo and Lycos," she said. "What we really consider ourselves as is a solutions-based destination site. Traditionally, we don't look at content as king. We really find that people are more interested in community and a place where they can receive feedback."
"There are a lot of specialized portals out there, but I think a lot of them really don't make sense," said Chen. "It's very hard to go out and invest and develop a brand. It has to make economic sense and also emotional sense," she said, if, from a business point of view, there's going to be a community that offers "the right type of bond between an advertiser, a consumer that visits the site and the company itself."
Let's Make A Deal
Finding the right mix has led to a frenzy of deal-making acquisitions, investments, partnerships, joint ventures among portals and vortals alike. "The Internet is kind of a deal crazy space," said Morris. But, he added, "one of the problems is a lack of focus. To do deals quickly requires knowing what your long-term goals are, what you bring to the table, and really thinking about what the partner brings to the table.
"You can always find a way to partner with someone, but the reality is, who are the few companies that can really add value to meet your long term objectives?"
At Yahoo!, said Collet, there's an "organizational imperative" to let individual units make the partnerships they need without having to get an okay from above. "It's kind of a classic triangle," she said, "where you've got a whole bunch of deals at the base, but they're often very simple and easy ones, and you have fewer of the ones that get very complex and integrated."
Partnerships, she said, allow for nimbleness and speed. Only when a deal gets so complex and integrated and strategic, does Yahoo! begin to think about an acquisition or at least an investment. "We never make an investment for venture capital type reasons. We invest only in order to cement relationships where that's important for the bond, if you will.
"Some of the companies that I think may do best are the ones that are going to that very sparingly, and have their acquisitions and their investments be with small companies that are easy to snap together," she added. "At the very least if they're doing these big deals, they're keeping them very few and thinking about them well in advance because there are a lot of costs in terms of speed and nimbleness."
A Blending of Online and Off
One deal-making trend that gets overlooked in shadow of big deals like the AOL-Time Warner merger, said Morris, is the coming together of online and offline players. There aren't going to be separate online and offline industries in travel or in autos or elsewhere, he said. Instead, "what you're seeing is people coming together. Some of the winners will emerge from online, some will emerge from the traditional space, but all in all you will see those companies coming together via acquisitions or strategic partnerships, because to win you're going to need to be strong across the board.
"There won't be two separate industries because that's not the way consumers think."
Chen, who is Vice President of Business Development at iVillage, sees vertical sites providing a helping hand that enhances the value of online-offline partnerships. "What we're seeing with a lot of partners whether it's advertisers or investors just pure business development relationships is that our offline partners really just want to understand how to get online and what really makes sense," she said. "They have brands that they've been boosting for many years, and they don't want to just go about [building an online presence] by themselves and create something that ends up being embarrassing to the company."
At the same time, said Chen, iVillage realizes that developing and bringing an offline brand online takes time, and some of their offline acquisitions may not be visible at all on iVillage for a while.
Building a Global Portal
Another area for growth, especially for the general interest portals, is international expansion. Here, Yahoo! and Lycos take different approaches.
Lycos, said Sege, has done all of its overseas expansion with the exception of Latin America with joint venture partners. "It allows us to grow faster," he said. "We have access to capital. We have access to local expertise so folks can know how to move into a particular market and how to localize content and services.
"We're very happy with our partnership strategy. Obviously you have a little less control than you do if you own these things on your own, but we believe we've benefited from speed and quality of localization in return for giving up that control."
Yahoo!, on the other hand, has done almost all of its other international efforts on its own.
"Those markets are hard to penetrate," said Collet. "It's hard to get a head around the issues. Also, in a lot of cases they don't have the infrastructure telecommunications, and dial-up, percent of households with computers, percent of households with credit cards so they can do online commerce.
"It's been easy for companies to say the market's not mature enough, it's not time to get in there," she added, "but I think there's some real advantages to being first mover, being in quickly, even if you've built a brand and built a site and there aren't many people coming there yet. I think it makes a lot of sense to lay the groundwork early, which is what we've done."
Portals in a Broadband World
Near the end of the panel presentation, moderator Butts brought the discussion back to the topic of broadband and its implications for portal sites.
"First of all," said Sege, "there are 15 narrowband connections for every broadband one, so it's still a narrowband world. As broadband becomes more prevalent, two things are going to happen: one is that today's Internet is going to go faster, and that's a good thing. And then in certain vertical areas you'll see very, very different kinds of content develop."
Broadband, he added, is not going to turn narrowband content upside down overnight, but "because the demographic [of broadband users] is wealthy, that's going to be an opportunity that's going to develop sooner rather than later."
Collet agreed. "The challenge that everybody's going to face," said Collet, "is the reality that some of the more valuable customers, in all senses of the word, are the ones who are on broadband connections, and yet the vast majority of your audience is not. For the next couple of years, you're going to have the challenge of designing a product that continues to attract the broadband customer while continuing to service the ones that are not there yet."
Additional Resources

Additional Reading
Items marked with the HBS shield ()
are available online only to HBS alumni subscribers to eBaker and to current HBS faculty, students and staff.
"'Grumpy' won't say what's next for Yahoo!, but scenarios abound". Wall Street Journal, March 6, 2000. (Wall Street Journal Online account required)
"Microsoft buoys MSN with record consumer foray". Advertising Age, February 14, 2000.
"Forrester: The portal race is over". Forrester Research Press Release, January 28, 2000.
"Sites crave status as 1st stop to shop". Advertising Age, November 15, 1999.