Cmg: The Web Giant Nobody Knows

Forget Silicon Valley's venture-capital powerhouses for a minute and check out the Boston suburb of North Andover, Mass. That's where CMG Information Services Inc. CEO and Chairman David S. Wetherell set up the company's first Internet venture fund in 1995. Now, the little-known investment and holding company's Net startups are coming into their own. Take CMG's 80% investment in America's No.4 search engine company Lycos Inc. It paid $2 million three years ago, when search engines were still being tinkered on in garages. Today, CMG's 30% stake is worth $390 million, and it could go higher if Lycos strikes a widely anticipated partnership with CBS, Time Warner Inc., or another major media company.

That's just the most prominent of CMG's 24 investments, running from the Engage Technologies service, used by Web site operators to collect and analyze user data, to GeoCities, the third most popular Web site, where consumers can set up home pages. When combined, the companies CMG has stakes in rank third in total Internet traffic, behind America Online Inc. and Microsoft Corp.'s Web sites. That has spurred such interest that CMG's third investment fund, which totals $150 million and closes in mid-August, will be the first to include outside investors.