As head of Ticketmaster Online-CitySearch, a company born in 1995 from the fertile mind of Bill Gross, Charles Conn runs a firm that has grown into a pillar of L.A.’s Internet community

Charles Conn easily blends in with the twenty-somethings streaming into Ticketmaster Online-CitySearch Inc.’s offices on any given workday. Clean-shaven and without a visible wrinkle or gray hair, he sits at an unassuming desk surrounded by scores of other employees at the company’s Pasadena headquarters.

Conn, however, is the CEO, a position he has held since online ticket sales site Ticketmaster.com and CitySearch, which he co-founded, merged in September 1998.

Conn, 39, was a partner at consulting firm McKinsey & Co. in 1995 when Bill Gross, a friend of Conn’s wife from Caltech and later the founder of Idealab, called with a proposition: “Let’s start a company together.”

The result was CitySearch, a company that serves as a local resource on entertainment and lifestyle activities in any sizable city, offering restaurant reviews, hotel listings and other online guides for natives and tourists. As the Internet has changed, the company has adapted, merging with Ticketmaster.com and last year acquiring most of Microsoft’s Sidewalk city guides. Ticketmaster Online-CitySearch is a division of Barry Diller’s USA Networks, which holds 52 percent.

Conn, who has about 1.5 million shares of the company’s stock, is confident that Ticketmaster Online-CitySearch will achieve profitability in late 2001. The company suffered something of a legal defeat last week after a federal judge dismissed four counts in Ticketmaster’s lawsuit against rival Tickets.com over the practice of hyperlinking; Ticketmaster claims that its competitor is damaging its business by making online links deep within its site, where users aren’t exposed to the advertising on Ticketmaster’s home page. Conn dismissed the ruling, saying the six most substantive claims on the suit are still going forward.

Question: What was the mission of the company when it was founded, and how has that mission evolved?

Answer: Ticketmaster.com and CitySearch started at around the same time, the summer of ’95. Bill Gross and Jeffrey Brewer, who now runs GoTo.com, and I started CitySearch.

As you looked around at all the sites that were popping up in 1995, they all played off the virtual community and global communication aspects of the Internet. There was nothing, though, that helped people get more out of their own community, the places where they spend their time and money. The Web had not been unleashed on that group of folks.

We wanted to leave behind the old models of Yellow Pages or even entertainment guides, and wanted to create a rich database of information about what was occurring, tailored to you and your needs.

Q: How has that changed?

A: Now we also help you get things done. Now we have the tools so that once you have information, you can take action. If you find a game you want to go to, we’ll get you a ticket. Once you’ve found a restaurant, we’ll get you a reservation. That’s something that’s just starting now. Once you find a place you want to visit, we’ll get you a hotel reservation. We can even help you get a date to go mountain biking. The increasing maturation of the Web allowed that to happen.

Q: How much autonomy do you have, as a unit of USA Networks?

A: We have quite a lot of autonomy. We’re 52 percent owned by USA Networks and 48 percent owned by the public, as a publicly traded company. We have a really good arrangement. We get a lot of assistance and support from USA Networks. They’re very good in the deal-doing, the M & A; area. They’re sophisticated with regard to partner relationships with other media companies. And yet we don’t really operate like a division. We operate like a public company. We’re able to move quickly, but we have good support from our corporate parent. The communications are frequent. The senior team here is in communication with the senior team at USA Networks, usually on specific projects, such as, “How is it going with X, Y and Z?”

Q: The popular Internet model has gone through so many transformations, from content supported by advertising, to e-commerce to business-to-business. What business model is ultimately going to work?

A: The fads of the Internet should be regarded as fads of the Internet. There’s plenty of good B-to-C (business to consumer) ideas, I’m sure there’s good B-to-B (business to business) ideas. The idea that somehow it’s only B-to-B now is just as silly as thinking that push technology remember that? was going to take over. But that didn’t happen. We think that businesses that combine and integrate content, commerce and some notion of community are the ones that are more likely to be successful and to be good businesses with high margins.

Q: So many Internet companies are drowning in losses. Your company’s annual report shows a loss of $121 million for 1999. How are you planning to turn a profit by your late-2001 goal?

A: Two out of our three businesses are already profitable, ticketing and the personals. The main thing we need to drive through to profitability right now are the city guides. They’re important because they act as the platform for all the other vertical transactions. They’re what we use to foster ticket sales, reservations, people meeting each other.

Most of our spending is on opening up new city guides and the people that are required to operate those. Last year was a big year of expansion for us; we opened or acquired 20 new cities. And we expense almost everything, as opposed to capitalizing. This year, we’re seeing a nice trend where we can reduce our losses as those city guides ramp up their revenues while keeping costs pretty close to fixed. That’s what economists call operating leverage.

Q: What’s the easiest way to get tickets to events these days? Is it the Internet?

A: Some people say it is. You can do it in the comfort of your own home and you don’t have to deal with as many busy signals, although you can get the equivalent of a busy signal. We try and make it equivalently fair between all of the mechanisms, so people in the outlets aren’t disadvantaged over the Internet or the phone. There’s a reason for that. People purchasing in the outlets are often teen-agers without credit cards who are paying in cash, and those are really important fans. You want to make sure they have access, too.

Q: The company’s stock has been on a wild ride, from a 52-week high of $47.38 to a low of $17.88 to a current price around $28.

A: Up and down, yeah. It’s hard to believe that it’s people responding to anything in particular, because our results have been consistently good. We were way, way over analysts’ expectations in each of the five quarters we’ve been public. Last quarter we did particularly well, at $36 million (in revenues) for the quarter and $105 million for the year. That’s about 100 percent more than what was expected at the time of the IPO; at the time of the IPO, it was expected that we’d do $50 million to $60 million.

I think the up and down of the market has been relative to broader Internet trends. People go hot and cold on Internet companies. It may also be that we don’t have too many comparables. How many other public local portals or networks are there? There’s none. If you look at national navigation sites, there’s many examples, so you can compare them, We’re confident that if we focus on building a real company with real economics, the market will figure that out over time.

Q: So where does the company go from here?

A: This year’s theme will be making sure that we’re on every device. Our kind of information is perfect for PCS phones, PDAs like the Palm Pilot, anything where you’re naturally mobile. What are the kinds of things you want to do when you’re out and about? When you’re going to a new city, you want to find out what great restaurants to go to. You’re out with your kids and you want to find out what kids’ events are happening. You’re driving by an Italian restaurant and you want to know, “Is that a recommended place?”

We’ve got deals with Palm Pilot and AvantGo and Nokia. This year’s theme is that we’ll have tailored original content on what’s happening in your city, transactional tools to get things done including access, and it’ll be on every device.