Barry Diller is not an Internet millionaire.

He's just here to pick up the pieces.

Over the years a lot of journalists have wasted a lot of ink (real and virtual) criticizing Diller and his stance toward the Internet. I've been guilty of it myself. Actually, several times.

But with his latest purchase, Lendingtree.com, perhaps it's time to look for a pattern in Diller's purchases, and some clues you might benefit from in developing your own Internet strategy.

I call the result “Diller's Rules.” They are at the heart of what can best be called Internet “value investing.” And if the sector is ever going to rise again, this is the way it starts, with folks picking up some bargains, and turning a profit on it.

1. It has to be strong offline. Diller has seldom bought “online companies.” Instead he has bought companies that also sell online. Ticketmaster is a great example. Ticketmaster existed before the Web, selling tickets to concerts by phone and through kiosks in record stores. Ticketmaster's Web site merely makes its existing business more convenient. The same is true for Home Shopping Network. Both these merchants were TV plays. Adding Internet commerce to them let them extend their product lines and try out some interactivity.
   
2. Don't invest: Buy control. Barry Diller has never been comfortable in a deal where he didn't control the resulting company. When he has done it, as with Vivendi Universal, he has done it with weak partners, and he has done it outside the online space.
   
3. The only content is a contract. Diller's one mistake in his Internet career was buying Citysearch, a collection of entertainment sites that came along with Ticketmaster. He saw a link between the two that didn't exist. He hasn't made that mistake again. All Diller's Internet purchases since have been of merchants. He has waited until a market has proven itself online. He has learned from his mistake.
   
4. Buy profits with profits. This is another lesson of the CitySearch deal. Diller doesn't buy companies that are losing money. He buys companies that are making money, based on a multiple of their earnings.
   
5. Seek the dominant position. Diller doesn't buy second or third-tier companies. By that measure, Lending Tree is a stretch--it is not the dominant online lender. Fortunately, it's profitable (see above).
   
6. Synergy doesn't exist. Yet another lesson of the CitySearch misadventure. You don't see any grand “USA Interactive” branding banner on sites like Expedia, Ticketmaster, Hotels.Com, or Home Shopping Network. Each one stands alone.
   
7. It's better to wait than to overpay. Diller has walked away from a lot more deals than he has done. In the 1990s this made him the butt of jokes. Now it looks like genius.
   
8. No one deal is a career. Diller has made literally dozens of major business deals since 1995. He has moved in-and-out of major media companies without concerning himself with a “legacy.” He will worry about that when he retires.

Look closely at all these lessons, and consider how they can apply to your own business, or your own career.