In 1990, Patrick Spain co-founded Hoover’s Inc., taking the reins as its CEO. The company, then known as the Reference Press, started out a money-losing publisher of business information books.
Then Spain, who considered himself a technophobe since he flunked long division as a fourth-grader, discovered the Internet and immediately began to move the company’s content online.
The former telecom industry lawyer made persuasive arguments to Disney , AOL Time Warner
and NBC for the money to kick-start the business. Then, he forged partnerships with financial content distributors including Bloomberg, Dow Jones and Yahoo!
. Eventually, the company grew into an important resource for executives, salespeople and stock traders, and went public. Last year, the firm was sold to Dun & Bradstreet for $119 million.
Now Spain is back. In 2002, along with small group of individual investors, he began gathering assets for a new venture, scooping up eLibrary and Encyclopedia.com from Tucows Inc. The group, operating under the name Alacritude, then bought the Researchville.com domain. And finally, developers put the finishing touches on a new user interface and technology platform that tied together all the company’s assets into a single “research engine.”
Last month, the company launched HighBeam Research (the name of the company and the service). Recently, internetnews.com spoke with Spain about his new venture and the space it operates in.
Q: What niche were you targeting when you began assembling the pieces of what would become HighBeam Research?
I started by asking myself, ‘What is the next opportunity in online world?’ I decided it was research. There was a glaring gap between free search like Google and high-end offerings like LexisNexis and Factiva.
Q: In addition to your catalog of media reports, academic papers and reference materials, HighBeam also offers Web search. Was that engine developed in-house?
No, we use Fast Search & Transfer underneath. We didn’t want to spend money to do that when there are good products already out there.
Q: Who do you envision as HighBeam’s customers?
Anyone doing research on the Web. That includes small business people for whom free online search engines are not suitable. Also, people working in larger companies. Companies are letting employees make independent decisions about the tools they need to help them do their jobs.
Budgets are moving away from centralized librarians in Fortune 500 companies. One way that online (purchasing) has completely taken over is travel. Today’s it’s mostly done directly by employees using Orbitz or other sites, not by corporate travel agencies. The same thing is happening with research — there are fewer intermediaries. That’s the long-term trend.
Q: What’s the revenue model for HighBeam?
We’ll have subscriptions and advertising, which right now is just a trickle. Users can pay $19.95 per month for access or $99.95 for a year. We’re just now implementing keyword advertising on the site; we should be announcing something on that soon. We also have some banner ads up. Some of the initial advertisers are actually the free Web search sites, including Ask Jeeves.
Q: How is the company set for financing?
I bought the assets (of eLibrary and Encyclopedia.com) using my good name and signature. Then I went out to individuals, some of them were original investors from Hoover’s. I also went to Prism Opportunity Fund of Chicago and 1 to 1 Ventures of Stamford, Conn. Overall, we’ve raised $4.3 million.
Q: One of the advantages of being an online business is a lean operating model. What’s HighBeam’s corporate structure?
We have 23 employees. We’ll probably hire three or four or five people by the end of the year, mostly in marketing. Our headquarters is in Chicago and we have Philadelphia technical center.
