HighBeam helps companies sift through information

August 3, 2004

BY HOWARD WOLINSKY Business Reporter

During the Internet boom, the mantra of operators of info-hungry Web sites was that "content was king." And, now, looking at the pending Google initial public offering, many today would say that "finding information is king."

Patrick J. Spain, 53, founder of HighBeam Research LLC, a Chicago online subscription-research service, has a different view: "I am convinced that the big challenge is organizing information." He said Google and Yahoo are great search engines for the masses for no-charge investigating, for instance, the best price for a digital camera. But they provide too much information for many business researchers. He said services such as Lexis-Nexis are great for people in large corporations who can afford the high cost of subscriptions and are comfortable performing complex searches.

So when Spain, 52, left as chairman and chief executive of Hoover's, the popular provider of corporate information, he decided to establish an online service to provide small businesses with the data they need with an easy-to-use search engine at a low price.

Chicago keeps calling to Spain BY HOWARD WOLINSKY Business Reporter Patrick Spain was born in Pakistan and grew up in Turkey and Washington, D.C., but Chicago keeps calling him back. Spain's father, James, former U.S. Ambassador to Spain, was a Chicago native. And Patrick went to the University of Chicago, where he earned his bachelor's in ancient history in 1974. "I studied under [economist] Milton Friedman. His classroom was above mine," he said. After graduation from law school at Boston University in 1979, he joined Northbrook-based Extel Corp., a teletype machine maker, as associate counsel and then moved over to the business side. He said he left in 1990 for Austin, Texas, where he and his old University of Chicago friends -- Gary Hoover, "an economist who actually studied under Milton Friedman;" Alan Chai, and Alta Campbell -- co-founded Hoover's, an almanac containing 500 reader-friendly profiles of companies. Hoover's was having a bumpy ride as the mass market wasn't interested in buying a reference book on business. Hoover's took off in 1993 when America Online began offering it as its only business resource, with corporate profiles and 10 years worth of financial information. After that, the other early online providers, CompuServe, AT&T, Microsoft and Apple, began offering Hoover's. Hoover's launched an Internet subscription Web site in 1995. Spain led Hoover's from an unprofitable private book publishing company with a couple hundred thousand dollars in revenue to a publicly traded, profitable media and business information company with $31 million in revenue. He also raised approximately $60 million of capital from both private and public markets. He left as chairman in 2002 and remained on the board as the company was purchased in 2003 for $119 million by Dun & Bradstreet. He said he returned to the Chicago area because his wife -- Barbara, who grew up here -- wanted to live here. "Chicago is a great place to do business. You can find almost anything you're looking for here. People were hard to find in Austin. The business community here is very supportive. And in Chicago, you have nonstop flights anywhere. That's not true in Austin."

HighBeam charges $100 per year or $20 per month for access via a simple word search to a database of 32 million documents from 2,800 sources, including the Associated Press and other wire services; popular magazines such as Time; photos from Getty Images; trade, business and professional publications such as Fortune and the Yale Law Journal; reference books, and TV/radio transcripts. In June, HighBeam added profiles of 20 million business executives, managers and employees from more than one million public and private companies and non-profits.

Spain built HighBeam by acquiring the eLibrary, Encyclopedia.com and Researchville. The company, which relaunched in January as HighBeam, rang up $5 million in revenue last year. Spain said he expects at least 50 percent growth in revenue this year as the company adds subscribers as well as starts selling ads at highbeam.com. The company has 25 staffers, divided between Chicago headquarters and Philadelphia.

Rather than being charged per item as some services do, HighBeam's customers have unlimited access to information for personal use, including a new search engine to profile corporate executives and information from companies, such as Gale and ProQuest, that primarily serve the library market.

HighBeam claims 40,000 subscribers, and about 40 percent are small or home businesses with five employees or fewer. Another 40 percent are in medium and large businesses that have corporate authority to spend $100. Another 20 percent are journalists, graduate students and clergymen, who apparently gather research for sermons.

HighBeam has received $4.3 million in venture backing from Chicago-based Prism Opportunity Fund, 1 to 1 Ventures in Stamford, Conn., and angel investors, including the original investors in Hoover's.

"Hoover's was the Wal-Mart of company information. I want HighBeam to be the Starbuck's of online information," Spain said. "HighBeam offers convenience. Our main competitor is Google. Our subscribers can get their answers in a half hour, instead of spending two to three hours at Google."