The Google of Engineering Content?

 
 
By Anna Maria Virzi  |  Posted 2007-10-01
 
 
 

When Jeffrey Killeen took over as chairman chief executive of GlobalSpec in early 2002, the Troy, N.Y.- based company seemed to be making substantial progress. "It had the potential to become the standard for product discovery, component-sourcing and industrial parts classification," Killeen says.

By end of year, the new CEO promised that GlobalSpec, founded in 1996 to provide a specialized search engine for engineers, scientists and purchasing agents, would have more than a half-million registered users of the company's proprietary database, SpecSearch. GlobalSpec's business model at that point was to build a database of parametrically searchable OEM and distributor catalogs, make them available over the Web, and make money by connecting customers to parts suppliers.

What Killeen didn't mention was that after three years in commercial operation, GlobalSpec still wasn't profitable; it was very small, with only $3 million in sales. That's why Warburg Pincus, a New York-based private equity firm, which had already agreed to invest $20 million in GlobalSpec, had sought out Killeen to join as chairman and CEO. GlobalSpec cofounder John Schneiter would stay on as president and cofounder Thomas Brownell would serve as senior vice president of production and engineering, positions they still hold.

Over the next five years, Killeen would overhaul the company's business model, adding new revenue streams, partnering with vendors that contributed to the company's growth and building GlobalSpec into a thriving midsize company that has become the preeminent online research source for the engineering community. His success and that of GlobalSpec provide valuable lessons to companies seeking to leverage their core strengths for growth and remain highly focused.

Killeen was new to the engineering sector, but had established an impressive track record in the Internet search arena. He had headed up barnesandnoble.com, taking it from a start-up in 1997 with 25 employees to a company with 1,000 employees and $200 million in annual sales by 1999. That's the year it went public, raising more than $500 million. Before taking the GlobalSpec job he served as president of Forbes. com. "When I walked in, it was a fledgling Web site, albeit one with very high potential," he says. When Killeen departed, it had a half-million registered users and was competing on equal footing with CNN.com and other financial business sites.

Killeen and venture partner Warburg Pincus had similar ambitions. GlobalSpec needed a vertical search engine with the scale, robustness and ease of use to hold its own in a world dominated by the giants, Google and Yahoo. But in 2002 the question was how to best accomplish this. That, of course, was the new CEO's challenge.

Next page: Getting Started


GETTING STARTED

In 1996, General Electric design engineers John Schneiter and Thomas Brownell, who had been managing major design and development efforts for jet engines, robotic manufacturing, locomotive controls and the like, met at what is now known as the GE Global Research Center in Niskayuna, N.Y. At the time, engineers and purchasing agents aiming to buy manufacturing products and components— pressure sensors, industrial pumps, motors, accelerometers— had to comb through an endless variety of vendor catalogs. In some cases, the vendors even had their product listings locked behind firewalls on their own Web sites on the so-called "dark side" of the Web, so they were unavailable to potential customers, at least online.

Schneiter and Brownell, who later resigned from GE, came up with the idea of using the Internet to build a database of products and vendors for the engineering community with parametric search capabilities. "This enables users to search by attribute and product specification as opposed to typing in a generic key word," Killeen explains. "For example, a user might enter 'brushless DC motors (motors used in variablespeed and torque applications) from 15 to 90 horse power.'" By 2002, GlobalSpec provided visitors access to more than 700,000 searchable product families representing 35 million parts from more than 1,300 searchable suppliers, making it the world's largest online database of technical products and services searchable by detailed specification.

Under Killeen, GlobalSpec redesigned its Web site, adding functionality to streamline the search process. "It's all about the content," Killeen says. "It has to be fresh, vibrant and constantly changing. And it has to be totally relevant to the community you're seeking to engage."

From 2002 to 2004, GlobalSpec also added new partners to provide additional product information to its database and had users register so vendors could better follow up on sales leads. "We're not e-commerce and we're not a transaction model, as OEMs sign up for annual service contracts," Killeen explains. "We're information brokers. We make our money connecting the buyer—the engineer—with the seller—the OEM—which we provide with a stream of sales leads."

GlobalSpec charges companies $5,000 to $500,000 to post their proprietary databases and catalogs. To protect the buyer's privacy, however, GlobalSpec will only pass along the name of the customer to the OEM after it has received permission from the customer, Killeen says.

Next page: Extreme Makeover


EXTREME MAKEOVER

Perhaps the most important change GlobalSpec has made came in 2004, when Killeen and Schneiter lit on an idea that would take the company to another level: Engineering Web, a vertical search engine that indexes hundreds of millions of pages of engineering content from the open Web as well as from a variety of proprietary content publishers.

Killeen and Schneiter envisioned Engineering Web as a platform that would serve as an online community for engineers—"the place," Killeen and Schneiter called it. This was an ambitious undertaking. The company drew down another $1.5 million in venture money, bringing the total it had received from Warburg Pincus to $31 million. It was also time-consuming in that GlobalSpec had to partner with numerous technical organizations such as Micropatent (now part of the Thompson Group), which retains a large database of patent information, and HIS, which maintains databases on engineering standards, to make their databases available on Engineering Web.

"This is all about building a community over time," Killeen says. "We didn't expect an immediate financial windfall. We also wanted the community to become scaled enough and vibrant enough so our users will say, 'It's a real place.'"

It was a year and a half before GlobalSpec began rolling out its next commercial offering, a suite of product area-specific e-newsletters supported by advertising. It also began selling ads on its Web site. "We went to the community and said, 'Take a look at our newsletters,'" Killeen says. "'Would you object to seeing relevant ads flow through the site?' If we had that at the beginning, it would have been beyond annoying."

By gaining the trust of the community first, GlobalSpec ensured that the newsletters would be readily accepted. In 18 months the company built up to 5.8 million subscriptions including 2.3 million unique subscribers, Killeen says. In June, the company launched Industrial Ad NetworkSM, an online banner ad network designed to reach the manufacturing, industrial, technical and engineering communities.

GlobalSpec has been profitable since early 2006. It has an I/PRO-audited Web site with more than 3.6 million registered users worldwide, a five-year revenue growth rate of 69% compounded annually; a user community that's growing by more than 80,000 new registrants a month; and 225 employees. "People often refer to us as the Google of engineering content," Killeen says. "I can't think of higher praise."


GlobalSpec Base Case

Headquarters: 350 Jordan Road, Troy, NY 12180

Phone: (518) 880-0200

URL: www.globalspec.com

Business: GlobalSpec is a specialized vertical search, information services and e-publishing company serving the engineering, manufacturing and related scientific and technical markets.

CEO: Jeffrey Killeen

CTO: Stephen MacMinn

Financials in 2006: NA (privately held)

Challenge: To be recognized by the worldwide engineering community as the preeminent online research resource

BASELINE GOALS:

  • Add 80,000 or more new registrants each month
  • Have 3,000 advertising clients by the end of 2007
  • Increase number of registered users to 6 million
    within the next few years