Providing Intelligent Tools
for People Who Want to Know!

Services
Business Information Services
NASD: HOOV

HOOVER’S, INC.

5800 Airport Blvd.
Austin, TX  78752

Jeffrey R. Tarr
President and
Chief Executive Officer

Interview conducted by:
Diane Reynolds, Co-Publisher

CEOCFOinterviews.com
March 2002

Bio of CEO.

Jeffrey R. Tarr is President and CEO of Hoover’s, Inc., and serves on the company’s board of directors.  Before coming to Hoover’s, Tarr was CEO of Austin-based all.com, Inc., a company that specialized in Web-based technical support for small businesses.  Tarr brings to Hoover’s extensive experience leading the development of technology-based business and information services in high-growth business environments.  Prior to joining all.com, Tarr was vice president at U S WEST, Inc.  Under his leadership, U S WEST emerged as the leading provider of a variety of Internet products and services in its 14-state region, including the number one-ranked Internet Yellow Pages (uswestdex.com, now qwestdex.com), the number one Web site developer and the leading provider of locally targeted Internet advertising solutions.  Prior to joining U S WEST, Tarr led sales and marketing for an international entertainment software publisher, and was a consultant with Bain & Company, based in its Paris office.  Tarr has written about customer service and international business for The Wall Street Journal Europe and EuroBusiness.  He holds an AB in Public and International Affairs from Princeton University and an MBA from Stanford University.

Company Profile:

Hoover’s, Inc. (Nasdaq: HOOV) delivers comprehensive company, industry, market intelligence and online tools to help businesspeople get their jobs done.  Hoover’s provides sales, marketing, business development, and recruiting professionals and senior executives with similar needs with the global business intelligence they need to prospect and prepare for client meetings, sales presentations, vendor and partner negotiations, and other business opportunities.

Through its Hoover’s Online service, Hoover’s staff delivers continuously updated intelligence on public and private companies worldwide. Hoover’s also delivers its information through corporate intranets and distribution agreements with licensees, as well as via Hoover’s-branded print and CD-ROM products.  Hoover’s is headquartered in Austin, Texas, and has sales offices in New York City and San Francisco.

Ceocfointerviews: Can you please explain to my readers about your company?

Mr. Tarr: Hoover’s provides business information for businesspeople to help them get their jobs done. Particularly, we are focused on the needs of outward-facing business executives – people who are in sales, marketing, business development or senior executive roles. These people need to know about the companies they’re meeting with – their prospects, their customers, and their business partners. That’s where Hoover’s comes in. We are constantly analyzing and providing proprietary information on more than 17,000 private and public companies worldwide, as well as partnering with well-respected third-party content providers to bring our customers crucial information on more than 12 million enterprises around the world.

Ceocfointerviews: When you deliver your information, is it a license agreement or a fee per request? How does this work?

Mr. Tarr: It is primarily a subscription program. For access to all of the information and tools on Hoover’s Online, our “Hoover’s Pro” pricing starts at $1,995 a year for up to a 5-seat account. We also deliver our information through corporate intranets and distribution agreements with licensees. The company started out as a book publisher 12 years ago, and we continue to publish books and CD-ROM products. The books are sold primarily to corporate librarians and librarians in the educational sector.

Ceocfointerviews: Do you think computers will eventually replace paper?

Mr. Tarr: I think publishing and the electronic media each have their place and unique advantages. We are definitely in an era where the electronic distribution of information is growing.

Ceocfointerviews:  I know you have a very large editorial staff.  There is a lot to cover these days, with everything that’s going on, and public companies are especially under the microscope.  How are you handling that?

Mr. Tarr: The Hoover’s database has taken more than 10 years to create. There is an element of history to our database. Our staff is always adding companies, but also maintaining existing companies as new developments and information become available on them. In addition, we have a very sophisticated back-end technology that allows our staff to be very efficient in the work that they do.

Ceocfointerviews: It’s not only the online business information that you provide, but there are tools also.  What are these tools?

Mr. Tarr: These tools allow our customers to search, sort, and download customized information. For example, a business development or sales professional who’s about to get on a plane for a business meeting in Boston can do a search on Hoover’s Online for other companies in Boston that would be within his or her target market. Or a salesperson can look for all telecommunications companies in Colorado and sort those by size, in addition to getting all of the officers’ contact information and biographies, which allows that salesperson to be well informed when it comes time to pick up the phone and seek out new business.

Ceocfointerviews: Are you just supplying information to US companies or is it International?

Mr. Tarr: We do have an international client base. Our services are sold through a sales agency in London that represents Hoover’s product offerings to the UK market. We have customers all over the world who buy our services either via the Web or by simply picking up the phone and calling us.

Ceocfointerviews: Information is readily available today.  How are you staying one step ahead of your competitors?

Mr. Tarr: There are other companies out there that basically take the information companies report in their SEC documents – what’s referred to in the trade as “SEC scrapes,” and present that to their customers. That’s not what Hoover’s does. We have writers and analysts who receive multiple news feeds from a wide range of sources, and they are constantly updating and covering these companies with an objective, third-party perspective, as opposed to simply re-packaging what’s presented in SEC documents.

Ceocfointerviews: Every company has its own website today. It’s a must.  They post their own company information and press releases onto these websites.  Are you finding this a sort of competition for Hoover’s?

Mr. Tarr: We don’t see it as a source of competition. We see it as a source of information. That’s one place people might go to get information on a company, but as you know, what companies say about themselves may be biased. Hoover’s seeks out multiple information sources to provide our customers with a fair, complete, and objective view of a company, its market, and its employees.

Ceocfointerviews: I have been looking at your financial statement and Hoover’s has been doing very well.  How do you intend to stay at that pace?

Mr. Tarr: We have made a great deal of progress over the last several quarters.  We just delivered our first profitable quarter as a public company, for the quarter ended December 2001, and we believe we are on a good path.  We are very much focused on execution here internally, improving our operations and growing our business in a profitable manner.

Ceocfointerviews: What avenues will you take to grow this company?

Mr. Tarr: We are primarily focused on organic growth.  We have a large market opportunity.  We are taking a number of steps to improve our product to better meet the needs of our target customers.  We are engaged in a number of significant marketing trials, where we’re trying different avenues to market our service and we’re measuring the ROI of those efforts.  So, we have a number of levers we are pulling to improve conversion rates and retention rates, and to reach out to new customers.  We’re also selling more services to our existing customers, including incremental services, as well as increasing our penetration within our existing subscriber base.  We believe there is ample opportunity to grow our existing business.  At the same time, like any company, we are open to the possibility of looking at the marketplace for potential acquisitions. But we have a very high bar for acquisitions. They must be accretive, manageable, and highly aligned with our strategy and with the culture of our business. Most acquisitions fail, so we believe that setting the bar high is important for an acquisition to prove successful. 

Ceocfointerviews:  Prior to coming on board with Hoover’s, you were with all.com, and U S WEST, which has since been acquired by Qwest Communications. What do you feel being a part of those companies has now brought to the table at Hoover’s?

Mr. Tarr: I’ve spent a good deal of my career focused on the mid market. Hoover’s also focuses on small and medium-sized businesses with a set of channels that are particularly well suited for the mid market. I bring to the table a lot of recent experience in creating technology-related products and services and delivering them through a range of channels to mid market customers.  Interestingly, before U S WEST, I was with Bain & Company, a strategy consulting firm, and that also gave me a very particular perspective on how to grow businesses in a profitable and sustainable fashion.

Ceocfointerviews: Does this company have the cash and/or credit for growth opportunities?

Mr. Tarr: We have a very large cash balance.  We’ve accumulated $31.2 million in cash as of the quarter ended December 2001.  That was up $1.3 million from the previous quarter.  We have been cash flow positive.  For the quarter ended December 2001, we generated positive cash flow of $1.4 million, bringing the year’s total to $5.9 million. 

Ceocfointerviews: Of the different services that Hoover’s provides, which one do you feel brings in the majority of the revenue?

Mr. Tarr: Our subscription services bring the majority of revenues to our company.  Subscriptions accounted for 67% of our revenue mix in the December 2001 quarter.  This is a highly predictable and recurring revenue stream.  We collect the cash up front, and contracts are primarily twelve-months in length.  It’s a very attractive business from a number of respects, and it also has attractive margins.

Ceocfointerviews: What would you say to an investor to get him/her excited about investing in your company?

Mr. Tarr: We have built a compelling customer franchise.  We have a very large user base, with 2.4 million unique users.  We’ve built a very large base of subscribers, with over 7,700 multiseat enterprise accounts.  The business is strong.  We have a strong balance sheet with no debt and $31.2 million in cash.  We are profitable, have attractive margins and a great deal of operating leverage in our business.

Ceocfointerviews: I noticed that the industry you are in is business information services and the sector is technology.  That will clump you in with some of the computer companies.  When they are hit hard, do you feel that has an impact on your company? 

Mr. Tarr: We all participate in the economy, and technology is a large part of our overall economy. So, as with many businesses, when our technology sector customers are hurting, that does impact us.  We have a very broad customer base, however, which recognizes that Hoover’s helps them to drive sales and contributes to their revenue growth. In many respects, the value Hoover’s brings to their business increases during a down cycle.

Ceocfointerviews: Please sum up Hoover’s, Inc.

Mr. Tarr: Hoover’s is a cost-effective provider of business intelligence tools that help sales, marketing and business development professionals drive growth in their businesses. Our many research-oriented professionals work to create our extensive database. That’s what is behind the Hoover’s Online service and Hoover’s Handbooks, the print form of our proprietary information, and both represent a convenient, unbiased source of company and industry information.

disclaimer