American Business Information, Inc. History

Company Perspectives:

The sources we use provide us with the most dependable and accurate information we can find, and we're able to identify virtually every business in the United States and Canada. But even though these are the best sources available, that's not good enough for us. It's our philosophy to contact every single company in our database to verify our information. As a matter of fact, we won't enter ANY information into our database until it's been personally verified. It all adds up to more than 14 million telephone calls a year, just to verify and update our information. Sure, it's expensive, but it's the only way to make absolutely certain that we have correct information. Aside from ensuring accuracy, however, telephone verification gives us a golden opportunity to gather more information. We are able to obtain such valuable information as the names of key executives, number of employees, suite number, and the exact line of business a company is in ... important information that helps our customers stay one step ahead of their competition. The result? The finest database of 11 million businesses in existence. In terms of completeness, accuracy, and depth, no other source can compare to our database of virtually every U.S. and Canadian business. Our commitment to quality at every level of the compilation effort guarantees you the very best business marketing information available.

Company History:

American Business Information, Inc. (ABI) is a leading U.S. provider of marketing-related business information for small businesses and consumers and in 1995 was the eighth-largest firm in the large and fragmented computer-related services industry. In addition to database developers like American Business Information, the computer-related services industry includes data vendors, directory publishers, list brokers, marketing consultants, and ad agencies. In the mid-1990s, more than 450,000 customers--two-thirds of them repeat buyers--used American Business Information's varied data products to generate sales leads, reduce selling costs, improve marketing efficiency, and verify business credit information. With one of the largest and most accurate proprietary business information libraries in the world, American Business Information's databases are divided into 7,500 industry categories and provide the data for all its directories, list brokerage and market research services, and phone and on-line information services. The preponderance of American Business Information's sales come from its CD-ROM, computer diskette, prospect list, and mailing label products, and in the mid-1990s its bestselling CD-ROM titles included The Ultimate Phone Book, American Manufacturers Directory, 88 Million Households Phone Book, and 16 Million Businesses Phone Book.

Mobile Homes, Phone Books, and the Great Untapped Market: 1972-80

After earning an MBA at the University of Nebraska, Lincoln, in 1971 American Business Information's Indian-born founder Vinod Gupta joined the Commodore Corporation, an Omaha-based mobile home manufacturer, as a marketing research analyst. When Commodore asked him to compile a list of mobile home dealers in its region, Gupta ordered AT&T's entire 4,800-volume catalog of national Yellow Pages phone books only to be told that Commodore would consider buying his list only if he did the work on his own time. Working with a colleague out of his garage, Gupta completed the list and offered to sell it to Commodore for $9,000 or give it to them outright in exchange for the right to market it to their competitors. Commodore chose the latter route, and armed with a $100 bank loan for postage, Gupta sent a sample list to the nation's mobile home makers to gauge their interest. Within a month, Gupta was deluged with checks totaling $13,000 and orders for another $9,000.

While holding down his Commodore job, Gupta hired two part-time employees and officially launched American Business Information, Inc., in 1972. By the end of its first year American Business Information had generated $22,000 in profit, and when Commodore's business began to slump in 1973, Gupta was freed to pursue his growing business full time. Following his success with his mobile home industry data, Gupta began compiling lists for the U.S. motorcycle, bicycle, boat, car, tractor, and CB radio industries and methodically inputting the nation's Yellow Pages into his master database. Because American Business Information was promising to give small businesses the same access as larger firms to data that would help them determine the size of potential markets, select optimal distribution channels, generate sales leads, allocate marketing resources in their territories, and prioritize and qualify customers, each of American Business Information's new lists was greeted with a flurry of orders. Gupta's visits to industry trade shows to "work the exhibits" only cemented his conviction that American small business's hunger for basic, comprehensive business-to-business data had barely been tapped.

Gupta soon discovered that there was more than one way to usefully package marketing data. Prior to the 1970s, sales and marketing costs for smaller U.S. businesses had traditionally been comparatively low, and only the largest American firms could afford to use expensive computerized data processing methods in their marketing programs. By the 1980s, however, marketing costs had skyrocketed, and computers were becoming cheap enough to help even smaller firms gather data on potential customers and target them with precision and efficiency. Gupta had followed the changing topography of business marketing closely and began to expand the available formats for his data, from simple alphabetic prospect lists that gave the name, address, and Yellow Pages heading of each company in an industry, to customized mailing labels, three-by-five index cards for telemarketer's cold-call notes, and, by 1977, magnetic tapes and diskettes for sorting and generating lists, labels, and cards.

Minding the Data Store: 1981-90

While American Business Information's staff painstakingly keyed in the entire industry-by-industry contents of the nation's phone directories, in 1981 Gupta began diversifying and specializing American Business Information's growing horde of data. Experience had taught him that the average American Business Information customer ordered only a few thousand names and that rather than offer customers a list for their entire industry his data could be repackaged in more focused and effective ways. In 1981 American Business Information therefore published its first state directory--for businesses in Nebraska--and two years later offered a directory of national businesses categorized by the four-digit Standard Industrial Classification codes published by the U.S. government. By 1984, American Business Information had moved squarely into the emerging electronic information services industry with the introduction of On-Line Business Link, a master database of American Business Information business information available to callers around the clock for a competitive fee.

Although Gupta had been sifting, repackaging, and enhancing the phone companies' business data for more than a decade, in 1984 the phone industry finally sued him for copyright infringement. Southwestern Bell Media charged that American Business Information's practice of basing its databases on the information and subject headings found in the Yellow Pages amounted to an illegal arrogation of the phone company's proprietary information. After three years of legal investigation and motion filing, American Business Information and Southwestern Bell reached a settlement that allowed Gupta to continue using phone directory information, temporarily averting a major legal setback.

By the mid-1980s, the nation's roughly five thousand individual Yellow Pages had finally been digested by American Business Information's computers, and Gupta continued to expand on his phone directory data by leasing the data of other commercial list compilers and owners. In 1985 he also began to retain advertising agencies and list brokers to help market American Business Information's products. American Business Information published 14 updated state business directories in 1987 and increased the number to 36 in 1989. To gain the largest possible piece of the small business marketing information market, Gupta kept his prices low, charging four to sixteen cents a name depending on the number of names, the sophistication of content, and the data format the customer selected.

In 1988 Gupta launched a comprehensive $4.7 million, three-year "data enhancement" program to systematically add value to his basic business lists. The rate of change among U.S. businesses seemed only to increase, and American Business Information's primary data sources--phone books and association membership lists--were no longer reliable by themselves to support the guarantee of accuracy and timeliness that American Business Information needed to win return customers. American Business Information compilation staff began to annually contact every business in its database with more than one hundred employees as well as each business that had registered a change or deletion of its Yellow Pages listing from the previous year (roughly 40 percent of American Business Information's database). They also verified the accuracy of American Business Information's existing information and added additional data such as business size, number of employees, and primary business activity. American Business Information's database soon included not only name and address but the product brands sold by each business, the size of the original Yellow Page ad, and the year the ad first appeared in the phone directory.

By 1988 American Business Information was also including the size of each business and the name of its owners or managers. Although the data enhancement portion of the program was complete by 1991, American Business Information's verification procedure became an ongoing process involving 14 million phone calls a year and the careful sifting of annual reports, government publications, business magazines, newsletters, and newspapers. As useful as American Business Information's affordable lists were proving for small business owners, larger companies (annual orders of $10,000 or more) still preferred information in directory-style books. Eager to win the business of these firms from the traditional marketing data companies, in 1988 Gupta released American Business Information's first American Manufacturers Directory, a hardbound reference tool that classified 125,000 U.S. manufacturing enterprises (with more than 25 employees) by name, city, and SIC code.

By 1989, American Business Information had expanded into the kind of customized, sophisticated market research services previously offered only by its larger competitors. Smaller firms desperate for data to determine sales goals, devise marketing plans, locate business sites, assign sales territories, budget marketing costs, or generate leads could now order American Business Information's "market opportunity reports," which characterized the size of a given market for a product and analyzed the customer's rate of penetration in a geographic area or industry group. American Business Information's "sales potential reports" analyzed a customer's sales history to determine its marketing success rates and return on investment and identified industries or geographic areas that offered the best promise for improved sales. The data could also be customized into statistical reports or color-coded maps, and American Business Information began offering to study a customer's in-house database to determine what information was missing or out of date. Finally, American Business Information's marketing services were now including a "namescan" feature that helped customers determine whether a proposed business name had been used or was eligible for legal protection as a new company name.

"They Shoot You": 1990-93

American Business Information's right to market products based on commercial phone directories was challenged again in 1990, when another BellSouth subsidiary sued American Business Information for copyright violation. BellSouth now demanded that American Business Information not only cease publishing its Yellow Pages-based information products but requested that the courts force it to destroy its databases and cough up cash damages for its alleged infringement. The suit struck at the heart of Gupta's data-gathering methods and, sensitive to its ramifications, American Business Information countersued, claiming that BellSouth's desire to view its phone directories as copyrighted material amounted to "monopolizing activity." In December 1991, American Business Information and BellSouth reached a partial settlement in which BellSouth agreed to withdraw its demand for damages and the destruction of American Business Information's databases in exchange for American Business Information's abandonment of its antitrust counterclaim.

Gupta's pursuit of the elusive large, national business customer drove him to establish a direct sales staff in 1990, which by the end of 1991 had grown to 12 reps in eight branch offices around the country. To expand American Business Information's client base and strengthen its sales through third-party resellers, Gupta also purchased list broker CompilersPlus, Inc. in January 1990 and in 1991 acquired the assets of marketing data provider Trinet, Inc. and directory publisher Contacts Influential, Inc. The Trinet acquisition broadened Gupta's reach into the large-company data market, and Contacts Influential expanded American Business Information's burgeoning stable of customers; both strengthened American Business Information's ability to reach new customers through direct sales. In 1990 Gupta opened an American Business Information office in Toronto and began to include information on Canadian businesses in his master databases. Before the year was out, he also unveiled a "Business Info-Line" that allowed customers to dial an 800 number (for credit card billing) or 900 number (for phone statement billing) to get specific answers to business questions. For $3 for the first minute and $1.50 for each succeeding one callers could get the kind of directory assistance information Ma Bell could only dream of supplying--the number of Honda dealers in Dallas, for example, or specific business information on an "XYZ Corporation" located somewhere on the West Coast.

In 1990 Gupta began a two-year, $3.2 million expansion of American Business Information's facilities and data processing capabilities. To ensure the security of its data, American Business Information now operated redundant computer systems at its data centers in Omaha and nearby Carter Lake, Iowa, and by the end of 1991 American Business Information's data processing staff had grown to 62, including 26 systems analysts and programmers charged with maintaining and improving American Business Information's ability to sort, manage, and expand the databases from which each product line and service was culled. The data compilation, data enhancement and verification, and order fulfillment arms of American Business Information's operation utilized 1,500 proprietary software programs, and American Business Information's data entry employees could access the company's database at a rate of 1.2 million records per month.

By the early 1990s the CD-ROM had emerged as the method of choice for libraries and information-intensive businesses that needed to store and quickly access large amounts of business and research data. Keenly aware of the medium's potential, American Business Information introduced a "Business Lists-on-Disc" CD-ROM version of its business data in 1991, giving customers yet another format in which to search, sort, and access market-critical company information. By the end of the year, American Business Information's traditional data formats&mdash′ospect lists, mailing labels, index cards, and computer diskettes and tapes--were accounting for only 71 percent of total sales, while its newer products--hardbound state and business directories, CD-ROMs, list brokerage and market research services, and On-Line Business Link--were generating a full 29 percent. American Business Information also introduced The Directory of Blue Chip Companies, which contained data on 120,000 major businesses with one hundred or more employees; published its first Directory of Public Companies, which provided names, addresses, product lines, and sales figures for 9,000 publicly traded U.S. companies; and offered 49 new U.S. state business directories. By the end of 1991, American Business Information was employing 422 workers; mailing more than 15 million catalogs, letters, and other marketing pieces to 1.2 million prospective customers; and closing its second decade of unbroken profitability.

In early 1995 Gupta took American Business Information public, instantly transforming American Business Information's business strategy from measured, gradual growth to all-out, relentless expansion. Because as a public corporation, "if you miss a quarter, they shoot you," Gupta now had to demonstrate constant forward momentum to his shareholders in each quarterly report. As a result, while American Business Information's net sales had expanded between $3.5 and $10 million a year from 1987 to 1991, during 1993-95 alone they grew at an annual $14 to $17 million clip. In 1992, Gupta formed a joint venture with credit-reporting agency TRW that allowed American Business Information to incorporate credit information in its databases, and in 1993 it acquired Seminars International to form a new division, American Business Communications (ABC), that moved American Business Information into educational services (ABC was later sold to Baker University of Kansas for $3 million).

Vindication, Partnerships, and the Internet: 1994-97

In 1994, Gupta won his long legal struggle to justify American Business Information's use of Yellow Pages business data when the Supreme Court refused to hear BellSouth's copyright violation lawsuit, finally establishing that phone companies could not claim a copyright on the information contained in their directories. To further position American Business Information as a cutting-edge information supplier, Gupta released two new products that moved American Business Information squarely into the exploding computer software market. Priced at $19 each, 11 Million Businesses Phone Book and 70 Million Households Phone Book gave businesses and consumers alike ready access to the bulk of American Business Information's database via their CD-ROM drives.

With nearly 500,000 customers and revenues closing in on $100 million, American Business Information unleashed a stream of new industry-specific CD-ROM products in 1995-96, including 517,000 Physicians and Surgeons, which gave medical industry marketers access to such key data as the medical speciality, patient volume, and education of virtually every physician in the United States, and 1.1 Million Professionals, which offered purveyors of luxury goods a single-source database for some of the most highly paid professionals in the United States. With its first ten CD-ROM titles--sold through retailers like Best Buy and Egghead Software--American Business Information had become a leader in the CD-ROM directory product market, with six of the top ten CD-ROM directory titles in 1995 and 48 percent of all CD-ROM directory sales.

In 1995 Gupta announced alliances with Bloomberg Financial Markets, Microsoft, and America Online to exploit the growing popularity of the Internet and World Wide Web as distribution channels for American Business Information's products. The Bloomberg deal gave stockbrokers and other financial industry professionals access to American Business Information's business database via Bloomberg's online data network, and the agreements with Microsoft and America Online offered the general online user access to the same information through two of the largest U.S. consumer online services. By 1996, American Business Information and Disclosure, Inc., a provider of financial business information, had unveiled the "Big Business Database" on Disclosure's Internet site, a massive research catalog of 100,000 U.S. companies. Moreover, in July 1995 American Business Information launched its own Web home page that exposed potential customers to American Business Information's products through such free information services as "Lookup USA," a search engine for finding individuals or businesses anywhere in the United States. "What our people have done here, very quickly," Gupta explained, "is come up with an Internet product that will generate revenue for the company.... It's what I call the hook--the free service.... The initial strategy is to drive a lot of traffic to use our Web site.... The fact that our information can be used in your daily lives is going to help us." Lookup USA, which mirrored the information available in American Business Information's new InfoAccess 800-number service, was expected to draw a million users in 1996 alone and, perhaps more importantly, attract advertisers and thus new revenue to American Business Information's site.

In 1996, American Business Information released its "ultimate" CD-ROM product, The 130 Million Listings Ultimate Phone Book, which combined its 88 Million Households, 16 Million American Yellow Page Businesses, 800 number, and nine-digit zip code products into one single-source reference tool. Gupta also expanded American Business Information's network of retail sellers by adding Staples and Office Depot to its network of outlets, hired a new vice president for its fields sales operation, and joined in the growing consolidation of the marketing information industry with four strategic acquisitions: Marketing Data Systems, Inc., a supplier of data warehousing, research and analysis services for target marketing uses; Digital Directory Assistance, the publisher of PhoneDisc, a competing CD-ROM directory product; County Data Corporation, the leading U.S. compiler of databases on new business formations; and DBA Holdings, Inc., the parent company of Database America Companies, Inc., a New Jersey-based supplier of data processing and analytical services for marketing applications. The number of daily average "hits" on American Business Information's web site was meanwhile exceeding expectations, and Gupta unveiled for-fee business profiles and credit reports to American Business Information's home page, which were to culminate, he predicted, in the company's first online sale of its data list and sales leads products.

To Gupta's delight, customer testimonials to the usefulness of American Business Information's products in finding lost family members and apprehending criminals began trickling into American Business Information's offices, providing him with invaluable material for his public relations campaigns. Moreover, American Business Information's new line of subscription products, which extended the life of its CD-ROM titles by including an annual subscription to monthly updates and data additions, were now accounting for 30 percent of American Business Information's total revenue. "The potential market is $4 billion," Gupta enthused, "if a company does $100 million, there's a lot of potential for growth."

Principal Subsidiaries: B. J. Hunter; American Business Information Marketing; CD-ROM Technologies; Contacts Influential, Inc.; County Data Corporation.

Further Reading:

• Cox, Kathleen, "The Grateful Graduate," Span, September 1994, pp. 29-31.
• Graves, Jacqueline M., "Building a Fortune on Free Data," Fortune, February 6, 1995.
• Norris, Melinda, "can Business Information Puts Phone Listings on Internet," Omaha World-Herald, March 31, 1996.
• Von Daehne, Niklas, "Data Wizard," Success, September 1995, p. 16.

Source: International Directory of Company Histories, Vol. 18. St. James Press, 1997.

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