Chemical Reaction
Wednesday, 01 July 2009 18:00
Chemidex uses online world to bring chemists and manufacturers together.Entrepreneur: Bruce Ianni
Company Information:
Chemidex
7932 Santa Fe
Overland Park, KS 66204
Phone: (913) 307-9010
www.chemidex.com
Type of business: Science and technology search engine
Year founded: 1997
Employees: 40
Keys to Success: “The business rules haven’t changed. You still have to make more money than you spend to stay in business.”
Free rent. That’s really how Chemidex came to be a Kansas City-based company. Bruce Ianni founded the company in his hometown of Cleveland, Ohio, but when he and his wife received an offer from someone in Mission Hills (her hometown) to house-sit for two years, the promise of free rent wasn’t something they could say “no” to; so they packed their things and moved here. Bruce fell in love with the area and the rest, as they say, is history.
“Google for Chemists”
So, what is Chemidex? Simply put, it’s a Google-like search engine for chemists. Ianni was working for Noveon Specialty Chemicals when he developed the idea for Chemidex. The Web site indexes and aggregates ingredient, raw material and technical data information from suppliers for formulators of consumer products. In the beginning Chemidex focused on the paint and coatings industry. Today, it has expanded to include food and beverages, personal care products, cosmetics, household, industrial and institutional cleaners, graphic arts and inks, lubricant and metalworking fluids, plastics and elastomers and adhesives and sealants.
For instance, a chemist at Proctor & Gamble working on a bath lotion can find the ingredients he or she needs by searching the Chemidex Cybrary.
In the beginning, Ianni had to convince both the chemical suppliers and the manufacturers that sharing the information, much of it proprietary, was a good idea and could be kept confidential from competitors. All users of the Chemidex site are verified before they can fully use the search engine and their professional information is validated every seven days.. There are more than 75,000 qualified Chemidex members.
To encourage the chemical suppliers to sign on, Ianni offered them a deal: three months free access. The product sold itself, he said.
“Instead of chemical suppliers having to call on manufacturers, the manufacturers are now calling on suppliers,” he said. “They have a need to find ingredients to solve problems.”
Chemidex has made the ingredients much more accessible to the chemists, as well as increased the breadth and depth of their options. Before, chemists and the suppliers had to go to many more trade shows, conferences and other meetings to find one another. Now, a researcher in the United States and a plant grower in a rain forest are just a mouse click away from one another.
Going Global
Chemidex grew quickly, so much so that in 2000, Japanese investors expressed interest in the company. Ianni decided against making that move then. He understood that, given the nature of his business, the company needed to be global almost from its inception. But he also knew the first target he needed to hit globally was Europe, primarily because so much research and development is concentrated there, particularly in the personal care product and cosmetics industries. He also knew that when he went to Asia-Pacific, it would be to China, first.
Beginning with 2001, an industry Cybrary “opened” in Europe or North America almost every year. The company also established a European headquarters in Dormagen, Germany.
Finally, in 2005, Chemidex made it to Asia-Pacific, establishing offices in Shanghai. In 2007, a Latin American Cybrary opened in all markets. And last year, the plastics and elastomers Cybrary opened in all markets.
The company’s information is translated into seven languages: English, German, Spanish, French, Portuguese and two dialects of Chinese.
Bring on the Pros
One of the keys to Chemidex’s success, Ianni said, was his hiring a professional management staff early on. He presented at InvestMidwest in 2003 and got not only angel funding through the process, but also an introduction to Jim Dodd, a 20-year veteran of the technology and telecommunications field.
Today, Dodd is the company’s president and COO, and is responsible for growing the company’s revenues five-fold, Ianni said. The rest of the management team brings expertise in a variety of fields that melds well with Ianni’s sales and chemistry background, he said.
Take the Money? No, Thanks.
Aside from hiring a professional staff, Ianni knows he has made some key decisions leading to his company’s success. One was not getting venture capital funding during the Internet and technology boom of the late 1990s, early 2000s.
“When I started Chemidex I had three angel investors,” he said. “Each put $25,000 into the business. We were able to buy back their stock and provide each with a significant return on their investment.”
Ianni is proud to say that Chemidex has become successful the old-fashioned way—through hard work and perseverance.
“The business rules haven’t changed,” he said. “You still have to make more money than you spend to stay in business. We did it the Midwestern way. We grew based on our cash flow and by providing true value.”
Mentor Me
Ianni was the 2008 Innovator of the Year for Kansas Technology Enterprise Corporation’s PIPELINE program. He said the program, which matches technology-oriented entrepreneurs with accomplished mentors for a yearlong fellowship, is like an “MBA in a year.”
He said being in the program kept Chemidex from making an investment that would have been a strategic mistake.
Ianni and his mentor, Tim Barton of Freightquote.com, along with other advisers, were working on market validation when they determined the investment would have been OK, but the product really wouldn’t have addressed an acute market pain-point. It’s better to sell a product that’s more like aspirin than vitamins.
“PIPELINE has created a virtual Silicon Valley here in Kansas,” Ianni said. “It’s really created a support network of business experts and sources of funding that significantly increases the chance of entrepreneurial success.”
Future Offerings
Ianni has plans to open more Cybrary’s in all areas of business-to-business transactions, whether in chemicals or not. Already Chemidex has moved into food and beverage and will continue moving into non-chemical areas, he said. He also isn’t letting the current economy change the plans he has for the company.
“Everything happened when it did for a reason,” he said. “We know when to step on the brake and when to step on the gas, and right now our foot is on the gas. We are providing suppliers with the aspirin they need during this recession to make their pain go away – more sales.”
Kate Leibsle is managing editor of KC Small Business. (913) 432-6690
