Invention Machine acquired, enters big leagues

I’ve long been fascinated by the technologies that have emerged to facilitate the innovation process and help creators find, assess and act on/reject information quickly. One of the early entrants was Invention Machine, whose semantic search technology let users quickly search patents, internal and external databases, and “documents” of many formats to process information. One of the best stories that I’m aware of is a mattress company combining patents from the Israeli army and other sources to come up with a mattress that senses when someone is snoring and inflates to change the sleepers’ position. A unique combination of ideas that led to an innovative product. While very cool stuff, Invention Machine’s (IM) Goldfire is a complex product and its benefits can be hard to describe to organizations and individuals that want to limit access to their intellectual property. IM was never able to reach a wide audience for its technology, and last week the company was acquired for approximately $40 million by IHS, Inc. IHS has been on a buying over the last month and these recent additions to its portfolio make it a player in the information used by and created for innovators in our space. So, who is IHS? IHS was founded over 50 years ago and has been reinventing itself as a provider of technical information, decision-support tools, and related services to the energy, defense, aerospace, construction, electronics, and automotive industries. The company’s offering is an interesting mix of data (on topics such as exploration, development, production for oil and gas companies; or standards, regulations, parts data, design guides, and other information for aerospace or auto makers), decision-support software and value-added services for its target industries. IHS says its customers include “70% of the US Fortune 1000 and 80% of the Global Fortune 500” and that it has “tens of thousands of customers and hundreds of thousands of end-users in over 100 countries”. In fiscal 2011, revenue was $1.3 billion. Until last week, IHS’s product design workflow products generated about 15% of the company’s revenue, mainly from the engineering specification and standards portion of its legacy PLC business. It was a fine, stable business but wasn’t growing as quickly or as profitably as IHS wanted, so IHS acquired GlobalSpec (for  $135 million), the CyberRegs business of Citation Technologies (for $11 million) and IM to “elevate a significant portion of [its] business” to achieve long-term, profitable, double digit growth. IHS CEO Jerre Stead told investors that Goldfire will be a “front-end, a workbench, that will bring together all IHS content, insight and tools into an innovative solution that will address many of the unsolved problems facing engineers. This will enable greater productivity, accuracy and design quality, and help customers accelerate innovation and deliver superior products and services.” Mr. Stead said that IHS’s existing products for regulatory compliance,  plus Goldfire and GlobalSpec’s vertical search capability will provide product information and required by the engineering, manufacturing and scientific and technical market segments. CyberRegs is an important adjunct because it offers regulatory compliance information – including statutes, registers and forms from all 50 United States and Canada, Mexico and Puerto Rico – focused on environmental, health, safety and sustainability issues. IHS COO Scott Key said that Invention Machine is a “critical component of the evolution and transformation of [the] Product Design business” and acknowledged that IHS paid a “strategic premium” for these companies, but said that the investment was critical in accelerating the growth of this segment of its business. Investors seem to like the strategy, and sent the stock price up about 2% on the news. The interesting thing about this acquisition is the bundling of information sources with retrieval with decision tools. GlobalSpec has a user base of something like seven million — and added 500,000 new registrants during 2011. These designers searched GlobalSpec’s catalogs for product data and services, read online newsletters — and now, their organizations could be prospects for Goldfire. Or some of Goldfire’s semantic search could be implemented inside the GlobalSpec search engine. It’s going to be exciting to see both how Goldfire is adopted by this new audience, and how Goldfire is adapted to this broad new audience.