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TechTarget Is In The Right Place At The
Right Time, With Most IT Professionals Opting To Do Research Online, For New
Products To Buy And The Advertising Dollars Are Following
Services
Business Services
(TTGT-NASDAQ)
TechTarget, Inc.
117 Kendrick Street, Suite 800
Needham, MA 02494
Phone: 888-274-4111
Greg Strakosch
Co-Founder, Chairman and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – March 21, 2008
BIO:
Greg Strakosch, Co-Founder and CEO
Greg Strakosch,
Co-Founder and CEO, has led the company from start-up to public company (NASADQ:
TTGT).
Since its launch in August 1999, Greg has grown TechTarget into a
fully-diversified IT media company. The company now has more than 500
employees, operates in 25 countries, and has won over fifty editorial awards
since its inception.
A host of organizations has recognized TechTarget’s success, and the
innovation and leadership that Greg has brought to the company and the
industry.
- Recipient of the Ernst & Young New England Entrepreneur of the Year® Award
- Named Media Business Top
Innovator in Business Publishing
- Named to the Folio: 40, a list
of “industry innovators with impact”
- BtoB named TechTarget to its
annual list of the most powerful business-to-business advertising venues for
the fifth consecutive year
- The Boston Business Journal
named TechTarget to its list of the Largest Private Companies, as well as
ranking the company on the top ten of its list of the fastest-growing
private companies in Massachusetts.
- The BBJ selected TechTarget as
one of the fifty “Best Places to Work” in Massachusetts
- TechTarget earned the #13 spot on the
Entrepreneur/D&B “Hot 100” list of the fastest growing
entrepreneurial companies in the US
- TechTarget was named to the Inc.
500 list of the fastest growing companies.
Prior to founding TechTarget, Greg was President of the Technology Division
of UCG, a leading business-to-business information provider, where he grew
the business more than 15-fold in six years. He joined UCG in 1992 when the
company acquired Reliability Ratings, a successful IT publishing company he
founded in 1989. Before Reliability Ratings, Greg spent six years in senior
sales and marketing positions at EMC Corporation, which he joined as the
company's 29th employee.
Greg has a BA from Boston College.
Company Profile:
TechTarget, a leading online
Information Technology (IT) media company, provides IT companies with ROI-focused
marketing programs to generate leads, shorten sales cycles, and grow
revenues. With its network of 49 technology-specific Web sites and over six
million active registered members, TechTarget is a primary Web destination
for IT professionals researching which products to purchase. The company is
also a leading provider of independent, peer and vendor content, a leading
distributor of white papers, and a leading producer of vendor-sponsored
Webcasts and Podcasts for the IT market. Its Web sites are complemented by
numerous invitation-only events and two magazines. TechTarget provides
proven lead generation and branding programs to over 1,000 advertisers
including Cisco, Dell, EMC, HP, IBM, Intel, Microsoft, SAP and Symantec.
CEOCFO: Mr. Strakosch, what was your vision
when you founded TechTarget and where are you today?
Mr. Strakosch: “The big picture in
viewing the growth of our business is that every major purchase, whether it
is made online or offline, is researched on the web. The audience has
shifted to doing their research on the web and the advertising dollars are
following. We are the leading place on the web where IT professionals go to
research which new products to buy.”
CEOCFO: Why
are people going to you as opposed to someone else?
Mr. Strakosch: “We have approximately
fifty websites so we divide up the IT market into very specific segments
that mirror the way IT organizations are set up. If you go inside a large IT
organization there is no IT generalist; the IT professionals are specialists
in areas like storage, security or networking. We have almost fifty
different websites that correlate to those different specialties so we have,
by far, the most targeted content in the marketplace. In terms of our
content, what attracts IT professionals researching what products to buy is
the desire to obtain information from three different sources: they want to
hear from the independent experts in the market, they want to hear from
their peers and they want to hear from the vendors. That is our strength. We
are the number-one place for independent content on the web for IT
professionals, we have the largest audience on the web so we have the most
amount of peer-to-peer content, and we are the leading distributor of vendor
content. We are the leading distributor of vendor white-papers, and we are
the leading producer of Podcast and Webcasts.”
CEOCFO:
Does the tech community know you at this point or do you still need to make
inroads?
Mr. Strakosch: “We are very well known,
and a very powerful brand with IT professionals, so if your full-time job is
managing storage you are definitely going to know about SearchStorage.com,
which is our storage site. If you are an IT advertiser you are going to know
about TechTarget. We generate a large volume of new traffic through
word-of-mouth; we have over six million registered members. We do get a lot
of new traffic from search engines because we have so much
technology-specific; our Web sites rank very high in search engines.”
CEOCFO:
What is new in the tech world today?
Mr. Strakosch: “In terms of technologies
that are pretty hot right now there is a lot of technology spending around
compliance, things like Sarbanes-Oxley and HIPAA (American Health Insurance
Portability and Accountability Act of 1996), so there is a lot of issues
around archiving data, storing data, and retrieving data. We have many
websites that address these issues, as we are the leading web destination
for content in all of those areas. Another area that is hot in the IT market
is virtualization -- server virtualization, storage virtualization, and we
have several sites around those topics as well. As these topics get more and
more specific, this trend really fits well into our model because we are by
far the most targeted player on the web in the IT market.”
CEOCFO: How
often do you come up with a new site?
Mr. Strakosch: “In 2008 we are going to
launch at least ten new sites so launching new sites is a big part of our
growth strategy and it is helping to drive organic growth.”
CEOCFO:
Please tell us more about the growth strategy.
Mr. Strakosch: “Our growth strategy
starts with continuing to launch new websites. Another big part of the
strategy is to continue to benefit from the migration from offline marketing
to online marketing. The audience has shifted to the web but the advertising
dollars have not caught up yet. We will continue to grow by taking advantage
of that shift. International is a big opportunity for us, about fifty
percent of the IT products are purchased outside of the US but currently
international represents less than five percent of our revenue so there is a
big opportunity there. While most of our growth has been organic we have a
very successful track record doing tuck-in acquisitions, so we will continue
to be opportunistic in that regard and that will continue to contribute to
growth.”
CEOCFO: How
do you grow the international side of the business?
Mr. Strakosch: “Internationally what we
have done recently is launch our first two websites outside of the US. We
launched our storage site and a securities site in the UK. Previously we
have just been doing partnerships outside the US. I think you will see us do
much more direct operations outside of the US.”
CEOCFO:
Will you be doing foreign language sites?
Mr. Strakosch: “Right now we have
foreign language sites through partners. Eventually we will develop other
foreign language sites in other countries run directly by TechTarget.”
CEOCFO:
What is the financial picture of the company?
Mr. Strakosch: “Very strong. TechTarget
has been profitable every year since 2002. Our EBITDA margins are about 26%,
and we have strong cash flow. Our margins have been expanding every year.
Financially this provides a high degree of operating leverage in the model
so as we grow revenue, and because we don’t have a high cost of goods, we
have very high incremental EBITDA margins.”
CEOCFO:
Please tell us about your acquisition of KnowledgeStorm, and is that typical
for you?
Mr. Strakosch: “KnowledgeStorm is a
home-run acquisition for us. TechTarget is the leader of online advertising
and online lead generation in the IT market. KnowledgeStorm was the
number-two play in terms of online lead generation, so we were able to
consolidate a competitor, giving us a tremendous amount of scale with regard
to audience. It also gives us a lot of scale in terms of attracting new
advertisers. We brought about five hundred new advertisers into the company
through the acquisition of KnowledgeStorm. It was also very compelling
operationally. Financially the standalone was running about break-even, so
as part of TechTarget we were able to eliminate about 50% of their costs --
about eight million dollars -- in the first 45 days of ownership. From an
operating or financial standpoint it is a very exciting opportunity for
us.”
CEOCFO: How
is the barrier to entry for competitors?
Mr. Strakosch: “No one has ever been
funded behind us so we have a very strong competitive position. We have very
dominant brands with both from IT professionals and advertisers. We have
been doing this for nine years and have a big lead in terms of how to do it.
We have raised over $200 million in capital. TechTarget has a very large
audience – over six million registered users -- with which we have very deep
relationships, and we have significant amounts of data about this audience.
That would be hard to replicate. We also have a tremendous amount of content
in our archives from years and years of building independent content,
peer-to-peer content, and vendor content. And that content in our archives
does very well with the search engines so the overall effect it is kind of
like a snowball rolling downhill.”
CEOCFO: In
closing, why should potential investors be interested and what might people
miss when they are looking at it from the investment point of view that they
really should understand?
Mr. Strakosch: “If you believe that the
IT professionals are going to continue to do their primary research online,
and all of the research shows that the Web is the first place IT
professionals go when they are researching products to buy. The Web is the
place where they spend the most time. However, the ad dollars have lagged
behind, so if you believe that what happens with all of the media is that
the ad dollars will eventually catch up to the audience, TechTarget is the
main beneficiary in our market place.”
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