When Bryan Anderson sold part of Autobase Inc. in 2004 to a venture capital firm, the owner of the marketing-software maker felt as though he had sent his unruly youngster off to boarding school to become more responsible.
Three years later, after convincing results and a subsequent sale to Virginia-based Dominion Enterprises, Robinson's offspring has turned into a much more mature and disciplined child.
The financial backing of Boston-based VC firm Summit Partners and the guidance of veteran technology executive W. Scott Webber-best known locally as the former CEO of Software Artistry Inc.-enabled Autobase to more than double its annual revenue to $20 million during the three-year span.
About 1,600 U.S. automobile dealerships have installed Autobase's system, which helps manage sales leads, customer contacts and records. The north-side company twice made the Inc. 500 and Deloitte & Touche's Technology Fast 500 lists.
The growth positioned Summit to earn a sizable return on its investment and shop Autobase to potential suitors. Dominion, a unit of Landmark Communications Inc., which owns television stations and newspapers, purchased the company for an undisclosed amount June 12.
Now that Autobase is on more stable footing, Anderson, who founded it in 1988, has retaken the helm from Webber and again is in charge of daily operations.
"People were beating our door down," Anderson said of the interest in Autobase. "Dominion was one of the companies that tried to acquire us in 2004. They just kept at it and were persistent."
Anderson at the time chose to sell a portion of Autobase to Summit because the venture capital firm could provide the clout to grow the company without the fear of job cuts, he said. In turn, Summit's infusion helped build a nationwide sales force and infrastructure, along with a stronger management team.
Dominion seemed like the logical choice this time, however. The corporation owns about 150 companies and roughly a dozen tied to the auto sector. They include Dealerskins, a Web design and solutions provider for dealers, and Cross-Sell, the largest national provider of accurate and quick-to-market sales data for new and used cars.
A week before Dominion's purchase of Autobase, it acquired Richmond, Va.-based InterActive Financial Marketing Group, which generates special finance and new car leads for dealers.
Adding Autobase to its stable makes good sense for Dominion, said Thilo Koslowski, vice president and lead automotive analyst at Stamford, Conn.-based technology research firm Gartner Inc.
"That's the beauty of it for dealers; it makes it easier to source [the auto subsidiaries] rather than having to establish different relationships with a dozen of them," he said. "That takes time and takes dealers away from what they're supposed to be doing, which is selling vehicles."
Anderson is the son of a car salesman who spent time on the lot haggling deals himself. While working for Beck Toyota on the city's south side, he bought some primitive off-the-shelf database software and began using it to track his sales prospects. Anderson soon became the dealership's top performer.
It wasn't long before Denny Beck asked him to share the software with Beck Toyota's 20 other salespeople. Anderson got his parents to help with data entry and Autobase was born.
He spent years criss-crossing the Midwest selling the system to other auto dealerships. By 2004, Autobase had gained enough traction to land heavyweight help. That's when Anderson sold majority dealership to Webber and Summit Partners.
Webber's first tasks after becoming CEO were to deploy the national sales force, hire executives experienced in leading fast-growing companies, and install systems to ensure customer satisfaction.
In the meantime, Autobase grew from 100 to 150 employees and from $9 million to $20 million in annual revenue.
Dominion has 7,000 employees nationwide and had more than $850 million in annual revenue in 2006. Yet, the conglomerate allows its holdings to operate autonomously, Webber said, making it an ideal parent. And unlike a venture capitalist, Dominion's focus is on long-term objectives rather than short-term profits or quarterly revenue projections.
In 1995, Webber's Software Artistry became the first Indianapolis software firm to go public. After IBM Corp. bought it two years later for $200 million, Webber bided his time mentoring companies he invested in. Now after exiting Autobase, he plans to return to his passion.
"I'm looking forward to doing what I do, and that is invest in companies," he said. "I enjoyed my time there, but the timing was right to have this transaction occur. It's a good thing all around."
Room for growth
Anderson expects Autobase to grow but not at an enormous rate. The company typically averages 30 new accounts a month. That number should increase a bit due to a change in sales tactics featuring shorter-term contracts customers might find more alluring. The brunt of growth, however, will come from offering additional services to existing clients, Anderson said. Local ones include Bill Estes Chevrolet, Penske Chevrolet and Dreyer & Reinbold BMW.
In February, Autobase inked a partnership with tech heavyweight Microsoft Corp. that will allow it to piggyback its software on Microsoft's as the Seattle company launches products aimed at auto dealers.
With the remaining 21,500 U.S. auto dealerships using another marketing system-or, more often, not using one at all-there's plenty of opportunity for growth. Two behemoths, New Jersey- based Automatic Data Processing Inc. and Ohio-based Reynolds & Reynolds Co., provide the dealership-management systems that dominate the market. Overall, about a dozen companies vie for market share.
Yet there remains potential for customer relationship management software, or CDM as it's known in the industry, for which Anderson is considered a pioneer of the technology.
"CRM in the past was primarily viewed as a database," Koslowski at Gartner said. "Now the second wave is leveraging the information. The majority of dealers do not embrace CRM in the way they could."
In any case, renewed interest from dealers should cause more consolidation among providers, Koslowski said.
Autobase's purchase by an out-of-state company should not be viewed unfavorably, said Jim Jay, president and CEO of locally based TechPoint.
"I don't think it's a negative for Indiana at all," he said. "It will bring new jobs and extra capital to take their technology to the next level, and add more enhanced products for their customer base."