Vivisimo percolating as next big thing

Source: - PittsBurgh

Pressure has been put on a 5-year-old software company to be the region's next technology breakthrough -- on par with FreeMarkets Inc. and Fore Systems Inc.

Vivisimo Inc. has been tagged by the president of Carnegie Mellon University and by Pennsylvania's top technology investment fund as one of the prime local companies to make the next big jump.

It's a challenge Vivisimo is happy to take on, with a verve worthy of its vibrant name. But the firm, which moved into new, larger offices in Squirrel Hill this week, is not eager to grow only for growth's sake.

An Internet search, that spits out a quarter-million poorly organized results doesn't necessarily provide the most value to the searcher, CEO Raul Valdes-Perez says. Likewise, companies that spend millions in investment capital to grow as quickly as possible don't always return value to shareholders.

Vivisimo's technology aims to conquer the scourge of the information age --- too much information and the inability to separate the wheat from the chaff, Valdes-Perez says.

The company has spent the past four years in a converted storefront and upstairs apartment on Beechwood Boulevard. But with 25 employees, the old space was getting too crowded.

"I can't believe I can walk 10 steps without bouncing into a wall or somebody else," Valdes-Perez joked Tuesday at the dedication ceremony for the new headquarters. He co-founded the company in 1999 with CMU computer science colleagues Jerome Pesenti and Chris Palmer.

The company's new space at the corner of Murray and Forbes avenues in the heart of Squirrel Hill is emblematic of Vivisimo's desire to be true to itself. It stayed in the neighborhood because most of its employees live nearby -- Valdes-Perez bikes to work -- and it wanted to stay connected to the community.

Contrast that with the original search engine company launched by Carnegie Mellon researchers, Lycos Inc., which bolted Pittsburgh for Waltham, Mass., after determining it couldn't grow quickly enough here.

Vivisimo is a long way from rivaling search king Google Inc., whose shares have tripled in its first year as a public company, rising to more than $300 per share for the first time Monday.

But make no mistake, Vivisimo's founders have ambitions.

They believes its mission of developing software applications for effectively managing the world's exploding volume of electronic information positions it in the mainstream of the information age.

Carnegie Mellon President Jared Cohon said yesterday that the university is counting on Vivisimo to carry on the tradition of Fore Systems, the computer networking gear company founded by four CMU computer scientists in 1990 and acquired in 1999 for $4.5 billion.

Valdes-Perez says he has talked to more than 100 venture capitalists, many lusting to get a piece of the next hot search-related technology, but has politely turned them away.

Vivisimo is profitable, expects to grow revenue 400-500 percent in 2005, and puts all of its profit back into growing the company.

The company's funding to date, aside from its paying customers, has consisted of $1 million from the National Science Foundation for technology development, and $500,000 from the state-sponsored Innovation Works economic development fund.

Terri Glueck, spokeswoman for Innovation Works, said Vivisimo has been paying off by adding jobs. She said her group isn't worried if it doesn't cash out of its investment soon.

"We're willing to be patient money," she said.

Vivisimo has a three-pronged strategy:


First, licensing its technology to corporations, government entities and other organizations seeking to better navigate electronic databases. Customers include Cisco Systems, NASA and the Journal of the American Medical Association. It has also donated its software to cluster search results on the City of Pittsburgh Web site.

Second, offering its document clustering technology to other search engines to improve their results. About six months ago America Online Inc. began using Vivisimo's software to improve the user experience on its AOL.com search box, where about 5 percent of all Web searches are conducted.

Third, debuting its own commercial Internet search engine, Clusty.com, which began last fall to rave reviews in the general and trade press. Clusty's clustering technology, which organizes search results into topical folders, was named top search feature in the annual search engine awards presented in March by SearchEngineWatch.com, an online publication of New York-based JupiterMeia.
Charlene Li, an analyst at Forrester Research, said that over time, niche specialty search engines like Clusty will erode the user base of the giants like Google and Yahoo.

"Major search players will play a central role but will slowly cede ground to search specialists," she wrote in a recent report.