Houston firm plans to create virtual library

Thursday, April 6th 2000, 12:00 am

By: News On 6

A Houston start-up called Questia Media Inc. has taken in more than $45 million in venture financing toward an ambitious goal - to convert books, periodicals and journals used in university libraries into electronic form so that they can be searchable and available to students everywhere.

The company expects that it will need to raise $210 million by the end of next year to fund the labor-intensive process of scanning the documents, converting them to text using software for optical character recognition, and proofreading the material to ensure everything worked correctly. Much of the conversion work is being performed at an undisclosed location overseas.

The company expects to have 250,000 volumes digitized within three years.

Troy Williams, the company's founder and chief executive, said he thought up the idea several years ago while he was working as an editor at the Harvard Law Review.

He said he was startled by the inefficiency of searching throug! ! h physical books for citations, compared with how productive he was when working with legal computer databases.

People often talk about how the Internet puts the world's knowledge in the hands of everyone with a computer, Mr. Williams said, but little of the material in books - including classic works from throughout the centuries - is available in electronic form.

"Five or six years ago, we all thought this would exist," he said. "Now I know why it doesn't: It's extremely expensive, and the cost scares most people away."

The company has operated in "stealth mode" since 1998 as it put together its business model, executives said. Questia already has more than 200 employees.

Private investors include Rod Canion, the co-founder of Compaq Computer Corp., who serves as Questia's chairman, and Kenneth L. Lay, the chairman and chief executive of Enron Corp., who took a board seat at Questia.
"I saw Troy present the plan to a small group of investors, and it grabbed me," M! ! r. Canion said. "After the presentation, I could hardly wait to call him. I set up a meeting for the next day."

Other backing for Questia comes from TA Associates of Boston, a venture capital firm.