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This article by Melinda Sherwood was published in U.S. 1 Newspaper on August 11, 1999. All rights reserved.
eBay for Business
It’s rare that a company snatches up 30 Fortune 1000
clients in its first 40 days of operation, but TradeOut.com, a new
online clearinghouse for businesses with excess inventory or assets,
has done just that.
"TradeOut is eBay for businesses," says Craig Fields, vice
president of eastern sales in TradeOut’s regional office at 223 Prospect
Plains Road in Cranbury. "Just about any corporation you can think
of has idle assets," he says. "We create an efficiency to
an inefficient model. They can focus on their core businesses and
we are a marketing arm or tool for a company’s excess."
Since going live on June 1, TradeOut.com (http://www.tradeout.com)
brought buyers and sellers together in transactions totaling nearly
$6 million, five percent of which goes in the pockets at TradeOut.com.
In a projected $300 billion market, nearly $300 million in assets
is already posted on the site, awaiting the highest bidder: everything
from unused printers to fiber optic cable, designer jewelry to hairstyling
scissors. Fields expects to dig up more goodies along the Route 1 corridor.
With electronic bazaars like eBay hitting a peak in popularity, TradeOut.com
arrives on the scene just in time. But CEO Brin McCagg says that his
company is more than just Internet hype. "We run this business
like a regular business except at hyperspeed," says McCagg, who
works out of the corporate headquarters in Ardsley, New York. "A
lot of web companies are younger kids who sort of race to the market,
rush to get their web site up, and then try to fix their problems
down the road. We built the full infrastructure and defined the business
model before we turned on the website. It was stealth."
McCagg, who holds an MBA from the Wharton School of Business and a
bachelors from the University of Vermont (Class of 1986), is pragmatic
in business. "This is not a toy company," he says. "We’ve
done it all before, we’re not guessing at what we’re doing." After
a stint as a Wall Street analyst, McCagg became an entrepreneur, opening
a factory in the Bronx for recycling electrical equipment with environmentally
pesky PCBs and CFCs. When McCagg left his business, Full Circle/Environmental
Technologies, in 1997, it was a $60 million publicly-traded company
with four factories and 150 employees.
When the entrepreneurial itch came again, McCagg resolved that his
next business should be Internet-driven. It was 1997, and McCagg didn’t
even use E-Mail and had almost no knowledge of the technology. "I
looked at over 40 deals. It was an arduous task."
Then someone handed McCagg the prospectus for eBay as he was on his
way to the National Electronic Manufacturers conference in Chicago.
Once there, he began quizzing representatives of major companies,
searching again for the business opportunity in other people’s problems.
"They said their biggest problem was excess inventory," says
McCagg, "and in my mind a lightbulb went off: why don’t we create
a business to business E-Bay?"
McCagg recruited fellow alumni from Wharton: Thomas Boyle, now vice
president of operations and strategy, and Peter Morin, vice president
of sales and customers service. The website developer, Peter Schilling,
is a former president and general manager of Cendant Internet Engineering
and has to his credit sites like NetMarket, RentNet, Match.com and
Century 21. He works out of the Cambridge office. With an initial
$1 million from 15 friends, and an additional $20 million from Caterton
Simon in New York, TradeOut.com was able to open offices in Ardsley,
South Texas, Los Angeles, and South America as well.
In the past 60 days, TradeOut.com has grown from a 10-person start-up
to a company with 85 employees and an international sales division.
The marketing department is pushing the pre-IPO company in 70 different
trade publications, and through a mass mailing blitz. There are plans
to go public in October or later, says Fields.
The sales team is busy doing their part too. When a consignment item
goes up on the site, they go to work calling companies that are likely
be interested in the deal. "If you look at the trend in E-Commerce,"
says Fields, "folks are realizing that the traditional method
of doing business is very important. To just build a site, and hope
people show upon it, is very difficult."
TradeOut.com does the matchmaking, but sellers and buyers finalize
the terms. Sellers post unused assets for a mere $10, and sit back
as the bidding begins. Once the highest bid comes through, TradeOut.com
washes its hands of the deal — taking a five percent chunk of
the highest bid — and industry professionals deal with details
like inspection of goods.
It is not the first e-bazaar to bring commercial buyers and sellers
together, but TradeOut.com is the only business taking a horizontal
approach to exchange. "In retrospect it looks glorious," says
McCagg. "It was an industry I thought I could get into where there
wasn’t competition. It’s relatively easy compared to running my last
company. It gets me nervous when I say it, but I don’t know any competitors
— Melinda Sherwood
08512. Craig Fields, vice president. 609-860-0850; fax, 609-860-0853.
Home page: www.tradeout.com.
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