The Minds Behind the Madness

What inspires someone to sacrifice sleep, sanity and free time to start a dot-com company? Usually, they'll see an unmet need and find a way to meet it. Find out more about a few of the minds behind the madness -- those who dreamed up solutions and...


But as a dot-com CEO, something has to give. "What suffers are friends and your health a little bit as you give up sleep," Baier says. "I try to work out, too, but meetings almost always supercede my workout schedule."

Previously working at a company that provided software to manufacturers and distributors, Baier noticed a great deal of fragmentation, lack of resources and other problems in the purchasing process for the $187 billion market of industrial and facility supplies. This prompted him to co-found PurchasingCenter.com in mid-1999 to meet the needs of maintenance, repair and operation (MRO) buyers.

Before starting PurchasingCenter.com, Baier and his wife beefed up their savings account so he could go for a year without income if needed. Fortunately, this hasn't been necessary. "Venture capitalists want the early folks starting a company to have some salary so they stay focused on the business and are not figuring out how to get a couple hundred dollars each month for food and rent."

Located in a suburb of Boston, another high-tech hotbed, PurchasingCenter.com is surrounded by individuals and companies interested and involved in e-commerce. As of last summer, the area boasted a 1 percent unemployment rate for high-tech jobs.

The high-tech savvy in the Boston area and around the country equalled opportunity for Baier and PurchasingCenter.com. "We realized that use of web browsers had increased significantly by purchasing agents," Baier says. "Some 90 percent were using them compared to 20 percent three years ago. We saw it as an opportunity to get online without needing a lot of tools."

PurchasingCenter.com offers a consolidated purchasing process for sourcing, buying, summary billing and reporting, along with group purchasing power and pre-negotiated contracts. In "My Purchasing Center," purchasers can automate requests for quotes (RFQ) with their individual lists of suppliers; set up a list of "favorites" or frequently purchased items; and view purchase and quotation history and a list of pending and closing RFPs. The site also offers news articles, message boards and purchasing-related job postings.

Baier started PurchasingCenter.com as a private company and raised about $34 million through venture capitalists. "There are nervous moments as you're closing financing," he says. "Despite the fact that people give verbal OKs, you never get comfortable until the money is wired over. There is some anxiety over that because people quit good jobs to come work for you."

Over time, Baier found the need to change the company's business plan in response to drops on Wall Street. "It's amazing how changes affect public and young private companies just as quickly," Baier says. "We changed our spending plans. For example, we reduced our marketing budget from $8 million to $2 million and slowed our hiring plans."

For others interested in starting dot-com companies, Baier stresses the importance of being able to build a good team quickly. "Time to market is so important," he notes. It's also important to talk to enough people -- potential customers -- to validate the idea.

When PurchasingCenter.com first started, the main focus was on building tools for the purchaser. Now, the team is also focusing on tools for suppliers and distributors. "We've moved away from the customer acquisition mentality to the profit mentality. It's a land grab at all costs," Baier says. "We, and many other companies, are currently in that mode."

But MRO buyers' needs still provide Baier's main focus. To stay in touch with their needs, the PurchasingCenter.com team holds focus panels of MRO buyers every couple of weeks to review products and web site capabilities. During the development stage, PurchasingCenter.com staff also paid purchasers to come in for three to four hours for more extensive feedback sessions.

"This is a very literal group," Baier says of MRO buyers. "They tell us they don't like sites with too much information. And they want to know that this is an industrial and not a consumer site. If there's anything that feels consumer-ish, they will hold it against us." Baier mentions a "$5 off if you buy today" type of promotion is one that would smack of consumerism and turn off an MRO buyer.

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