Reinventing Ventro

New CEO lays out new course for an e-marketmaker-turned-software company

Tempe, AZ  December 4, 2001  When Ventro announced the promotion of its president, Ted Drysdale, to the posts of chairman and CEO last week, it marked the completion of the company's transition from e-marketmaker to software company.

Ventro rode the wave of B2B e-commerce that swept the technology sector in 1999 and 2000, hosting e-marketplaces in a variety of industries. But Ventro, like other e-marketplace hosts, fell on hard times when the so-called "Internet bubble" burst, beginning in mid-2000. By December of that year, the company announced a restructuring, moving from e-marketplace host to e-marketplace technology provider.

Then, following the acquisition of privately held software company NexPrise in August of this year, Ventro dropped the e-marketplace focus altogether and turned to developing and promoting NexPrise's lineup of business collaboration solutions. The ascension of Drysdale, who had been CEO at NexPrise, to the chairman and CEO posts at Ventro last week signaled, in a sense, the final stage in the company's transformation into a software provider.

Drysdale, a 30-year software industry veteran with experience at Ventro competitor PTC (formerly Parametric Technology), discussed Ventro's future and the challenges ahead for the company and its customers in an interview with iSource last week.

iSource: What do you bring to your new position from your experience at NexPrise?

Drysdale: At NexPrise we built applications for the manufacturing environment, for quote management, design collaboration and project management. The reason that it makes sense for me to take over [at Ventro] is because that's the direction of Ventro now. We really are a provider of applications for the manufacturing environment, to provide either quote management or project management, and that's my strength.

iSource: Is what you're offering now a fundamentally new direction for Ventro?

Drysdale: Oh, yes. It's not even the same business. Ventro was in the business of being an exchange to allow people to acquire predominantly commodity items, whether that was in the healthcare industry or any number of industries. Today we're not in any of that business. We've completely discontinued all the exchange business and we're 100 percent focused on providing collaboration tools for quote management and project management. It's 100 percent different.

iSource: That being the case, do you feel like you have a certain baggage to overcome with the Ventro name?

Drysdale: I guess in some communities. A lot of our customer base had never even heard of Ventro because they weren't in the exchange business. So from a business side, I don't think it's an issue. Certainly there's a legacy to the financial side of Ventro that we're going to have to deal with. But, at this point, we want to be able to prove ourselves as a business and be a viable business and then the financial community will pay attention to us. Until we do, I don't think they'll pay attention to us anyhow.

iSource: What industries are your targeting?

Drysdale: We have some high-tech customers, but we really are focusing our efforts on aerospace and automotive, and that represents the bulk of our business. We're still a relatively small company, so there's lots of opportunity for us to grow in those segments.

iSource: Why the focus on those two verticals, automotive and aerospace?

Drysdale: We want to stay focused on providing solutions in an industry where we have domain expertise, where we can really provide them value, and then expand.

If you can do engineering change notice or you can do quote collaboration for a discrete manufacturer, you can certainly do it beyond high tech and automotive. You can do it in the process industry and you can do it in the electronics industry. It's a matter of flavoring the presentation with the terminology in those industries. In the automotive industry they refer to program management as being a program book, and everything is divided into a set of chapters around building an item for an automobile in a program book. In the aerospace industry, it's a "project." So just getting the terminology right and understanding it are important for a little company to keep credibility.

The other piece of it is that we already have customers in those industries, good reference customers, and customers to help us drive the technology around solutions, and we want to leverage that as much as we can.

iSource: What are the challenges that your customers face?

Drysdale: Five years ago, manufacturers had complete control of all of their design and a large component of their assembly and the delivery of products. Then, over the last five years, they started to outsource more and more of the actual manufacturing of that product. So the difficulty was creating a communications vehicle between the manufacturer and provider to build a product.

Now it's moving even more and more to where they are outsourcing key components of the design. If you take an automotive manufacturer, for example, it's not only outsourcing the wire harness to a wire harness supplier  it's outsourcing the design to the wire harness supplier. So the ability to collaborate and communicate with people outside the firewall has become a much bigger challenge for them.

It's the same for a project. If you're building the next Sonic Cruiser for Boeing, there are going to be thousands of suppliers that participate not only in the manufacture of it but also in the design of it. So managing a project to build a new aircraft requires, from the very beginning, the ability to deal outside the current enterprise. Yet you still have all the requirements of security. You're dealing with suppliers who deal with your competitors, so trying to keep control of what they see and how they see it, how they collaborate on it, yet still be able to get their input on it, is the challenge for us.

iSource: What do you view as Ventro's competitive advantage?

Drysdale: Well, we have this great technology. NexPrise had spectacular technology, and it solves this problem. What Ventro provides is adequate capitalization. So we've got spectacular technology and adequate capitalization to go out and compete with anybody in the space that we're pursuing now, and that's a huge advantage. We have enough cash so that we can sustain a turndown in the economy for the next two years if that's what it takes. And yet at the same time, with our technology, we've got a huge lead on competitors, and we're going to continue to keep that lead.

iSource: Who do you see as Ventro's primary competitors now?

Drysdale: It depends on the industry. In the automotive industry, we see MatrixOne, and that's predominantly around program management. In discrete manufacturing industries, or the aerospace industry, we're seeing some of [PTC]. On the quote management side, we see a lot of people talking about it, but none of them delivering anything. So when I said earlier that we have a lead on the market space, it's because we've been delivering products for these customers for some time.

iSource: Still, Parametric and MatrixOne are pretty big companies. Do you feel a little bit like a David going up against a couple Goliaths?

Drysdale: Yes, but I think we have the advantage of being little. We can be quick on our feet. And this is the only business that we're focusing on.

iSource: In terms of Ventro as a business, then, do you see a clear path to profitability?

Drysdale: Yes, I do.

iSource: Care to make any forward-looking statements?

Drysdale: [Laughs.] No, I'd rather not do that right now. We are a publicly traded company, so I have to be cautious about what I say, which is a challenge for me because my background has been privately held companies.

iSource: What do the new additions to your board, Dr. John Glancy and Tom Jones, bring to the table that will be a benefit to Ventro moving forward?

Drysdale: My intent is to have board members that are industry-specific and add value to us from a management side and even from a reference side into the industry.

So we're looking for Dr. Glancy to give us some help in the aerospace industry, and to validate our thinking. He adds an enormous amount of value on the experience side, on the industry side and on the business side. And Tom Jones has been the CEO of a number of different companies. So as we discuss managing the business as such, he has a lot of experience, including a lot of experience in the Internet space.