In November 1999, Patrick Grady gathered some friends and advisers to talk about creating an Internet service that would transform the way businesses services are delivered to large corporations. The idea was to build an on-demand Web services platform and a digital personal assistant that takes the hassle out of making travel and dining plans, shipping packages, setting up Web conferences, procuring event tickets and scheduling parking or car services. The metadata-driven technology would take into account user and business preferences and normalize service interfaces so that users could access data from several providers, such as airline or hotel reservations.
In 2005, I met with Grady as his company, Rearden Commerce, was just beginning to gain some customers. He had received $42 million in venture capital at that point and a few big name customers, including Cingular, Genesys, JDS Uniphase, Motorola, Warner Music, and Whirlpool.
Flash forward to July 2008. Rearden Commerce is flush with $200 million in total capitalization, more than 2000 customers, 1.5 million users, more than 160,000 merchants, multiple revenue streams and lucrative distribution deals with minority investors American Express and Chase (which is owned by J.P. Morgan).
Grady has big ambitions for his company. He believes that Rearden Commerce will emerge as one of the top Web companies, alongside Google, Amazon and other giants, in the next several years. In fact, he thinks that Rearden Commerce's Personal Assistant will become for business and consumer users what Google is to the search. He is not far off.
"The market is that big. It's a unique opportunity in both business-to-business and business to consumer arenas. I don't know of another company outside of Microsoft that addresses enterprise, mid-size, small business and consumer markets," Grady told me in a recent interview.
As a kind of validation of Rearden Commerce's rising star, Google has been rumored to be sniffing around the company, although both companies have refused to comment on any relationship they might have. I would guess that Amazon, Microsoft and others might find Rearden Commerce attractive, even at a billion dollar-plus valuation.
Rearden Commerce's business-to-business service is not yet profitable, but Grady expects to hit break-even in 2009. With American Express and other distribution partners, the company is adding 30 to 50 customers per week, and enlisting new merchants and application providers, Grady told me. The company collects highly valuable usage data and generates revenue from target ads and by taking a cut from every transaction. The revenue share for e-commerce services, such as event tickets and dining, range from 6 to 25 percent per transaction. For applications, such as WebEx's Web conferencing service, the fees are 25 to 50 percent of the transaction. In addition, partners, like American Express, pay an annual licensing fee for distribution rights to Rearden Commerce's service.
This month the company filled out its business services with the acquisition of ExpenseWire, which provides on-demand managing employee spending, including expense reporting. In addition, the company is spending its war chest to expand outside the U.S. The service went live in the UK recently, and will expand to Western Europe later then year and into Asia in 2009.
But the major new focus and investment area for the company is expanding into the consumer space. In May, Rearden Commerce announced that it is working with Chase to develop a customer loyalty program for the financial firm's millions of credit card users. The new consumer service will go into beta test in Q4 2008 and be available in general release in Q1 of 2009. Among the business to consumer services planned are health care, such as making doctor and dentist appointments; personal services, such as finding a gardener or yoga class or golf tee times; home repair, such as Service Magic and Service Master; and purchased goods as in what Red Envelope offers.
In addition, Rearden Commerce is bringing social networking capabilities to its platform. For example, like Dopplr, the Rearden Commerce Personal Assistant could let users know what "friends" in the network are in what locations. Members of the Rearden Commerce network could also rate items, such as hotels, bars or car services. "I don't care what the purple-headed kid in Potrero Hill thinks. I want ratings sorted. If I have a meeting with Chase and go to a bar close by, it might be too loud and I can't get any business done. I would want the result filtered by what 9 or 10 CEOs think," Grady said.
Grady also plans to open up the Rearden Commerce platform. "You will see this summer at least two pretty significant announcements from partners regarding how open we are. We will make core parts of platform available to some people who compete with us. We don't want to hold users captive and want to give them access to best of breed applications," he said.
If Grady is to fulfill his dream of joining the pantheon of Web giants, Rearden Commerce will need to make its personal assistant available to any user, and with a less clunky name. With about 1.5 million users today and over a billion Internet users, the company is still emerging from its cocoon. If it successful in its next growth phase, Rearden Commerce won't be an independent, private company for long.