Website Recycling Company, or Webreco, an online spinoff of the nearly 100-year-old liquidation company Gordon Brothers, intends to resell or license software mostly from defunct technology companies. On Tuesday, the company is expected to announce its first major deal.
Boston-based Webreco, launched in May, is expected to announce that it has been chosen to sell software developed by former retail giant Montgomery Ward, Webreco President Gage Andrews said. Montgomery Ward closed its doors in December.
While other liquidation companies have specialized in selling the computers, servers and Aeron chairs of failed dot-coms, they have left behind software that the companies often spent millions of dollars creating, Andrews said.
For instance, Montgomery Ward, which was around for almost 130 years and certainly would not be classified as a technology company, spent nearly $100 million on creating software that did everything from helping track orders and inventory to sending e-mail to automotive customers reminding them to change their oil, Andrews said.
"We think there is a value to companies taking advantage of someone else's investment instead of paying to create it themselves," Andrews said. "We identify the right industry and the assets we want to sell and then contact potential buyers."
During the Internet boom, a good portion of the billions invested in tech companies that have since fallen from grace was spent on paying legions of software programmers. Often, they wrote the code that powered the companies' online efforts.
But as they began to close their doors and auction off assets, many dot-coms struggled to get top dollar for their software, Andrews said. He explained that dying dot-coms were frequently without enough employees to hunt for buyers, and there are few liquidation companies that have the expertise or inclination to resell software.
In addition, buying second-hand software in the past has meant having to pay in-house programmers to learn the code's intricacies. But even with that, glitches could still arise that a buyer was unprepared to fix.
Once a company turns over its software, which Webreco leases in order to sell it, the company sends in a specialized team to analyze and then dream up new ways the software can be used. More functions for the software means the potential for more buyers.
Each member of Webreco's analyst team, or "re-purpose team," brings with him or her expertise in one of four areas: marketing, technology, business or sales.
"The problem with the software developed by some Web companies was that it was written for a highly specific use," said Gabe Fried, one of the team's members. "We've got to think beyond the functions the company intended for and find out what it really can do."
As for the risk involved with used software, Webreco tries to limit it by sending in its re-purpose team to learn the code for the customer so that Webreco can provide technical support. The team studies the software's supporting documentation and in some cases provides access to the original team of developers.
Yet, with all the precautions, the company offers no guarantees. Webreco sells the software "as is."
"The final payment wouldn't be made unless the software was up and running," Fried said. "And in the end, any risk is taken care of in the price of the software."
Webreco said it plans to make money on a commission basis, taking 20 percent to 50 percent of the resale price of the assets. If that sounds like a large cut, Andrews says that in many cases, "there is no value to the asset unless we go in and create it."
Drumming up business will not be hard for Webreco, Andrews said. In the Montgomery Ward deal, Webreco was hired to find a buyer for the retailer's software by Consor, which specializes in selling intellectual property other than software.
But in most other cases, Andrews said, Webreco will work closely with Gordon Brothers, which has managed the liquidation for a host of dot-coms during the Internet shakeout.