Rearden Commerce is a survivor. Founded right before the dot-com bubble peaked in early 2000, it's gone from a tiny company based in a sketchy San Francisco neighborhood to a growing Silicon Valley online service that helps more than 2,000 customers manage business services such as shipping and travel.
In a recent e-mail interview, CNET News Executive Editor Jim Kerstetter asked Rearden CEO Patrick Grady what's next for his company. In the interview, Grady was surprisingly candid about whether Rearden is a good acquisition target, discussed how Rearden made it through the dot-com bust, and revealed himself to be a considerable fan of the author Ayn Rand.
The following is a condensed version of that interview:
Q: When I first met you, your company was in a little office on the edge of (San Francisco's) Tenderloin. What happened to that old office? Grady: When we moved into that office in February 2000, it was the very top of the bubble and the vacancy rate was one-half of one percent in San Francisco. It was the absolute cheapest space I could find and it came with some interesting "amenities." We had the XXX "Theater" next door, drug dealers openly conducting business in front, the homeless regularly making their way into our cubes, and the methadone clinic behind us. As soon as the real estate market collapsed, we ran from that lease and the neighborhood and never looked back!
Your company is certainly a survivor. How'd you make it through the dot-com bust? Was there a point when you worried the company was going to go under? Grady: Nuclear winter was much longer and far more difficult on us than most companies I believe. First, we had raised a seed round of only $2 million before the bubble burst as opposed to the war chests of others. Second, our initial target market was the "enterprise" and large corporations simply didn't begin buying in any consistent manner from start-ups again until 2004. Third, more than a simple Web application company, we were building out a general-purpose platform and an application in parallel. In summary, we had virtually no cash, no customers and enormous technical complexity to contend with from 2000 to 2004. We call it the character-building era.
We survived by recapitalizing the company and ridding ourselves of investors that didn't have the patience to be in it for the long haul, moving into an industrial warehouse for a fraction of the cost of our former space, buying our equipment from auctions of dead dot-coms (i.e. Pets.com, WebVan) and having employees exchange cash for stock. During one stretch, our executive team worked for a $1 annualized salary and I invested $3 million personally to provide confidence to other investors. We lived payroll to payroll through the nuclear winter.
When exactly did you change the name of the company from Gazoo (to Talaris and finally Rearden Commerce) and why? Grady: I always intended to call the company Rearden Commerce once we had established proof of the platform and the business model. The name Rearden Commerce was inspired by the literary character, Hank Rearden, in the book Atlas Shrugged. Rearden worked for nearly 10 years to create a new kind of alloy that was far superior to steel. Rearden Metal was lighter, stronger, and cheaper than steel, revolutionizing not only the steel and railroad industries but served as a core enabler for the industrial economy.… Read more
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