TradingPartners: A Founder's Obituary

Today we welcome guest commentary from Chirag Shah, a founder of TradingPartners and the firm's former CEO. Chirag is currently Chairman of MarketMaker 4, an e-sourcing and market intelligence specialist.

Founded in 2000, TradingPartners was amongst the pioneers in the eSourcing movement. The company focused on providing "Fully Managed eAuction Services." This combination of capabilities represented a hybrid combination of eSourcing and consultancy support. With many large corporations struggling with understanding the role of eSourcing and lacking in-house expertise to operate such technology, the company found itself in an attractive niche and grew very quickly, twice garnering accolades in the Sunday Times TechTrack 100 league table of UK's fastest-growing technology companies.

The company took on venture capital funding from Kennet Venture Capital in 2005 and rapidly expanded into the USA and China. By 2006, revenues exceeded $10m with limited revenue concentration across geographies. It was a global, viable successful business.

Yet by 2007, I noticed as the CEO that we were starting to suffer from 'leaky bucket syndrome', where a company's growth starts to stall as it loses customers almost as fast as it gains new ones. Having familiarized and internalized the skills required to conduct eSourcing activities, many TradingPartners clients were seeking a commercial model that gave them more self-sufficiency and a lower cost per auction.

At the time, I proposed to the board that we needed to focus development efforts on a lower-cost, more flexible subscription-type service for the customers who were further ahead on the learning curve. The rest of the board did not share such concerns and our relationship soured. Marc Halpin took over as CEO, although as a principal shareholder, I remained on the board.

Through 2007-2010, the company experienced very little growth and by 2011, keen to find an exit for the business, Kennet brought in a new CEO, Mark Barnekow, to find another way to create value for the company. Frustrated by the board's unwillingness to simply recalibrate the business in response to customer (and staff) feedback, I left to start a new eSourcing company, MarketMaker4 with the aim of addressing those customer requests.

New CEO Mark Barnekow shunned the eAuction business that TradingPartners operated and bet the company on being able to develop a capability in spend analysis. The plan was always ambitious, considering there was no 'corporate DNA' in spend analytics and development budget was limited. In the meantime, eAuction revenues declined through 2011 and 2012 and started to impact the company's working capital position. In August 2012, an unexpected customer withdrawal left the company unable to meet payroll and with still no material revenues from Spend Science (their spend analytics product) the board put the company into administration (bankruptcy, in the US vernacular).

TradingPartners' initial strategy to use a managed services model to generate cash flow and scale the business enabled it to become a top 10 vendor in the eSourcing arena. But its failure to listen to customers meant that it did not see the "second bounce of the ball," which caused it to lose ground to new competitors with newer technology and more relevant commercial models.

Chirag Shah, Chairman of MarketMaker 4, an e-sourcing and market intelligence specialist, co-founded TradingPartners and formerly served as its CEO.

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Voices (3)

  1. John Hatton:

    Like other posters here, I was very fortunate to work at TP during the ‘really good years’.

    I joined the company having previously selected it as my chosen eSourcing partner whilst CPO at Scottish & Newcastle. During these interactions I grew to believe in the business and whilst it was far from being an obvious move for me, I took the leap in ’03 and never looked back.

    As Dave Bowen has already mentioned (and I know this sounds like a cliché), TP’s greatest asset by far was its people.

    As a business we really punched above our weight in that we were able to attract extremely high calibre people – something a small and fledgling business often finds it hard to do.

    The reason was simple: it was just a great place to work.

    Not only were we consistently deriving huge satisfaction from delivering massive value to our clients: we were also always celebrating internally. From Fridays in the Office (invariably ending in cocktails) to the many and memorable awaydays, the team spirit was immense.

    I lament the passing of the business but feel privileged not only to have spent four fantastic years there but, more importantly, also to have connected with some wonderful people along the way.

    Long live the TP Alumni!

    John H

  2. Jon Simkin:

    I was one of the first people to support Chirag and Sirish in the early days of TradingPartners, and even then I argued in favour of creating a more rounded offering (ironically underpinned by the solid foundation Spend Analysis provides). But the addiction to quick growth through the "flavour of the month" that eAuctions provided proved to be intoxicating and distracting. There have been too many good providers that have failed over the 20 year or so lifespan of eProcurement (so far) and most have been casualties from the pursuit of a quick buck. Who’ll be next?

  3. Dave Bowen:

    As a former employee of TradingPartners, I have to say that the greatest strength of that business was always its people. I was fortunate enough to work alongside incredibly bright and hardworking individuals throughout my tenure at TP – many of whom I still keep in touch with regularly today. In an effort to form a network of "TP People," a group on LinkedIn has been formed called TradingPartners Global Alumni where you can post resumes, job openings, share ideas, and catch up with old colleagues. I would encourage all ex-TPers to join as there are always new opportunities being posted!

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