Silicon Valley based Rearden Commerce is a company that I’ve spoken to a few times over the last year to hear what they were up to. They are well known in enterprise/business solutions circles, and in a few months they are going to put one very large footprint down in the consumer space as well.
The best way to describe Rearden Commerce is “mashups for adults.” Like some very early stage startups we profiled last week, they are targeting global services – hotel, airline, restaurants, rental cars, shipping, event tickets, and parking. Eventually they’ll dip down deep into the long tail and include things like doctor and dentist appointments, massages, etc.). In total, services are roughly 60% of the worldwide economy.
Their strategy to date has been to sign large corporate customers and create customized websites for their employees. The service acts very much like a personal assistant. Set your profile up with the types of restaurants you like, whether you like aisle or window seats, and your preferred car provider, and Rearden will book all aspects of your trip for you.
Rearden will also keep track of reward miles and points from airlines, hotels, rental cars, etc., and lets users use those points to book additional travel and other services. Cancel a flight? No problem. Rearden keeps track of the credit in its system and suggests you use it the next time you travel.
They charge corporate customers a yearly fee that ranges into the millions of dollars, and are able to take a fee per transaction as well. Companies like it because they have to hire fewer administrative staff, and have excellent visibility into discretionary travel and entertainment spending (because it all goes through the site). Companies can also control costs easily – if they are having a rough fiscal quarter, they can simply turn off business class travel and expensive hotels.
Services are pulled into the system using whatever interfaces are available. This is a big problem (since they have thousands of service providers), but it’s also a huge competitive advantage now that they’ve done it. It will be very hard for anyone to scale to their size very quickly. No one else has even tried, so far.
Rearden allows employees using their service to create a personal profile as well, and plan their travel and entertainment that isn’t business related with a different profile and credit card. That service has proved to be massively popular. And so their next step is to offer the service to anyone through resellers. In 2008, they’ll release their own consumer branded service, too. They’ll also begin allowing smaller service providers to hook into their system (that’s when the doctors, dentists, flower shops, etc. will start to join in).
The company won’t disclose their revenues to me (no matter how many times I ask), but it’s clear that they already have substantial cash flow. They say they’ll be cash flow positive by end of year, with 340 or so employees (they’ll double from their current headcount of 160). The vast majority of their headcount are product focused and/or developers – the company still only has six sales people.
Rearden Commerce was founded in 2000 and has raised $100 million in funding from Foundation Capital, Oak Investment Partners and American Express. The American Express investment came late last year as part of a larger deal – Amex is now reselling Rearden Commerce to its corporate customers as well. This company is hiring like crazy.
