Rich Rawdin is still playing his role from the dot-com gold rush. Unfortunately, he?s not a bank.
An Internet entrepreneur is perhaps a more appropriate title. Back in 1999, Rawdin, who at the time was vice president of finance at Crown Asphalt Products, Salt Lake City, envisioned a place where members of the asphalt industry could learn, share ideas and buy and sell products electronically. After putting together a business plan and showing it to Jeff Fishman, AsphaltExchange.com was on its way to joining the likes of e-STEEL and PaperExchange.com in the business-to-business Internet circuit.
"I loved the idea of e-STEEL and PaperExchange to have a central online vertical hub for the whole industry to come for information, to transact business. When I looked at those two, a light just went on in my head. I said, ?Hey, if they can do it for paper and steel why not asphalt??" Rawdin told ROADS & BRIDGES. "It just made a lot of sense to me. It still does."
Wall Street, however, went on to beat several dot-com companies senseless. Rawdin?s days as a website opportunist may be numbered, AsphaltExchange.com is currently up for sale, but he still thinks the promise of such an idea is limitless.
"Even though Internet stocks have taken a pounding, I believe the Internet and b-to-b?s are here to stay," he said. "I believe within three to five years most businesses will be using the Internet as one of their primary business tools."
Just a phase
Soon after the business plan was installed, Rawdin and Fishman went on a management team manhunt. Mike Fowler, who eventually became CFO of AsphaltExchange.com, Steve Bench, executive vice president, and three "top notch" marketing people joined the effort, and over $1 million was raised to cover start-up costs.
"When I put together the business plan, I never dreamed we would have a management team like this," said Rawdin. "I just never forsaw the Internet stocks crashing the way they did. It affected a lot of the Internet companies."
The growth of the site was outlined in three phases, but funds dried up before the team could reach step two.
The initial phase covered the foundation. AsphaltExchange.com contains a free membership application, catalog and auction services, links to different sources in the industry, discussion groups and basic online information.
A "Demo" window serves the e-commerce function. It shows the user how to set up a catalog of products or an auction online. Rawdin hoped the "live" auction would generate a lot of excitement from asphalt equipment companies. But despite the website averaging about 400 "unique" hits a day, few have taken advantage of the idea. Website usage, however, wasn?t the focal point of phase one.
"Our focus in phase one was to get the site online, to start building the membership base," said Rawdin. "We never expected much usage in phase one."
Activity was expected to flourish in the second round of upgrades. Private marketplaces, new interfaces and an RFQ/RFP arena were some of the customized solutions. Request for Quotations (RFQ) come in handy for users in search of a particular need (e.g., equipment). After making a post, prospective sellers try to strike a deal. Request for Proposals (RFP) involve state agencies coming online to submit bid information.
"We were going to do another round of financing and roll out phase two," said Rawdin. "We thought the financing would come pretty easily. That didn?t happen."
Funds might be exhausted, but the enthusiasm isn?t. Over the last six months, the AsphaltExchange.com team has met face-to-face with just about every major association in the industry. A bulk of the major companies and publications also have been contacted.
"We?re like pioneers," said Rawdin. "We got people thinking about e-commerce, and somebody is going to do very well with AsphaltExchange.com or a similar type of Internet company."
Rawdin doesn?t think the website is a hard sell, mainly because most of the hard work is already out of the way. The first wave of money and energy centered around educating the marketplace.
"Our guys were always on the road. They were on the road at least half of the time. The other half they were on the phone."
The situation on Wall Street could improve as well. During the initial "gold rush," thousands crammed into the dot-com neighborhood. The hype was big, but profits didn?t materialize as fast as some had hoped, stock prices started to plummet and investors bailed.
"The stocks were just beat up," said Rawdin. "I followed some stocks that were $244 a share and went down to $1. There were too many Internet companies, too much competition. Things went drastically in the other direction."
Rawdin believes Internet companies will come back into play, but consolidation will form a healthier market. The numbers will be few, but the business models will be strong.
"Wall Street just threw a ton of money at the Internet companies initially, and a lot of the companies, particularly the business-to-consumer sites, just had bad business models. You can?t undercut existing businesses, cut your margins, and go out and build the same type infrastructure and expect to make money."
The AsphaltExchange.com model is still evolving. The original thought was money would be generated through transaction fees, advertising and store fronts, which would basically allow an asphalt company to create an online store within AsphaltExchange.com. Rawdin now sees a major source of revenue coming from "application service providers."
"They will be providing online services for members of the industry," he said.
"We think (AsphaltExchange.com) is a great opportunity for a company that looks into the future. We?ve had several interested parties (looking to purchase the site), and we had an offer which didn?t close. I think something will happen. There?s just too much potential here, and we?ve done all the hard work."