Rearden would rather buy Google

Summary:If Google bought Rearden Commerce, as one analyst has suggested, it would derail the latter's strategy of conquering the corporate market first on its path to world domination.

AMR's Bruce Richardson has garnered attention with his speculation that "Google should buy Rearden Commerce." I'm not surprised to learn that Rearden's CEO and founder, Patrick Grady, "laughed" when Richardson called to ask his opinion. I met Grady last week, and his ambitions for Rearden are to rival Google in size rather than getting swallowed up before realizing Rearden's potential.

Sure, Google has the money to buy Rearden, but I'm not sure that it has the imagination or the agility to benefit from the transaction. Grady has spent five years carefully developing Rearden as an on-demand 'service grid' that connects buyers and sellers of business services, aiming to make it as easy as possible for users to compare and select from multiple suppliers. Like Google, the objective is to put Rearden on every desktop. But unlike Google, Grady's strategy has been to establish itself in the market by winning corporate deals first.

That strategy has been bearing fruit this year, and I met Grady while he was in London last week to deliver a keynote to the Association of Corporate Travel Executives' global conference. Selecting and booking travel is an obvious early target for Rearden; it's out of control, the old methods don't work any more, the market is well defined, and it plays to some of Rearden's uniques as a services marketplace with a consistent user interface and the ability for administrators to set fine-grained business rules and workflow.

Grady’s strategy is to seek out corporate deals to get on every desktop in an organization. For example pharma giant GSK just signed a deal that is set to put Rearden on 140,000 desktops. That has two network effects. First of all, it brings in suppliers who want to get on those desktops and win trade from that organization. After just a few man-hours of work hooking into the XML interface, any supplier becomes available to all of Rearden’s customer base, both now and in the future. It’s a compelling proposition.

But just as important for Rearden’s future expansion, “That’s 140,000 consumers,” said Grady. Rearden hasn’t rejected the consumer market, just chosen to reach it from a different route — one that secures those all-important supplier deals.

If Google bought Rearden, this crucial strategy would be completely derailed. Google's track record in the corporate market is abysmal, and unless it were prepared to take a few lessons from Rearden's management — unlikely given its current arrogant mood — it would just throw away any chance of furthering Rearden's progress. In fact, that's what Richardson effectively recommends: "Google ... could eliminate the salesforce, give the software away, and make money from advertising and transaction fees." That's a sure-fire way to guarantee no more corporate deals — and probably the loss of several already signed.

On the other hand, if Rearden remains independent and continues on its current path, it has established such a lead in building and establishing its platform it is difficult to see anyone else catching up with it. Travel, by the way, is just the starting point for its 'Employee Business Services' application, which also embraces package shipments and other categories, while EBS is just the starting point for its Commerce Platform, which Rearden expects to open out to third-party application builders next year.

If it executes successfully, Rearden will indeed end up on every desktop alongside Google, Amazon and others. By that time its software probably will be free, and its revenue from transaction fees may even end up bigger than Google's. Are Grady and his backers going to throw away all that potential if Google comes along and offers them a huge buyout offer? It might be tempting, but somehow I doubt it.

Topics: Google

About

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant. He founded pioneering website ASPnews.com, and later Loosely Coupled, which covered enterprise adoption of web services and SOA. As CEO of strategic consulting group Procullux Ventures, he has developed an evaluation framework t... Full Bio

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