Enterprise 3.0 In The Supply Chain: GT Nexus Cofounder Greg Johnsen (Part 3)

Sramana: When you started GT Nexus, who were your first customers and what did they buy?

Greg Johnson: We started the company in 1998 and we won the consortium deal in 2001. In 1999 we were focused on building the software platforms we needed and by 2000 we were talking to the big carriers and getting meetings with APL. We got a lot of high-level meetings with the CEOs of carriers. This was back in the dot-com heyday, and everybody in the world was looking to take advantage of e-commerce.

In parallel we were calling on HP and Home Depot. For them we had the procurement contract management solution. That is where we lived. The sales team was focused on securing enterprise customers for ocean transportation management services. We called on VPs of transportation.

Sramana: What is the business model?

Greg Johnson: It is predominately an enterprise customer revenue driven model. These are services sold as subscriptions. We have dozens of services but we typically start with a core service for our customers. The way in typically is supply chain visibility because that is very strategic.

Sramana: When you started you had 13 carriers. Was your money coming from the carriers, or was it coming only from the enterprise deals you managed to find?

Greg Johnson: The money came from both. We get subscription software services revenue from customers but we get transactional revenues from service providers who plug into the platform to receive electronic messages. The great thing about our model is that a single constituency does not drive our revenue.

We monetize with enterprise customers through software subscription fees that scale based on how many subscriptions they use and how big their organization is. On the service provider side, the benefit to a carrier or freight forwarder that plugs into that electronic network is not just their ability to automate processes in support of their customer, but that they can also pull clean, trusted data from the network electronically instead of having someone pick up the phone and enter the data they hear manually. Those calls used to cost them $35 to $45 a call. The electronic feed they get from us is available as a transaction fee which is around 2 to 5 dollars per transaction.

Sramana: How many transactions do you do?

Greg Johnson: The market is still relatively unpenetrated. We think that 8 to 10 percent of these transactions are electronic. There is a lot of head room. Most of those organizations are sending faxes. Parts of the business have gone electronic, but there is a lot of room for electronic commerce to grow. The business model today is definitely enterprise customer driven. They pay the deals of the service providers.

If you win a major anchor tenant, they have the power to bring their service providers in. We went for the big multinationals, and they have brought thousands of their partners with them. We have made it easier for their partners to plug in with no fee, but the moment they do plug in they start to see that there are other elements of the platform they can take advantage of. That is a revenue opportunity for us.

This segment is part 3 in the series : Enterprise 3.0 In The Supply Chain: GT Nexus Cofounder Greg Johnsen
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