Focus On Quality

Bid4Assets, founded in November 1999, auctions the assets it gets from surplus government properties and bankruptcies, ranging from office furniture to buildings to financial instruments. The company, which expects to be profitable by mid-2002, has only 35 employees, and its network of contacts is small. Standing alone, the company’s chance for success was slim, says Executive Vice President David Marchick.

Marchick made a list of auction leaders in the markets Bid4Assets wanted to penetrate: real estate, financial, bankruptcy, liquidation and food services. His criteria were multilayered. He looked for leaders whose network of contacts, service capabilities and sales staff would benefit Bid4Assets without incurring added overhead. In addition, he wanted companies whose culture and mission fit his company’s mix of traditional and entrepreneurial endeavors. In exchange, Bid4Assets offered ties to a Web front-end and the technology supporting it.

"We wanted to partner with a leader that was more established than us and who was interested in using auction technology, but one that didn’t want to develop it themselves," Marchick says.

The result was a partnership with Trumbull Services, a subsidiary of The Hartford Insurance Co. Trumbull handled the administrative side of bankruptcy court claims and had a vast network of contacts in the bankruptcy field. In August, The Hartford invested $4 million in Bid4Assets. Trumbull gave the Silver Spring, Md.-based company access to its contacts, and now the two companies sell bankruptcy claims on Bid4Assets’ auction site. They also partnered with SB Capital of Dallas, a leading liquidator whose sales and inventory force let Bid4Assets expand its sales capabilities.

For Trumbull, the partnership offered a way to get on the Internet without hiring a staff to develop a site. Bid4Assets had a business model that differed from every other startup Trumbull interviewed, says Lorenzo Mendizabal, vice president of the Windsor, Conn.-based company. "We looked at five or six other companies, none of which are still in business," Mendizabal says. "There was an enthusiasm, vision and strategy that attracted us to Bid4Assets, and that energy helps us be more entrepreneurial."

"We had done only online auctions, and we knew a large part of the liquidation business is more amenable to offline auctions," Marchick says. "Someone in California is not going to fly to Washington, D.C., to buy 10 cubicles. Since we have only 35 people, sending 10 of them around the country to round up material made no sense. SB Capital had people all over the country who could handle inventory, live auctions and equipment removal."