ChemConnect as B2B Success

WSJ has a story that will warm the B2B fans (any still left): ChemConnect has survived and thrived to become “the biggest online exchange for chemical trading, with volume of $8.8 billion in 2002.”

One key to ChemConnect’s survival was speed. It was first to market, launching an Internet bulletin board in 1995. It was also the fastest and best fund-raiser among its dozens of competitors — bringing in $105 million by the time the stock-market bubble burst in 2000, compared with $50 million for its chief competitor, Mr. Beasley also realized that the only way to persuade traditional chemical companies to trade online was to allow the industry to profit from ChemConnect — so he sold about one-third of the company to more than 40 chemical companies.

ChemConnect still isn’t profitable, although it expects to break even this year. And while it is used by about 44% of the industry, many sellers wish there were more buyers online, according to a survey of 250 chemical buyers and sellers by AMR Research. “The key now is to basically be as patient as you can, but to continue to push the adoption curve,” [founder] Mr. John Beasley says.

With its hefty cash hoard, ChemConnect took the opportunity to buy competitors, including and an industry-owned exchange. Mr. Beasley also recruited a seasoned chemical executive, John Robinson, to run the company as chief executive, while Mr. Beasley remained chairman.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.