This headline from yesterday, not 1996, really caught my attention:
B2B Marketplace Kinnek Raises $10 Million From Matrix To Help SMBs Find And Purchase Supplies
Kinnek is a site that allows companies to post their Requests For Quotations (RFQs)(presumably for slightly arcane vertical-specific equipment or supplies–otherwise Grainger, Staples or Amazon might do) and collect quotes from qualified, rated vendors. Vendors will presumably pay to subscribe to certain categories and/or pay a success fee.
Kinnek is an example of Matchmaking, one of the nine value propositions B2B Industry cloud platforms provide. Matchmaking in B2B has been around since before the dawn of the millennium. For example, some of the best people I have met in software were at SupplierMarket in 2000 trying to do the same thing in manufactured parts when Ariba bought them for $581 million (thankfully in stock). Since then almost every industry and some cross industry companies have tried a form of this RFQ monetization:
- I helped start a matchmaking service at Ariba called Ariba Discovery
- Mfg.com has been picking away at manufacturing and textiles for a while
- BuyerZone has been a form of this service in broad horizontal categories
- elance and odesk are a form of this in contract labor
- There are several example in the legal industry
- Fedbid provides this service for the federal government and now commercial companies
- And one could argue that Cvent is by far the most successful form of this in hotel meetings and events (though they do a lot more)
There are many more matchmakers that have gone by the wayside. This is a really hard business, especially in the SMB segment where Kinnek seems to be playing. There are all sorts of reasons these businesses are hard and take a lot of capital:
- These sites by their nature target “spot” versus recurring purchases, which are hard to monetize
- Related to the above, it is easy for participants to go around the system after an initial introduction
- Google and Amazon search and content just keep getting better
- There are lots of small commerce and non-commerce sites by vertical
- Amazon spent $157 million on Google adwords last year, competing with that is impossible, so how can you drive buyers to post RFQs on your site?
- Which supplier gets the RFQ? Is it based on ratings or payments?
- If the RFQ does not add structure and content expertise, how different is it than sending an email requesting a quote?
These businesses monetize a flow of RFQs that they generate. How Kinnek will economically generate that flow is the critical question. The Matrix people are very smart and make a lot of good investments. Perhaps they have an answer to that question that I have not found or perhaps they are willing to spend even more capital. If not, they may eventually be calling it DisKinnek.