As a more “official” announcement (I suppose), I have joined the MFG.com global leadership team as SVP of Technology. One obvious focus of mine is to help evolve our technology platform. However, the thing that I am most excited about is the opportunity to also participate in evolving the MFG.com business model itself.

Since I’ve already been there for a few months, we’re knee-deep in a ton of different initiatives already, with undoubtedly plenty more to follow. As time permits, I’ll try to share some of the cooler things we’re doing here in my blog.

In particular, though, we are undertaking some things that will fundamentally shift the landscape of our sector. That’s the kind of stuff that gets me jazzed.

Cheers.

I was asked if I could suggest some “rockstar” caliber entrepreneurs that they could engage here in Atlanta (or Georgia). Ideally, this would be someone who was currently enjoying a great deal of success, and who also had “name recognition”. Obviously, the combination lends itself to “street cred”, and the ability to draw enough people to fill a venue.

I thought about it for a few minutes, and I must admit, I was a little stuck. I mentally sifted through a few dozen names, but they generally fell into one of the following buckets:

• They satisfied one criteria (are currently enjoying success in a venture), but not the other (they bring name recognition), or vice-versa.
• They are too “new” – they haven’t had a big hit yet, although I’m bullish on them. But they don’t have the street cred yet as a result.
• They had a great deal of success at some time in the past, but are not currently doing much of anything.
• They are ultra successful (cash-wise), and do not currently face the challenges that early-stage entrepreneurs face.
• They are “tired” – everyone has trotted them out over the past 5 or 10 years as a speaker, and thus wouldn’t bring a fresh perspective.
• They are “real estate” moguls, or in some other industry which is driven more by how much cash you can deploy rather than swinging for the fences as a bootstrapping upstart.

If I were to plot this as a distribution curve, there are lots of people on either side of the bell (the long tail!), but not many people inside of the sweet spot (currency/relevant now, street cred, success, etc.)

The only name that really jumped out at me was Mitch Free from MFG.com. MFG went from being bootstrapped from an Excel spreadsheet/sneaker-ware marketplace to an international B2B player backed by Jeff Bezos. And they are still going strong.

Who am I missing?

While I think there may be some gaps now, this won’t always be the case. I think in the next few years we’ll have a new wave of rockstars that will emerge from what is happening here now. But boy, if we were to hold a Woodstock and try to populate it with current Rockstars in Georgia, it wouldn’t be a terribly long show.

Cheers.

I’ve written on the issues of B2B marketplaces and online communities before (here and here), and I’m glad to see MFG moving in that direction. This will be a very interesting experiment for them.

I really like the fact that they decided to brand it “adjacent” to their marketplace site (MFG.com), rather than making it part of the marketplace site itself. This will provide a nice way to offer some free tools to non-marketplace participants as well, and hopefully serve to drive new subscription traffic into their crown jewel at MFG.com over time.

There isn’t much content up there yet – but this will change in the short-term I am sure.
Cheers.

One of the big catch-phrases of 2006 was “chopping wood,” I phrase I picked up from Rutger’s football coach, Greg Schiano.

Every problem at Rutgers can apparently be solved with a furious cutting motion. Worried about a letdown in next week’s game at Cincinnati? Upset over a low ranking in the Bowl Championship Series standings? Bogged down with homework?

“Keep chopping,” advised Greg Schiano, the Rutgers coach.

Schiano gathered his players in a meeting room and recalled the words of a sports psychologist he once met at the University of Miami who told the team that playing football was like chopping wood.

“We’re in the middle of a forest,” he remembered telling the team. “It’s dark. You have to chop wood. You have to start chopping.”

“It was so simple,” said Ramel Meekins, a defensive lineman. “It made so much sense. Coach ingrained it in our minds. He kept saying it over and over. It’s all we know. It’s all we do. Chopping is a way of life.”

The ax is a logical extension of the chop. The day before each game, players wear shirts emblazoned with axes. Top contributors are awarded an ax affixed to a block of wood. A sign on the front of the practice field includes two painted axes.

If Rutgers did not have a 9-0 record and an outside shot at playing for the national championship, anyone carrying a makeshift ax on campus would probably be apprehended. But because of the circumstances, the ax is a symbol of dedication and perseverance.

“We live by it,” Leonard said. “It might be funny to some people, but it works for anything in your life. Get fired from a job? Keep chopping. Get another offer.”

Established:

If you are an early-stage company that is reaching for the stars, here are a few established companies that are now able to see the forest and the trees quite clearly. And they got there because everyone on the team became a lumberjack.

MFG.com – The largest online marketplace in the manufacturing space. Until recently, these guys were Atlanta’s biggest sleeper story. Now with Jeff Bezos’ personal investment group behind them, the sky is the limit. They’re profitable, growing, and they have a mandate from Bezos to conquer the world. If you want some deep insights into MFG, check out the podcast we did recently with MFG founder and CEO, Mitch Free. I had dinner and a few beers with Mitch last night, and one of my takeaways (among many) was just how passionate he is about innovation and execution.

EZ Prints – These guys are easily my “turnaround pick” right now. Formed during the dot com buildup, these guys ran into serious troubles during the bursting of the bubble. The investors were ready to pull the plug and write them off as a loss, but Jamie Bardin (now the CEO, at the time the head of Marketing) put together a plan to salvage the company. The investors bought off on it, and the wood chopping began. The rest is history. Now with strong revenue growth, and a nice outside round led by General Catalyst out of Boston, these guys have cleared a pretty sizable chunk of forest.

Rising Star/Sleeper Pick:

VendorMate – These guys didn’t need a venture capital infusion, thanks to the earlier successes of founder/CEO Andy Monin (Broadsource), but these guys have built a chopping wood culture like nothing you’ve ever seen. Andy has a sign over his desk that says “ABC = Always Be CEO’ing”. Of course, it may as well say “ABC = Always Be Chopping.” Whenever I walk out of their offices, I leave with a renewed sense of urgency in my own dealings. I like that. They are in the ATDC right now, but my gut tells me that won’t last for long. Their financials are looking solid, and Andy has what it takes to get them to that next critical level. Whether or not they take on a round of outside capital down the road is to be seen, but I can tell you that Vendormate will be driving the terms of that deal should it happen.

Embryonic/Newborn:

It is hard to pick companies at this stage, because they haven’t been in the forest long enough for you to determine whether or not they are going to chop at all. However, I’m going with my gut feeling here.

Intellection Group – I’m not very high on the name of the company, but they have some cool technology nonetheless. They turn natural language into database queries. “Computer, how many blue widgets did we sell in the northern provinces of China five years ago?” Yeah, cool stuff. These guys are a TAG Top 40 innovative company, and deservedly so – founder Dave Bernard is a first class geek who may very well be on to something with this one. They have a lot of wood to chop yet, but everytime I’ve seen Dave in the past few months, he’s been sharpening his axe.

I have a LOT of early-stage Georgia companies on my radar right now, and over the next few months or so, it will be interesting to see how many of them make the lumberjack roster, and how many of them end up running in circles like these guys instead:

Cheers.

Mitch shares some very candid views on a variety of topics ranging from what its like to work with Jeff Bezos to what his view of the early-stage venture market is here in Atlanta.

This is a must-hear podcast if you are an early stage entrepreneur.

So how does a guy go from running up his credit cards and cashing in the 401K to growing through acquisition in Europe, expanding heavily into China and processing over $4.5B in transactions in just a few short years? Join us for a very intimate conversation with Mitch Free, the founder and CEO of MFG.com, one of the world’s largest online marketplaces within the manufacturing space.

As an added bonus, hear Mitch’s view on where the Atlanta early-stage venture market is, what it is like to work with Jeff Bezos and the Samwer brothers, and what is next for MFG.com. We also discuss the subject of several outside venture funds taking a closer look at the Atlanta market.

I have long felt that MFG.com (along with EZ Prints, Vendormate, and a few others) are leading the charge for early-stage Atlanta companies. These guys all continue to chop wood and gain traction. All of these plays have logical global expansion routes, although MFG is further along on that path than the others. Nice to see a globalization strategy paying dividends for them.

Here is the press release in its entirety:

###

Manufacturing Marketplace MFG.com Secures Funding for Global Expansion

European Founders Fund Joins Bezos Expeditions as Key Investors.
Funding Follows Record Breaking Year in 2006 for RFQs and Revenue.

Atlanta, February 5, 2007 – MFG.com, Inc., the largest global online marketplace for the manufacturing community, today announced the closing of a round of funding by European Founders Fund (EFF), based in Munich, Germany. Existing investor Bezos Expeditions, LLC, led the round of funding. The funds will be utilized for MFG.com’s continued global expansion and the creation of innovative new online services for the manufacturing community.

“The manufacturing industry is one of the largest industries in the world, it is global by nature and highly fragmented,” said Oliver Samwer, co-founder of the European Founders Fund. “MFG.com is bringing tremendous efficiency to the manufacturing industry and has garnered the all important critical mass that a marketplace requires to be successful. Our organization knows the marketplace business firsthand and looks forward to contributing our experience and expertise to MFG.com.”

MFG.com also announced that for the year ending December 31, 2006, the Company saw a new record in the volume of manufacturing projects sourced through the online marketplace and recorded the highest sales and revenue in company history. Marketplace volume increased by 103% and revenue was up 97% from 2005.

“The Internet and the manufacturing ecosystem are both global and an online marketplace for the manufacturing industry won’t work on a localized basis,” said Mitch Free, Founder & CEO of MFG.com. “2006 was a fantastic year for us with a lot of focus on creating a global foundation for us to build upon. With our acquisition of SourcingParts.com in Geneva, the establishment of a wholly-owned foreign entity in China, our new offices in Europe, and a strategic partnership in India, we are now a significant player in the most important buy and supply markets.”

“I am pleased to have Bezos Expeditions and European Founders Fund as partners,” continued Free. “Jeff Bezos and the Samwer brothers are highly successful entrepreneurs with hands on experience building large global online businesses. They invest their own money and bring a level of expertise and experience that pure financial investors just can’t offer.”

The MFG.com online marketplace, which facilitates billions of dollars in manufacturing transactions annually, supports 10 languages and 12 currencies and has offices in Atlanta, Geneva, Shanghai, Paris and London.

About MFG.com
MFG.com is an online marketplace servicing the global manufacturing community. MFG.com instantly and intelligently matches sourcing professionals and engineers with suppliers who have the right expertise and capacity to manufacture parts and tooling on demand in accordance with their engineering drawings and CAD files. MFG.com’s on-demand service is consolidating the once-fragmented world of custom manufacturing into an efficient marketplace, enabling products to be sourced and built more easily, quickly, inexpensively, and at higher quality levels. For more information, please visit http://www.mfg.com

About Bezos Expeditions, LLC
Bezos Expeditions, a personal investment company of Jeff Bezos.

About the European Founders Fund GmbH
European Founders Fund GmbH is a highly selective investment company run by brothers Marc, Oliver and Alexander Samwer, with offices in Munich, Germany. The Samwers are the founders of eBay Germany (alando) and Jamba! (now part of News Corporation). The internet companies founded by the Samwers have achieved combined sales of more than €1 billion. They are entirely focused on investing in the equity of young technology companies, especially internet & wireless. The Samwers have direct experience in these segments and an extensive network of partners who bring significant value-add to their portfolio companies. With every investment, the Samwers aim to make a difference and to build enduring, significant companies.
####
Congrats, Mitch!

Cheers.

Part One: The Profile

Company Name: MFG.com
Founded: 2000
Founder: Mitch Free, CEO

About the company: MFG.com is the largest online community for the manufacturing industry.

About the CEO: Mitch Free fervently believed in an idea that struck others as crazy, impossible or worse. Why would someone create an online marketplace at a time when all others were crashing and burning and why do it in an industry as slow to adopt and as fractured as manufacturing? The answer – passion.

Mitch Free has over 20 years of experience and has spent much of the time solving problems and not listening to conventional thinking. Mitch founded and now serves as the President and CEO of MFG.com. Since founding the company, Mitch has followed his original business plan and has created a company that is continuing to change the way that manufacturers do business. Through his vision, creativity and persistence, Mitch has grown MFG.com to a company that services thousands of buyers and suppliers. Under his leadership, the company has experienced a tremendous amount of growth in a market segment he is continuing to help define.

Prior to founding MFG.com, Mitch was founder and CEO of 3DATUM, a provider of technology solutions for the manufacturing and engineering communities. In addition to these roles, Mitch has held a variety of senior management positions with Northwest Airlines where he managed aircraft engineering, technical procurement and aircraft acquisition projects.

Mitch, an Atlanta-native, began his career on the shop floor and has worked his way to the top of the manufacturing industry. He holds two patents and is recognized among his peers for his strategic vision, domain expertise and creative management style. Inc. Magazine named him an “Entrepreneur of the Year” finalist in 2005, and under his leadership MFG.com was ranked by Deloitte and Touche as one of the top technology growth companies in the U.S., and in the top 10 technology growth companies in Georgia.

Mitch is an avid speaker at technology forums and conferences, including recent presentations to the Kellogg School of Business at Northwestern University and the Society of Manufacturing Engineers. Mitch belongs to the Atlanta Technology Angels, a private group that actively seeks investments in early stage technology companies based in Atlanta.

Funding: Boot strapped until September 2005….it was tough, but it was the best thing for the business. Boot strapping forced us to focus on delivering value and loving our customers. Series A investment by Bezos Expeditions, a private investment company founded by Jeff Bezos in September 2005.

Why Georgia?: I am from Georgia originally and I had just returned to Atlanta from spending several years in Montreal when the idea for MFG.com came to me. I didn’t really put a lot of thought into whether or not Atlanta was the best place to start such a business, it just happened.

Part Two: The Interview!

And now, some questions for Mitch, inspired by Bernard Pivot and James Lipton:

SB: What is your favorite business or technology-related buzzword?

Community.

Web 2.0.

What excites me is hearing the stories from our users around the globe about how we enabled them to bring new products to market, improve their bottom line and gain new customers they could never have connected with previously. For others, we have helped them keep their business open and put food on the table. That makes me feel like we are doing something worthy every day.

The U.S. manufacturing industry has a fear of globalization and instead of embracing it and learning to play in a global economy they waste a ton of energy trying to promote protectionist policies.

We are in an “experience economy.”

Any phrase that involves the use of the word “functionality.”

I can’t imagine doing anything else right now.

Lifeguard. I’m a terrible swimmer.

Chase your passion and not the money. If you are passionate about something, you will do it well and the money will find you.

MFG.com revolutionized an industry and has helped make the world a better place.

Mitch – thanks for playing along :) Good stuff.

Part Three: My Two Cents

I have followed MFG’s progress for the past few years, and I can tell you that this outfit ranks in my top 5 post-bubble Atlanta startups.

First, I like the fact that Mitch started what equated to a B2B marketplace play during the height of the bubble bursting. Exchange and marketplace plays were no longer en vogue then (I know, at the time, I was working for one that was slip-slidin’ away). Yet, he stuck to his guns. Why? He believed in what he was doing, and saw value to the customer. Ya gotta love that. Passion. Persistence. Chutzpah. When you spend some time with Mitch, and listen to him for a while, you’ll see this passion shine through early and often.

I’ve never met a successful entrepreneur that wasn’t passionate about what he or she was doing. There is a lesson there.

Next, you have to love the bootstrapping success story – founded in 2000, and bootstrapped for five years. Mitch and his wife sat at our table at the TechBridge Digital Ball this past year (a fantastic black tie charity event, by the way). Listening to he and his wife sharing some of their “bootstrapping war stories” was inspiration in and of itself. If I could have recorded that conversation, it would have made for great required listening in any course on entrepreneurship.

Mitch told me that MFG was a free service in the beginning, and that later, he made the crucial switch to a pay model. I asked him what the attrition rate was when he “made the plunge.” He told me that only something like 2% of his original users made the initial plunge to the pay version of MFG.com. That’s a 98% attrition rate! Making the switch from free-to-pay is a tough decision for any entrepreneur. Folks, that’s called “betting the farm.” Nevertheless, he knew it was the right thing to do in order to grow the business, and he stuck to his guns. Again, chutzpah. And of course, over time, many of those 98% drifted back in and converted.

So how well is MFG doing now? To date, their online marketplace has sourced over $4B in manufacturing/machining orders. They have nearly 100K members, and are averaging well over 5 quotes per RFQ. Nice.

I’ve gotten to know Mitch over the past year and I can tell you that he is perhaps one of the most approachable, down-to-earth success stories you’ll ever meet. He is always willing to share his knowledge to help other entrepreneurs in their quests for excellence, and that is something that we can always use more of.

What more evidence? Just ask his employees what they think. After Jeff Bezos invested a sizable chunk ‘o change into MFG, and made Mitch a small fortune in the process, Mitch immediately turned around and began writing checks to his employees (the folks who had given their all for MFG.) What’s not to like? Leadership. Inspiration.

Finally, I like the fact that Mitch has joined the ATA (Atlanta Technology Angels.) It is always good to see local success stories getting back into the fold from an investment standpoint. This is the type of thing we need more of in order to avoid the linear entrepreneurship sandtrap.

Good job, Mitch, and may you have continued success with MFG!

Note: If your Georgia-based firm qualifies as a “startup” or “emerging” technology company, and you think your story would be of interest (and more importantly, value) to other Georgia entrepreneurs, I want to hear from you.

Cheers.

I have been working with various forms of online communities since the days when people interacted asynchronously in social settings over 300 baud modems. We’ve clearly progressed quite a bit since that time. Online communities have taken on lives of their own, often playing integral roles in vendor-to-consumer relations. The following is the first in a series of articles which I hope will provide some value around what online communities are, how they function, and what value they can bring to the table. Given that B2B net markets are poised to make a comeback, I will drive most of the discussion in that direction, although much of what I will discuss will have a certain applicability to B2C or P2P/social communities.

During the Internet boom (or bust, depending upon your perspective and choice of stock broker), the concept of community-building was taken pretty seriously. Everyone wanted to “build a community” or “aggregate eyeballs.” Granted, many community builders wanted to aggregate eyeballs using some rather questionable business models, but community building offered a nice, sticky path to bringing those eyeballs together. However, many communities took a pretty hard hit during the economic downturn (a politically correct way of referring to the time when “we all took it in the shorts”). As many online communities relied heavily on advertising revenues, the vast majority of these communities fell by the wayside as the ad dollars became as hard to find as an easy path from Alpharetta to downtown Atlanta at 5pm on a Friday night.

However, now that the global economy has turned the corner, and investors and entrepreneurs are getting back to more proven business models (the ones that make money rather than bleed it), we are seeing a resurgence of the community concept. As an industry, we’ve always recognized the value of fostering communities online, but now the dollars are finally starting to flow back into it. In today’s competitive environment, the net market makers that win will be the ones that get closest to their key customers, suppliers and employees. One effective way to do that is through community. Every online business can benefit from community - end of the story – no questions asked.

Online communities (OLCs) offer tangible benefits across all three types of communities: business-to-business, business-to-consumer and employee-to-employee. According to an Andersen Consulting report, for all types of communities under active management, companies have experienced very favorable return-on-investment figures, with community ROIs exceeding 500% of invested funds/time.

Some specific B2B benefits include:

• Strengthen relationships with hyper-affiliated business customers to increase loyalty, retention and revenue opportunities
• Actively listen and respond to business customers
• Lower operating and customer acquisition costs
• Drive interaction within net markets
• Improve channel effectiveness through sharing of best practices

A fantastic example of these concepts in action can be seen in the manufacturing RFP/RFQ sector. At Atlanta-based MFG.com. CEO Mitch Free and his team have built a truly amazing transactional platform (the technology part of the equation). Members of their fast-growing network of over 40,000 industrial buyers and suppliers have the ability to conduct business together using a sophisticated set of tools. The operating costs for their members is much lower than it would be if the transaction were conducted offline, and they are driving interaction within their market by constantly improving their tools based on customer feedback. But how do they integrate more personal aspects of “community” into their offering? The short answer is, they really aren’t. True, MFG.com has the ability for buyers and sellers to interact with one another using a constrained set of transactional tools, but they are not allowed to interact together beyond that (at least as far as I can tell).

On the other side of the spectrum, you have a new upstart called RFQWork.com. They have a much simpler technology platform than MFG.com – they are using a customized version of the $150 vBulletin forum software, rather than a sophisticated procurement platform. Instead of using sophisticated workflow tools to marshall a transaction through from origination to closeout, RFQWork uses simple posts in their forums to allow buyers and sellers to communicate their needs. It doesn’t take Werner von Braun to realize that MFG.com spends a heck of a lot more of its capital on information technology than RFQWork.com, and likewise, it doesn’t take Einstein to figure out that there also exists tremendous value in MFG.com’s tool-driven approach. However, RFQWork was apparently born out of a perceived need by a group of machinists for an alternative to the bigger, flashier MFG.com. The RFQWork model is based around members having a more “personal” or “social interaction” with one another.

On a related note – in 1999 I found myself in a very similar position as RFQWork.com. I founded a community web site in a sea of larger, more established competitors using the same platform that RFQWork has chosen (vBulletin). I sold that community five years later after eclipsing 65,000 subscribers and becoming the largest player in the space. While RFQWork.com clearly has its work cut out for it, it isn’t entirely out of the realm of possibility that it could achieve much greater heights.

Nevertheless, while RFQWork may never eclipse the larger and more heavily capitalized MFG.com, their membership will most likely, over time, become more loyal. Why?

Because personal interaction, even in the online sphere, is critical to the long-term health of the community. Think about it pragmatically for a moment. If you are standing in a room by yourself, and your only outlet to other people in the world was a small document-sized opening which fed into the next room, you would be inherently limited in what actions you can perform. You could interact with the person in the next room by exchanging documents through the small opening in the wall, but that’s about it. Now consider being able to stand in the same room with the other folks in the building, and being able to communicate freely with them, as well as the people who actually own the building. Now we can get somewhere.

If you think about the two forms of community value being illustrated with the MFG.com and RFQWork example, you can quickly spot the relationship. On the one hand, you have the freedom and flexibility of allowing your community members to have more of a say in what is going on, to be in a position to develop non-transactional relationships with other members, and to feel empowered. However, this free-for-all format can lead to undesirable inefficiencies, inconsistent data, and even political issues. The long-term value will come from the cult-like following you will develop as the community takes on a life of its own.

On the other hand, you have the constrained interactions whereby technology is used to limit or constrain the interactions between community members. This will provide exponentially more transactional efficiency and data consistency, but will likely not allow the community to become “sticky” beyond the value of the economic transaction taking place.

At the end of the day, there should exist a balance between the two. If I could take the grass-roots community feeling of RFQWork and throw it into a blender with the robust transaction platform offered by MFG.com, I’d make a nice big fat B2B margarita, sit out on a veranda overlooking Peachtree Street and count the dollars. The ideal model is a workable blend between the structure you get from having logical constraints in place, and the loyalty you breed by creating an environment conducive to open and honest communication between members.

This is a classic David vs. Goliath scenario. A few years ago, if you asked the editor of your local newspaper if he or she knew who Craig Newmark was, they would have most likely said “no.” If you asked them today, they would probably say “he’s the guy who is taking a lot of our revenue through his really low-budget, low-tech, open-community web site at craigslist.com.”

Until next time …

Cheers.