Yesterday, we reported that First Index, a sourcing marketplace for industrial parts and former consulting firm, had closed its doors earlier this week. My tip on the situation came from AJ Sweatt, a colleague and friend who serves as community and blog master for MFG.com Mojo. AJ’s employer is a competitor to First Index so there was some obvious gloating in his tone, but I’m appreciative for the tip and also his connection to colleague David Landsman, another MFG.com employee, who had previously worked for First Index and shared a number of details and thoughts with me about their history.
According to David, First Index’s final decline was very sudden. What’s more interesting than how it ended is how it began–and what made First Index different. First Index hosted an online site where it facilitated the exchange of supplier information to buyers, but the primary core of the business remained offline, where groups of employees would cold call buying organizations to drum up RFQs which they could then provide to their active suppliers, in effect “making the market,” just as a trader does on the floor of an exchange. Using this model as a foundation, First Index’s core revenue generation came from selling subscription services to suppliers (for anywhere from $3,500 to over $10K per year), and in turn gave them access to buyer RFQs. The primary categories they focused on were a near carbon copy of the early target areas FreeMarkets (not Ariba) tackled from a strategic sourcing perspective as well: machinings, stamping, fabrications, electronics, plastic injection molded parts, etc.
Two of the early leaders of the business, including Russ White, came out of the publishing business. This makes sense, because in many ways, just as MFG.com is doing, marketplace business models take supplier advertising revenue away from media and directory sources and more closely tie it to leads generated. In essence, it is really just a new form of publishing, whether such a model was carried out manually, like First Index, or in an automated manner like MFG.com. Owing in part to the slow growth of this core publishing/marketplace business in the nineties, First Index later branched out into offering sourcing and direct material supply chain consulting services.
First Index’s growth in consulting was relatively rapid…
As a former First Index employee I am saddened by this clearly First Index had a better model than MFG.com but in the end was mis managed by a new ceo who gutted the sales program and the men who were driving it’s growth, Peter Cook, John myself and many others. First Index started in 1992 and grew to a 20 million dollar a year firm. We had clients like Haliburton, who we did wonders for that mfg couldnt touch from a technology position.
FI you will be missed
I am sad too by this news since I have contact with first index in 1990’s, but that is ok when you realized that now it is time for China to buy from US since US made education products, high tech products and properies are MUCH COMPETITIVE than China made and qulitiy is more reliable, whoever support US, you should support US products advocator like byusa.org, let’s work together to push US export and US jobs, tks for reading, by the way, if Dan Jacob can read this message, pls contact me at this.is.charlie@hotmail.com
Personally im sort of glad they have gone. As a web designer in the engineerign sector I can vouch for their hard nose sales techniques and lack of performance. They sold their services equally to small businesses that would never win these endless tenders they produced. I have direct experience with several companies that fell for the First Index sales patter and seen first hand their dissapointment and in one case LIQUIDATION as a result. Gaining business is hard, and First Index mislead people by making it sound easy. A lotop fthe tenders were not legitimate, they were just companies looking for a better price on something they already had a source for and to whom they would probably still go. A lot of quotes were never responded to. Whilst the theory is good, I think the practice is much different.
Why would you ever be glad at the loss of jobs specifically in a bum market? All of the companies you mentioned would have most likely shut their doors anyway. Buyers source for price, quality and delivery and if a job shop could not convince the buyer to convert suppliers it is a sales issue with that job shop, not the vendor who furnished the lead. A subscription was $3-10k, if that breaks a companies back – there are a lot larger issues.