Introducing Paul St. James – in his own words I'm the president and owner of bidtopia.com. After graduating from college, one of my first professional projects was automating the manual systems at Dytech in New York. My experience there gave me a taste of what I enjoy doing the most: bringing technology to an area that is generally devoid of it.
Following my time with Dytech, I became involved in a marketplace that did indoor swap meets. I noticed the massive amount of what we call "off prices," which are distressed products that need to be sold. This opened my eyes to the incredible product volume that reverse logistics and distressed inventory markets handle.
Let me explain reverse logistics by comparing it to normal logistics. Products flow from manufacturer to distributor to wholesaler to retailer to end customer. If that flow is interrupted in any way, we call it reverse logistics.
If you return an item to the store where it was purchased, that product is now heading the wrong way. Items get discontinued. Trains derail, and trucks flip over. These things need to be disposed of or liquidated and that's the realm of reverse logistics. Most retailers write these off as losses, but there is the opportunity to create an additional profit center if the inventory is managed properly and reallocated to another sales channel without violating their base brand."
To solve the challenges that arise from reverse logistics, I started a company called Warehouse86. Initially, the company sold and liquidated items on eBay, but because eBay's model was changing to target e-tailers with fixed priced store items rather than true auctions, we needed to build our own engine and site, Bidtopia.com, that could handle the tremendous volume.
How many items do you typically list on your site in any given week? Because bidtopia.com is involved in the liquidation business, our sales volumes can swing dramatically. For example, we might list 30,000 items one day, while the entire next week we might list only a couple hundred items.
Our listings depend on the events of the week, and what goes wrong during the normal logistics process. If a train derails or one of our partners has a warehouse catastrophe, we might have hundreds of thousands of items to liquidate.
What are some of the most interesting things you've auctioned? If you think about it, everything you see in your house traveled at some point, on a train or truck. Trucks anywhere in the world can lose merchandise or flip over at any time. We once auctioned off a truckload of communion wafers intended for the Catholic Church. We've had caskets. We even had an argon laser that burned the "born on" date on the bottoms of beer bottles.
Bidding for all items starts at 99 cents, but they can sell for much, much more. We even auctioned off an aircraft and it started at 99 cents! The great thing is that everything sells. We even went so far as to test what wouldn't sell. We once got a bunch of plastic baggies that were in a truck that flipped over. They were loose; they weren't in boxes yet. We decided to try to sell those. We filled one with water and listed it as an "invisible goldfish," and it actually sold for $28. We tried to tell the buyer it was a joke, and then sent him a $30 gift certificate, but he sent us a letter stating, "Send me my fish!"
We once took a crumpled piece of paper out of the wastebasket and listed it as an "origami boulder." It sold for $8. The guy who bought it actually started a business where all he sells is origami boulders.
We understand that you chose Windows and the .NET Framework 3.5, which was still just a beta version, to build your new site. Why didn't you choose the LAMP stack? By pairing our new hardware with the new SQL Server Enterprise Edition, searches on our site are five times faster than before. And for Bidtopia, our top priority is speed and agility. We have to be extremely quick with our development and we have to be able to handle any volume. Windows and the .NET Framework allowed us do those things in a way that LAMP doesn't.
We receive anything from water-damaged cowboy hats to Caterpillar diesel engines from our seller partners, so we have to be prepared to list virtually anything and, more importantly, at any volume. And because every item is posted at an initial bid of 99 cents with no reserve, we generate an incredible amount of traffic. We're setting record after record with our site.
The whole purpose of reverse logistics and liquidation is to redirect product when the original destination is no longer an option. It isn't like running a department store, where every day you receive two trailers full of product and sell it for "x" price based on your best predictions about what the market will bear.
When Hurricane Katrina hit in 2005, we launched some charity auctions to raise money for the community in New Orleans. Britney Spears donated items including a rhinestone bra. The first day the item was listed, the resulting traffic on the site nearly crushed us. The next day, the traffic doubled. We had a dozen T1s at that time, so we had to lease a T3 temporarily just to handle the traffic from people looking at a bra!
Some people who are experienced with LAMP development may think that LAMP could meet bidtopia.com's needs. What would you say to these people? The .NET Framework 3.5 and Windows Server 2008 are brand new. It's like comparing one doctor using an X-ray and another using a CAT scan. The X-ray has been around for a long time, plus it's stable and proven. So why not stick with it? Well, a CAT scan uses more advanced technology.
It's the same with us. Windows and .NET use better technology, and Microsoft is constantly making improvements to them. .NET is significantly better than when it first came out, and it's always improving. LAMP simply isn't evolving at the same rate.
Finally—and this might not be a mainstream thought—I just can't run my business on shareware. I have to be able to pick up the phone and know that there's someone responsible for the software if we get in hot water. More often than not we move so rapidly that we use beta software in production. When we're using beta software in production and there's a problem, we just call our reps and work it out relatively quickly.
So you're saying that Microsoft gives you leading-edge software and support, even for beta software? Absolutely. There's experimental and goofy stuff on the LAMP stack, but it's just that: experimental and goofy stuff. Major revisions don't come along all that often for LAMP. If you really look at .NET compared to PHP, it is clear that .NET is advancing much faster.
It's important to have a partner that can provide great service and expertise for their product. My business can't worry about having to rely on the user community and exchanging ideas just to get something to work. Microsoft understands what companies like us are doing and what we need, and they provide it in an extremely professional way every time they pick up the phone. That's significant to us.
Can you describe that support process? We simply call Microsoft—we usually work with Beth Templeton—and say, "Beth, we have another fun opportunity for you." That's all it takes to get results. For beta products, you don't call the 1-800 support hotline, but Microsoft is very interested in talking to people like us because we're using their technology before it's released, and we're probably finding things that they haven't seen before.
Microsoft looks at our problem and works with us, and we always come up with a solution. The support is great, even for beta products, and over the years, we have learned that we can rely on it. With LAMP, there's just not a partner like that.
What about security and reliability? Many people versed in LAMP think that Windows is neither secure nor reliable. We don't have any issues with security or reliability. I have no vested interests in going with Microsoft or any particular vendor. My IT team, which is equally familiar with PHP, debated which platform to use, but it chose .NET and Windows.
Our trouble ticket system is actually running Perl because it made sense for that particular system. I give my people the freedom to choose whatever technology they want, and they chose Windows and .NET for the development productivity and the reliability and security.
Are there specific things in Windows Server 2008 that you've found particularly beneficial? Oh yeah! We were running Windows Server 2008 when it was in beta. The most significant benefits are its built-in load balancing and fail-over redundancy. At our Phoenix location, we had 24 servers, all of which we moved over to Windows Server 2008 as soon as possible.
Some people see the ability to mix and match technologies in LAMP as vitally important. Microsoft tends to give you one technology for a given task, and Microsoft is the integrator. Would greater choice be beneficial? I wish Microsoft made the computers and integrated everything right down to—and including—the hardware. Microsoft saves us a lot of work.
What about recruiting? What do you look for in the people you hire? As far as capabilities, we look for a very broad range, and it doesn't involve only Microsoft skills. One of the first people I hired didn't even know .NET, so he just picked it up along the way. We look for a diverse background and the ability to adapt and learn new things.
The one thing I will say about Microsoft technologies is that there's plenty of assistance out there. There are courses, books, seminars, and we'll get our people whatever they need. In particular, people from the Microsoft like Beth Humphreys and John Box have been instrumental in our success from a technological perspective.
Thanks for taking the time to chat, Paul. Thank you.
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