NetFreight.com

I founded NetFreight.com in 1998. It was the first business to business internet based marketplace to service the transportation marketplace (long haul trucking, both full truckload and less than truckload). Over the next two years, we raised and spent approximately $3.2M, built some cool technology but never really got traction in the marketplace (although we did have some cool test customers like Home Depot and Del Monte).

The reason we never got traction is that our service (and the internet enabling of logistics and transportation management in general) was really sustaining for the marketplace we were after -larger companies with big freight bills. We were trying to provide better/faster, and as a result butting heads with all the large, entrenched third party logistics companies (3PL's) out there. They had huge amounts of money, customers who depended on them, and salespeople with tight relationships with the customer. Hard to break through that.

What we should have done is focus on the small companies, the ones that couldn't afford sophisticated transportation management software (typically VAN and private network based), but would have accepted our product as being "good enough" to do a job they were already trying to do (manage freight and hold costs down). The problem is that this market was hard to quantify, and the sales model required to address it was uncertain, so second round investors were not impressed (especially given that in March/April of 2000 you needed to be pretty bulletproof to raise money).

In the end we shut down the company, at least finding a home for the IP and other assets with another company, where the technology could live on and we could take care of most of our vendors.

A valuable lesson learned - sustaining business models are tough to execute without heavy duty backing and a lot of patience. There is no doubt in my mind that our internet based solution was superior in almost all ways to the old, closed, proprietary software solutions out there, but changing the mindset of customers with a sustaining product is very, very difficult.