July 25, 2005
The next level | Blue Tarp hopes a host of changes lead it to the break-even point and beyond
By David Raths
In the last year, Blue Tarp has gone through a whirlwind of change. The company, which Brian Rigney of Portland founded in 1998 based on a business school project, offers credit services to the building material industry. Last November, Rigney relinquished the position of CEO to financial services industry veteran Bond Isaacson and became the company's vice president of business development. That was followed in January by the announcement of a $14 million round of venture capital funding. (The company had raised more than $5 million in three earlier rounds of financing.)
More recently, the company announced a name change from Blue Tarp to Blue Tarp Financial Inc. to stress that it offers financial services, and last month it hired a Pennsylvania marketing agency to coordinate focus groups and customer surveys so that Blue Tarp can make changes to its services in response to user preferences and market conditions.
With his eye on national expansion, Isaacson currently is focused on establishing banking relationships for working capital and beefing up the company's infrastructure, including adding technical staff and call center personnel in Portland, and salespeople up and down the East Coast. And while the company is expanding into new markets and increasing its penetration in others, it also wants to be careful not to expand too fast before proving the concept works and can be profitable.
"The goal is not to go national right away," Rigney said, "but to make sure the markets we're in are dominated by Blue Tarp."
Isaacson said the company wants to prove it can grow well beyond break-even in specific markets. "If you have that successful model, then you can get more financing to expand further," he said.
As the provider of a purchase card program for the building material industry ˆ an industry worth an estimated $250 billion ˆ Blue Tarp believes it can help both suppliers and contractors. Dealers such as lumberyards can benefit from increased cash flow and reduced credit risk, according to the company, while contractors using the cards get detailed invoice information and a way to download job-cost details directly into their accounting systems (see "It's in the cards," Oct. 13, 2003).
Although the privately held company does not disclose revenue figures, Blue Tarp has been adding dealers and contracting customers along the East Coast, and now provides more than 250 dealers and 7,500 contractors with trade credit services. That's up from 175 dealer locations and 500 contractors in 2002, although Rigney said the company is less focused on those numbers than on maximizing the amount of business it does with each customer.
Augusta-based Finest Hearth & Home, which has eight locations across the state, recently signed up for Blue Tarp's services. "We think it will help limit our exposure to bad credit and help our sales because contractors will do more business with us," said Don Ferry, the firm's vice president of sales.
Bill Lee, a consultant with Lee Resources, a Greenville, S.C., consulting firm that specializes in the building materials industry, said Blue Tarp's concept looks to him like a "win-win" for the contractors and suppliers.
For contractors, Blue Tarp offers rewards based on spending volume; Lee said it also has advantages for contractors who work in multiple locations. "One day you're in Portland and the next you're in New Bedford, Mass.," he said. "Rather than having to fill out credit applications in each town, you can just look for a supplier that advertises that it accepts this card. I can't think of a negative about it, except that they've got to carry another card."
For the supplier, Lee also sees accepting the card as a "slam dunk." Suppliers don't mind investigating big companies that spend $250,000 or more, but they don't want to research the credit history of every little company that comes through the door, he added. Plus, suppliers' administrative costs are lower because they don't have to do collections.
The job ahead
The company now must build its name recognition with contractors, which requires some evangelizing, both by suppliers and by Blue Tarp. Rigney said efforts to sign up contractors here have had varied results depending on the market, with New York and Philadelphia both what he describes as "great successes."
Michael Greeley of IDG Ventures, a Boston-based venture capital firm that co-led Blue Tarp's recent VC deal, recently joined Blue Tarp's board. He sees three areas on which Blue Tarp needs to focus to reach the next level:
ˆProduct development. Some of the Internet portion of Blue Tarp needed improving. For instance, Isaacson said users expect the online product to be intuitive and to offer instantaneous credit approval.
ˆAttracting talent. The company was only modestly capitalized before the recent investment. Hiring and recruiting are key at this point, Greeley said. "Hiring for small companies is tough in this economic environment, because talented people can be leery of small companies," he said.
ˆMarketing. Greeley said the company will continue to fine-tune its message. "This is the arena Bond comes from," he said of Isaacson, a former executive with Visa USA and Bank of America Corp. "You do the product positioning and then attract people." The company has begun to hone its image by working with several marketing firms on logos, the name change and advertisements in industry publications.
Greeley said the company's investors would be patient about getting a return on their investment, either through a public offering or a sale to a bigger company. "There's no urgency about this," he said. "If it takes four to six years, we're delighted to ride along. As these things go along, they reach a tipping point where they scale up and we see a real acceleration."
Isaacson added that he feels no pressure yet from the venture capitalists to turn the investment around. He just wants to prove it's a viable business model.
With the recent changes, the company's official headquarters have moved to Charlotte, N.C., where Isaacson and several members of his executive team live. But Rigney stressed that the company will continue to have a strong Maine presence. Blue Tarp recently hired several Portland-area staffers, bringing local employment to 15 and total staff to 30.
The Portland crew includes customer service, credit, collections and the technology department. "It was very important to me to keep some element of the company in Maine," Rigney said.
For his part, Isaacson said he's excited about leading a small company after working at big financial institutions most of his career. "At larger companies, you can only affect one piece of a larger overall business," he said. "I realized I was ready to address an entrepreneurial opportunity where I would be CEO and lead a company from its infancy to its growth to profitability."
Over the next two years, Isaacson plans to work on that process, prove that Blue Tarp's concept works and reach break-even. At the moment, he said, "We are way ahead of plan."
More recently, the company announced a name change from Blue Tarp to Blue Tarp Financial Inc. to stress that it offers financial services, and last month it hired a Pennsylvania marketing agency to coordinate focus groups and customer surveys so that Blue Tarp can make changes to its services in response to user preferences and market conditions.
With his eye on national expansion, Isaacson currently is focused on establishing banking relationships for working capital and beefing up the company's infrastructure, including adding technical staff and call center personnel in Portland, and salespeople up and down the East Coast. And while the company is expanding into new markets and increasing its penetration in others, it also wants to be careful not to expand too fast before proving the concept works and can be profitable.
"The goal is not to go national right away," Rigney said, "but to make sure the markets we're in are dominated by Blue Tarp."
Isaacson said the company wants to prove it can grow well beyond break-even in specific markets. "If you have that successful model, then you can get more financing to expand further," he said.
As the provider of a purchase card program for the building material industry ˆ an industry worth an estimated $250 billion ˆ Blue Tarp believes it can help both suppliers and contractors. Dealers such as lumberyards can benefit from increased cash flow and reduced credit risk, according to the company, while contractors using the cards get detailed invoice information and a way to download job-cost details directly into their accounting systems (see "It's in the cards," Oct. 13, 2003).
Although the privately held company does not disclose revenue figures, Blue Tarp has been adding dealers and contracting customers along the East Coast, and now provides more than 250 dealers and 7,500 contractors with trade credit services. That's up from 175 dealer locations and 500 contractors in 2002, although Rigney said the company is less focused on those numbers than on maximizing the amount of business it does with each customer.
Augusta-based Finest Hearth & Home, which has eight locations across the state, recently signed up for Blue Tarp's services. "We think it will help limit our exposure to bad credit and help our sales because contractors will do more business with us," said Don Ferry, the firm's vice president of sales.
Bill Lee, a consultant with Lee Resources, a Greenville, S.C., consulting firm that specializes in the building materials industry, said Blue Tarp's concept looks to him like a "win-win" for the contractors and suppliers.
For contractors, Blue Tarp offers rewards based on spending volume; Lee said it also has advantages for contractors who work in multiple locations. "One day you're in Portland and the next you're in New Bedford, Mass.," he said. "Rather than having to fill out credit applications in each town, you can just look for a supplier that advertises that it accepts this card. I can't think of a negative about it, except that they've got to carry another card."
For the supplier, Lee also sees accepting the card as a "slam dunk." Suppliers don't mind investigating big companies that spend $250,000 or more, but they don't want to research the credit history of every little company that comes through the door, he added. Plus, suppliers' administrative costs are lower because they don't have to do collections.
The job ahead
The company now must build its name recognition with contractors, which requires some evangelizing, both by suppliers and by Blue Tarp. Rigney said efforts to sign up contractors here have had varied results depending on the market, with New York and Philadelphia both what he describes as "great successes."
Michael Greeley of IDG Ventures, a Boston-based venture capital firm that co-led Blue Tarp's recent VC deal, recently joined Blue Tarp's board. He sees three areas on which Blue Tarp needs to focus to reach the next level:
ˆProduct development. Some of the Internet portion of Blue Tarp needed improving. For instance, Isaacson said users expect the online product to be intuitive and to offer instantaneous credit approval.
ˆAttracting talent. The company was only modestly capitalized before the recent investment. Hiring and recruiting are key at this point, Greeley said. "Hiring for small companies is tough in this economic environment, because talented people can be leery of small companies," he said.
ˆMarketing. Greeley said the company will continue to fine-tune its message. "This is the arena Bond comes from," he said of Isaacson, a former executive with Visa USA and Bank of America Corp. "You do the product positioning and then attract people." The company has begun to hone its image by working with several marketing firms on logos, the name change and advertisements in industry publications.
Greeley said the company's investors would be patient about getting a return on their investment, either through a public offering or a sale to a bigger company. "There's no urgency about this," he said. "If it takes four to six years, we're delighted to ride along. As these things go along, they reach a tipping point where they scale up and we see a real acceleration."
Isaacson added that he feels no pressure yet from the venture capitalists to turn the investment around. He just wants to prove it's a viable business model.
With the recent changes, the company's official headquarters have moved to Charlotte, N.C., where Isaacson and several members of his executive team live. But Rigney stressed that the company will continue to have a strong Maine presence. Blue Tarp recently hired several Portland-area staffers, bringing local employment to 15 and total staff to 30.
The Portland crew includes customer service, credit, collections and the technology department. "It was very important to me to keep some element of the company in Maine," Rigney said.
For his part, Isaacson said he's excited about leading a small company after working at big financial institutions most of his career. "At larger companies, you can only affect one piece of a larger overall business," he said. "I realized I was ready to address an entrepreneurial opportunity where I would be CEO and lead a company from its infancy to its growth to profitability."
Over the next two years, Isaacson plans to work on that process, prove that Blue Tarp's concept works and reach break-even. At the moment, he said, "We are way ahead of plan."
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