CEO Bruce Hoberman & co-founder Joe Petsick tell the Proxibid story
Proxibid CEO Bruce Hoberman and co-founder and CFO Joe Petsick in the company's Omaha headquarters. Photo by Danny Schreiber.
Last November, while hundreds of bidders gathered at the Sheraton Hotel in Manhattan for the auction of Bernard Madoff, the man behind a multi-billion dollar Ponzi scheme, thousands of bidders flocked to Proxibid.com, a website allowing bidders unable to attend the live, physical auction to participate online.
“It was a recognition of an opportunity to disrupt a marketplace that had really gone unchanged for thousands of years,” Petsick said. “[The auction marketplace is] maybe one of the few remaining marketplaces that is not only extremely prevalent in our economy, it is also unique in the fact that technology had done very little to shape it yet.”
Proxibid is based out of Omaha and is now housed in its own offices at 11171 Mill Valley Road (pictured left, photo by Danny Schreiber). Its formative years, 2002 to 2004, were spent in the Scott Technology Center incubator, of which they were one of the fist graduates. In 2003, the company conducted its first online auction.
The concept is similar to eBay but focuses on a “qualified marketplace.”
“Both bidders and sellers are qualified to a degree you wouldn’t find on eBay where any person can sell and any person can buy,” said Petsick, Proxibid’s chief financial officer. “Here, the auction companies are typically either experts or very knowledgeable in what they’re selling or they’re going through a specific process that usually gives a consumer a higher degree of confidence as opposed to someone who selling out of their garage. The bidders also have to go through qualification process.
“Since the process is all about liquidating, it’s all about basically doing what they know they need to be doing to make sure the transaction occurs and occurs quickly," said Petsick.
Each Proxibid auction is set on an individual basis. For instance, real estate auctions require a much higher degree of qualifications in order to make successful transactions as opposed to smaller auctions over things like collectible items. Every auction company that utilizes Proxibid requires a bidder to register to provide Proxibid with a certain amount of information so they understand the person they’re dealing with in the transaction.
Another of Proxibid's assets is their ability to overcome an issue seen in typical auctions: geographical boundaries. By removing these boundaries, auctions saw an increase in size, and having a larger audience helped both the seller and buyer. Just as amplified microphones helped auctioneers reach the very last row of a crowd, Proxibid has helped auctioneers reach the other side of the world.
Above, a Proxibid software operator monitors a live auction. Photo by Danny Schreiber.
“We took geographic businesses and introduced them to a global marketplace,” said Bruce Hoberman, CEO of Proxibid.
Since its inception, Proxibid has grown rapidly. In 2003, it conducted 176 auctions, which produced about $3.8 million in sales, and so far in 2010, it has conducted nearly 10,000, which have produced more than $200 million in sales. The company's revenues run parallel to those figures as Proxibid take a percentage of each sale made. Hoberman said that in eight years, Proxibid has seen more than $2 billion in sales.
Today, the company employs nearly 80 full-time staff members and just about 60 contractors. Looking forward, Proxibid president Ryan Downs, sees continued growth and he's open to the possibility of seeking additional outside investment. In 2008, the company secured funding from Tetrad Corporation, but for the most part they are privately funded.
"We are experiencing strong growth, and our plan is to accelerate that growth," Downs said. "We continue to double in size every 12-18 months and currently we are managing our growth well. At some point, we may consider outside capital, if the timing is right and it makes sense to do so."
Proxibid has not only seen growth within its company but has helped other businesses grow locally and globally and stay competitive.
“Many number of auction houses say without Proxibid, they probably wouldn’t be in business today,” Hoberman said. “Auction companies that have gone to virtual auctions completely realize online is much higher than on-site.”
Hoberman believes Proxibid is successful because it created something few have created and it tread uncharted territory.
“When you start a new business, you look at one who does it well,” Hoberman said. “In a new industry, none of those exist. People are beginning to model off of [Proxibid]. If you take care of customers and employees, it leads to reasonable return in the marketplace."
The Madoff auction this past November, which also included items from outside the Madoff estate, brought in nearly $1 million, which, according to a UK Telegraph article, was double the amount expected by the U.S. Marshals. Of the 189 lots of items previously owned by Bernard and Ruth Madoff, Proxibid reported 47 percent were sold to online bidders, including the infamous Madoff Mets jacket, which sold for $14,500.