Wednesday, October 25, 2000
Interview with Russell Stern, CEO of Escrow.com
I recently talked with Russell Stern, CEO of Santa Ana-based Escrow.com and got his perspective on the company and its ecommerce transaction management and escrow services.
BK: What is the company all about?
RS: Escrow.com's business objective is to facilitate and accelerate global e-commerce through the development and deployment of robust online escrow, transaction and contract management technologies.
While the frictionless economy emerges and online markets continue to rapidly evolve, automation advances are required due to the complexities and business risks involved in e-commerce transactions. Escrow.com's patent-pending transaction management service, TransactionPoint, provides the critical component necessary for managing complex transactions.
TransactionPoint combines secure online escrow services with comprehensive transaction management features, resulting in a single point for managing all transaction participants and business terms. The service proactively sequences business steps, adhering to any industry's standard business protocols for transactions, tracks and confirms performance of all participants, and delivers secure and efficient collection and disbursement of funds.
Essentially, Escrow.com provides the necessary infrastructure components for successful B2B online transactions. The company offers unrivaled expertise in trust accounting technology and escrow compliance along with highly scalable architecture that can support exponential transaction growth. I like to think of Escrow.com as the solution to the "last mile" problem that exists in B2B e-commerce today.
Our lineage includes Fidelity National Financial, Inc. (FNF), the world's largest title and escrow company, and Micro General Corporation (MGEN), the technology development arm for FNF. Using technology originally developed by MGEN, Escrow.com was incorporated in October 1999, and has since gained the market recognition as the leader in transaction management and escrow services for B2B e-commerce.
BK: What are the entrepreneurial aspects of the company?
RS: The company's culture is based on entreprenuerialism and reflects its heritage and founding. Despite its size, FNF is recognized for its highly innovative and entrepreneurial environment. Escrow.com grew out of an idea created and pursued by a small team of individuals within MGEN. Luckily, both MGEN and FNF presented an atmosphere where these employees could refine their concept, present it to senior management, secure support and create a completely new business. Even more telling was the decision to split Escrow.com from MGEN in order to ensure the company had the complete freedom to pursue its potential.
One of my main considerations in deciding to take the helm of Escrow.com was the entrepreneurial spirit within the company and the prevalence of a "nothing can stop us" attitude. As we plan for the future, my management team and I are focused on leveraging the spirit of innovation and creativity within the company while creating an environment and culture that will enable the company to fulfill its significant potential. As we speak, small teams of employees are pursuing a number of promising new service areas that can be driven by enhancements to our core technologies. Each of these projects grew from employee insights regarding market opportunities and our ability to leverage our assets to pursue them.
BK: At what stage is your company? Has your service been launched yet?
RS: Escrow.com is beyond start-up mode and has been fully operational for several months, penetrating key markets with our B2B transaction management services. We completed our series C preferred stock financing in April of 2000.
In January of 2000, Escrow.com launched version 1.0 of its service, gearing its transaction support services toward the C2C market. The company introduced version 1.2 in March of 2000, and officially entered the B2B segment of the marketplace, providing services for one buyer and one seller via an integration kit. Then in June of 2000, we developed version 1.3, which provided B2B transaction management services for one buyer, one seller, and an exchange. To address and solve many of the business and technological problems associated with crossing the B2B e-commerce chasm, we developed TransactionPointTM in August of 2000. TransactionPoint allows for many participants, many terms, full integration, and provides the framework for businesses to conduct Escrow Managed Business Transactions (EMBT).
BK: Who are your investors?
RS: We secured $30 million in our last round of funding, which was lead by SOFTBANK FINANCE Group, The Chase Manhattan Corporation (Chase.com, Chase Capital Partners), Pacific Century CyberWorks Limited (PCCW), VerticalNet, Inc. (through a wholly owned subsidiary), and MGEN Tech Fund I. Additional companies who have invested in Escrow.com since its incorporation include Network Commerce and Madison Securities. To date, our capitalization totals $40 million.
BK: What is your background, and how did you end up at Escrow?
RS: I have 23 years of executive management experience, and came to Escrow.com to help guide the development and implementation of the company's business strategy, oversee its operations, and lead its efforts in becoming the leader in providing services for enabling online business transactions. I was drawn to the company based on its solid business model and critical role it plays in enabling online business commerce. Prior to joining Escrow.com, I served as co-chief operating officer of Western Digital Corporation, where I held total profit and loss responsibility for all lines of business, as well as managed research and development, marketing, strategic business development, mergers and acquisitions, and technology. Additionally, I held executive management positions at Seagate Technology, Adaptec, and IBM.
BK: Finally, what do you see as the main challenge that you face in the coming months in making your company successful?
RS: Like many companies at our stage of development, our challenges exist on two fronts. First, we must creatively and cost-effectively brand our company while raising awareness and understanding in the B2B marketplace regarding online transaction management, escrow services, and our company's role as a leader in these areas. Second, we must effectively execute against our company strategy. We are fortunate to be faced with an almost overwhelming number of opportunities for our business. Therefore, we must properly sequence our moves and ensure outstanding efficiency and effectiveness for all of our activities. Our next six months will be critical in positioning us as a major long-term player in the B2B space.