When Brookfield Properties Corp. began looking to use technology to improve services for its business tenants, officials hardly thought theyd end up launching a new company.
But $10 million and 15 months later, the worlds fourth-largest commercial property company late last month launched Semprio Inc.—a startup dedicated to providing small-business tenants in premier properties with the kinds of office services the big guys can afford.
The startup was the idea of consulting company Gen3 Partners Inc., whose claim to fame is the ability to identify hidden gems within established companies and use them to add to the bottom line. Although Gen3 doesnt often counsel clients to create new companies, in the case of Brookfield and its venture arm, the startup made sense, and Gen3 offered a graceful way to get it up and running.
“We initially wanted some help on the strategy side. If we only had a consultant who said, Heres whats out there, Im not sure we would have gone the next step,” said John Campbell, president of Brookfield Ventures, in Toronto. “I think given that its new to us, I dont think we would have created Semprio if wed have to jump in cold turkey and create it ourselves.”
In fact, Gen3s expertise in business strategy and technology consulting, coupled with its willingness to use its own people to initially staff the startup, gave Brookfield the confidence to create a new business outside its core real estate interests, Campbell said.
“From a professional services perspective, the opportunities like this are highly dependent on understanding technology issues. Without the combination of strategy and technology, you arent creating enough risk mitigation value for the client to get them to test the waters,” said Paul Hardy, president and CEO of Semprio, in Boston. Hardy, formerly a Gen3 executive, was brought on permanently to lead the startup, in which Gen3 also took a small equity stake.
“We literally built the company using Gen3 personnel, then went out and hired people in the marketplace to take over operational roles,” Hardy said.
Semprio, which will eventually offer its services to tenants in other properties, aggregates the demand from smaller tenants for a variety of goods and services and creates procurement relationships with suppliers that can fulfill that demand at prices the smaller companies couldnt get on their own. It uses the Internet as the conduit to bring both sides together.
“All tenants have office managers and IT managers,” Hardy said. “Theyre trying to create procurement relationships with a wide variety of suppliers for everything from break room and office supplies to courier services to shipping services to catering to cleaning to telecom to IT and even to plant watering services. There is a tremendous amount of work there thats redundant. The opportunity is for the landlord to use its scale to create those same supplier relationships and provide them to the tenants as a business service.”
Semprio provides suppliers with access to that combined purchasing power in a variety of ways, including a building account manager, a call center and an online procurement tool based on an Ariba Inc.-powered marketplace.
Suppliers, too, achieve savings in their use of assets and sales and transaction costs through the Ariba Marketplace. “We bundle those things and the growth they will experience and sell it to the supplier,” Hardy said. “That lets us provide our tenants with a lower price than they could achieve on their own, provide them with one point of contact and a set of productivity tools from Ariba Marketplace that saves them time and money.”
In addition to helping Brookfield Properties find the opportunity and put together a business plan for the startup, Gen3 Partners evaluated the technologies required to make the business work, and it used its systems-integration background to evaluate and select the systems integrator to build the online marketplace.
“Our basic approach was to say, This will be a successful, scalable business. That was an important criteria for making technology decisions,” said Kit Manning, senior director of launch services at Gen3, in Boston. “Everything had to be scalable, including the cities we are in, starting with Boston and going to others, also signing up different urban offices and tenants in those offices and adding on a whole bunch of different suppliers locally and nationally.”
Gen3 chose the Ariba Marketplace Network Edition as the commerce platform and the BEA Systems Inc. WebLogic application server. The Web and directory servers are based on iPlanet server technology.
In selecting a systems integrator, Gen3 looked for a company “small enough that wed be considered a good-sized client, but not so small that they couldnt handle an enterprise solution,” Manning said. “It couldnt just be a Web shop—they had to work with us on the billing system, integrating with the call center and Aribas AMNE and individual components.” Gen3 selected The Avicon Group, a 100-person shop based in Waltham, Mass., that had the skills in-house necessary to take on the project without having to subcontract work.