InformationWeek

Industry support provides the experience necessary to ensure that a marketplace is suited to the needs of traders. Looking at the flip side, if knowledgeable industry leaders aren't willing to invest in a business proposition, then why would outsiders? To be sure, in the absence of industry investors, outsiders flush with capital may be ready to step in and be part of the E-commerce wave. Yet industry insiders affirm E-commerce's role in the evolution of a brick-and-mortar industry.

Second, industry ownership also provides the necessary mass an E-marketplace requires from the get-go. There must be sufficient traffic for an E-marketplace to be viable for new entrants; success begets success. The global reach offered by the major energy companies represents new opportunities for suppliers, which are frequently regionally constrained by traditional distribution channels. Besides furnishing critical mass, the major energy companies and owners of the marketplace also flow revenue into the venture and attract new participants. Looking ahead, sufficient market liquidity offered by industry participants will allow more rapid development of new services-such as product auctions, drilling services, and project management-as a scalable platform offers new opportunities for service companies to market and bundle, or unbundle, their services.

Finally, solid support by industry insiders provides the capital support and market longevity necessary to attract new participants. The oil-and-gas sector spends about $400 billion worldwide annually and is recognized as being capital-intensive but capital-inefficient. The clear operating efficiencies offered by an online exchange, even on the most simplistic level such as asset optimization and streamlined order processing, suggest that the industry migration to an E-marketplace is not a question of if, but when.

In selecting which venue to pursue, new participants will prefer E-marketplaces that are well-capitalized. Traditional industry participants intrinsically take a longer view of their own marketplaces, whether they are brick-and-mortar or digital. Their businesses will continue to be built on the success of client relationships. Faced with many options, new participants will choose a well-capitalized E-marketplace with a long-term view. A shakeout in the E-oil digital sector will occur, and the better capitalized, industry-supported companies will inevitably survive the merger and consolidation process. Therefore, it behooves new entrants to partner with the longer-term players.

By having more than one industry leader as a founder, the PetroCosm marketplace possesses the neutrality necessary to encourage participation by new entrants. Already customized to accommodate multiple users, the marketplace is neutral by defini-tion and provides a level playing field for all participants.

The makeup of the management team is also a key determinant in fulfilling the needs of customers and founders. Therefore, assembling a team of top-flight managers with significant industry experience was crucial. PetroCosm recruited senior managers who each possess an average of more than 20 years of germane work experience, and are drawn from a broad array of service, independents, major energy, and technology businesses. The breadth and depth of the PetroCosm team helps ensure that our marketplace is attentive to every leg of the oil and gas industry. This experience provides the knowledge necessary to accommodate customers' needs, while providing sufficient perspective and independence. This, in turn, engenders trust and fairness-two critical factors in operating a successful marketplace, whether it's online or traditional.

The important thing to remember is that eschewing industry support for the sake of maintaining the appearance of neutrality will shortchange customers and investors alike, as they lack capital and liquidity necessary to thrive in the E-marketplace.