Amex Launches, Invests In, Develops Rearden Platform

American Express Business Travel today launched a new Web-based marketplace powered by San Mateo, Calif.-based Rearden Commerce. American Express also has taken a minority equity stake in Rearden, and the two firms plan to develop new products and features that will be exclusive to American Express for up to six months.

The private-label American Express Intelligent Online Marketplace, or Axiom, brings the breadth of the Rearden procurement platform to offer American Express customers inventory from more than 135,000 suppliers of travel and related services, including package shipping, dining, event tickets and airport parking. The solution also has the capability to recognize a traveler's identity, itinerary details and physical location, and to alert travelers and update their calendars when there is a change in plans.

"Maybe equally as important as part of the deal construct," said Andy McGraw, American Express Business Travel executive vice president and general manager for North America, "we've developed a joint product council that will include three senior members each from the management teams of American Express and Rearden Commerce, who together will build the development roadmap for future suppliers to add to the grid as well as new functionality."

American Express paid $22.5 million for its equity stake in Rearden, which is now financed with $100 million in venture and corporate capital. "The balance comes primarily from Oak Investment Partners, Foundation Capital and myself," said Patrick Grady, Rearden Commerce founder and CEO, who said the proceeds from the equity investment primarily will be used as working capital. "We're expanding the network on the buy side and the merchant side very aggressively, sustaining research and development and continuing to open up the network to more merchants and service verticals."

While the deal is not exclusive, whatever the product council develops will be exclusive to American Express for up to six months. There are five objectives the group already is working on and council expects to generate its first features as a result in the coming weeks and months.

"This is a well-thought-out construct that I do think differentiates this relationship from any other," Grady said, "and I think it's something that has been in place these past few months. It's a good cross-functional productive group that engages weekly. The product council really separates this from other agreements I have seen between innovative technology companies and large offline organizations."

The parties, which began talks about two years ago and previously had what McGraw termed a "casual reseller agreement," closed this deal in July. In the past two years, Amex has gone through a complete due diligence process on the technology side as well as the customer side. In the past two months, Amex has trained a portion of its sales team, which has signed 15 clients, large and small, that it is now in the process of implementing and is pursuing a healthy pipeline of other customers.

Meanwhile, Amex has one client, JDSU, that has been beta testing the product for the past 18 months. "Working with them," McGraw said, "we got a lot of experience and feedback in terms of the application, which has been overwhelmingly positive for the travelers and administratively to gain transparency into a host of spend categories."

In a prepared statement, Terry Wood, JDSU director of workplace solutions, said, "Rearden's technology enhances my visibility and control over travel and services spending, provides management with a better understanding of spend levels and savings opportunities and gives our employees a single source for services purchasing to aid in both productivity and policy compliance."

American Express will offer Axiom to all of its customers on either a subscription or a transactional pricing basis.

Currently, there are about three dozen non-Amex Rearden customers, which range from global organizations like GlaxoSmithKline to companies with only 200 to 300 employees. Grady said Rearden will continue to be agency-agnostic, but noted that "headcount has doubled in the past nine months. While we may continue to expand that eco-system, there will be a significant commitment of time and resources in this partnership. This agreement evidences a very material commitment to change the game again. I think it will be transformational for the industry."

Priyan Fernando, executive vice president and chief operating officer of American Express Business Travel, agreed. "We've been able to bring together the expertise of Rearden with other competencies that make us extremely relevant and in many ways change the face of T&E management going forward. We are excited about partnering with Rearden. We think their technology is spot on in this world of Web 2.0."