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Startup MarkITx Seeks To Revolutionize Secondary Market For IT Gear

One thing that any IT specialist handles on a regular basis is replacing old equipment. Technology is moving so fast that today’s cutting edge device can be tomorrow’s paperweight. That raises an interesting question though. 

One thing that any IT specialist handles on a regular basis is replacing old equipment. Technology is moving so fast that today’s cutting edge device can be tomorrow’s paperweight. That raises an interesting question though. Once an organization does decide to upgrade or replace any of its existing technology, what should they do with the old gear? Rather than just throw it out, an ideal solution is to sell it on the secondary market to bring in extra money to the IT organization.

Luckily, for IT pros who may want to consider this option, a new startup called MarkITx has an ideal solution for them. MarkITx provides an online platform that links sellers of IT gear with buyers who are interested to save money by purchasing IT equipment on the secondary market. Joining us today to discuss MarkITx’s story in more detail is CEO and Founder Frank Muscarello.

IT Specialist: Thank you for joining us today Frank. To start with, can you provide our readers an overview of the background of MarkITx’s founders, and your inspiration for launching the company?

Frank: The company was founded in 2012 when I got together with my partner, Ben Blair at Chicago’s startup center, 1871. We quickly realized our backgrounds were very complementary and uniquely suited to build MarkITx. I had previously built a $20 million reseller of electronic point-of-sale systems and Ben built high-frequency trading and real-time web systems.

IT hardware has become commoditized as evidenced by the growing trend toward open compute, SDN and differentiating value moving toward software vs. hardware. Inspired by what StubHub did for events, we saw the same opportunity to leverage the power of information to unlock a market overrun by middlemen, capricious pricing and risk for both buyer and seller.

IT Specialist: What is the prime issue or pain point that MarkITx was created to solve?

Frank: Enterprise companies spend millions - if not more - on their IT infrastructure, but when it comes time to refresh that hardware, they depreciate the gear down to zero, sell it for pennies on the dollar or worse, pay to have it hauled away. In all cases, they have no insight into what that equipment is truly worth and no means by which to forecast the best time to sell it. Further, there is a significant of risk they undertake when they try to sell their equipment to a middleman or through a site like eBay or Craigslist.

MarkITx  eliminates the risk. We help companies recoup as much as 40% of their IT budget, source certified, pre-owned hardware at a fair-market price and ultimately, get the most value out of their capital assets.

IT Specialist: How big is the secondary market for IT products?

Frank: The secondary IT market is $312 billion dollars big - the data center networking market alone is expected to be worth 21.85 Billion by 2018.

IT Specialist: Wow, $312 billion, that's serious money! What generally drives companies to want to replace their IT equipment – is it basically they just consider it legacy or are there other reasons as well?

Frank: The driving forces behind an IT hardware refresh project can vary. Some firms -- such as high-frequency trading shops -- refresh frequently in order to maintain the fastest systems. In other cases, mergers and acquisitions can result in the need to offload gear as businesses consolidate their IT operations. Green IT initiatives are yet another reason why we’re seeing some companies decommission or restructure their data centers. Lastly, as I mentioned earlier, the trend toward a software-defined data center has prompted many companies to rethink how they buy and sell their IT hardware.

IT Specialist: Who are the primary sellers who use your exchange? On the buying side, who do you generally see?

Frank: Our typical seller tends to be a Fortune 1000 company selling a short list of items or taking advantage of our block trading capabilities that allow them to sell a whole pile of gear at once. That said, we see individual sellers list individual items such as switches, routers and storage equipment all the time. The exchange is designed to be open to anyone and everyone.

As for the buy side of the business, we’ve seen interest from a variety of industries including universities and schools, government municipalities, cloud providers, wholesalers and other parties looking for great deals on quality gear without the risk they may encounter on eBay or Craigslist, for example.

IT Specialist: Turning to how MarkITx’s exchange actually works, could you take us through the mechanics of how equipment is bought, sold and/or traded? What role does your exchange actually play in this transaction?

Frank: It’s really quite simple. Anyone can upload a list of gear and see what it’s worth either by emailing an invoice or spreadsheet to value@markitx.com or uploading directly via our Gear Tracker feature. 

If you choose to sell your equipment, you open an order by filling out a few simple questions including your asking price, quantity, condition and timing. The exchange triggers automatic alerts for anyone who has expressed interest in buying that gear and through these automatic communications, helps both parties adjust pricing and get deals done.  All equipment goes through a certified partner who confirms authenticity and - if needed - refurbishes the equipment. MarkITx guarantees all trades and maintains anonymity between buyers and sellers to protect all parties. 

IT Specialist: One thing I noticed that is intriguing is that you have access to real time pricing information on IT products, is that correct? How are you able to obtain this information, i.e. where does it come from and how do you aggregate it all into a form that customers can actually read and use to make decisions? I assume there must be some kind of big data technology used in this process?

Frank: We have a team of data scientists who gather information from a number of sources in order to arrive at a fair-market price. Our algorithm is continually updated with every new transaction so it gets smarter all the time. For any given part, the MarkITx Price Report may provide the New Retail price, the Low Price, the Wholesale price and an Estimate Market Value so the member has a good sense of what the equipment is worth.

If we don’t immediately have pricing for a particular part, we have a fully staffed team operating our Trade Desk and they work tirelessly to track down pricing for members.

IT Specialist: How does Markitx actually obtain revenue, do you take a percentage of the transaction?

Frank: Our revenue model is based on a combination of commission for equipment sold on the exchange, membership fees paid by frequent traders in lieu of commission, and we’re also rolling out a SaaS offering of predictive analytics tools that is currently in the pilot phase.

IT Specialist: Looking at the business side, what has the response to Markitx’s platform been in the market? Can you give a sense of how many customers you have?

Frank: We recently surpassed the 2,000 member mark and we’re doing business with some of the largest companies in the world across 5 continents. We’re pretty proud of what we’ve built so far, but we’ll be the first to admit that trust is earned over time and we are continually striving to improve.  Response from the market and larger tech community has been amazing so far. In fact, just last week, we presented at Google for Entrepreneurs Demo Day and were fortunate to be among the 10 startups that inspired Steve Case (former AOL CEO and Chairman) to invest in the business.

IT Specialist: At the corporate level, have you raised any capital to date and what are your funding plans going forward?

Frank: We’ve raised $4.67 million to date and are always looking to invest in the business as it grows.

IT Specialist: Finally, for people who may want to connect with you, who do they contact and how can they register on the site?

Frank: It’s free to register on the site and upload some gear to see the current fair-market value. We encourage everyone to visit www.markitx.com. You can get in touch with me directly @FrankMuscarello and on LinkedIn. Thanks for your interest - I hope to see some of your ITSpecialist members check out MarkITx.

IT Specialist: Thanks so much for your time Frank, and best of luck going forward.

 

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