BuildDirect aims to be Amazon of building supplies

After raising $16.5-million in venture capital, BuildDirect seems to have become an overnight success story.

The reality, however, is that the Vancouver-based company has been around for 13 years. In the process, it has become one of the world's leading online manufacturers and wholesalers of flooring and building materials.

The investment from OMERS Ventures last June was the first major financing done by BuildDirect, which plans to use the proceeds to aggressively expand in a fragmented market worth $500-billion a year.

There are many interesting angles to BuildDirect, which had a relatively low profile until the investment from OMERS Ventures.

Among the most fascinating is how the company was started in 1999 at the height of the dot-com boom. Many people forget there were many e-commerce players that rocketed onto the scene, only to implode when their business models failed or they couldn't attract enough customers to stick around.

In hindsight, Jeff Booth, BuildDirect's co-founder and chief executive officer, said the company was excited about the opportunity to disrupt the home-materials business but underestimated how much of a challenge it would be to break into a market plagued by far too many layers between the consumer and the manufacturer.

"When we started in 1999, everyone was trying to create dot-com dreams and go public," he said in a recent interview. "We didn't care about the money at all; we wanted to change the industry, simplify the industry and reduce the chaos so the average person could go and understand what they were getting."

Mr. Booth's decision to start BuildDirect was sparked after he ran into problems getting floor supplies while he operated a home-building company. While building one home, he had to put a family in a hotel and their belongings in storage because their flooring didn't arrive in time.

"I was trying to hold someone accountable to make it right but I couldn't believe how difficult it was," he said. "I thought I was buying two removed from the actual source; it turned out I was buying six removed from the actual source. I couldn't believe the lack of customer service."

Today, BuildDirect has 100 employees, after hiring 40 in the past month. Mr. Booth said there are another 30 open positions, while making it clear that talent acquisition is the company's biggest challenge and opportunity.

"The key is great talent tied into the values and dreams of this business," he said. "We are attracting unbelievable talent and people who have been there before."

Armed with enough venture capital to drive BuildDrive faster and harder, Mr. Booth said he wants to show Canadian entrepreneurs that it is possible to build a world-class company rather than selling out early.

The goal to become the Amazon of building supplies was a big reason why BuildDirect decided to raise the funding from OMERS – a partner it selected after reviewing term sheets from many high-profile venture-capital firms.

"Why raise this money?," he asked. "It wasn't a matter of needing a lot more cash but also [of] having the right partners to build it into an Amazon-size company. Canada develops a lot of good companies but they don't typically scale. We don't want to be caught as being in the future of a great industry in which we are second [or] third place."

So what do you do actually do with $16.5-million?

"We're using it to really blow the doors off and add more product," he said. "There is so much demand for manufacturers to get on the system, the demand helps us expand categories and products, and buyers want to buy more product from us. It's natural to go after it as fast as you can."

Special to The Globe and Mail

Mark Evans is the principal with ME Consulting, a communications and marketing strategic consultancy that works with startups and fast-growing companies to create compelling and effective messaging to drive their sales and marketing activities. Mark has worked with four startups – Blanketware, b5Media, PlanetEye and Sysomos. He was a technology reporter for more than a decade with The Globe and Mail, Bloomberg News and the Financial Post. Mark is also one of the co-organizers of the mesh, meshmarketing and meshwest conferences.

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