Harvesting an E-Commerce Solution

B.E. 100s CEO Chuck James hangs out an e-shingle and brings new technology to the produce business

$25 million in 1998, to Salinas, California-based Taylor Farms Inc. “Selling North American to a larger company that had already made the capital investments to compete placed me in a great position to take more calculated risks going forward,” says James.

After the North American deal closed, James took time off to spend with his three boys and work on his golf handicap. He also contemplated buying another food-processing business. “I really enjoyed spending time with the kids, but I also started reading a great deal about Internet transactions and the impact of the Web on more old-line businesses [including the produce industry].”

James clearly understood the industry’s inefficiencies and areas for improvement. “I’d watch my father run the company and the day-to-day work involved in taking phone orders, hand-coding data and passing that data to a data entry clerk for input,” he says. “Under this method, each time the format of the data changed, the order could be entered incorrectly. There is a much higher probability of error. Transactions on the Web substantially reduce the occurrence of errors.” Furthermore, according to James, doing business online can reduce internal transaction costs by up to 70% for produce buyers and sellers, resulting in improved profit margins.

With his Internet ideas still fresh in his mind, James, a Morehouse College and Wharton School of Business graduate, spent last Memorial Day weekend on a Disney cruise with members of the Young Presidents Corps. At the time, James mentioned his idea to several professionals, who greeted it with enthusiasm. One of them, Byron Roth, chairman and CEO of Newport Beach, California-based investment bank Roth Capital Partners, was willing to invest. He put James in touch with an experienced Internet developer, Ron Nelson, a former technology officer for Imperial Bank, Los Angeles, who had designed an elaborate Internet system for foreign exchange transactions. This expertise was easily transferable to the needs of ProduceOnline.com, and James hired Nelson as a contract programmer.

Armed with his big idea and the support of trusted experts, James was on his way. He cites that weekend as the founding of ProduceOnline.com, and soon after began putting together his management team.

ASSEMBLING THE PLAYERS
One of the first to join forces with James, and the chief growth architect of the new company, was Ken Johnson, currently vice president of sales and marketing. A 25-year food-industry veteran, Johnson had served as vice president of sales and marketing for North American Produce.

A solid board of directors is key to a new company gaining marketplace credibility and raising investment dollars. ProduceOnline.com’s current board is comprised of James; Han Kim, a general partner with Altos Ventures, a venture capital firm that has invested $3 million in the company; and Larry del Santo, former chairman of supermarket operator The Vons Cos.

By tapping contacts secured through his 15 years in the produce industry, James also was able to assemble an extended board of advisors comprised of other industry heavy hitters: Dennis Gertmenian, founder and CEO of Ready Pac Produce Inc.; Chris Nelson,

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