Online Auction Bellwethers Honesty.com, Andale Merge 7/18/00
By MICHAEL E. RUBIN

NORTHBROOK, Ill. – In a marriage of auction services providers, Chicago-based Honesty.com (http://www.honesty.com) has merged with Mountain View, Calif.-based Andale (http://app.vendio.com). As a result, 31 percent of all items sold at auction on eBay (http://www.ebay.com) will go through the combined Honesty/Andale entity. That alone accounts for 600,000 users and $1.7 billion in gross sales.

Under the terms of the merger, both facilities and their respective brands will remain independent while operating under the Andale banner on a corporate level. Neither office will be shuttered, and officials do not anticipate any layoffs from the now-150 employee strong company. Financial considerations, including cash and stock, were exchanged but no details were disclosed.

Honesty CEO Scott Samuel will add a new title to his belt and become the first Chief Community Officer. Andale CEO Munjal Shah will continue as the CEO of the merged entity.

Already well known in the online auction space, Honesty and Andale have both developed tools designed to assist online auction sales at all revenue levels. The difference came in specific markets targeted. While Honesty's popular free counters, quick listings, and image hosting services attracted the first-time or casual seller, Andale focused on small businesses and large corporations using auctions as a B2B e-commerce channel. Both companies will continue to enhance their brands separately, though sharing resources and expertise on the corporate level.

"By merging, we have a complete horizontal platform of services, whether it's a new or beginning user or a true small business where the whole business depends on auctions ... selling up to a corporate enterprise where auctions are used as complementary sales channel," said Andale spokesperson Mary Camarata.

In addition to the services both provide, the merger will strengthen Online Traders Web Alliance (OTWA), the Honesty creation that has grown into an official online sellers' council and the largest auction merchant organization in the industry. Designed as a sort of Better Business Bureau for the online auction space, the OTWA will become the auction sellers' business liaison and develop an intermediary function to help resolve disputes and pool merchant interests on issues such as fraud, deadbeat bidders, advertising, fees, and other topics.

"What's happening with auctions is nothing short of an economic revolution," said Samuel. "We're empowering people to control their own destinies."

Samuel was equally ebullient when talking about bridging the differences between the Chicago and Silicon Valley.

"I'm having a ball here," Samuel said. "We get along real well and I don't see any differences. The Honesty folks have really taken to the Andale folks and vice versa. We all work well and have become a unified team in a very short time, meshing quite well in a matter of weeks."

As previously reported on ePrairie on May 23, Honesty already raised $1.24 from a syndicate of private investors, friends, and family after its inception as a personal auction tool for Samuel. Andale has raised a total of $62 million in financing from various investors, including Bowman Capital Management, Texas Pacific Group's (TPG) Tarrant Venture Partners, Accel Partners, Mohr Davidow Ventures, Oak Hill Venture Partners and other angel investors.

According to Camarata, the company is considering a public offering to take place mid-2001. "The company will definitely be reaching profitability at that point [mid-2001]," she said. "When the company reaches profitability, an IPO will definitely be considered."