Whole Hog

By Rafe Needleman,  Editor
Redherring.com, February 24, 2000

"The BLT sandwich drives the bacon market," Rod Heller, founder of  FoodUSA.com, was telling me. And what drives the BLT? "Tomatoes," he says.

But while the BLT is popular in summer (when tomatoes are ripe), hams are  popular in spring. The commerce of hogs reflects this: bacon is pre-sold in  summer, but ham is not. Yet the hogs keep coming, and with the same parts,  regardless of season. So brokers scramble like crazy to sell the unpopular cuts  on the spot market.

Mostly, the spot market is old-tech. Brokers and traders get on the phones,  chat about their kids, and do deals. It's inefficient, but it's human and  comfortable.

It's into this fray that Rod is taking FoodUSA.com. Like Gofish.com (see  story, below) and other perishable-goods exchanges, Rod believes his marketplace  will be more timely and price-efficient, more accurately reflecting  industry-wide supply and demand. He plans to make money not just on his cut of  transactions (0.5 percent), but also by setting up users with other services,  like logistics companies.

To fund this direct assault on an established way of business, Rod raised  about $3.3 million from a local (Madison, Wisconsin) venture capitalist. He's  beginning work on his next round.