The Silicon Review
‘Creating and capturing revenue opportunities from the $300B IT hardware secondary market.’
PureWRX, based in Austin, Texas, has been building Certified Pre-Owned (CPO) programs for brands for nearly 20 years. In that period, PureWRX has sold over $800M worth of CPO products for over 40 manufacturers. The PureWRX goal is to help companies utilize assets for their highest and best use in a market that exists outside the main focus of most OEMs.
The company works directly with key stakeholders across your organization to implement best practices for pricing, sales, operational, financial and legal aspects of launching and growing a CPO program. Founded in 2012, the company also has offices in Dallas, St. Louis, Atlanta, Greenville, Chicago, Sunnyvale and Amsterdam.
In Conversation with the Key Executive
Tell us about your first product that was launched.
Having started 6 companies, I am aware of the need to pivot and try several things until you find your product/market fit. We certainly have done this at PureWRX. We initially focused on the SMB market in 2012-2013 with lower-end, commoditized products (inexpensive switches, security appliances, access points, etc.…). Although we had success building these programs, we realized over time that selling big iron into larger enterprises was a better fit for us. We’ve also changed our sales model over the years to focus more on a traditional enterprise sales model.
Explain the secondary IT hardware market from your POV and where Pure WRX fits in the ecosystem?
The secondary IT hardware market has a $300B TAM. It is massive, mature and serves a purpose.
Late in the product lifecycle, when new products pass end-of-life sales dates, the sources of gray market inventory often expand beyond the direct oversight of original OEMs. Accordingly, OEMs’ methods to combat gray market with their direct customers may become less effective as that new inventory appears in various sales channels. Beyond the end-of-sale date, intermediaries and end customers alike often turn to the gray market for more varied inventory needs to maintain legacy systems, and this is when gray market options can become the most difficult to discourage. In many cases, OEMs may not be aware of the full extent of end-customers’ participation in this market.
In conjunction with compliance efforts on new product sales, Certified Pre-Owned (CPO) programs can be an effective complement to address the gray market between the close of the new product sale window and the end of product support. As a 2016 KPMG whitepaper on this topic correctly notes, distributors and resellers of gray market product are concerned about violating their OEM agreements and losing manufacturer warranty (see chart below). CPO programs address these concerns directly by giving end-users a way to both strengthen their OEM relationship and retain warranty coverage. By offering OEM-branded CPO inventory with some form of warranty protection, companies can often draw volume away from “brokered” inventory in the gray market and achieve a premium to gray market pricing at the same time. When OEM inventory is used efficiently, a CPO program is a profitable way to both clear up lingering gray market demand AND gain a greater “share of wallet” from current customers.
How successful was your first project roll on? Share the experience?
The launch of our first customer was bumpy. For one, we were a new company with all the inherent growing pains and lack of resources. Secondly, we were launching an entire new product category that required a lot of explanation to the sales organization and channel partners. In hindsight, I would not change a thing as we learned a ton from the bruises that took as well as the success that we found, but most certainly it was not even close to smooth sailing out of the gate.
I do think there is an important lesson in this…. several. For one, you must go into a new product launch with the understanding that you are going to hopefully be directionally correct, but that you will need to listen, learn and be prepared to pivot. No one gets it right out of the gate and your assumptions will inevitably be wrong on some aspects of the product or sales model. This is not a time or place to be stubborn. You have to listen and quickly adjust.
Secondly, I think these product launches/hiccups are simply part of the process and that everyone should experience this directly as part of the growth process of a business. Although rare, I’ve seen companies that “nail it” coming out and then get content and fail at some point in the future because they did not learn the valuable lesson of failure and listening to your customers early on. I know is sounds counter-intuitive as everyone would like to “nail it” coming out, but that’s rarely the case.
If you have to list a few factors that have been/are the biggest asset to your organization, what would they be and why?
People – by far the most valuable asset we have. We are a family first and really try to build that into our culture. What we do is not easy and our people are constantly challenged beyond what they would face in a similar role within another environment. Therefore, they have to have real passion for what we are trying to accomplish together and take pride in doing it better than anyone.
Partners – our OEM partners are hand-picked on both sides. We must want to do business with them and vice versa. Therefore, we make sure we choose partners that have amazing products and share our vision and commitment to growing a world class CPO program together.
Product – the product that we provide to our OEM partners, channel partners and end-users is second to none. We’ve spent nearly 20 years perfecting our financial, operations, marketing and GTM strategy. The result is a great product offering that is truly a win-win-win.
What do you feel are the reasons behind your consistent growth as an organization?
We’ve got a core group of folks that have been together for nearly 20 years. We know each other’s strengths and weaknesses. We also know how to support one another in their personal growth as a manager and business owner. It’s a unique situation that sets us apart from the pack and allows us to surround ourselves with talented people that are drawn to the sense of family that we have here.
How do you and your company contribute to the global IT platform and society at large?
We have more focus on the environment today than in history. I believe the next generation will be the first that truly start to look at this factor in everything they do. At PureWRX, we are re-deploying previously owned assets that would be scrapped and off to our landfills if we were not selling them as CPO. This is a very important part of who we are and what we do.
Do you have any new products ready to be/getting ready to be rolled out into the market?
Yes, we will have some pretty big news coming out in 2017 on the development of new software and service offerings.
Where do you see you and your company a couple of years from now?
The thought and market leaders within the secondary market for IT hardware.
Meet the Key Executive
David Schofman, CEO and Co-Founder: David is an entrepreneur who has co-founded, invested and served as a board member for several technology companies. The PureWRX business model is a result of many of those experiences, which over the last 20 years have resulted in multiple companies being created and sold, generating tens of millions of dollars for customers and investors. David is a graduate of the University of Texas at Austin.