JERUSALEM — VerticalNet Solutions, formerly known as Tradeum Inc., is closing its Jerusalem offices and moving its development activity to company offices in Palo Alto and San Francisco, company executives announced last week.
All 32 employees in the company’s Malha technology park office were given notice, and are working on transferring information to the Bay Area offices, said Doron Gez, responsible for VerticalNet’s Israel operations.
“Tradeum’s contribution to VerticalNet was huge, and we’re still using the technology,” said VerticalNet’s chief operating officer David Kostman. “But given the current financial situation and company streamlining, it’s better to have the entire operation on the West Coast.”
Tradeum was sold to VerticalNet, Inc. for $508 million in shares in March 2000.
At the time, the start-up’s purchase was touted as the third largest acquisition in Israeli high-tech history.
The largest was Lucent Technologies’ purchase of optical technology start-up Chromatis Networks, for $4.5 billion, which was also closed earlier this year.
However, Nasdaq volatility later that month precipitated the collapse of the deal’s value by close to 60 percent to a mere $220 million, as VerticalNet shares took one of Wall Street’s hardest falls.
Founded in 1995, VerticalNet, a Nasdaq-traded company with headquarters in Horsham, Pa., develops software solutions to help businesses communicate and collaborate better.
In Israel, Tradeum’s envisioned solution offered a new way for businesses to exchange and barter goods in the digital marketplace.
The company’s product, Xchange Suite 2.0, aimed to offer a flexible marketplace solution that enables trading parties to discover the right bundle of products and services for the best transaction possibilities and outcomes.
There are still “more than a handful” of former Tradeum employees working at VerticalNet in Northern California, where the Tradeum headquarters were initially headquartered, said Kostman.
When Tradeum was purchased, the Israel office grew from 30 employees to around 100. That number was narrowed again to just over 30 during the last 12 months, Gez said.
Zvi Schreiber, Tradeum’s founder who left the company over a year ago, had no comment regarding the closure. He is now the founder and CEO of Unicorn Solutions, Inc., a Jerusalem-based company that developed data infrastructure to manage and integrate corporate data.
A Ph.D. in computer science, the British-born Schreiber began working with a team of mathematicians on the Tradeum concept in October 1998, creating a set of algorithms to form an unobstructed marketplace.
The idea was to create a generic software platform for dynamic trading of direct goods. This was several months before the term B2B, or business-to-business, was born.
The company was purchased by VerticalNet after making only one sale. It was later chosen as the platform for the Converge consortium of high-tech companies — including HP, Compaq and NEC — in a deal worth $115 million.
According to the deal, Tradeum was a fully-owned subsidiary of VerticalNet, relieving the Jerusalem company of its start-up title, which is the Latin term for “pinnacle of trade.”
The B2B market was potentially massive, estimated to reach some $1 trillion by 2003.
For a start-up like Tradeum, the key to success in this new business model was to provide the technologies and infrastructure necessary for the supply chain to operate quickly and efficiently.
But no more. The company’s 32 employees will clear their desks within several weeks, shutting yet another Jerusalem high-tech operation.
“Our experience in Israel was great,” Kostman said, “but we needed to consolidate the development activity.”