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Good morning! It's Friday, December 22nd. Today’s post looks at Knowde, an online chemical marketplace that’s received over $91M in funding!

THE FEATURE

Knowde— Creating the Amazon of the Chemical Industry

The chemical industry is a colossal market that generates over $4.7T annually. Despite its size, the industry has clung to traditional business practices, with most transactions taking place offline. 

Ali Amin-Javaheri is looking to change that with his company Knowde, an online chemical marketplace that's raised $91M in funding and attracted massive sellers like DuPont!

The Founding Story

Ali Amin-Javaheri's whole world has always revolved around chemistry. His father, a chemist from Iran, fled to the United States after Ayatollah Khomeini's Islamic revolution. 

Working multiple jobs to make ends meet, Ali's father no longer worked as a chemist but instilled his deep passion for science in his children. 

After Ali graduated from the University of Washington in 2001, he worked at ChemPoint for nearly a decade, helping to grow the company to $400M in revenue and climbing the corporate ladder from intern to head of engineering and global sales. 

Ali left Chempoint in 2017, believing it had abandoned its mission to revolutionize B2B chemical sales. So, he set out to do it himself with the help of friends from business school and ChemPoint colleagues. 

Their vision was to create the first digital marketplace for the chemical industry. Today, that digital marketplace is Knowde, home to 8,000 suppliers (including 7 of the 10 largest chemical companies). 

 The Business

Knowde's digital marketplace allows buyers to search, compare, sample, and purchase chemicals.

While that sounds simple, manufacturers in the chemical industry have unique labels and words for patented products, meaning it's not easy for buyers to identify and purchase the chemicals they are looking for. But thanks to Ali's extensive knowledge of chemistry, he developed a taxonomy that categorizes sellers' unique vocabulary and makes it easy for buyers to navigate the marketplace.

In most online marketplaces, revenue is generated from transaction fees, but Knowde takes a different approach. Knowde generates revenue solely from the seller side, charging a flat fee to create an online storefront and an annual subscription fee.

How They Win: Optimizing the Chemical Sales Process

Before Knowde, specialty chemical manufacturers had to rely on field sales teams to tell buyers what their products did. As a result, the sales process was slow, and oftentimes, salesmen didn't have the appropriate breadth of knowledge to communicate product value. 

Ali understood that creating a digital marketplace, akin to Amazon and eBay, and tailoring it to the needs of the chemical industry could rapidly speed up the sales process and cut out the middlemen. 

For example, a chemical flavor producer using Knowde saw a 1,000% increase in sales of Madagascar Vanilla, a product the company's sales team hadn't tried to sell for 25 years. By creating a digital marketplace with an all-encompassing catalog, manufacturers can see where demand really is, uninfluenced by the biases of salesmen. 

Key Observation: See What Works and Apply It to Your Niche

We can safely say that there aren't going to be any new and viable competitors to e-commerce titans like Amazon and eBay, but that doesn't mean there isn't room for innovation.

Ali found massive success with Knowde by taking the digital marketplace business model and deploying it in an industry few other entrepreneurs understand. For entrepreneurs with unique interests and knowledge, this is a key playbook to use.

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