DirtMarket finds riches in all things dirt
Most people don't give much thought to the ground beneath their feet. But in the construction industry, dirt can be a huge headache. Contractors working on large excavations such as underground parking garages need someplace to dump the soil they dig up. And contractors who need to fill holes or level ground have to find a whole lot of it.
Now contractors who used to make dozens of phone calls to find dirt or a place to dump it can instead make a single call to DirtMarket. The 35-employee, $20 million company matches dirt buyers and sellers, and tests and transports the soil. "We're like a dating service for dirt," says Dave Rossi, who co-founded the Los Gatos (Calif.) dirt broker with his wife, Lesley Matheson.
Rossi, now 37, was working as a manager for a commercial construction company in 1999 when he realized how much time and effort went into handling dirt. "Getting rid of dirt was a difficult task that required calling a lot of different people, many of whom weren't the most scrupulous," says Rossi. He thought a Web site would be a good way to match the players and mentioned the idea to Matheson, who has a PhD in computer science from Princeton and an MBA from the Wharton School at the University of Pennsylvania. Matheson, 47, went to work building a local search engine that linked dirt buyers and sellers based mostly on location—years before Google and Yahoo! rolled out their own local search capabilities. Says Matheson: "In some respects, we were ahead of our time."
The couple tapped their savings and pooled funds from eight investors, raising $1.7 million to launch Dirt- Market.com. But contractors didn't embrace the site. "Most didn't even have e-mail," says Rossi. Undeterred, they used the technology Matheson developed to become dirt brokers, directly matching contractors who pay them to remove dirt with those who pay them to find it. DirtMarket takes a cut on both sides of the transaction, with profit margins averaging around 25%.
In 2004, the company spotted another niche. When a project involves a lot of excavation, a construction company typically hires an engineering firm to remove dirt from the site, which can account for as much as 75% of a project's costs. "We always thought the process was backwards," says Rossi. So DirtMarket started an engineering contracting division that oversees a project, including hiring an engineering firm, handling the dig, and removing the dirt. About 80% of the company's revenue now comes from this division, which it markets primarily by word of mouth. Says Rossi: "We have a lot of repeat customers."
The couple, who met on a blind date, have divided the tasks of running the company according to their complementary strengths. Matheson, the company's president, manages operations. "I'm happy working in an office, surrounded by computers," she says. "Dave's the gregarious, hand-shaking guy." As CEO, Rossi handles business development, including a new partnership with Home Depot. Landscapers, homeowners, and other customers at 60 Home Depot stores can place orders in the store and get soil, bark, or rock delivered through DirtMarket. Rossi expects the service to be in 500 stores, primarily in the West, in the next three years. It seems Rossi and Matheson have hit pay dirt.
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