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How one idea led to five companies

The success of Education Supply Network has allowed founder Mike Dietrich to spin off several other companies. The key? Meeting the purchasing demands of regulated sectors.

ESN's Mike Dietrich (right) expects his company to grow from five to 25 employees by the end of 2016. (Photo by LeAnne Matlach)

Speed is key to Mike Dietrich’s success.
It took him 90 days to meet his first-year goal of $500,000 in revenue for his company, Education Supply Network. Then it took only a few months to decide to move his company from Alexandria, Va., to Baltimore and to stop scouting other cities as his home base.
That fast growth has come out of a practice that usually takes a lot of time: the RFP process in school districts.

What we designed is a model that takes advantage of how schools purchase.

“In schools they put most of the supplies and purchases out to bid and that is the ultimate price transparency. They select it based on criteria and rules, but the guy who is one penny lower than the next guy is going to win,” Dietrich said. “So this is the perfect place to prove that in a market where the customer owns price and you own cost the winner will always be the person who has the lowest price.”
It sounds simple: Always have the lowest price and then you win. Dietrich said no one had ever tried to consolidate all of the purchases a school district makes. He did and now works with 700 school districts. The Education Supply Net platform contains nearly a million items.
“We are the company of record when a purchase is made. A school district doesn’t have to deal with thousands of providers, they only deal with us,” he said. “What we designed is a model that takes advantage of how schools purchase. We didn’t go in and say, ‘Go to this website and use it for good prices.’ Schools don’t do that.”
Now he’s taking that idea — personalization by industry — and spinning out several companies that run on the same model but focus on different sectors.
“We didn’t try to homogenize everybody. Federal [government] buys differently than schools, and when we move into healthcare they will have a separate entity,” Dietrich said. “Even what an industry calls things is different. A school may call a post-it note an art supply but the commercial sector might call it a desktop supply so we had to build the accommodations for that in the platforms.”
That idea of personalization is part of what drew Education Supply Network and its sibling companies to Baltimore. Maryland Secretary of Commerce Mike Gill invited Dietrich to check out Baltimore and he was quickly wowed by the city and the people.
“We immediately said we needed a place to work and they put us in touch with Betamore,” he said. “We were here three days later and we started meeting everyone we could in the city.”
Once his roots were planted at Betamore Dietrich decided to stop flying to Detroit, Atlanta and the other cities he was considering for the company.
But Dietrich may need to start his search again. He doesn’t see himself leaving Baltimore but expects to outgrow Betamore’s Federal Hill space by the end of the year.
“We’re gonna go from four or five people full-time to 20 or 30 by the end of the year,” Dietrich said. “We’ll probably have to leap space and get into a bigger space but we don’t ever want to officially leave Betamore.”

Companies: Betamore

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