FreeMarkets: The Birth, Rise, and Legacy of Pittsburgh's Market Making Procurement Pioneer
Pittsburgh Startups: Then & Now
NotebookLM Podcast Version:
In the mid-1990s, as the internet began reshaping business, two former McKinsey consultants, Glen Meakem and Sam Kinney, seized an opportunity to revolutionize industrial procurement. They founded FreeMarkets, Inc. in 1995 to streamline the outdated procurement process through online competitive bidding events—a concept that would transform B2B commerce. Over time, FreeMarkets became one of Pittsburgh’s most iconic tech success stories, and its legacy continues to this day.
The Founders: Glen Meakem and Sam Kinney
Glen Meakem’s entrepreneurial journey was shaped by diverse experiences. After graduating from Harvard and serving as a captain in the Army Reserve during the Gulf War, Meakem worked at Kraft Foods, McKinsey & Company, and General Electric (GE). It was at GE that he recognized the potential of electronic commerce to streamline corporate purchasing—a revolutionary idea at the time. However, GE wanted to keep the concept internal, while Meakem envisioned commercializing it. This difference in vision led him to leave GE and ultimately co-found FreeMarkets with Sam Kinney.
Sam Kinney, a Dartmouth graduate with expertise in sourcing and operations effectiveness from his time at Booz-Allen & Hamilton and Lucas Aerospace, met Meakem at McKinsey’s Pittsburgh office in 1992. Together, they began refining their vision for transforming procurement. Procurement at this stage was a labor-intensive process—finding suppliers, obtaining price quotes, and negotiating contracts—which aligned well with FreeMarkets’ consulting-driven approach. Despite their strong backgrounds, raising capital for FreeMarkets was challenging. West Coast venture capitalists were skeptical of both the business model and the company’s location in Pittsburgh. To fund operations, Meakem sold his home and moved his family into an apartment, raising $500,000 from personal savings and support from friends and family.
Early Successes: Proving the Model
FreeMarkets’ breakthrough came in November 1995 with its first pilot Competitive Bidding Event (CBE) for Frigidaire. The event demonstrated significant cost savings for the appliance manufacturer and validated FreeMarkets’ business model. Another successful CBE followed with Phillips in January 1996, further proving that online reverse auctions could drive down procurement costs while increasing transparency. These early wins attracted investment from Pitsburgh-based Birchemere Ventures, which helped FreeMarkets expand.
By 1997, FreeMarkets had grown to 37 employees and secured contracts with major companies like United Technologies, Caterpillar, and General Motors. The company continued to scale rapidly, opening an office in Brussels to serve European clients and moving into larger offices in downtown Pittsburgh’s One Oliver Plaza (renamed FreeMarkets Center), which featured a live auction floor where clients could observe competitive bidding in real-time.
IPO Success Amidst Growing Competition
FreeMarkets went public in December 1999 during the height of the dot-com boom. Its stock opened at $48 per share and closed at $280 per share on its first day—one of the largest percentage gains for a U.S. IPO at the time. By this point, FreeMarkets had grown to around 400 employees and reported revenues of $13Mil for the first nine months of 1999. However, competition was intensifying from other e-procurement platforms like Commerce One and Ariba. These companies argued that advancements in procurement software would make FreeMarkets’ reliance on consultancy services obsolete. To stay competitive, FreeMarkets invested heavily in improving its bidding software (BidWare) and introduced new products like QuickSource—a self-service auction platform designed to cater to smaller businesses.
Global Expansion Under David McCormick
As FreeMarkets grew rapidly after its IPO, David McCormick joined the company in late 1999 as executive vice president. Initially responsible for customer sales and service, McCormick played an instrumental role in expanding FreeMarkets’ global footprint—particularly by establishing operations in India to serve marquee clients like Tata Motors. McCormick’s international expansion efforts focused on finding both customers and suppliers across key emerging markets—particularly three of the four BRIC nations: Brazil, India, and China—as well as Mexico. This strategic move allowed FreeMarkets to tap into rapidly growing global markets while supporting clients looking for suppliers across these regions.
In addition to international expansion efforts, McCormick reorganized FreeMarkets' operations by dividing consultants into two teams: one focused on serving clients directly while the other specialized in gaining purchasing expertise within specific industries. This structure allowed FreeMarkets to serve more customers without significantly increasing headcount. In 2001, McCormick was promoted to president of FreeMarkets, and by 2002, he became CEO. Under his leadership, the company continued expanding internationally while navigating intense competition during the bursting of the dot-com bubble.
Acquisition by Ariba: A Strategic Merger
In January 2004, FreeMarkets was acquired by Ariba for approximately $493Mil—a fraction of its peak valuation but still a significant achievement given market conditions at the time. The merger proved highly complementary because while FreeMarkets specialized in procurement—finding suppliers and negotiating contracts—Ariba focused on purchasing transactions with established suppliers (like an internal Staples.com). This combination created a comprehensive solution that spanned both procurement (strategic sourcing) and purchasing (transactional buying), merging services with software to cover the entire procure-to-pay cycle. McCormick ensured that Pittsburgh remained a central hub for operations even as global expansion continued.
The Ariba Supplier Network (ASN)
One of the most significant outcomes of the merger was the creation of the Ariba Supplier Network (ASN). This product leveraged FreeMarkets' expertise in supplier sourcing combined with Ariba’s strength in transaction automation to build a network where suppliers became paying customers. The ASN helped suppliers find new clients while also increasing their operational efficiencies by connecting them with large corporate buyers using Ariba’s platform. The ASN was led out of Pittsburgh and became a core part of Ariba’s business model post-merger. It eventually played a crucial role in SAP’s acquisition of Ariba in 2012 for $4.3 billion. While SAP focused on growing ASN as a key asset, FreeMarkets' original consulting business was spun out to Accenture. Both businesses continue to have a sizable presence in Pittsburgh today.
Key Alumni: Making Waves Beyond Procurement
The legacy of FreeMarkets extends far beyond its acquisition. The company played a pivotal role in establishing Pittsburgh as a rising tech hub and demonstrated how B2B e-commerce could transform traditional industries. Many former executives and employees went on to make significant contributions across various industries:
Glen Meakem: After exiting FreeMarkets, Glen Meakem remained a key figure in Pittsburgh’s entrepreneurial ecosystem through both investing and advising emerging startups. In 2005, he co-founded Meakem Becker Venture Capital (MBVC), which made notable investments such as Kiva Systems (sold to Amazon), HotPads (sold to Zillow), Shipwire (sold to Ingram Micro), CloudMeter (sold to Splunk), and Schoology (sold to PowerSchool). In 2012, he founded Forever.com —a permanent cloud storage company designed to preserve family memories indefinitely.
Sam Kinney: After co-founding FreeMarkets and playing a pivotal role in its growth, Sam Kinney continued his work in technology-driven procurement solutions by co-founding Right Hand Manager. He also founded The Firehole Foundation, which supports innovative ventures aimed at solving complex global challenges.
David McCormick: After leading FreeMarkets through its acquisition by Ariba, David McCormick transitioned into public service under President George W. Bush’s administration before entering finance as CEO of Bridgewater Associates—the world’s largest hedge fund. In 2024, McCormick ran for the U.S. Senate, representing Pennsylvania in a race that triggered an automatic recount due to the close margin between him and incumbent Bob Casey. Although many outlets have projected McCormick as the winner, the recount is ongoing.
Jim Frankola: CFO during FreeMarkets' acquisition by Ariba. He later joined Yodlee as CFO before moving on to Cloudera, where he helped guide it through its IPO. He now serves on boards such as Ansys and Skillsoft.
John Lanigan: After serving as COO at FreeMarkets during its growth phase, John Lanigan became President of Logistics.com before joining BNSF Railway as Executive Vice President. He played a key role in BNSF’s acquisition by Berkshire Hathaway.
Mark Clouse: After serving in senior sales roles at FreeMarkets, Mark Clouse became CEO of Pinnacle Foods before leading Campbell Soup Company as President and CEO. His leadership has solidified his reputation as a key figure in the consumer packaged goods industry.
Alex Lintner: After his time at FreeMarkets, which focused on global expansion efforts similar to those under McCormick's leadership strategy for BRIC markets like China or Brazil, Alex Lintner built a notable career with leadership roles at Intuit before becoming President and CEO of Vertafore; he now serves as CEO of Experian Software Solutions.
These alumni have carried forward the innovative spirit they developed at FreeMarkets into new ventures across industries such as finance, logistics, consumer goods—and more—continuing to drive meaningful change globally.