Grant Street Group, the Pittsburgh-based company that pioneered internet auctions of bonds, will be celebrating the 10-year anniversary of the first internet bond auction this week. At 11:30 a.m. sharp on Tuesday, November 18, 1997, the City of Pittsburgh, using Grant Street Group's MuniAuction website and patented auction methodology, began accepting bids from investment banks for its $70 million bond offering. By the time the auction ended at noon, an unprecedented 20 underwriters, including local, regional and national firms, had submitted hundreds of bids, saving the City over $1 million in fees and expenses. Traditional, non-electronic auction methods would have yielded only one bid from each of 3 to 5 "usual suspects". Despite formidable opposition from Wall Street to the innovation, the same technique is now used to auction over $79 billion of municipal bonds every year, which is 89% of all competitive bond sales.
For its courage, the City of Pittsburgh received the prestigious "Innovations in American Government Award" from Harvard University and the Ford Foundation. "The whole process was fascinating", said Paul Hennigan, former Finance Director for the City of Pittsburgh under Mayor Tom Murphy, who authorized the internet sale. "Prior to our sale, the internet was being used to auction Beanie Baby teddy bears and Pez candy dispensers on eBay. We took it to a whole new level in one transaction."
Since that first auction in November 1997, Grant Street Group has grown to become the largest auction house in the world (by dollar volume), hosting more than 81,000 auctions totaling over $9 trillion. Prominent clients include Freddie Mac, BNYMellon, the Commonwealth of Pennsylvania as well as more than 1,000 other state and local government and non-profit entities.
In 2006, there were three very significant events in the Company's history. First, Grant Street's Founders, Myles Harrington and Dan Veres, repurchased The Carlyle Group's minority stake in the Company. Second, the Company won a huge verdict in its patent infringement suit against Thomson Corporation (NYSE: TOC) - currently valued at more than $100 million (pending Thomson's appeal). And third, the Company launched an entirely new business, tax collection and billing systems, which already serves 8 Florida counties with an aggregate population exceeding 1.5 million. "I never would have imagined the Company diversifying in this direction", said Myles Harrington, President of Grant Street Group, "but there is suddenly a screaming need for experienced suppliers of software as a service to government entities, particularly web-based applications that run on open source architecture, like Linux and MySQL. We have been doing that successfully for over 10 years now with our auction platforms."
For the past 10 years, Grant Street Group's revenues have been growing at an average rate of about 30% per year. The Company has nearly 50 full-time employees and expects to continue hiring locally at a rapid clip. "Pittsburgh has proven to be an excellent marketplace for us to build a fast-growing, high-tech business", said Dan Veres, Co-Founder and Chief Operating Officer of Grant Street Group. "It's hard to imagine a better place to build a Company like this."