Interview with Bill Ballenden, CEO and owner of Dragontree
Digitalization, Blockchain, online trading – keywords that become more relevant even for a traditional business like cotton trade. Bill Ballenden is CEO and owner of Dragontree. The company recently launched an online platform for raw cotton auctions. Before founding his own company in 2017, Bill Ballenden managed the cotton business for Louis Dreyfus in various roles in Europe and Asia. He is currently President of the ICA Liverpool. During the interview with the Cotton Report team he shared insights about his online business, digitalization in the supply chain and the future of cotton trade.
Cotton Report: Mr Ballenden, please explain to us the idea behind the auction platform Dragontree.
Bill Ballenden: Dragontree is based on a very simple concept: It allows the seller to auction its cotton electronically. The goal is to offer a more efficient way for a seller to negotiate with multiple buyers. It is a very transparent tool for multilateral negotiation. The highest bid is visible to all buyers and also to all other sellers. So it cuts through the effort of dealing with different buyers one on one. You can welcome 20 buyers in one auction and the highest price is visible instantly. An auction is online for 10 minutes. When a predefined minimum of the seller has been hit, the so called reserved price, a contract between the seller and the highest bidder is issued immediately.
Is the bidding anonymously? How do you secure the safe transfer of money and goods?
During the bidding process the trading partners stay anonymously. But what we have is a matrix: You preapprove the partners that you wish to do business with. Everyone has a confidential list of partners, and only when these partnerships are mutual, negotiations and eventually a contract will be allowed.
The final contract is issued under ICA rules, bylaws and arbitration and contains the names of the seller and the buyer. When the names are revealed and the contract is issued, we step away and leave the contract to be executed by the partners.
It sounds a bit like “ebay” for cotton. Are there similarities to that platform?
There are many similarities with “ebay”. In fact, we are just launching a new tool with a “buy it now” price. So the sellers can set a reserved price at which they wish to sell, but in the meantime give a “buy it now” price to all buyers. We are going to continue to roll out new tools in 2019: a new functionality for templates, allowing InApp notifications and probably a negotiation tool. The aim is to create a more dynamic environment.
What is the advantage of using your platform?
My goal is to bring the global export bale into one market place and shrink the world a little bit. What Dragontree is trying to achieve is to take a first step towards a digital supply chain, but respecting the way our business runs today. We are not trying to reinvent the future, we are trying to save money and time on the way cotton is transacted today. Our target market is growers and traders, at the moment we have 30 Brazilian farmers and about 35 Australian farmers online. Then we have about 30 international traders and 5 agents signed up – about a 100 users.
What do you think of blockchain in terms of security and practicability?
If blockchain becomes a reality, it changes everything, but I think we are still some years away from any kind of viable blockchain in cotton. When blockchain fulfills its potential all transactions become secure online. If the seller completes certain tasks according to the smart contract and presents the documents electronically in compliance with this smart contract then payment happens automatically. If every actor in a supply chain cooperates, I believe blockchain can function properly. But you do need chambers of commerce, customs houses, banks and insurance companies and shipping lines all blockchain ready and all agreeing to the smart contract.
It could revolutionize our business but in practice there are so many different moving parts, that I think it will take a long time to ensure a smart contract is truly efficient and enforceable.
How can traders and other stakeholders in the cotton supply chain adapt to these changes?
I believe that everyone needs to have a strategy for online marketing. We are a conservative business, and we are quite proud of that. But we need to realize, that the world is changing, and we should make sure that this change is happening within our cotton community. Let’s not wait for an outside actor to come and change it for us.
Everybody needs to be aware that online or electronic marketing does not destroy relationships. You still need the relationship to know who you are trading with. A good electronic marketing strategy goes hand in hand with the existing, important relationships in our business. At least until Blockchain becomes a reality.
Thank you for the interview!
The interviews in the column “Question Time“ embody the opinion of the respective interview partner and do not represent the position of the Bremen Cotton Exchange as neutral, independent institution.