Overcoming failure is just a part of success for entrepreneur Chase Franklin
Story by Vanessa Blackburn ('95)
Chase Franklin (‘86 Economics/Mathematics) knows what it’s like to face catastrophic collapse. His Seattle-based dot-com software company Qpass was poised to go public in 2000 when the bottom fell out of the market. With $25 million in the bank, Qpass had just enough to pay its 200 employees for six months. Franklin quickly realized he needed to make some swift and difficult decisions.
So Franklin, a Microsoft alum who founded Qpass in 1997, made some brash moves to reposition and restart the company. In a software company, people represent the lion’s share of operating expense. So almost overnight, the company took steps to lay off two-thirds of its employees, released all of its customers, and began the difficult process of changing direction – all while maintaining the full support and confidence of the company’s investors. Qpass went from selling e-commerce services to more than 100 Internet sites to selling a similar product for a much smaller group of wireless carriers.
The move focused the company on a more viable market and positioned it to be sold for more than $300 million in 2006, which at the time was the third-largest acquisition of a privately-held, venture-backed technology company in Washington state.
Not bad for a company that was on the brink of failure just a few years earlier.
Window Magazine caught up with Franklin, who has been working with entrepreneurs for years, to ask him some secrets to start-up success.
You mentioned in your Fall 2011 commencement speech at Western that entrepreneurs “first take the risk and ask permission later.” What did you mean by that?
Entrepreneurs need to be indifferent to risk – or at least have a desire to take risks. It’s similar to someone with a gambling addiction. You almost have to enjoy that constant sense of uncertainty. Especially in technology, the ambiguity of the startup environment means you are constantly trying to make good, high-quality decisions based on profoundly incomplete or inadequate information. When all eyes are on you as the CEO, a startup is a deeply disconcerting place to work if you’re troubled by ambiguity. Ultimately, to be successful, you have to see an opportunity that no one else sees, then muster the courage and determination to pursue it.
You’ve also spoken about the importance of having a talented workforce. How do you attract and keep talented people?
The market for talent in the Northwest’s software industry is ultracompetitive. Not only do you have upwards of 250 active startups, but giants like Amazon, Google, Adobe, Zynga and others employ thousands of software professionals. So you must create a company culture that can rise above the white noise of competition, not only to recruit new employees but even more importantly to retain experienced employees. Everyone must work to create a culture that makes the company a great place to work, that allows for autonomy, responsibility and respect for others. You know your culture is constructive and strong when your employees become genuine evangelists to friends and former colleagues.
What’s the biggest thing you’ve learned from facing failure?
I’ve had many opportunities to learn from failure. Acknowledging and embracing failure are among the best ways to learn and a major strength of America’s form of capitalism. However, I am sometimes bothered by a tendency in the startup community to celebrate failure, as though failure is a badge of honor among the digerati. Saying “Oops, we failed, but we should all feel swell because we worked so hard” is not constructive. I think if you’re too laudatory about failure and simply accept that only 20 percent of startups succeed, then it can take you off the hook. Success is what everyone is trying to achieve, and if you don’t obtain it, people should be really disappointed. And if it’s part of a pattern of failure, then there need to be serious steps to change that course and fix it.
What is the No. 1 piece of advice you have for budding entrepreneurs?
Probably to under-promise and over-deliver. Entrepreneurs tend to be disproportionately optimistic and confident. Blended with managerial inexperience, the result is often a cascading array of missed dates, forecasts and objectives. It’s easy for entrepreneurs to over-simplify problems, either to employees or their board or peers on the management team. Ultimately, everyone in the business needs to trust the leadership team to guide the company to success, and also be realistic about what the company can do.
Vanessa Blackburn (’95, Journalism) is a freelance writer and former entrepreneur based in Bellingham.