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CommerceHub co-founder recalls key steps to success

CommerceHub co-founder recalls key steps to success

CEO Frank Poore recounts birth, growth of Albany firm handling $16B a year in e-commerce
CommerceHub co-founder recalls key steps to success
CommerceHub CEO Frank Poore speaks at the BizLab-Clarkson Lunchtime Entrepreneurship event Thursday.
Photographer: John Cropley/Gazette Business Editor

SCHENECTADY — It’s important for people who run young companies to seek advice, but more important that they listen to the right advice.

CommerceHub co-founder and CEO Frank Poore on Thursday recounted his rise from video game store manager to head of one of the Capital Region’s most successful startups ever. He recalled seeking advice while building something for which no good model existed: online retail sale and delivery of goods without ever touching the goods.

“We were way ahead of our time,” he recalled. “I was trying to raise venture capital and people were saying, ‘Nobody’s ever going to put their credit card online.’”

Twenty years later, U.S. online retail activity totals more than $400 billion a year, and much of it is done with credit cards. CommerceHub and Poore are still based in Albany, and the company facilitates $16 billion a year in sales. And two private equity firms last week announced a deal to purchase CommerceHub for $1.1 billion.

Poore spoke Thursday at the New York BizLab incubator/accelerator on State Street for the 10th edition of the lunchtime entrepreneurship series the BizLab started last year with Clarkson University. Coming nine days after the CommerceHub sales announcement, it was the best-attended luncheon yet.

Poore recounted the road to success as long and not particularly easy.

From a modest childhood home in Massena, he enlisted in the U.S. Army and served as a combat radioman to raise money for college. He didn’t enjoy the guns and cold mud familiar to infantrymen the world over, nor the hurry-up-and-wait business model, also familiar to soldiers over the centuries.

But he took away a determined mind-set that would serve him well in the next phase of his life.

Poore earned a bachelor’s in psychology and philosophy at SUNY Plattsburgh in 1990 and, years later an MBA in management information systems at the University at Albany.

Along the way, managing a video game store in Albany, he conceived a model by which a retailer could sell more video games than were on its own shelves — to access the entire inventory of a wholesale supplier without incurring the expense of buying and storing hundreds of different titles.

That is the essence of the CommerceHub model today: It takes online orders for 50 clients, including retail giants such as Walmart and Best Buy, and fulfills them from 11,000 suppliers. The retailer gets to offer a much larger inventory so as to better compete with Amazon, without ever having to buy, warehouse or ship all the inventory. The supplier ships the product right to the buyer.

Poore said his strength is selling the service more than figuring out how to make it work. He described his first attempt as a Rube Goldberg project.

“I couldn’t figure out how to make the technology go,” he recalled of the early days.

That became the realm of CommerceHub co-founder Richard Jones, who remains its chief technology officer today. “We’ve been through everything together.”

An early contract with QVC was where the rubber hit the road. It was a rocky start, with many lost or bungled orders. But it got better.

Poore on Thursday rattled off the tale of CommerceHub and three early competitors: The competitors had startup capital ranging from $76 million to $130 million and pedigreed leaders, while Commerce Hub had $500,000 (eventually $7 million) and a pair of untested Albany residents. The other three never turned a profit and have since disappeared. CommerceHub has been profitable since 2001.

The post-Sept. 11, 2001, period was the closest CommerceHub came to collapse, Poore recalled.

QVC tried to squeeze him, and he pushed back. After some agonizing brinkmanship, Poore won.

“That was the moment I realized you have to be tough, you can’t cave,” he said Thursday.

The founders were bought out and they left for other pursuits in 2006. But Poore and Jones returned to an active role in 2011, and remain there today.

The management team will remain with CommerceHub after the sale is finalized. It will retain its 320 employees and retain the Albany headquarters where most of them work.

Poore offered four key points from the CommerceHub story to the business people crowded into the BizLab atrium on Thursday:

THINK BIG. Not just goals and vision, but environment. Poore said he loves the Capital Region and remains a resident here, but also recognizes it’s not a huge market. Make connections beyond here, he advised. Grab the CEO’s ear, don’t settle for an assistant, he added. He recounted some remarkable ways he did just that, from 5 a.m. phone calls to an intentional “chance” meeting with his quarry that turned into a 45-minute captive sales pitch and led to a deal.

SEE THE BACK OF THE NET. Don’t look at the labels on the goalie’s pads, see the net behind him, and get the puck there. (Poore is a big hockey fan.) In other words, find a way to win, he said. “I hate excuses more than anything.” He added: “Richard says there are physical impossibilities. I say, there are today. Somebody’s going to figure out something in physics, too.”

NEVER BACK DOWN. An early example was the QVC showdown, but there have been many others. “If you really want to build a billion-dollar company or a $10 billion company, you’re gonna deal with a lot of adversity and you’ve got to go out and do things,” he said. “The one thing I did was I always stood my ground.” Most importantly: “I got people to pay us what we’re worth, and that business model persists to this day.”

PERSEVERANCE. This complements the never-back-down rule. It takes persistence just to get to a position where one can back down or stand firm. “There’s huge, huge ups and downs.” This goes back to his Army service, he said, recalling a rainy Panama jungle 30-odd years ago, where the unit got lost and walked all night, 17 miles, to get back. “I remember the next day feeling like a man. It just felt like, if I could do that I could pretty much do anything.”

Poore expects CommerceHub to grow abroad. It has focused on the U.S. market until now but has moved into the foreign market, with an office in England. But it will remain an Albany company, he said.

“We’re keeping it in the area,” he said. “We’re going to continue to build here, we’re continuing to hire. We’ve still got a lot of opportunity.”

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