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As I sit here in the San Francisco International Airport (they announce that so proudly over the PA when they tell me that the thread condition is orange every few minutes) I’ve been pondering the unexpected Frontier Airlines bankruptcy. My Frontier flight is now an hour late so I’ve had plenty of time to surf the web and try to figure out how / why this happened so suddenly. I’m also almost brain dead from my 10 day trip so it’s hard to actually do anything productive at this point.
I’ve determined that the bankruptcy filing is simultaneously a smart survival move for Frontier and an example of the classic "unintended consequences" (which my dad also taught me result from "complicated mistakes.") This one is a doozy. I have no idea what the actual facts are, but the WSJ asserts that the Chapter 11 filing by Frontier was in response to their credit card processor (First Data) increasing they amount and length of time of their holdbacks for credit card receipts.
Let me get this straight. I’m a customer. I charge a Frontier ticket on my credit card. First Data processes it but now holds the money until they decide to release it to Frontier. As a result, First Data effectively controls Frontier’s cash flow (since almost all customer purchases are made on credit cards.) All right, I got it.
In one of the articles I read, it was stated that First Data increased the holdback percentage from 45% to 100% and the time duration until "the flight was taken." That strikes me as completely unreasonable on First Data’s part – they now control the float from the moment of purchase until the moment of flight completion confirmation (which I expect is a non-trival reporting process for Frontier.)
Frontier’s response – "Dear First Data: Bullshit. We are filing for Chapter 11 and invalidate your ability to change the holdback terms. See you in bankruptcy court."
All the chatter I heard today while waiting for my plane was whether Frontier would be going out of business and whether our plane would arrive. The fact that is was an hour late didn’t help. Nor did the fact that the electronic scoreboard announcing the flight time was not working and the gate agent wrote all the info on a piece of paper taped to the wall. Everyone at Frontier is keeping their chins up and saying "no problem – this is just a technicality."
Hopefully I’ll get home today. As one of my twitter friends told me – "at least I’m not on American Airlines."
I haven’t written much in the Failure series lately, but I’ve got a doozy or two coming soon. In the mean time, Chip Griffin has a good post up titled Don’t Fear Failure, Learn from It. Definitely worth a click through to hear about his three different kinds of failure (Spectacular Collapse, Death of a Thousand Cuts, and The Land of Lost Opportunity) as well as some lessons from his failures.
Alan Shimel has a fantastic post up titled Do they have to grow up? As I read it, I thought of some of the great lessons my dad taught me when I was a little kid and how hard they must have been for him to carry out.
Amy and I have a regular discussion about whether or not it is helpful to tell a child "you can do or be anything you want." Amy’s reply is that she could never be an NBA center and neither could I. While the metaphor is a good one (e.g. "don’t let anyone limit your aspirations or dreams"), accomplishing things – especially amazing ones – requires a huge amount of hard work, perseverance, drive, skill, genetics, timing, and luck. Alan nails it:
"At some level I guess it is part of growing up and realizing that you are not the next Nolan Ryan or Josh Beckett. It is similar to a truth I come to grips with every day. That is as I get older with each day, there are going to be some dreams and hopes that are going to go unfulfilled in my own life. There are going to be mountains I am not going to climb. As I have gotten older I have come to grips with this reality and even accepted it. "
I must be brutal to be a father and have to teach this lesson to your child. My first reaction to Alan’s approach was probably similar to some of the parents in attendance – namely – "make the madness stop." But there’s a big part of it that is brilliant. It’s one thing to be told something, it’s an entirely different thing to experience it.
I’ve just read Alan’s post for the third time and it gets better with each read.
"But I felt I had to do this. I think they had to learn this lesson, I just wish it were not the hard way. After the game I gathered the team and told them baseball is a team sport. Each member of the team contributes in their own special way. They each possess a unique set of talents and skills that allows them to help the team, but not everyone is cut out to be a pitcher or a catcher. I think they all realize it now. Some of the kids accepted this and told me they did not want to pitch anymore. Other kids said they would practice and try to get better. "
I’ve had my share of lessons I’ve learned the hard way – say Interliant, my biggest failure and the source of some of my greatest lessons, or my first 8.01 (MIT freshman physics) test which I got 20 (out of 100) on. Failure is when you really learn things. I just keep practicing and trying to get better.
My long time friend Ben Neumann has a detailed post up titled Network Outage. Ben is CEO / owner of Globat, a successful web hosting company. I met Ben through an acquisition in the late1990′s when Interliant bought his previous company Icom (also a web hosting company.)
Ben’s company had a tough day yesterday. Multi-hour critical failure is a way of life in any rapidly growing SaaS / hosting / web business. It’s nice to fantasize that it will never happen, but virtually every high growth company has "its moment of fun." It’s all in how you deal with it, how you treat and communicate with your customers, and what you learn from it.
Part of dealing with it is being open about what happened and what you are doing about it going forward. Ben does a nice job of setting an example here of how to do it.
On top of the outage, it was Ben’s wife Andrea’s birthday. Andrea – I hope you gave Ben a raincheck and decided to celebrate your birthday this weekend! Ben – hint – flowers, chocolate, jewelry, and a trip to Hawaii.
Mitchell Ashley has an excellent post up titled Fail Early, Fail Often. I’m seeing a little more chatter about failure, introspection about how it feels, and suggestions about how to turn it into a positive (or at least effective) experience making the rounds.
As someone who has experienced a lot of success and failure, I’m glad to see more people talking about failure in the blogosphere. It’s a key part of the entrepreneurial experience. It’s also an integral part of life that cannot be denied. While it’s a lot more fun to succeed, it’s important to understand how to deal with failure.