Chicago Entrepreneur Sean Harper

Interview by Kevin Ohashi of Ohashi Media

Sean Harper is the founder of TransFS and TSS-Radio. He attended The University of Chicago for his undergraduate education where he studied Economics and Computer Science. He also returned to Booth Business School (University of Chicago) and completed his MBA last March. Unsurprisingly, he lives in Chicaco and is really pushing for it to become a big tech hub. Sean has played both sides of the table; he started out in the venture capital industry at Longworth Venture Partners and also put on his entrepreneurial cap afterward to start TSS-Radio. TSS-Radio is a satellite radio and accessories shopping portal which has won some acclaim such as ranking 94th on the Inc. 500 which Sean helped grow to a 4.5 million dollar revenue business in 2008 in 4 short years.

TransFS, Sean’s current company, is dedicated to credit card processing comparisons. It provides a bidding platform for credit card processing companies to make offers to businesses and allowing them to select whichever company they choose. They also play an active role in pre-screening companies to make sure you only get reputable companies making offers. On average TransFS saves businesses 40% on credit card processing fees! You know what the best part of TransFS is? It’s free for businesses.

MO:

You worked in VC industry before starting out on your own. You also worked for The Boston Consulting Group for a while. You must get very different perspectives from all these different areas. How did you get involved with the VCs and what did you learn from them about starting your own business? How about the consulting side?

Sean Harper:

Longworth is a pretty early stage VC, so it was great practice for being an entrepreneur. A lot of my time was spent figuring out how to evaluate the quality of a market – basically are there enough potential customers and is their need strong enough to justify building a company to solve that need. In both my businesses I have been able to survive a lot of mistakes because I chose good markets.

Also, working in VC teaches you when to not waste time trying to raise money. For most of us, its very hard to raise money without first building a product and getting some customers. So don’t waste time with it until those milestones are met.
As for consulting, I really enjoyed getting exposure to business problems. Entrepreneurs fundamentally like to solve problems, and consulting provides exposure to problems that products and companies could be built to address.

MO:

We actually have an uncannily similar background (I studied Economics/CS and then went to business school for graduate degrees). You have a self-proclaimed passion for economics, but it’s got a pretty bad name at this moment in time. It’s often considered a very abstract or high level type of thinking about whole business systems. How do you apply your knowledge of economics to your business decisions?

Sean Harper:

It’s nice to meet another geek with the same interests. Micro and behavioral economics are super useful for business, mainly for understanding motivations. For example, credit card processors bid aggressively to offer the best deals on TransFS. They do that because they have large fixed costs and low variable costs, which creates an incentive to grow in order to spread those fixed costs across more customers.

MO:

You founded TransFS based around a specific need/experience of your own. That is often the strongest force for driving an entrepreneur to do something. How did you get started with TSS-Radio?

Sean Harper:

My business partner and I were both big radio and especially Howard Stern fans. We had aftermarket satellite radios installed in our cars and when a part broke had a really hard time finding a replacement at Best Buy or on the web. So we saw an opportunity to provide those spare parts and accessories on the web. So I guess that one was motivated by personal experience too. :)

MO:

The financial services industry is one of the most cut-throat industries online in terms of competition for traffic. The founder of Mint.com recently talked a bit about their strategy of landing pages for virtually every keyword in the financial sector among many other things. How do you market TransFS cost effectively?

Sean Harper:

Pretty much in the same way, we provide a good product, tell as many people about it as we can, and create content that is helpful to web searchers, which is really what Mint was doing with those landing pages.

MO:

I have to take a moment and admire your website; it’s exceptionally clean with a lot of clear calls to actions where they make the sense. I can imagine hundreds of iterations and A/B tests to maximize your returns, but I only am guessing. Could you tell us a bit about the process you have gone through designing it and what the biggest challenges are?

Sean Harper:

Thanks! I really appreciate the praise – it’s something we as a business have worked really hard at – it’s also the one part of the business that I have personally had the least to do with. Josh, our CTO, and Tisho, our UI guy, have done 4 big iterations since we launched and many little iterations in the middle. Like you said, building the perfect web product takes a lot of iteration and testing and we just had to launch it, acknowledge that it would be awful at first, and then work our butts off to optimize it in response to analytics and user feedback.

We still have a ton to do, a todo list with dozens of improvements and tests on it, and we add more every day.

MO:

TransFS only lists three people and an advisor on your website. It looks very much like most early stage web startups. How has your experience differed with a completely web startup (versus TSS-Radio where you appeared to have a physical warehouse and inventory)? Do the same rules apply?

Sean Harper:

We have some more people involved that are not up on the site yet, but yah, we are tiny, very early stage. TSS-Radio has a warehouse and physical inventory now, but when we started, the warehouse was one half of my business partner’s studio apartment. We would sometimes store product in his backyard, fortunately it was in Los Angeles and we never got caught in the rain.

I think most of the same rules apply. Dealing with physical inventory has its challenges, but at TransFS we deal with virtual inventory, the bids and offers that the credit card processors make to our customers, which also has challenges. Ultimately the challenge is to deliver a product customers want in a way that’s easy for them to consume.
The worst thing about inventory is how much it costs, we put every dime we earned during the first few years into increasing inventory, which ultimately paid off and gives us a great competitive advantage now, but at the time was extremely painful. Inventory, unlike other business expenses, isn’t tax deductible, because it’s an asset that retains value, which makes it even worse.