“Losing to Win, and Carving a High-Tech Path to Success”

From the day Dan Caulfield launched his business from his bedroom in 1994, he pursued his "dream client."

Caulfield, founder of Hire Quality Inc., a Chicago firm that matches current and former military personnel with prospective private-sector employers, set his sights on FedEx Corp. Employees at the overnight-delivery giant needed to fly and repair planes — talents possessed by many military veterans. And FedEx’s founder and chairman, Fred Smith, was a former Marine just like Caulfield.

"I started this company to get FedEx as a client," Caulfield says. "It seemed like a perfect fit. All I needed to do was make them see that."

Hire Quality signed up FedEx in March 1995. Yet four months later, FedEx terminated their contract.

In retrospect, Caulfield admits that his company failed to perform. His employees weren’t trained to service FedEx properly, and he hadn’t built the proper infrastructure to handle the sudden surge in activity brought on by his newest and most demanding client.

"We went to them too early," he reflects. "We just weren’t ready to make it work."

Caulfield "overpromised" what his company could provide. To make matters worse, he rushed to bring in even more business: "Part of the reason I lost FedEx is I was out selling other contracts. I should have been managing our performance more closely."

As a result, Caulfield wasn’t surprised when FedEx pulled out. But he vowed to learn from the experience and never again subject his company to a challenge for which it wasn’t prepared.

Even after losing the account — and 33% of his company’s revenues in the process — Caulfield’s optimism propelled him forward. He hired a professional salesforce and soon built a stable of solid clients.

He also refused to give up on FedEx. He maintained close contact with its key executives and kept them updated on his company’s growth. "Fred Smith liked my tenacity," he says. "After two years of my plugging away, he gave me another chance."

Yet Caulfield couldn’t regain the confidence of the FedEx operating managers whom he had let down before — and he needed their support to succeed.

"I told Fred Smith that I’m setting myself up for failure," he recalls. "I wasn’t going to hurt my reputation by sticking around and watching things fall apart. So I quit the account."

Turning to Technology

By mid-1998, Caulfield revamped his business model. By embracing technology, he could move beyond personnel placement and not have to depend on FedEx — or any other single client.

He launched Hire Quality’s first Web site in 1995. Three years later, his Internet ambitions grew, and he laid the groundwork for a new military community Web portal, MilitaryHub.com, which made its debut in April.

About half of the company’s current revenues come from technology sales, including fees that employers pay to post job listings on its Web site and private-label software that Caulfield’s team created to help other placement firms post jobs and screen candidates on the Web.

In 1999, Hire Quality earned about $3 million in sales with 30 employees. This year Caulfield expects sales to exceed $5 million.

Writer: Morey Stettner