Category Archives: Biography

THE LEAN STARTUP

blacksmith hammer - The Hammer SourceMichael Pollack of Rocket Fuel Labs

Verbatim, Part 4 – John Jonelis

“If it doesn’t work, get a bigger hammer.” – Butch Fischer, Local #1 Boilermaker Foreman

Entrepreneurs need a wide array of management and technology talent to build truly extraordinary companies. How do you fill those gaps while remaining lean?

What if you could draw amazing talent from a common pool as needed? What if that source was a fully functioning development studio?  What would that look like? A number of pictures spring to mind:

  1. Lower cost for each company due to pooled resources.
  2. Increased success because talent is there when you need it.

This is the picture I’m getting of Rocket Fuel Labs. They are part development studio, part incubator, part product-development resource, part innovation think tank. I’m continuing a conversation with Michael Pollack, their CEO, and he’s indicated that he wants to hone in on specific concepts.

.Rocket Fuel Labs logo - Large

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Discovery

John—Okay, let’s say I’m a customer that meets your criterion. What am I buying?

Mike—Sure, let’s walk through it. The first step is discovery. And discovery is, I think, hard for a lot of entrepreneurs. But at the conclusion of this process there’s a discovery doc, there’s a lean canvas.

Typically the start of this process is something that doesn’t get enough attention but is really the most important thing you can ever do—customer development.

Most startups fail. Not because they don’t build enough product. Most actually build too much product but never identify who their target customer is. The first step in discovery is, “Who are we targeting?” And once that’s been addressed then, “What are we building?” Because the WHO is the most important piece.

John—That’s why you stress prototyping and the lean canvas.

Mike— I agree with the agile, lean startup mentality, because we want to validate in the real world. I think Steve Blank got it right. I think Ash Maurya is spot on.

John—I thought that all came from Alexander Osterwalder.

Mike—Actually, I think it all came from Boyd John Boyd—brilliant man—military_strategist—fascinating guy—I highly recommend reading up on him. There’s one book in particular called BOYD.

BOYD

See it on Amazon

Iteration

Boyd was a Marine pilot. Top Gun was his idea. During the Korean conflict, he became fascinated by a practical question—why certain pilots succeeded and others didn’t. If you think about air-to-air combat skills, during WWII, they were very good, but in Korea, MiGs with Russian-trained Chinese pilots were taking out American planes. Our military was trying to figure out why it was happening. It’s interesting and has ramifications for most any competitive pursuit.

The Air Force at this time believed that the best pilots were the smartest pilots. They were recruiting these guys from Harvard and from Yale. They were saying, “We’ll get the most educated people.” And what John Boyd identified very quickly was that what made the best fighter pilots actually had nothing to do with decision quality. It had everything to do with decision quantity.

John—You’re saying that paralysis by analysis is not a good thing in real time, whether it’s in a dogfight or in business.

Mike—Exactly. If you’ve heard of an  OODA loop—that’s Boyd—Observe, Orient, Decide, Act.

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OODA loop - Boyd - courtesy Wikipedia

OODA loop – Boyd – courtesy Wikipedia

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What he found was that the best fighter pilots weren’t the smartest or the best classically trained. The best were the ones that could make the most decisions fastest. His maxim was that decision quantity trumps decision quality.

As it pertains to a startup, what I found firsthand was this: If we designed a product that didn’t work, we pivoted. As I’ve told my teams in the past, and I ardently believe it: “Speed kills when you don’t have it.”

John—That’s a great quote. The way you state it makes me stop and think.

Mike—NOT making a decision IS a decision, and the more decisions you make, the greater the likelihood that you’re going to get to the right one because every decision, if you’re doing it right, is based on a hypothesis. You should seek to prove or disprove that very hypothesis.

What makes the lean model exciting is using data to make those pieces actionable.

Michael Pollack

Michael Pollack

When you think about the customer development process, you want to put things in place that enable those OODA loops. Are the entrepreneurs able to make a decision? Because every decision should yield more data. More data means more decisions—more decision quantity. Again, when you’re in a dogfight, quantity trumps quality.

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The MVP

John—So you’re making a minimally viable product for your client, then you’re going out and testing it, and you’re asking the customer to react, and you’re changing the product and repeating the process…

Mike—Exactly. And so part of what we’re doing is giving a startup the infrastructure to do just that. We can deploy software in ways that you couldn’t ten or fifteen years ago. In our business, we want to bring that capacity to entrepreneurs. Then we actually teach the lean process along the way.

Increasingly people are asking us to do online marketing for them because people assume, “Hey, I’m not getting customers—I must have a marketing problem.” Just because you’re not getting customers doesn’t mean you have a marketing problem.

  • It could be that you don’t have product/market fit.
  • It could be that your customer development was insufficient or you didn’t ask the right questions.
  • It could be that the product doesn’t work. There could be all sorts of elements there.

We talk to a lot of startups. We put them through discovery and they get jazzed by our process and we get excited by it, too.

  • What is the need?
  • What should we be selling?
  • What is the market missing that we can deliver better?

Don’t tell the market those things. Test your hypothesis. Let the market tell you.

John—You let the customer respond to your MVP. You rebuild it to the need and keep discovering new needs and filling those needs that the customer never thought to ask at the beginning of the process. The customer doesn’t know how to do that. Most people aren’t thinking in those terms, they’re thinking marketing studies, focus groups, surveys.

Mike—Exactly. Henry Ford has a great quote in which he said: “If I asked my customers what they wanted, they would have said a faster horse.” Innovation is an iterative process. We’re trying to figure out the gaps in the market.

Our methodology is agile. Agile gets thrown around a lot and I think it’s kind of hollow at times. What agile means to us is this: We’re going to iterate with you. And we’re going to help figure out the problem. We want to spend time with the people feeling the pain because that’s what you need to know in order to build thoughtful solutions.

Modern-Day Venice.

Make it Stick 

As I ride back in the water taxi and gaze at the gleaming buildings it feels like a slice of some modern Venice.  A few quotes from the interview turn over and over in my head. I’m sure Pollack doesn’t lay claim to them all, but these strike me as significant:

ON VISION—“People have a hard time separating cause and effect. You can’t fix effects, but you can treat causes.”

ON INFRASTRUCTURE—“Good infrastructure is a platform. You build on it, just like software. The highway system provided the platform on which McDonalds could provide roadside dining. Hilton and Marriot could build massive hotel chains.”

ON COLLABORATION—“If I’m the smartest person in the room I know I’m in the wrong place. As the dumbest person in the room, you work harder, you think harder, you prepare for every question, and you do your homework even deeper before going to that meeting, so you can over-deliver.”

ON DISCOVERY—“Where’s the pain in your business? Once we do the whole inventory, it’s just like taking something apart. What’s working and what’s not working?”

ON MARKETS—“I never knock the competition because I’m sure they’re doing a great job. Competition helps. It creates a market. If I see inefficiency, I want to challenge it and do better.”

ON INTEGRITY—“My firm and adamant business philosophy is that I sincerely and always want to under-promise and over-deliver.”

ON EXECUTION—“A lot of entrepreneurs have an idea, but don’t know how to execute it. Even if the idea’s great, it comes down to execution. There were fifty facebooks before there was Facebook and they were all good ideas, but Mark Zuckerburg out-executed them all.”

ON THE PIVOT—“Speed kills when you don’t have it.” Ω

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BACK TO PART 1

Contacts

Rocket Fuel Labs

  • Specialties – Startups
  • Industry – Computer Software
  • Type – Privately Held
  • Company Size – 1-10 employees
  • Founded 2013
  • Expertise – Web Development & Deployment, UI/UX, Online Marketing, Product architecture, E-Commerce.
  • Headquarters – 222 W Merchandise Mart Plaza #1212 Chicago, IL 60654 United States
  • Website – RocketFuelLabs.com
  • Email – Info@RocketFuelLabs.com
  • Phone – 855-4FR-LABS
  • Fax – 312-620-9655

Photos courtesy Wikipedia, Amazon, John Boyd, The Hammer Source, Michael Pollack

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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2 Comments

Filed under 1871, angel, angel capital, angel investor, App, Biography, chicago, Consulting, Education, Entrepreneur, Entrepreneurship, Innovation, Innovation and Culture, Invention, investor, Marketing, Mobile App, new companies, Think Tank, vc, venture capital

4 STAGES OF DEVELOPMENT

Technical Ice Climbing - National GeographicMichael Pollack of Rocket Fuel Labs

Verbatim, Part 2 – John Jonelis

“My firm, adamant business philosophy is that I sincerely and always want to under-promise and over-deliver.” Michael Pollack

I’m in the belly of the beast—the huge 1871 incubator in the Chicago Merchandise Mart that hosts universities, accelerators, venture capital firms, and private companies that help the many startup ventures housed in their space.

Merchandise Mart

Chicago Merchandise Mart – jaj

Entrepreneurs need an array of technology services that separate the merely ordinary from the truly extraordinary. Rocket Fuel Labs proposes to supply that technology on a contract basis. They act as part development studio, part incubator, part product-development resource, part innovation think tank.

I’m continuing a conversation with a genuine thought leader—Michael Pollack, CEO of Rocket Fuel Labs. As I write this, his own company nears its launch date.

Michael Pollack—When I think about infrastructure, I think about our business. It’s about providing technology infrastructure that businesses can build on. That’s where I get really excited about what we’re doing here.

John—Would you mind filling in a little more of your own history? Maybe pick up where we left off and lead up to your new venture.

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The Serial Entrepreneur

Mike—Sure. I happened to get into the logistics business—AFN—Advantage Freight Network. We were pretty successful. We grew the business to a very respectable figure in two and a half years. After the merger, I exited that business. I didn’t want to stay there anymore. I was immature.

John—You’re creative. You get tired of one thing and want to do another. I made the same decision after a merger.

Mike—I couldn’t have said it in a nicer way. Better coming from your mouth than mine. So I ended up in management consulting. I worked for a boutique firm here in Chicago called Sequence. Worked on some awesome projects.

We tended to do large not-for-profits, so I worked with AARP, American Chemical Society, Make a Wish Foundation. I got to work on one of my favorite projects—re-designing the “wish granting.”

If you think about the problem, the Make a Wish Foundation wants to create a wish—a different experience for every child in a cost-managed way. So we designed a process that could result in a little girl getting a princess wish and a little boy getting a wish to be a firefighter for a day, while controlling costs throughout the process, giving them visibility. It’s really cool—an amazing organization, an awesome experience.

In 2009; I started my own consulting business. One of my first clients was a freight brokerage in Chicago that was looking at buying a software package. I helped them audit it, picked out a vendor, and I think got a great deal on the software.

I enjoy software negotiation. It’s a purely theoretical, philosophical sales exercise and if you’re ideologically dogmatic about what you want, you can get anything. Because when someone is selling you a product with a 90% margin, you can pretty much negotiate all the way down. It’s a lot of fun if you enjoy that type of jousting, which I do.

John—As long as you don’t do a Jurassic Park—

Mike—Exactly. (We both laugh.)

Through a bizarre series of events, I happened to meet an entrepreneur who wanted to get into the logistics space. They were in the process of raising capital. I joined them, and we raised $3M in a Series A. Then we raised $6M in a series B from Charles River Ventures and Globespan Capital Partners. We took on $3M in venture debt so we had $12M invested in the business.

What we were doing, which was really exciting, was to disrupt those 14,500 brokers. We were trying to build the Kayak, Expedia, or Orbitz of the industry and put all the inefficient bloated travel agent-style firms out of business. Because what’s mind-blowing is these freight brokers operate at about 20% margins. We felt we could build a tech-enabled business, much more scaled, that could run at 7 or 8% margins.

John—I would think so, too.

Mike—So we did it. We were acquired by Echo Global Logistics here out of Chicago in March of this past year—and it’s pretty cool to know that the technology we built is powering parts of an almost billion dollar company. I guess we were so good that we scared them to the point they bought us.

So I get to the big company and there are a lot of smart people there, a lot of cool people, but I like to be able to control my destiny. I’ve worked startups and small companies the majority of my career. It’s what I enjoy. I felt being in a big company, I couldn’t—

John—You’d rather DO than MANAGE.

Mike—Yes sir! That’s exactly correct. And what happened was, I decided to leave Echo. And in one of these weird series of events, Lance Ennen, who is a lifelong friend of mine and a stupendously talented, gifted programmer, happened to call me that afternoon and say, “Hey, I got an idea. Let’s get together and grab a drink and talk.” We started talking and realized we had the same idea. I was in the process of forming another startup. He was thinking through Rocket Fuel. I realized that there were ways in which we could merge our idea. And so the big reveal is, Rocket Fuel Labs is trying to address what we see as a hole in the market.

Rocket Fuel Labs logo - Large

Lance is someone who, as a kid, got into developing video game design. Attended school to build video games. Worked at Midway, a big design shop. Worked on Mobile Combat. But he was on the design piece. Guys that were programming—that’s where the real money was, where the real challenge was. That was the exciting part. So Lance, over the past 7-10 years, transitioned over to development. Now, if you search for Ruby on Rails Programmers on Google, the first one you’re gonna find is Lance Ennen. When it comes to Ruby on Rails, which is kind of the Chicago school of programming, one could say he’s definitely one of the foremost authorities on the topic.

John—What did you think about the prospects of starting a new venture in Chicago?

Mike—I lived in Boston for two years when I was with Open Mile. And you look at the sophistication of that startup ecosystem, you look at the sophistication of investors, you look at the sophistication of entrepreneurs—at the time, the ecosystem was much more mature there. I left Chicago in 2010 for Boston and what’s amazing now is how much the startup ecosystem here has exploded since then. Groupon is—I credit Groupon with a lot of it…

John—Did you see my logo? “Chicago is the World.”

Mike—It is. And we see it and it’s amazing.

John—It’s because adversity breeds creativity.

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Four Stages of Development

Mike—I would say adversity breeds camaraderie as well. I’ll give you an example: I used to do a lot of technical ice mountain climbing. I climbed McKinley in Alaska, Gannett in Wyoming. When you take kids out there and you train groups, you do Tuckman’s four stages of group development:

1.) Forming—The individuals start to get used to each other.

2.) Storming—Individuals may challenge your authority.

3.) Norming—The group really starts to come together.

4.) Performing—They’re ready to conquer a challenge together.

When you think about adversity; when you think about startups; when you think about groups as a business, Rocket Fuel, I think, is past norming and I can’t wait till we hit performing.

Eisklettern_kl_engstligenfall - Wikipedia

But to your point, Chicago has exploded. I think about the city I left in 2010. This didn’t exist (he waves an arm, indicating the 1871 incubator where we’re talking), the skilled people weren’t evident, the infrastructure didn’t exist, investors weren’t here—they were looking to invest in real estate, franchises and dry cleaners. And now you have investors say, “Wait. I see the potential!” Ideas don’t have to be good or crazy—we need to find entrepreneurs that can execute and some of these things are doable. The payoff, if you get it right, is tremendous. The risk is there but the reward is also there.

John—Chicago is a good cross section of company types. It’s not all mobile apps. It’s tech-enabled industry, too.

Mike—Exactly. And that’s what we love about Chicago as a city. You look at Boston: Overwhelmingly you see healthcare. You see enterprise. You look at San Francisco: It’s overly consumer. It’s overwhelmingly mobile.

In Chicago—you look at the businesses that are here—from real estate to advertising, to trading—there’s a lot of smart people here working on different things and there’s a lot of what I call latent technology skill that’s just waiting to get deployed. And that gets us excited. And that’s where we think Rocket Fuel Labs can really be a game-changer. We’re operating between incubator, startup services, and technology support.

A lot of entrepreneurs have an idea and don’t know how to execute it. You look at DashFire, a company that helps entrepreneurs visualize their MVP (Minimally Viable Product). We see that as cool, but we think there’s more than that. If you have a technology stack and you think about each of your team members, there has to be more.

For instance, my background spans across managing sales teams, designing product, designing process, management consulting. I think any startup needs some variation of those skills.

I look at my partner’s skills and I think, “I’ve got one of the best developers around, who’s also managed teams of developers. Who’s able to be a thought leader, an evangelist, and a really bright light in the space for our technology.”

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The New Venture

John—Okay I’m lost. Are you telling me that you’re something like an accelerator or are you telling me that you’re somebody who provides talent for startups?

Mike—We’re more the latter than the former. We have expertise in startups. Our expertise is typically in the form of services, so what that means is we can deliver a team that can deliver a product. I can help you through a customer development exercise or help you through a product development exercise.

The challenge is, in Chicago there are a tremendous number of startups that can’t afford us that we’d love to help. When we look at the investor community, we say, look—we’re meeting with awesome entrepreneurs every day. We’re entrepreneurs and we know what makes a successful entrepreneur. In ten meetings a day one or two of them—and that’s a good ratio—one or two make you think, “Wow, I’d seed this if I could.” What we’re trying to do is build a development studio that hires the best developers in the world because we can retain them, because we have awesome projects. The prerequisite is that we have awesome projects.

John—So you develop for this company, then that company. So you might have 3, you might have 10 on your team. It’s a boutique outsource approach to an accelerator.

Mike—Yes. Yes, that’s exactly right.

John—Okay, then you’ve got all the services and the talent pool and you’re looking for these tremendous ideas that need that kind of help. Do you help raise their money?

Mike—That may be the next leg in our stool. Right now, we’re getting deal flow. Entrepreneurs come to us and the most common thing we hear is, “Hey, would you be my interim CEO?” or, “Could you be a consultative CEO?” Our long-term goal is to be able to help incubate those startups ourselves. As we build our brand, that’s something we think is a tremendous opportunity. But that’s long term.

I’m a big believer that focus is not about saying, “Yes,” it’s about saying, “No.” We don’t want to take on more than we can handle. My firm, adamant business philosophy is that I sincerely and always want to under-promise and over-deliver.

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GO TO PART 3 – TAKING IT APART

BACK TO PART 1

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Contacts

Rocket Fuel Labs

  • Specialties – Startups
  • Industry – Computer Software
  • Type – Privately Held
  • Company Size – 1-10 employees
  • Founded 2013
  • Expertise – Web Development & Deployment, UI/UX, Online Marketing, Product architecture, E-Commerce.
  • Headquarters – 222 W Merchandise Mart Plaza #1212 Chicago, IL 60654 United States
  • Website – RocketFuelLabs.com
  • Email – Info@RocketFuelLabs.com
  • Phone – 855-4FR-LABS
  • Fax – 312-620-9655

Photos courtesy Rocket Fuel Labs, NASA, National Geographic, Wikipedia, John Jonelis

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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Filed under 1871, angel, angel capital, angel investor, big money, Biography, Chicago Venture Magazine, Chicago Ventures, city, Entrepreneur, Entrepreneurship, Innovation, Internet Marketing, Invention, investor, new companies, Think Tank, vc, venture capital

MAY IS GONE

Ron May - Tech CocktailWe lost Ron May. There’re those that are bitter and those that’ll weep. There’s those that always revere him and swear by his widely circulated May Report—and then there’s the others that still feel the sting. Everybody has a powerful opinion, but I got more than one reason for liking the guy.

I recall my first private equity meeting in a BIG room with an ENORMOUS conference table, a room packed with a double ring of tough investors—beer in hand, every face seasoned and hard. I sit back in a high-backed leather chair and listen to a terrific investment pitch that includes an impassioned plea—hugely impressive and compelling. And the oohs and aahs from these highly experienced men and women. How can I not invest in this offering? Everybody wants in!

Then a voice cuts through the warm glow like somebody just pulled the ripcord on a chain saw. “I heard you give that same pitch two years ago. What happened to that venture?”

The room goes silent a long moment. Then the speaker tries to wiggle out, but Ron keeps after him. Am I grateful? Hell yes! Ron May plucks me from certain destruction and I’ll never forget it. Then he goes after the next speaker, but that guy gives it right back to him, fighting like rats.

Ron May - Tech Cocktail

Ron May – courtesy Tech Cocktail

Ron gets banned from that venue but not from others. I’m at another event when I hear that rasping holler: “Jonelis, you still writing that shit?” Well, yeah. Hello to you too, Ron. But I still love ya.

Ron’s a blogger with the instincts of a newspaper reporter. More than once he shouts at me from across a room:

Ron May - Crain's Chicago Business

Ron May – courtesy Crain’s Chicago Business

“Jonelis are you going to get this out by morning, because I’ll call you every hour on the hour till you do!”

That’s the way Chicago people encourage each other. Those of you at sophisticated New York events and California beach parties may not appreciate the Chicago way. Too bad. It’s a good way.

The phone rings real early one morning and I feel around in the dark for the receiver. That voice again. “Jonelis, your magazine is a joke! You know who this is talking to you?” How can I not know? And he doesn’t stop with vulgar generalities. He goes on to tell me precisely what’s wrong. And yes—he’s got the problem nailed! Now I know what to do. That day, I make major changes. I’m still working on it. Thank you Ron!

Just the other day he calls me from the hospital—just out of intensive care. He might lose his foot. He states the circumstances without griping. No, that’s not his concern. He’s gonna miss the FFF event—maybe even Techweek!

So I get back from FFF with over 6,000 words of notes and I know what I gotta do. I send ‘em to Ron so he’s got material for a few articles while he’s in the hospital. And I let him know I’m praying for him. Then I give him a call. But so many people are trying to get this guy on the phone, his voicemail is all plugged up. I never hear that harsh, grating, magnificent voice again.

G’by Ron.

John Jonelis – ChicagoVentureMagazine.com

PS: In the final edition of his May Report, he writes: “Despite much prayer and hope it was Game Over. So if you have sent me any emails recently, don’t expect a response… We had a good run and I leave this life with no real regrets, at least none that I can print… To all my family, friends, faithful readers, supporters, detractors, gadflies, cronies and anyone else I hit my cane, I am signing off one last time…Till we all meet again. I have to go now. This really is my final report.”

PPS: You can read his obituary in Crain’s Chicago Business: “Tech blogger May’s final scoop: His own death.”   It’s a real good article by John Pletz.

Here’s one from Tech Cocktail: Chicago Tech Reporter Ron May Passes Away: The End Of An Era

Here’s another in the Chicago Tribune: Ron May, longtime Chicago tech gadfly, dead at 57

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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2 Comments

Filed under Biography, Characters, chicago, Chicago Ventures, city, Conflict, Entrepreneur, Entrepreneurship, Events, Internet

WHO DO YOU TRUST?

PIVOTJohn Jonelis—Verbatim from special correspondent, Donatas Ludditis

Welcome—welcome to Ludditis Shots & Beer! Glad you come in.

Got question for you.

Don's look-alike

Don’s lookalike

I hear about this guy: Nikhil Sethi his name. No, don’t ask me—I never say it right. He got easy way to advertise on social web. His outfit called Adaptly. Got three slick platforms that work as if by magic. And his company, it grow like crazy! This I want to know more about.

SPEAK UP! . WHAT IS THAT TERRIBLE NOISE, YOU SAY? . IS ONLY “L” TRAIN. . PRETTY SOON YOU NO NOTICE.  .DRINK UP.  .I GIVE YOU MORE.  .IS ON HOUSE!

Ludditis Shots and Beer

Pivot to Success

There you see? Is quiet now.

So I go to big Northwestern University event and hear him speak—entrepreneur@nu they call it. Hey, finish drink. I give you highlights only. Here, I got notes—wait, my thumbs too big, even for this gadget.

Editor’s note—Ludditis keeps his notes on a huge Samsung Note II phablet but his fingers look like sausages. Ah, he’s found his notes:

Business only three years old. It still baby but look how big already! He start when still at university. So how he get funding to grow so fast? He say, “If you ask for money you get advice. If you ask for advice, you get money. We ask for a lot of advice.”

Nikhil Sethi at e@nu

Nikhil Sethi of Adaptly

He make me think. He say, “Technology just way to copy some kinda human behavior,” or words like that. I crank that over in my old noggin a long time. It finally sink in.

Then he say, “At any given moment, eight groups are working on the same idea. Somebody will do what you’re doing whether or not you do it yourself.”

So outa all them company’s, maybe only one is winner. How you become winner? I like answer he give. He keep pushing to next level. You think he too pushy? That is what make success. Drive, he call it.

Hey – there no be this bar if I not drive business.

Is same for this guy.

audience-angle

Another thing—nowadays startups all in big hurry. Wait, I check word: “Minimally viable product.” Yeah that is what these kids make nowadays. They put junk out there and see how people like it, then change, then change again. “Pivot,” I think they call it. “Fake it till you make it,” he say, “You don’t know you missed it till you miss it.”

You want truth? I like this new way. Is quicker than expensive marketing study and faster too.

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What Makes a Great Team?

What about his people, you ask? Every team member must understand deep root of why they do what they do. That way it make sense to them.

Then surprise: “Don’t hire your friends,” he say. “It is about going into a world that’s not so friendly.” Then he say, “One of the biggest reasons for failure is difference of opinions between founders. It’s like dating. You want to know each other’s deepest and darkest secrets. If you don’t find out now, it will come out later.”

Seem like – how you say – contraption. Non-sequencer maybe. I mean I cannot put his two ideas together, but lots o’ times I no can put two ideas together. So I give him benefit of doubt. Here, I pour you another—no worries.

Nikhil Sethi

Nikhil Sethi

How he keep growing so fast? Is initiative! “We make sure we keep reinventing ourselves at a high rate. Our rate of change is ridiculous. We have to destroy and reinvent the business every six months.”

So he create when he destroy. “These things are working and growing but they’re not going to keep working and growing forever. It’s hard to throw something that’s working in the garbage but you gotta do it. There no lack of opportunity—only lack of focus.”

I say it take special talent to do that. Startup is high-stress. I like bar a whole lot better. So I get rough and throw out troublemaker sometime. That – what you call – therapy. Let off steam. Is good for the old ticker. Here, have another shot.

When can he break his own rules? “When you need to.” He says. “It’s a gut feeling. You first have to understand what the rules are.”

e@nu-conference

How he know what advice he take? “Ignore everything and only do what you think is right. Otherwise, it hinders making a decision.” Then he bounce this off wall: “Get your advice from a limited group of trusted people. The biggest decision on picking a board is you trust each other. Find people you can trust.” To me it sound like another contraption, but I see wisdom on both sides. I live my whole life with people I trust. Is best way to live. Best way do business.

You already have enough drink? Come back and I tell you how student companies make money.

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GO BACK TO PART 1

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ContactsInc Magazine Cover

Follow Nikhil Sethi on Twitter – @nsethi

Adaptly

Entrepreneur@nu Pivot to Success Conference

Forbes - NU most entrepreneurial Inc. Article on NUvention

Forbes article – “63% of NU students claim they want to start their own businesses”

Photographs courtesy Northwestern University, Adaptly, John Jonelis Studios.

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money. .Copyright © 2013 John Jonelis – All Rights Reserved . .

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THE TWO LAWS

IMSA Kids at MIT Enterprise Forum

From a special correspondent – Mark T. Wayne,

as told to John Jonelis

Mark T Wayne Frankly sir, I am flabbergasted! This is something beyond my experience! Think of it. High school students turned serious entrepreneurs. These are children in suit and tie—teams of them politely waiting to speak in turn without interrupting the others. Not so much as a spit wad—do you hear me? Not one! That in itself is cause for more than casual interest. And no fluff here, sir!  These kids seek equity funding without so much as a blush. And they do it with such aplomb.

One by one they each give a compelling presentation before a swarm of serious investors and businessmen. Each offers a new venture—a real venture with a plausible business plan. Yes, I witnessed it myself. Something astounding is taking place among those students and I want to put my finger on just what it is.

Let’s look at one example. Jason Lin is on stage to confront the audience at the MIT Enterprise Forum, Chicago—

Jason Lin

Jason Lin – WikiRoster

This is a crowd of competitive peers, cynical investors, critical business people, and a panel of jaded judges. Young Jason stands before this daunting mob, tricked out in his tailored suit, relaxed, poised, and glib. He calmly and professionally convinces us that his company is number one. His is not a pipe dream.  NO – IT’S A FULLY OPERATING BUSINESS, SIR!  And remember, this is high school.

I talked to Kendrick Lau from his team while waiting for the judge’s decision. We traded letters after that. Every encounter tells me of sincerity, intelligence, and good breeding.

Judge Bob Geras

Judge Bob Geras

Does this surprise you? Everyone knows that our public schools are the laughing stock of the world. Today, a faithful teacher invests all her hopes and struggles to graduate just a few students that can read, write, and comprehend the rudiments of the English language.

And this has been the way of it for at least 150 years. Take the well-known example of a boy named Tom who I know from my own youth. Not a model student but not unusual, either. He hates school with his whole heart. In class he starts a quarrel with the first boy that comes handy. Then he pulls a boy’s hair in the next bench. Next he sticks a pin in another boy, in order to hear him say “Ouch!”

And Tom is not unique. No sir! His whole class is of a pattern—restless, noisy, and troublesome. Fidgetings and whisperings extend far and wide. Soon the classroom air is thick with paper wads.

Can you conceive of building a serious business venture in such chaos?

David Park

David Park – tunesketch

IMSA – the Illinois Math and Science Academy has teamed with other high schools in the region.  As a result, these children might very well be the best-of-the-best.  But can that explain this wonderful performance? Rubbage! That does not answer. Kids are kids wherever you go. There must be some fundamental law at work.

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Two Laws

As I cogitate on that a while, I actually come up with two fundamental laws:

  • Law #1—Misfortunes are forgotten in the excitement of new enterprises. It does not matter if the enterprise is puckering the lips and successfully whistling for the first time or a more complex pursuit such as playing a tuba or starting a business. When the thing is achieved, exultation takes over.
  • Law #2—Work consists of whatever a body is OBLIGED to do. Play consists of whatever a body is NOT OBLIGED to do. Entrepreneurship—at the fundamental level—is pure play. Folks will work harder at play than at any other activity under the sun.

Mark T Wayne

I recall these same two laws driving a boy to engage in private enterprise about 150 years ago. Everybody here is familiar with Tom’s brush with whitewashing his Aunt Polly’s fence. The story has been around long enough to suggest universality.

For a boy, painting a fence is a daunting task and one sure to bring the scorn of other boys who are setting off on interesting Saturday expeditions. Permit me to dwell for a few moments upon the manner in which Tom turns a hated task into a profitable venture.

Kendrick Lau

Kendrick Lau – WikiRoster

With his bucket of whitewash and a long-handled brush, he surveys the fence in genuine anguish. A quick accounting of the resources in his pockets makes it clear that he cannot hire boys to do the work—he must find other means. So he brushes on the whitewash and stands back critically, then dabs at the fence and again surveys his work. When his friend Ben comes by, Tom convinces him he’s having the time of his life (Law #2). After eager negotiation, Ben gives up a juicy apple for the honor of painting that fence and he sets to it with enthusiasm (Law #1).

Boys happen along to jeer but remain to whitewash. Tom trades the next chance to Billy Fisher for a kite in good repair.

Ethan Gordon

Ethan Gordon – Bend

Then Johnny Miller buys in for a dead rat and a string to swing it with. When the middle of the afternoon comes, Tom is literally rolling in wealth. He has twelve marbles, a piece of blue bottle glass, a spool cannon, a key that won’t unlock anything, a fragment of chalk, the glass stopper of a decanter, a tin soldier, a couple of tadpoles, six fire-crackers, a kitten with only one eye, a brass door-knob, a dog-collar, the handle of a knife, four pieces of orange-peel, and a dilapidated old window sash.

His enterprising spirit does not stop there.  The next day at Sunday School, he trades these treasures for yellow and blue tickets earned by diligent students that meticulously memorized Scripture. He turns in those tickets in one big pile and wins the honor of the faculty and a girl’s heart – at least until he is questioned more closely.  It seems the most boastful are the first to get found out.  We will draw the curtain on that scene.

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The Winners

Winners of the MITEF / IMSA Power Pitch with IMSA Faculty

The Winners

So what have these young folk at MITEF to offer? Here are the winners:

  • WikiRoster – Jason Lin, Jung Oh and Kendrick Lau operate a website that answers the question, “Who is in my class?” This is the first question a student asks. It’s already changing the way high schools interact and the way marketers do business. It facilitates collaboration on homework, notes, tutoring, sale of textbooks. There is almost no competition in the high school market. And it’s a going venture!
  • Bend – Ethan Gordon has developed a way to generate electricity from undersea currents. This is in the far depths and does not interfere with commerce or recreation. And it’s clean!
  • Tunesketch – David Park offers software that lets you write beautiful music by the simple act of making a rough sketch. I can think of many folks who will buy that!
Judges

Judges

And these are high school age children! All of them give us a peek at their business plans and answer the important questions: Why will folks buy it? How does the company make money? How does the investor make money? In my imagination, Tom and Billy Fisher and Johnny Miller and all the other fence painters want to buy in. And well they should. I do too!

powerpitch logoAllow me to bestow credit to Jim Gerry of IMSA and Moises Goldman of MITEF for bringing inspiration to us in in the midst of all the chaos we call education.  Tonight we have seen it as it never appeared in our fondest dreams.

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ContactsT MITEF

Moises Goldman PhD – MITEF – M&J Acquisitions –  Moises6@comcast.net

Jim Gerry – Innovation and Entrepreneurship Director at IMSA – jgerry@imsa.edu

IMSA – Illinois Math and Science Academy – www.imsa.eduT IMSA

MITEF Chicagowww.mitefchicago.org

WikiRosterWikiRoster.com

tunesketchtunesketch.com

Photographs courtesy IMSA Student Productions  www.imsastudentproductions.com/view.php?id=128

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GO TO PART 2 – SIX KIDS PUT TECH COMMUNITY TO SHAME

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Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link . This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.

.Copyright © 2013 John Jonelis – All Rights Reserved

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Filed under angel, angel capital, angel investor, App, big money, Biography, Characters, chicago, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, IMSA, Innovation, Innovation and Culture, Internet, Internet Marketing, Invention, investor, Mark T Wayne, MIT Enterprise Forum, MITEF, Mobile App, Mobile Marketing, Software

THE PIVOT

The Story of Ray Markman-Part 12

Friday, 4:40 pm

Ray MarkmanI’m winding up my own conclusions about Ray Markman’s bold assertion that he never worked a day in his life. At the same time, Loop Lonagan’s big boxing match with Alexander Harbinger is getting close. I don’t know how you feel, personally about the sad spectacle of a friend beating up on another friend—in cold blood in a rule-based arena—but I plan to be there to enjoy every second of it.

Lonagan’s feet rest on my desk. The guy seems entirely oblivious to the impending match.

“Okay,” I say, “I’ve got some stuff that needs saying. At this point, Ray’s outa the video business, on the loose, trying to decide what he wants to do and he tries a bunch of things: He teaches marketing at Northwestern and NYU. helps edit the classic book, DIRECT MARKETING by Edward L. Nash and writes the chapter on broadcast advertising.

“He gives a series of speeches to the Direct Marketing Association.  Then he gets a call from the US Secretary of Commerce. ‘Will you give that speech around the country? We’ll program it, pay your fare, provide a publicist for you at all times and we’ll pick the venues.’ He does that for two years and winds up with a personal commendation from the president.”

Lonagan looks at me slantwise. “So he’s right back on duh road? You gotta be puttin’ that outa sequence.”

“Maybe—but it happened and there’s more to it.

“Ray and his partner start doing town hall meetings to make people aware of economic issues. They start a company called FACT with 15 congressmen and senators—luminaries at the time. They support him and lend their names to it. When he begins his fundraising, a $500K donor asks him to come to New York first. ‘I’ll introduce you to some folks,’ he says.

Ronald Reagan

Ronald Reagan – Reagan Library

“Ray gets to New York and guess what.  This guy’s got a duplex overlooking the UN building. He walks Ray across the street and introduces him to the NFIB, the National Federation of Independent Businessmsn, an organization of a million conservative thinkers and businessmen. Then all of a sudden it’s, ‘Ronny, I want to introduce Ray Markman.’ And it’s Ronald Reagan. This is before he’s president. And Reagan gives a speech. He says everything Ray wants to say and more and Ray’s thinking, ‘They don’t need us. If he gets elected, he’ll have millions of dollars of public money and we have to raise ours privately. He’s gonna do it from the stump.’

The Meryll Lynch Bull

Meryll Lynch Bull

“So Ray gets out of public life because Reagan is doing the job for him. And Ray appreciates it, too.” I read the quote out loud: ‘He was terrific. The country was in a depression and he got us out of it. That’s when Meryll Lynch started running the ad: We’re Bullish on America. It was because of Reagan.’

Lonagan takes his feet off my desk and looks at me hard. “We done with all the do-good stuff? Good. Soes a friend—one of them five guys worked with him on his first companies—this guy’s a general agent in the insurance business—real successful. He says to Ray, ‘Why don’t we start a wealth management company?’ He’ll do the insurance and Ray’ll do the investing.

“So Ray takes his Series 7. He says, ‘Toughest test I ever took in my life. Six hours. A lotta work. But I passed the first time luckily somehow.’  Hell, I took my Series 7 and I’m here to tell yuh it’s tough.  Ray’s just bein’ modest when he says he got lucky passing it duh first time.”

Lonagan leans back in his chair. “So they hang out their shingle and start what he calls the Financial Life Planning Company.

“Of course, he’s lookin’ for investors to get started. And he starts with friends like everybody does. They’d say stuff like, ‘We got Meryll Lynch. But you’re a good friend. Howsabout $25,000?’” (I love the whiny voice Loop uses in his parody of a reluctant client.)  “Hey–truth is, Ray’ll take 25 cents! He ain’t got no business yet.”

Lonagan grins. “So he takes this course at duh University of Chicago in modern portfolio theory. He learns duh same stuff we all learn in that line o’ work—stuff outsiders don’t know about. Basically, it’s as simple as this: If you add a few non-correlated assets like real estate or commodities to a portfolio o’ stocks ‘n’ bonds, you make out real good. You increase return ‘n’ lower duh risk! That is, if you do it right. They plot it on a fancy curve called the ‘Efficient Frontier.’ But Ray goes at it a different way. Uses modern portfolio theory by investing in startups. And he builds a substantial business that way.

The Efficient Frontier

— The Efficient Frontier — (source unknown)

“But after a while, regulations change and broker dealers get even greedier. They want him to sell their own stuff exclusive. REITS, limited partnerships—boring kinda stuff—not the big returns he gets on startup companies.”

He pours more scotch. “So about that time, Ray and Len Bland start showcasing and funding startup companies. After some time, they build what I call a storefront. Startups come to them. They got a regular vetting process in place. They can pick the best companies outa the bunch. Meanwhile, they’re all comfy in their air-conditioned store, looking out their storefront window at all duh other consultants sweatin’ at duh curb, holdin’ out their tin cups fer work. And if it’s cold, Ray just turns up the thermostat.”

Renaissance Fund

Midwest Renaissance Fund

“So why shouldn’t they start a venture capital fund and pick the best companies they know? Just stands to reason. Ray comes up with the name ‘Renaissance.’”

“Here’s what Ray says.”  Loop reads from his notepad out loud: “’I had a partner helping me raise money. A terrific young guy—and he was a serial entrepreneur himself. He and I were working on projects. He was in Indianapolis. I said, ‘I’d love for you to join us.’ So he comes to Chicago and I introduce him to Len. Everybody likes everybody else. He has a lot of contacts and begins bringing people in. Pretty soon we’ve got a guy in Columbus Ohio, in Cleveland, three guys in Indianapolis which by the way is a real hotbed. Now we’re in eight states. And that’s the way this will happen.’”

“Hey Loop, look at the time. Better get your sorry ass over to the club or you’ll lose that boxing match by default.”

He glances at his smartphone and leaps to his feet. “I’ll get a cab. Split da fare with yuh.”

I nod in the affirmative. But how can a guy with that much money be so cheap?

And on the ride over, I make up my mind. After all the research and all the arguments back and forth, I believe what Ray said. I believe it when he claims he never worked a day in his life. And I like the way he put it: ‘I loved what I did. To me working was the greatest things in the world. I still average twelve hours a day. I never felt I worked a day in my life.’

My cell phone rings. It’s Bill Blaire placing a bet on Harbinger. $10K. He must be crazy. No way Harbinger wins this fight.  I take the bet.

Go to Part 13 – The Big Match

Go back to Part 1

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Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2012 John Jonelis – All Rights Reserved

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FAMILY FIRST

The Story of Ray Markman-Part 11

by John Jonelis

Ray MarkmanFriday, 4:30 pm

I’m trying to gathering material on Ray Markman’s assertion, “I never worked a day in my life,” before time runs out. This very afternoon, my two colleagues—Loop Lonagan and Alexander Harbinger—will fight a duel over this, and one of them may not live to tell about it.

Lonagan paces the worn oak planks of my office floor in the back room of Ludditis Shots and Beer. “I wanna say somthin’ about dis new business Ray starts. Him and his partners is already makin’ a bundle, so why should he try’n change the way people buy things? But that’s just what he does.

“Ray gets this new idea about retail distribution. So he runs a test.  He takes that Jane Fonda tape and puts it into Wal-Mart, K-Mart, Dominicks.  He gets into these stores ‘cause he offers the tape on consignment and gives ’em the displays.  In other words, he’s takin’ all the risk!  So they go along.

“Turns out, Dominicks outsells K-Mart and Wal-Mart by far on a per-store basis. A food store!  Who woulda expected that?”

Hanna-Barbera Video Cover

Hanna-Barbera Video Cover

Lonagan steps over to my desk and grabs his notes: “So Ray says this to his partners: ‘Let’s start another company and just go into supermarkets. There’s nobody there.  We can pre-empt the competition.  Here’s the idea:  We go to Disney, Hanna-Barbera, Warner Bros, and get their children’s animations.  We price “em at $9.95.  And we put displays in the stores and sell it like soap.  We’re gonna blow ‘em out of the stores.  We’re appealing to another audience.  It’s women and it’s for their children.  They’re gonna buy it.’  Now if you know Ray, you gotta know he says all dis in a real soft voice.  To me that gives da words even more punch.  Hey, I can buy into that idea myself.  All his partners is galvanized into makin’ the move right alongsida him!”

Lonagan’s pacing speeds up and in this big back room, he ranges from the crates on one wall to the bottles on the other. Seems like there’s not enough room in my backroom office to hold him.  “‘Course, they can’t run both companies—it’s way too much. So they merge the first one into another company and get their money out.  Then they start a new company called Magic Video.  Don’t know why they call it dat but it seems to catch on just fine.”

Dominicks Foods

He stops in front of my desk. “And how d’ya think they distribute to the food stores? The usual way—by themselves?  You can forget that idea.  They do it with food brokers.  Food brokers!  These outfits don’t know video from a slab o’ meat, but they’re in the stores and the stores know ‘em and they got carte blanche to put up displays.  Dis is brilliant!”

I nod and he resumes his pacing. It always tickles me when phrases like “carte blanch” slip out of Loop’s mouth.  Such a contrast to the streetwise front he puts on.  Loop is highly intelligent.  Besides his experience as a futures trader in the pits, and the many private equity deals he’s made since then, he sports a masters in finance from the University of Chicago.  So I know a lot of his old neighborhood accent is a put on.  I’ve learned not to fall into the trap and underestimate him.  He’s quick.

Lonagan continues: “The way Ray works it, he goes with his food broker to a major supermarket chain and sells the idea to HQ. After that, the brokers put the product in.  They do all the housekeeping, the displays, all the details. 

“It works out great. They’re buildin’ a fantastic business.  In 2-1/2 years their run rate is 250 million bucks!  Tell me that ain’t good business.  And Ray knows he can grow it into a billion!  But it don’t turn out that way.”

Now he has my full attention. I want to know the rest of the story.  What’s Loop waiting for?  Pausing for some big effect? “Yeah?” I say, trying to egg him on. “And?”

“His first grandchild gets born. A little girl.  Big deal for Ray.  He’s traveling 90% o’ the time so he can’t see her.  He decides family comes first. 

“His partners whine and complain, ‘Ray, you can’t quit, you’re the whole company.’ So he makes an agreement with dem guys.  He sticks it out fer six more months while they get a new president settled in.  After that, da new guy’s supposed to do the day-to-day business while Ray keeps the relationships going with Disney, Hanna-Barbera and Warner Bros.  He says, ‘Okay but if you screw around with the time, I’m gonna be gone.’  He’s not waitin’ around for his granddaughter to grow up without him. 

“Of course, six months pass and they ain’t done nothin’. Don’t even hire no new guy.  So Ray sells his share o’ the company.  He makes out real good but he gives up the chance o’ buildin’ a billion dollar company.  Family first!  And I say, he’s right!”

 

Go to Part 12

Go back to Part 1

Comment on this article — Name and email optional

Find Chicago Venture Magazine at www.ChicagoVentureMagazine.com Comments and re-posts are welcomed and encouraged. This is not investment advice – do your own due diligence. I cannot guarantee accuracy but I give you my best.

Copyright © 2012 John Jonelis – All Rights Reserved

1 Comment

Filed under Biography, Characters, Chicago Venture Magazine, Chicago Ventures, Conflict, Entrepreneur, Entrepreneurship, Innovation, Invention