Category Archives: Chicago Startup

WILDERNESS

by John Jonelis

.In Chicago, we enjoy something few high-tech centers can boast—easy access to a primal wilderness—a vast paradise, ancient and unspoiled—unique in the world and very special.

Whenever I’m in this place, I love the world just as I find it.

A short commuter flight from O’Hare Field whisks me to Winnipeg International Airport. Then a short local flight delivers me to an isolated airstrip carved out of an untouched forest—hundreds of miles from roads and crowds. And I experience absolutely no jet lag. My destination is located within my own time zone! This amazing opportunity is accessible due to technology, and I intend to enjoy it as often as I can!

Canadian Shield shown in red

My favorite location is Manitoba at the 55th parallel—as far north as Alaska’s Aleutian Islands and the Bering Sea—as far north as Omsk. North of that grow stunted trees in permafrost, but here tall Pine and Aspen surround the lakes. Uncounted and untouched waters flow through this region—a massive system of rivers and lakes, draining into Hudson Bay. Here it is not uncommon for the ice to measure four feet thick as late as May. I come in June.

Boreal Forest—the crown of the Northern Hemisphere

Mark T Wayne kindly explained to me the geology of this place that I love so intensely. This is the unique and magnificent intersection of the Canadian Shield, and the Boreal Forest. The Shield is a vast area, surrounding Hudson Bay, where, during the last ice age, severe glaciation removed everything down to bedrock. The Boreal (also known as the Snow Forest) is a predominantly conifer range that rings the northern hemisphere like a crown. (In Russia, it runs through Siberia.) Canada’s intersection of Boreal and Shield makes up the largest unspoiled wild area in the world.

Overstressed Chicago entrepreneurs need a place to burn off the tension of a high-risk high-reward lifestyle. Some find solace at the golf course. Others in spectator sports, television, or booze. I prefer the stunning spectacle of God’s creation in the raw. And I bring my fishing rod!

The great Northern Pike reigns in these waters and grows to enormous proportions! Nobody stocks these lakes, but the waters teem with these ferocious predators. Conditions are just as they’ve been for thousands and thousands of years, and unlike other regions of the globe, Manitoba means to keep it that way. No live bait. Barbless hooks. All fish returned to the water unharmed. That transforms an idle pursuit into a challenging alternate activity for budding business tycoons.

Vladimir Up Yours Putin finds time to enjoy the Boreal in his native Russia—that is, when he’s not busy overrunning free countries or thumbing his nose at our great nation. If he can get away for such activities, I think Chicago entrepreneurs can do the same.

I’ve experienced many good fishing lakes in Canada’s provinces. This is my favorite. Knee Lake is a 50-mile-long body of icy water punctuated by rocky reefs and 150 islands. Only one small lodge operates here. They call it North Star Outpost and to me, it’s as close to heaven-on-earth as you can get.

Loop Lonagan, Mark T Wayne, and Donatis Ludditis from my magazine surprised me with tickets for this excursion. And I am immensely grateful.

Here, a man indulges in the elemental fight against nature and—for a precious time— entirely escapes the Chicago rat race!

Here, a man lives off the fat of the land, and—in a delightful exception to the catch-and-release rules—harvests fat walleye for that exquisite tradition known as Shore Lunch.

Nothing tastes better than fresh walleye cooked over pine logs. This is beer batter—my favorite.

In this ecosystem, nothing goes to waste. After that wonderful meal, I’m back hunting big pike.

Without warning, a strong strike sends a shiver up my elbow and shoulder. I feel vital life at the end of my line. The weight of it leaves no doubt that this is a trophy fish. Then a sharp pull almost yanks the rod and reel from my hands and the water boils!

I catch my breath and strain against the fish. This monster goes through all the escape behaviors learned over a life of perhaps 50 years. It jumps clear of the water. It runs deep. It rolls in my line. It thrashes, tugs, and splashes the surface of the water. Every time I catch sight of this fish, it strikes me with awe. This one is strong and thick. As they say up here, it has shoulders!

It charges the boat and I reel fast to keep my line taught. A moment of slack and the prize will be gone. It swims underneath me and I plunge my rod deep into the icy water and then work it around the bow. When I finally bring this fish to the side of the boat, it turns away and peels line off my big round reel at will.

This battle repeats three times. A fish this big does not succumb easily and expends all its energy before surrender to the net.

Quickly, I lift him into the boat. The barbless hook falls from its mouth. A hurried measurement—46 inches! One snap of the shutter and my prize is back in the water.

A fish this size is delicate and often will not survive the fight without help. Holding it by the tail, I move its body back and forth, flowing water through the gills. A minute or two, and the great northern pike strokes its tail free of my hand and swims away with power. I hope to catch that one again next year.

But for now, I must catch my own breath. This primal battle in God’s wilderness leaves me stunned and in awe and immensely satisfied.

Read – BEST GIFT

 

This is North Star Executive Outpost on Knee Lake, Manitoba, a protected pike sanctuary.

Website – northstarresort.ca

Phone – Talk to Hope Levenhagen at 800-563-7151

Email – hopelevenhagen@northhavenresort.ca

 

Charts and Maps—Wikipedia.

Photography—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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
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Filed under angel investor, Canada, Chicago Startup, Chicago Ventures, Entrepreneur, Entrepreneurship, fly fishing, Startup, startup company, vc, Venture, venture capital

STARTUP OF THE YEAR

by John Jonelis

Here’s a Chicago Area startup that brings pleasure, relaxation, and satisfaction to tired business people, gets them out in the open air, away from the pressures of the big city, and teaches them to smile again. Does that sound like a worthy goal?

.

I think so.

Now imagine you’re in waters bounded by trees of all kinds—not a house or building in site! No water skiers. No high-powered outboard motors. Not a boat of any kind!

Well, can you imagine that?

Ah!

You see the flight of the blue heron, the bald eagle, ducks and geese. A couple of otters. Nobody in your boat sets eyes on another human being all day long! Sound good so far?

Ah!

This is nature in the raw. You’re drifting a wild river—in strong current—strewn with huge boulders. As you make your way downstream, you shoot several rugged rapids. But due to the skill of your guide and his specialized boat, the ice in your martini glass is never disturbed. You feel at ease the entire day.

Ah!

You bring along a hat, polarized sun glasses, a rain jacket, but no fishing gear. Your guide hands you an expensive Orvis 8-weight fly rod. It feels surprisingly natural and light in your hand.

Maybe you never cast a fly rod before, but your guide gives you a few pointers and moves the boat a little closer to the target—just to make it simpler for you. Now you’re casting hand-made six-inch streamers at the banks with ease. Soon you find out why the fly rod is favored on the river. It’s the most efficient tool for the job.

And fly-casting is therapeutic and highly relaxing.

Ah!

Soon you thrill to strikes from trophy smallmouth bass that fight like a tigers. The fish here grow fat as footballs. Landing one in the heavy current on a fly rod takes all your skill and strength. I can think of nothing else that gives this kind of peace and satisfaction.

Ah!

Ah!

Wahoo!

Hooray!

Yes, we all dream of exotic trips to faraway places. But this one requires no passport. No airplane tickets. All this is happening on the Wisconsin River—a three-hour car ride from Chicago!

Wanna go?

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Hoo-boy!

You gain entry to this paradise in an unusual little boat—a specially designed dory—incredibly maneuverable—easily able to withstand these rocky rapids.

Motorized aluminum rowboats and jon boats risk ripping open their bottoms and ruining their props and lower units on submerged rocks. Electric trolling motors are useless. These rapids swamp canoes and challenge kayaks. A $75,000 bass boat wouldn’t last an hour.

But the diminutive dory makes for safe passage and provides a comfortable and stable platform for you to cast your line with accuracy. It makes the raging water seem calm.

Ah!

Your guide controls the boat with incredible precision using oars.

Yes—oars!

The specialized equipment and the guide’s skill allow you to gain entry to this paradise. Almost nobody else can get in here. That makes for very little fishing pressure. That means abundant game, eager to attack your offering. And the bass here are much larger than those found on famous rivers out east.

Now, THIS is what I’m talkin’ about!

Abe Downs—a chemist by profession—runs Great Northern Fly Fishing out of Stevens Point Wisconsin—just three hours north of Chicago. He’s an Orvis-certified guide and brings his scientific training and businesslike professionalism to bear alongside his extensive fishing knowledge. He’ll even get you a discount at a local restaurant.

Abe switches to musky with the fly rod in the Spring and Fall and scores a good percentage of the time. I love fishing musky but they’re called “The Fish of a Thousand Casts” with good reason. In contrast, these huge smalleys seem always voracious for a meal—even after a cold front! They fight harder than pike. And they bite in the summertime!

Okay, I hear the objections. This ain’t no startup because—because what? Because Abe doesn’t plan to grow like Uber?

Bosh! This little company may not present an investment opportunity for your venture capital fund, but it’s a startup all the same—and quite a successful one. He’s booked most every day of the season. Like a tech startup, he makes use of specialized technology and proprietary knowledge to operate the business. Few can compete in his niche.

And he brings pleasure, relaxation, and satisfaction to himself and his clients. Does that sound like a worthy goal?

I think so.

.

On one trip this summer, my fishing partner was my son. On another, it was my friend, Rod Erickson. Neither fished with fly rod and streamer ever before. Both learned quickly and—truth be told—out-fished me. I think Abe is a good teacher.

Photography by John Jonelis, Robert Jonelis, and Rod Erickson

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Great Northern Fly Fishing

Abe@GreatNorthernFlyFishing.com

715-572-3225

1020 Tree Lane, Plover, WI 54467

 

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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
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Filed under chicago, Chicago Startup, Chicago Ventures, Entrepreneur, Entrepreneurship, Fishing, fly fishing, Innovation, new companies, pike fishing, smallmouth bass, Startup, startup company

INVESTORS LOSING PATIENCE WITH PIVOTS

by Howard Tullman

There’s no polite or easy way to say this, but winter is on its way in the venture world. It’s getting tougher and tougher for startups caught in the lukewarm limbo between ideas and invoices to get their early backers to up their bets especially when it’s not clear that they’ve found a viable business model and/or a way to stop the bleeding sooner rather than later. Too many pivots with too little to show for the dollars down the drain and pretty soon no one wants to hear your, “someday soon,” story or your next grand plan.

dice

And if you’re not breaking even, no bank will look twice at your business or your balance sheet. This change isn’t restricted to the unicorpses in the Valley; it’s going on in every village where waves of wishful thinkers are starting to wonder what hit them.

My sense is that the smart investor conversations taking place today aren’t very often about the company going big for the gold or about the current investors doubling down so some startup can shoot for the stars. These increasingly cranky chats are less about excitement and enthusiasm and much more about ennui and possible exits. Because the two things that some early investors and every VC understands are sunk costs and opportunity costs.

While the entrepreneur is sweating survival, the investors are trying to decide whether their incremental dollars would be better spent on a new deal elsewhere. These are the days when easy money gets hard.

Those great gluten free sugar cookies (from the hip new bakery down the block that just shut its doors) are tasting more like ashes in their mouths and they’re asking themselves how they ended up sitting in a room with no doors feeling like some sucker after the circus left town.

The unhappy folks who are still sitting at the table (more likely associates now than the partners who got the ball rolling) aren’t talking about how much more money they can put to work; they’re trying to figure out how little additional cash they can put up to preserve what’s left of their position.

cash

Everyone is telling you that they’re really not inclined to do much of anything at all if you can’t drag some new money from outside players to the table to help set the price and get the next round started. Flat valuations in times like this are the new “up” rounds and there are down rounds galore.

This is a Plan B world at best and the down and dirty talk on the limo ride to LaGuardia almost always includes whether to also shoot the CEO while they’re in the process of trying to clean things up and save a little face. So if you’re the one on the bubble, forget Plan B, and get started on what I call Plan C. You need to get a head start on talking about the tough choices and critical changes that need to be made.

It’s about figuring out what immediate actions you can take that will make a difference before they turn the lights out. You can have results or excuses, not both. Focus on facts rather than futures if you want to be there when things turn around.

And forget about playing the blame game – no one cares.

Plan C is all about choices: contraction, consolidation, combination, conversion, and concessions. The last C is closing the doors and that’s not a sight that anyone wants to see. So find out which of the C’s makes the most sense for your startup.

contraction

Contraction

Just suck it up and admit it. You can’t be all things to all people and no one ever has been. Focus on what sets you apart and what represents the best prospect of a long term sustainable competitive advantage for your business and forget everything else. Don’t apologize, don’t try to explain, just buckle down and get the job done. The recent launch of UberEats in Chicago (as an “instant” meal delivery service) and its almost immediate abandonment of that commitment is a good example of knowing when to hold ’em and when to fold ’em. It doesn’t take a genius to figure out that it’s pretty stupid to open the umpteenth home meal delivery service in Grub Hub’s hometown.

Businesses that scale too soon and which are a mile wide and an inch deep are doomed for many reasons, but the clearest and most telling is that they can’t cost-effectively engage with, support, or connect to their customers because the customers are simply too few and too far between. It’s critical to nail it before you scale it and, if you’re grossly overextended, your business is going nowhere.

consolidation

Consolidation

Shut down the stupid San Francisco office sooner rather than later. You had no business being there in the first place and the fact that you doing no business there ought to speak for itself. San Francisco may be the most overheated and least representative market in America. Everyone there drinks the KoolAid for about 10 minutes and then moves on. Building a new business there is as slippery and unstable as trying to nail Jell-O to a tree.

New York should be next on the list. NYC isn’t a city – it’s 5 or 6 different marketplaces all mashed together – with a million people just waiting to eat your lunch. Your business expansion needs to be driven by actual demand, feasibility and real opportunities – not by some investor’s fantasies and/or fables about life in the Big Apple foisted on the public by the media and by people barely making it in Brooklyn.

combination

Combination

Take a careful look around and see who else in your space (or adjacent to it) is doing things right and see what the prospects of some kind of combination may be especially if your market itself continues to be more cluttered and competitive. We hear constantly that the shared/surplus economy or the “Now” economy continues to grow fueled by millions of millennials holding multiple jobs. But tracking the gig economy isn’t quite that easy. While the number of multiple job holders has in fact grown dramatically, the percentage of the number of people so employed as compared to the total number employed has been flat or down over the last decade.

We had a great example of a timely and smart combination recently in Chicago where Shiftgig and BookedOut got together and decided that there were all kinds of economies and opportunities in a merger as well as the sheer relief in knowing that they could stop trying to beat each other’s brains out in the market. They are both players in the increasingly crowded space which the Commerce Department is trying to define as “digital matching firms.

Shiftgig was bigger and better established, but BookedOut had a lot of momentum and was gaining important traction in the experiential marketing sector. Now instead of spending time building duplicative back ends and other redundant systems and offerings, they can bring a single story to the market in a cleaner, more efficient and less costly way. This is exactly the kind of story that all of their investors wanted to hear.

It’s not easy in any market to attract the technical talent, the motivated sales people, and the operations folks that you need to grow quickly and a well-planned and thoughtfully executed combination can demonstrably accelerate the process. You need to be careful to make sure that the companies’ visions are aligned and that the problems they’re addressing are similar and that the cultures of the businesses (and the leaders in particular) aren’t in conflict.

These things aren’t made or broken in the board room when the papers are signed, they rise or fail in the implementation and the execution. But in today’s world, it’s often a lot better and smarter han trying to go it alone.

conversion

Conversion

Sell some of your stuff to someone else. You may be great at lead generation and lousy at closing the sale once those prospects show up at your door. Or you may be a great sales organization that sucks at fulfillment and customer service. When you look at your skill sets and your customers, users, clients, etc. through a different lens—looking at them as potential assets to be converted or sold to some other enterprise, it helps you see more clearly exactly what kind of business you’re building. It may make the most sense to look at your company as a conduit or an intermediary and not as a one-stop shop trying to meet all the needs of the marketplace. You’ve got to play to your strengths and build on those if you’re planning to stick around.

concessions

Concessions

Maybe your pricing made sense in some early fever dream where you were the best and only player in the space, but now there are fast followers and clones everywhere you look and their offerings (at least on the surface) look a lot like yours. Once your customers start talking about price, you’re on a very slippery slope.

 

Conclusion

Here’s the bottom line. In the long run, you can’t save your way to success and it’s no fun to fire your friends or postpone your pet projects. But if you don’t survive during the difficult times, you and your business won’t be around to savor any success down the road. Do what needs to get done and do it now.

 

Big Gulp from Howard Tullman

About the Author

Howard Tullman is the father of 1871 and Matter—the huge Chicago incubators.

This article appeared previously in News From Heartland

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References

Shiftgig

BookedOut .

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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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
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Filed under 1871, angel, angel capital, angel investor, big money, Chicago Startup, Chicago Ventures, Economics, Entrepreneur, Entrepreneurship, Heartland Angels, Innovation, Invention, investor, Startup, startup company, vc, Venture, venture capital

THE JOB INTERVIEW WITH WILLIAM SHAKES

by Mark T Wayne

We’re here to interview some reprobate named William Shakes for the job of special correspondent. I do not know why I’m a part of this. No sir! Perhaps it’s the strange nature of the recruit. Perhaps it’s because Jonelis recommended this particular…person, and does not entirely trust the judgement of Jim Kren, his assistant editor. (Shakes bears an uncanny resemblance and must be related in some way—maybe) Perhaps it’s because that execrable Lonagan creature is the only other help Kren could muster. But we need more writers, so here I am, eager and helpful as always, ready to lend any assistance within my power.

Mark T Wayne

Kren consults a wrinkled scrap of paper. I believe he’s reading questions from a list. “So, uh…your name is William Shakes. Is that right? Tell me about yourself.”

What kind of softball question is Kren pitching? There sits Shakes in frilly regalia, looking like something out of an Elizabethan play. He probably came here straight from an all-night costume party, roaring drunk, and Kren asks a fool question like that. Wait, I believe the man is transparent enough to respond to such utter inanity.

  • “What’s in a name?” he says with dignity. “That which we call a rose by any other name would smell as sweet. We are such stuff as dreams are made on. But if it be a sin to covet honour, I am the most offending soul alive.” Spoken fluently and with aplomb! And in a well-modulated voice!
  • Loop Lonagan looks at the man slack jawed. After a moment I hear him whispering to Kren. “What didee say?” Kren fiddles with his paper and mutters to Lonagan, “Idiot! I was gonna ask you that!”
  • My value to the proceedings is now clear. Not to mention that I recognize the true and somewhat illustrious identity of this candidate. “Gentlemen, Mr. Shakes expresses the sentiment that his name and his fame do not matter; that he brings to the table a strong imagination and boundless creativity. He’s proud of his accomplishments and liable to brawl with anyone that displays the audacity to criticize his work. (Also, gentlemen, notice that the man carries a sword.)”

“Why,” Kren asks testily, “didn’t he just come out and say what he meant?”

I express the opinion that’s precisely what he did.

Lonagan shrugs and grins at his boss. “Ain’t got no problem with it.”

William Shakes

Kren reads the next question:

  • “What is your greatest accomplishment?”
  • Shakes sits there in that hot scratchy outfit, seeming at ease. “Some are born great, some achieve greatness, and some have greatness thrust upon them,” He says. “The play’s the thing. Thirty Seven there be, wherein I catch the conscience of the king and posterity.” The man runs off these lines without breaking sweat.
  • More muttering and both Kren and Lonagan turn to me. I clear my throat. “He’s considered the supreme writer in the English language and highly respected throughout the known world. Among other things, he produced 37 highly prized major works of written material that have captured the attention of world leaders.” (Privately, I take violent exception to the widely-held belief regarding his supremacy as a writer.  Such accolade is more aptly applied to myself. But I refuse to squabble.  Honour is at stake. Yes sir! I will do nothing to lampoon this interview!)

A brief dumbfounded silence. Then the barely vocalized sounds of approval indicate that these two examples of lower life are suitably impressed by the response. I warm to the task! Kren scans his page of questions.

  • “What major problem have you had to deal with recently?”
  • Shakes: “A fool thinks himself to be wise, but a wise man knows himself to be a fool. It is not in the stars to hold our destiny but in ourselves. We know what we are, but know not what we may be.”
  • I immediately translate: “He says he’s learning not to underrate himself. As a result, he never shirks a task, even if he feels inadequate. Because of that, he’s consistently surprised by hidden talents.”

Lonagan finally gets up the nerve to ask a question himself:

  • “Are you one o’ deeze team players?”
  • Shakes: “Prithee, it be thus. Love all, trust a few, do wrong to none.”
  • Me: “Ditto that.”

Loop’s dog Clamps. No known photograph of Lonagan exists, but they look a lot alike.

Lonagan again:

  • “What’s yer biggest weakness?”
  • Shakes: “If you prick us do we not bleed? If you tickle us do we not laugh? If you poison us do we not die? And if you wrong us shall we not revenge?”
  • They both sit there stunned, so I venture another paraphrase: “He says he’s only human, subject to the same vices of body and character as you two.”

Kren throws up his hands, then with an obvious effort, composes himself, and manages to appear grave and somewhat skeptical. Then he plods on.

  • “How do you think you can add value to our magazine?”
  • Shakes: “There is a tide in the affairs of men, which taken at the flood, leads on to fortune. Omitted, all the voyage is bound in shallows and in miseries. On such a full sea are we now afloat. And we must take the current when it serves, or lose our venture.”
  • Lonagan: “What didee say dat time?”
  • I happily translate: “He says the magazine could go on the rocks due to poor staff and lousy management. But we’re at a critical stage right now and must take full advantage of it while the opportunity is ripe.”

That last answer emits a bit of grumbling between the two louts. Those fellows have no idea who they’re dealing with. Lonagan asks what I can only assume expresses the issue that bears most tenderly on his feeble mind:

  • “How much money d’ya want fer dis gig?”
  • Shakes: “While I am a beggar, I will rail and say there is no sin but to be rich; and being rich, my virtue then shall be to say there is no vice but beggary. If money go before, all ways do lie open, but the comfort is, you shall fear no more tavern-bills.”
  • I immediately insinuate myself: “He says he doesn’t come cheap, but he never pads the expense account.”

Kren utters a deep sigh and hits him with what I am sure is his final payoff question:

  • “Why should I hire you?”
  • “Our doubts are traitors and make us lose the good we oft might win by fearing to attempt.”
  • I try not to bust out laughing. “He says, don’t be a ninny.”

Kren and Lonagan stare at each other. Face it—they botched the interview. There is nothing remaining to discuss. No sir! Jonelis wanted this relic on staff. These goons found no reason to reject the man.

Kren shrugs. “Show up tomorrow for work. Eight o’clock sharp.”

Shakes gives a bow and a flourish. “Good night, good night! Parting is such sweet sorrow, that I shall say good night till it be morrow.”

As William Shakes nobly marches out, I can barely contain my mirth.  But tomorrow, the man will stand on the sidewalk for hours.  Our office rents space in the back room of a fine establishment and Ludditis doesn’t open the bar till the potato pancake connoisseurs crowd in for lunch.  Kren’s revenge.

 

Read the first in this series – TO BE OR NOT TO BE HACKED.

Image Credits – John Jonelis, Public Domain
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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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
.
.

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Filed under angel, angel capital, angel investor, Big Corporations, Characters, Chicago Startup, Chicago Venture Magazine, Chicago Ventures, Entrepreneur, Entrepreneurship, Jim Kren, loop lonagan, Mark T Wayne, Startup, startup company

CHICAGO TECH’S NEXT CHAPTER

At Tempus, Ocient and Catalytic, Chicago’s most prominent entrepreneurs are moving on to their next big thing.

by Jim Dallky

Chicago tech is growing up.

One sign of a maturing tech ecosystem is the success of a city’s serial entrepreneurs, and recently we’ve seen some of Chicago’s most high profile founders and technologists move on to their next companies, and tackle big industries like the Internet of Things, cancer research, and artificial intelligence.

Uptake - ChicagoInno

Look no further than Groupon founders Brad Keywell and Eric Lefkofsky. Keywell brought Uptake1 out of stealth in 2015, and the fastgrowing IoT startup has already raised $45 million at a $1.1 billion valuation. Lefkofsky left his CEO role at Groupon last November and, as we first reported in July2, has since been working on Tempus3, a healthtech startup that’s “building the infrastructure to modernize cancer treatment.”

 

Ocient - homepage

Also in July, Cleversafe founder Chris Gladwin, who sold his data storage company to IBM in 2015 for $1.3 billion, unveiled4 his next startup Ocient5. Gladwin has yet to make Ocient’s product plans public, but the software company expects to “ultimately hire hundreds of local employees.”

 

pushbot - website

Sean Chou, the former CTO and employee No. 2 at Fieldglass—which sold to SAP for more than $1 billion—recently, launched Catalytic6, a startup building chatbots for businesses. The company’s platform, Pushbot, helps enterprises “build, run, and improve your processes.”

 

bright - website

You can also look at Jeff Judge, the founder of Signal (acquired by BrightTag in 2014) who’s now building business metrics platform, Bright.7

Kickstarter cofounder Charles Adler is giving entrepreneurs, creatives and makers a better place to work with the Center for Lost Arts8; Motorola veterans are spinning out to create new hardware startups like John Renaldi’s “invisible wearable” company Jio9; along with many, many other founders who are on to their next project and have committed to building in Chicago.

“Certainly, as a community, I think we are maturing,” said Illinois Technology Association CEO Fred Hoch. “It’s being driven a lot by those serial entrepreneurs that are coming back and doing their next thing.”

Hoch described how the city experienced an “excitement period” 3-4 years ago where a lot of startup activity was taking place but, “a lot of bullshit was being developed…things that don’t have a long-term revenue stream.” Chicago’s strength as a tech city is in B2B, Hoch said, and Chicago tech has started to get back who it is as a community. “What’s happened over the last 18 months is that we’ve come back to realize who we are,” he said. “[Entrepreneurs] are not thinking about dog-walking apps. They’re thinking about big things that affect businesses nationally and globally.”

1871 CEO Howard Tullman added that Chicago also has a handful of who he calls “benchers,” successful entrepreneurs who are taking some time off but will likely “be back in the action in a reasonably short time.” This list includes Fieldglass founder Jai Shekhawat, AKTA founder John Roa, and Roger Liew, the former CTO of Orbitz. Tullman also said that 1871 isn’t just full of first-time founders. There are dozens of serial entrepreneurs working out of the Chicago tech hub.

“People don’t understand that the 1871 members aren’t remotely all first timers,” Tullman said. “We have several dozen serial entrepreneurs working here and building their next businesses who are smart enough to avoid making sizeable infrastructure and other capital commitments until they determine whether the dogs will be eating their new dog food…we are definitely seeing a wave of more seasoned, more talented and more aggressive serial entrepreneurs—all working in Chicagoand, largely using their own resources to start the next group of great tech businesses right here.”

Of course, as Chicago’s tech community matures, it doesn’t come without growing pains. Some of the city’s most prominent startups have gone through layoffs in recent months, with Avant firing 60 employees and Raise trimming 15% by cutting 45 people. And the city is still well behind other markets like New York and Boston when it comes to total venture funding.

tempus - website

Tempus

 

But Chicago is proving to be a city where entrepreneurs are willing to double down after successful exits, and that’s good news for the future of Chicago tech.

“We’ve come a long way in the last 10 years,” Hoch said. “[Entrepreneurs] are choosing to stay and be a part of this community because it’s a strong community now.”

 

About the Author

Jim Dallke is the Associate Editor of ChicagoInno of Streetwise Media, where this article previously appeared.

This article appeared in News From Heartland

 

 

Links cited:

Graphics and logos from company websites and ChicagoInno

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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
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Filed under 1871, angel, angel capital, angel investor, Big Corporations, big money, chicago, Chicago Startup, Chicago Ventures, Entrepreneur, Entrepreneurship, Howard Tullman, Innovation, Innovation and Culture, Invention, investor, new companies, Startup, startup company, vc, Venture, venture capital

WHY MILLENNIALS KEEP DUMPING YOU

An Open Letter to Management

by Lisa Earle McLeod

Attracting and keeping top millennial talent is a burning issue for leaders. Millennials are 35% of the workforce. By 2020 they’ll be 46% of the working population.

Some of our most successful clients — organizations like G Adventures, Google, and Hootsuite — are filled with millennials who are on fire for their jobs. Yet many organizations struggle to attract, and retain, top millennial talent.

One of us, Elizabeth, wrote this letter, to share insights about what top-performing millennials want and how leaders can ignite the “energy of a thousand suns.”

~ ~ ~

An Open Letter to Management:

You hired us thinking this one might be different; this one might be in it for the long haul. We’re six months in, giving everything we have, then suddenly, we drop a bomb on you. We’re quitting.

We know the stereotypes. Millennials never settle down. We’re drowning in debt for useless degrees. We refuse to put our phone away. We are addicted to lattes even at the expense of our water bill. Our bosses are not wrong about these perceptions. But, pointing to our sometimes irresponsible spending and fear of interpersonal commitment isn’t going to solve your problem. You still need us. We’re the ones who’ve mastered social media, who have the energy of a thousand suns, and who will knock back 5-dollar macchiatos until the job is done perfectly.

I’ve worked in corporate America, administrative offices, advertising agencies, and restaurants. I’ve had bosses ranging from 24 to 64. I’ve had bosses I loved, and bosses I didn’t. I’ve seen my peers quit, and I’ve quit a few times myself. Here’s what’s really behind your millennials’ resignation letter:

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-1- You tolerate low-performance

It’s downright debilitating to a high achiever. I’m working my heart out and every time I look up Donna-Do-Nothing is contemplating how long is too long to take for lunch. I start wondering why leadership tolerates this.

Is that the standard here? No thanks.

Fact: Poor performers have a chilling effect on everyone.

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-2- ROI is not enough for me

I spent Sunday thinking about how I can make a difference to our customers. Now it’s Monday morning, what do I hear? Stock price. Billing. ROI. Suddenly, my Monday power playlist seems useless. I’m sitting in a conference room listening to you drag on about cash flow.

I was making more money bartending in college than I am at this entry-level job. You say I’ll get a raise in a year if the company hits a certain number? So what? I need something to care about today. Talk to me about how we make a difference, not your ROI report.

Fact: Organizations with a purpose bigger than money have a growth rate triple that of their competitors.

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-3- Culture is more than free Panera

Don’t confuse culture with collateral. Yes, I am a cash-strapped millennial who really appreciates free lunch. But I don’t wake up at 6AM every day to play foosball in the break room. I’m not inspired to be more innovative over a Bacon Turkey Bravo.

I need to be surrounded by people who are on fire for what we’re doing. I need a manager who is motivated to push boundaries and think differently. Working in a cool office is really awesome. So is free lunch. But a purposeful culture is more important.

Fact: A culture of purpose drives exponential sales growth

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-4- It’s ok to get personal

Treat me like a number? I’ll return the favor. This job will quickly become nothing more than my rent payment. I’ll start living for Friday and counting down the minutes until 5. After a few months of that, I’ll probably have a drunken epiphany and realize I want more out of my life than this.

Then I’ll prove your assumptions right. 8 months in, I’ll quit and leave. Or worse, I’ll quit and stay, just like Donna-Do-Nothing.

That’s not good for either of us. Here’s what you need to know:

I was raised to believe I could change the world. I’m desperate for you to show me that the work we do here matters, even just a little bit. I’ll make copies, I’ll fetch coffee, I’ll do the grunt work. But I’m not doing it to help you get a new Mercedes.

I’ll give you everything I’ve got, but I need to know it makes a difference to something bigger than your bottom line.

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Signed,

A Millennial

~ ~ ~

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The millennials are telling us what we already know in our hearts to be true. People want to make money; they also want to make a difference. Successful leaders put purpose before profit, and they wind up with teams who drive revenue through the roof.

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This article was co-written with Elizabeth McLeod, a millennial and cum laude graduate of Boston University, and daughter of Lisa Earle McLeod.

Lisa Earle McLeod is the creator of the popular business concept Noble Purpose and author of the bestselling books, SELLING WITH NOBLE PURPOSE and LEADING WITH NOBLE PURPOSE. Lisa is a sales leadership consultant and keynote speaker who helps organizations improve competitive differentiation and emotional engagement. www.mcleodandmore.com

This article previously appeared in Forbes

Image credit: Lisa Earle McLeod

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Also by Lisa Earle McLeod:

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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
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THE BIG LITTLE TRAP

by Scott M. Anderson

An investor, Sally, recently heard two pitches. The first was from A-Dot-Co, which will produce polka-dot jellybeans using a new patented process. The second was from BetterBean, will produce purple jellybeans using a trade secret method which improves existing manufacturing processes.

Having spent several years owning a candy company, Sally was interested in both opportunities.

Jellybean T

Sally knows that the jellybean market is large and well established. With a few regional exceptions, she knows the annual market growth has been 3% for many years.

sales projection MS Office

Accordingly, she was a bit surprised to see strong growth projections in the presentations from both A-Dot-Co and BetterBean. More diligence would be required.

Sally asked both companies to submit detailed materials in support of the projections they presented. She was particularly focused on the factors responsible for revenue growth. Since the market is large and established, Sally knew that growth for a new entrant must come from either expansion of the overall market or from switching behavior (customers switching from established providers to new providers). She was hopeful that the detailed support material for each revenue projection, would reflect management’s understanding of these market dynamics.

 

A-Dot-Co

A-Dot-Co

Sally received the following support detail from A-Dot-Co:

A-Dot-Co Revenue

She knew from prior experience that the total candy market was very large and she was glad to see the jelly bean sub-market in excess of $2 billion. There would be plenty of upside for A-Dot-Co. She was also glad to see that in year 5, the founder did not expect to exceed 1.0% of the market. Any larger share percentage would require major resources and additional funding rounds.

However, before investing, Sally still needed more information on the detail behind the market share projections. She scheduled a follow-up call.

On the call, A-Dot-Co was very enthusiastic. It went like this:

Sally: “Thank you for your revenue detail. I have some follow up questions. How do you expect to land nearly $2 million in revenue in the first 2 years?”

Founder: “A-Dot-Co is well positioned to achieve our revenue goals. We have a seasoned team who formed many candy company startups in the past.”

Sally: “That’s great. But how do you intend to land $600K of sales in year 1?”

Founder: “My team has deep knowledge about the jelly bean market. We only need a mere 0.03% of the market to land the projected $600K! Surely there are enough polka-dot jelly bean eaters out there to achieve this projection!”

A-Dot-Co’s founder fell into The Big Little Trap.

trap MS Office

 

The Trap

The Big Little Trap occurs when a founder believes his future projections are achievable because the market is so big and the market share percentage is so little. Specifically, that the sales goal will be very easy to accomplish because the market goal is such a small percentage, such as 0.03% with A-Dot-Co. (“It’s so small that anyone can reach it…as easy as falling off a log!”) In fact, the Trap victim might further say that the percentage is so tiny, that it may take only a few customers to reach it, and “…clearly the market has more than just a few customers!”

The response to an enthusiastic Trap victim: “I’m glad you’re excited. Name the customers!”

 

BetterBean

BetterBean

BetterBean submitted the following detail to Sally:

BetterBean Revenue

 

As before, Sally was glad to see confirmation of the jelly bean market. (They must have used the same market study). But she was even happier to see customer detail behind the revenue projection.

target market MS Office

The detail reveals several important items:

  1. BetterBean knows his target customers and may already have relationships established with them.
  2. Knowing BetterBean’s target customers should lead to a more efficient operation by helping the company prioritize the company’s limited time with its important customers over less strategic prospects.
  3. BetterBean has applied the 80/20 rule—at least 80% of the revenue is derived from specific, identified customers. The remaining revenue will come from other customers, currently unknown. Forecasting is an inexact science and to communicate over-precision in the detail implies the founder may be taking his projections too seriously. BetterBean has not been overly precise.
  4. When—not if—BetterBean misses its projections, the detail will provide insight as to why the projections were missed. The “why” is more important for fixing future revenue projections.
  5. BetterBean is more transparent than A-Dot-Co. Specifically, BetterBean’s founder has shared his target customer list, perhaps with the hope that Sally may have contacts to be leveraged at those customer accounts. Conversely, A-Dot-Co has shared no customer detail, suggesting that its founder may not know who his customers will be. This is concerning if true.

 

Decision Time

Sally rejected the opportunity with A-Dot-Co. It fell into The Big Little Trap—and didn’t even realize it. The lack of transparency did not generate confidence in the company’s management team.

Sally proceeded with further diligence on BetterBean.

The Big Little Trap grabs victims all the time. Like Sally, an investor should consider the market size, but only in the context of the startup’s upside potential. As she observed, there’s, “…plenty of upside for A-Dot-Co.” However, market share is not the justification of year-to-year or month-to-month revenue goals. Market share is best seen as a byproduct of sales efforts.

The jellybean example is fictitious, but the Trap is very real. Watch for The Big Little Trap at your next pitch session. See if the founder falls into it!

 

About the Author

Scott M. Anderson is a principal at Anderson Financial Services, LLC and has been performing cash projections for decades as an investment banker, a workout specialist, and recently, as an advisor to investors and startups. He can be reached at scott@andersonfsllc.com

Graphics from MS Office

 

This article appeared in NEWS FROM HEARTLAND

NEWS FROM HEARTLAND – The Journal of the Heartland Angels is published tri-annually for its members. We encourage reproduction and quotation of articles, if done with with attribution. Copyright © 2017 Heartland Angels. John Jonelis, Editor – John@HeartlandAngels.com

FOR MEMBERSHIP IN THE HEARTLAND ANGELS, contact Ron Kirschner Ron@HeartlandAngels.com

FOR FUNDING, apply online. Go to www.HeartlandAngels.com

NEWSLETTER SITE – View past and present editions at News.HeartlandAngels.com

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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
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Filed under angel, angel capital, angel investor, big money, Chicago Startup, Chicago Ventures, Entrepreneur, Entrepreneurship, Heartland Angels, Innovation, Invention, investor, new companies, pitch, Startup, startup company, vc, Venture, venture capital