Category Archives: Think Tank

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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1 Comment

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

THE SUM OF THE WHOLE

Moises GoldmanHigher Education and the Economy

Moises Goldman PhD – resident scientist

In today’s digital environment, the words entrepreneurship and innovation are the flavor of the day. Universities and even certain high schools believe they are preparing their students to go out into the world armed with the necessary tools to excel. But are they?

Parts - Royalty Free 5

Consider the following points:

  • The “whole” is equal to the sum of its parts.
  • The sum of its parts is equal to the “whole”
  • The sum of its wholes makes a bigger-and-better “whole.”

This article will focus on the third idea.

.Parts - Royalty Free 2

The Part

Graduate engineers can usually code in various languages—Python, Flash, Java, CSharp, Ruby on Rails. Perhaps they are able to create “apps.” They are specialists. With diligence and luck, they go to work in enterprise and fill specific roles.

In those roles, they create what might be call “parts.” A project manager pulls together all the parts into a “whole.” As typically happens, several of the parts do not fit. The process provides for other specialists that fill the gaps.

Parts--Royalty free 3

I am describing a typical mode of work. Specialists in cubicles re-design parts designed by specialists in other cubicles until the organization achieves a satisfactory whole. This is an iterative process, but not a creative one. Industry blunders forward. By any economic measure, it is grossly inefficient. Where, one may ask, is the root of the problem?

Moises Goldman PhD

Moises Goldman PhD

What is Optimal?

We need only ask a few questions:

  • Do the individual engineers on any given project understand what impact, Parts - Royalty Free 4implication or influence their developments have on the overall wellness, intent or strategy of the enterprise they serve?
  • Do they take into account current policy, regulatory, ethical, or socioeconomic factors?
  • Do they are work together—focusing on the whole and not their “part alone?

If the answer to any of these is no, then without a doubt their efforts cannot be optimal.

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The Whole

Parts - Royalty Free 1Universities turn out engineers that are themselves essentially parts. I would argue that they should train-up collaborators adept at comprehending the larger view and better understanding their “part” in the “whole”—in other words, people who are themselves whole.

When each specialist embraces the larger picture, each specialty complements the others. The sum of each whole person makes a bigger-and-better whole project. The sum of the wholes is a bigger-and-better whole.

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GO TO PART 2

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Contacts

This article was adapted from a paper for the Institute for Work and the Economy by Moises Goldman PhD.  www.workandeconomy.org

Moises GoldmanMoises6@comcast.net

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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.

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.Copyright © 2013 Moises Goldman – All Rights Reserved
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2 Comments

Filed under chicago, Chicago Ventures, Economics, Education, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Innovation, Innovation and Culture, Invention, MIT, MIT Enterprise Forum, Think Tank

WHAT’S GOOD?

Impact Engine – Part 1

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

Impact Engine

Loop Lonagan here.  Dis is somethin’ can change da world.  It’s called IMPACT ENGINE ‘n’ it’s dare first investor showcase. 

Already met one o’ da founders, Linda Darragh and she made a big-time impression on me.  I saw dis gal charge-up a roomfulla sleepy thought leaders with da energy of an oxyacetylene torch.  Ideas and plans fly off her like da Fourth o’ July.  She’s the reason I’m here. 

So I tear myself away from da great Funding Feeding Frenzy after way too much to eat ‘n’ a whole lot too much to drink.  I stagger outa my cab into da Chase Auditorium to hear IMPACT ENGINE rev it’s cylinders. 

(NOTE TO JOHN—I made merry after lunch at FFF.  Words ain’t comin’ out da way dey should.  Better clean up my copy for me.  I’m gonna make a big effort to straighten myself out here.  I see coffee at da other end o’ da lobby and I’m headin’ that way now.)

(NOTE TO LOOP—Your points come across nice and clear.  I’ll continue to print it exactly the way you dictate it.)

 

What They Do

I got a hot cup o’ coffee in my mitt so lemme start feedin’ ya the goods:  IMPACT ENGINE helps fer-profit startup companies make money by doin’ good things fer folks. I said FOR profit.  I’m all fer dat.  Dis is what you call Social Entrepreneurship

(Sound of slurping coffee.)

Hey—if yer gonna earn a livin’, why not do it in a way dat helps some other poor slob insteada just yerself?  Whaddaya think yer put on dis green earth for anyhow? 

And if yer gonna help somebody, why not do it as a business ‘steada holdin’ out yer hand like some leach?  Business is way better den charity ‘cause it supports itself.  Teach a man to fish and so on.  Dis is da future.  Dis’ll change da world. 

And demand!  Hey—dare’s no shortage o’ people dat need help!  And no end to it!  Like I always say, I got it on good authority dat the poor will always be among us. 

(I just poured a second cup.  Real strong stuff.)Impact Engine logo

I still got them slashed knees from fallin’ in a pothole this morning.  And it still don’t look stylish.  Hey, dis ain’t no pair o’ bluejeans—it’s a $2,000 suit.  So’s I look like a bum, but nobody’s gonna say nothin’ ‘cause I’m actually ready to write out a check.  Day call it Impact Investing.  I wanna make an impact.

(I slugged down three cups o’ this black stuff ‘n’ my eyes is buggin’ out.  Must be espresso or somethin’.  Anyhow, maybe the rest o’ this report’ll sound more coherent.  But you know me.  I studied on Wall Street and the Back Street.  I ain’t no English teacher.)

(NOTE TO LOOP—You don’t fool anybody with that school-of-hard-knocks routine.  The University of Chicago doesn’t hand out Masters of Finance degrees in back alleys.)

 

How They Do It

IMPACT ENGINE is a super-duper incubator that helps entrepreneurs launch ‘n’ win. 

  • They immerse ‘em all in a 12-week intensive program o’ workshops at the 1871 collaborative workspace. 
  • They hook ‘em up with a huge network o’ mentors, thought leaders, ‘n’ investors. 
  • They give ‘em brand exposure. 
  • They send ‘em out with a $20K kick in the pants.  Seed capital.   

 (Hey, that rolled off o’ the tongue pretty good.  Maybe espresso is better than beer.  But don’t tell the guys I said that.) 

 

The Weed

Linda Darragh

Linda Darragh

First time I met Linda Darragh was at the Levy Entrepreneur Mastermind Group.  A buncha sharp folks.  Linda’s a gal from da University o’ Chicago Booth who’s workin’ at Northwestern’s Kellogg School o’ Management.   That puts her in a real peculiar kinda position.  And she ain’t lettin’ it go to waste, neither!

Turns out Linda usta have about ten titles.  Couldn’t fit ‘em on a business card, so she dumped it all in one bucket.  Now she’s the Executive Director of The Kellogg Entrepreneurship Initiative.  Hey, one title fits better than ten. And it’s a helluvalot easier to say.  Turns out the startup community’s heart is poundin’ real strong here in Chicago.  But all the programs to juice these folks is fragmented all over the place.  Should we glue ‘em all together? 

I SAY NO!  Insteada tryin’ to control all them different silos, Linda Darragh is coordinatin’ ’em. 

BIG DIFFERENCE!  After all—each one o’ them groups is independent and all of ‘em got somethin’ special to offer. 

So I tell her she’s a black widow spider spinnin’ a big web.  But turns out she pictures herself as a “weed.”  I don’t get it, but if that’s the way she wants it, it’s okay by me.

So what exactly is this weed doin’?  Hey—what ain’t she doin’?  At Northwestern, she’s settin’ up the whole entrepreneurship curriculum—across the entire university.  Already replaced all them courses with stuff that’s more up to date.  AND online learning.  AND other stuff beyond the classroom. 

She says no more screwy mobile apps that already been done and ain’t goin’ nowhere.  AND no more static business plans.  Instead, a lean canvas.  She insists that every business starts with hypothesis testing and only then fleshes out a business model.  I like it!

She ain’t stuck to just one university neither.  She’s cooperatin’ with the University o’ Chicago, IIT, DePaul, Loyola, and others.  AND she’s reachin’ out to corporations too.  AND a she’s got a big presence at 1871.  AND she’s leveraging Kellogg’s worldwide alumni network along with ones from other schools.  She’s buildin’ one powerful, cohesive drivetrain.  I really like that!

I told ya this gal is a torch.

IMPACT ENGINE is one o’ her biggest projects, co-founded with Jamie Jones.  Now Chuck Templeton’s in it up to his neck.  These people all deserve alotta credit fer startin’ this highly unique incubator.

(Fifth cup and I feel great.  Headin’ into the auditorium.)

 

Take a SWAG

Usta take years to make a good business.  Now two kids in a dorm create somethin’ that goes national in no time.  Web-based companies can test fast and fail fast.  You can find out if it’s a go in 6 months!  This is a big deal.  You do all the testing before you sink in the big money. 

That means classical marketing is dead.  That’s what I said—dead meat—road kill.  It’s dead ‘cause now you can test yer product in the real world faster ‘n’ cheaper than doin’ a formal marketing study.  Look out Dr. Kotler—time to write another book.

Dr. Philip Kotler

Dr. Philip Kotler

Here’s the way it usta be:  You do one o’ them in-depth marketing studies.  That takes lotsa time and money and produces zero profit.  Then by the time the Execs decide what to do, the trend already shifted nine times.  That don’t work no more.  Better to test in the real world, fail fast, then make yer adjustments and give it another shot.

Another new thing is Big Data.  It’s a huge driver in the new way o’ doin’ things.  It makes it possible to pick up on trends using simple web searches.  Big Data also brings up lotsa big challenges.  Maybe you got all the data in the world but how d’you visualize it?  You gotta figure out the right questions to ask. 

That all sounds like cross-disciplinary stuff, right?  So IMPACT ENGINE is lookin’ for the right kinda people and helpin’ ‘em use all these new tools.

Yer head spinnin’ yet?  Lemme lay it out in four simple steps.

 

Da Final Four

Here’s the short list on what Linda Darragh says you need to do:

  1. PEST ANALYSIS—(Politics, Economics, Social, Tech).  You gotta identify the trends.  Big Corps gotta innovate here and summa them is doin’ it.  But it’s a whole lot easier fer a startup—that is, if you don’t trip over yer fat ego.
  2. DA CUSTOMER IS KING—What does yer customer need now?  Keep talking to ‘em and keep adjusting to ‘em. Find out if customers is leavin’ and where they’s goin’.  More than ever before, it’s all about the customer. 
  3. TRACK YER COMPETITORS—What are them bums doin’ now?  Are they gonna take you out?  You gotta figure out the changing value chain and how it’ll affect you.  It’s real easy to believe things is goin’ good—then wham—you get blindsided.
  4. TECH IS DA ICING—Fer early-stage funding, the Chicago success model is tech-enabled manufacturing—not pure tech.  Lotsa opportunities ‘cause ever’body needs tech these days.

One more thing:  Impact investing’s got a whole different timeline.  Angels and VCs usually cash out in 5-7yrs.  Impact Investing might take 10-15 years.  Yeah, it’s a bigger horizon but we gotta put aside legacy thinking. 

My batteries is runnin’ down again.  I’ll get back to you later and show you what summa these new social entrepreneurship companies look like.  Fer now, check out this great video about IMPACT ENGINE:

 

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CONTINUE TO PART 2

Go back to Shark Tank Meets the Apprentice

 

Da Contacts

IMPACT ENGINE – www.TheImpactEngine.com

Ask a question:  www.TheImpactEngine.com/Contact

Impact Engine.

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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CHECK YOUR EGO AT THE DOOR

AN ENTREPRENEUR’S THINK TANK

John Jonelis

Let me tell you about a group that remains nameless. They don’t want publicity. They don’t want new members. I cannot share names. They gather together to talk freely about business problems and help each other find solutions. It’s amazing to me that this is going on in Chicago. I plan to learn a lot here.

It’s just after dawn on a weekend morning and I’m sitting among Chicago’s top thought leaders by invitation of a friend. The best of Chicago’s business thinkers come here in blue jeans with sleeves rolled up. The members meet me with a warm welcome. The founder holds everybody’s respect and has quite a history, including a street named after him. I also find that I’m now a permanent member. A sweet lady hands me a cup of warm coffee.

I see a number of familiar faces. That breaks the ice for me. One tells me he’s afraid to speak up in this group, so he just listens. I on the other hand rarely hesitate to blurt out an idea or opinion. Sometimes that’s good, sometimes not so good. But I embrace the philosophy that says, if I throw ten ideas at the wall and one sticks, I’m good. There’s very little downside to that. What do I care if somebody rips up my argument? I’m fat, bald, old. I know my IQ. What more can anybody say? So I raise my hand and the moderator calls on me in due course.

These meetings follow a couple of formats. One week, a member brings up a problem and the group tries to solve it. Another week, somebody prepares a topic and leads us in discussion. This is high-level thinking, highly stimulating, and I love it.

This week’s speaker presents his problem. Here’s a guy that wrote a famous and highly respected management book. I’m glad to call him my friend.

His problem is interesting. He’s developed an extraordinary software application on the wave of a creative spurt. He has no financial goal for it yet. He wants the project to succeed and help people—maybe 10 million people. If he makes a little money doing good, he’s happy.

He explains the details and I’m amazed that he bootstrapped this complex and practical tool in such a short time at almost no cost. While sitting in venture capital meetings, I’ve seen lesser offerings looking for major funding. This one addresses the pertinent problems, deals with them rationally, and offers real solutions. The inputs are simple and elegant and I wonder how he managed to create this in his spare time. We ask questions—a lot of questions. Then we consider alternate value propositions, added features, and disparate business strategies—the basic steps skipped over because of the speed of the development process. Once we’ve kicked those around, the solutions start coming through a formalized brainstorming process.

I’m a writer and constantly take notes. That afternoon, I am delighted to email my friend an outline of the entire meeting. It occurs to me that I can make use of this brain trust in the future and I feel a smile coming on.

Not all sessions go smoothly. You need to check your ego at the door. On another weekend, a member presents his project but disappoints us by not framing his question. Everybody tries to help, but he turns defensive. Instead of pursuing new ideas creatively, he turns them away with rational arguments. That’s not the way to get to a solution. I doubt he gained anything from the session and I reflect that ego is the stumbling block for most businessmen.

On yet another weekend we’re presented with the question of leadership.  What is it?  What’s effective?  The interesting part of this discussion is that it starts with a number of highly educated definitions, but after the session rolls on it all comes down to delegation.  We talk about delegation almost the entire morning.  My contribution is as follows:  Surround yourself with people more intelligent or more expert then yourself, then facilitate the team.

Check your ego at the door

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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.

© 2011 John Jonelis – All Rights Reserved.

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Filed under Mastermind Group, Think Tank