Tag Archives: Chicago

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

.

References

Shiftgig

BookedOut .

.

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
.
.

Leave a comment

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

CHICAGO—THE BEST INCUBATOR IN AMERICA?

by Denny O’Malley

Recently, Inc.com published an article about the best cities for early-stage companies. The premise: Chicago is the surprise winner.

Why would that be? San Francisco and New York are both beautiful, thriving cities that dramatically represent the diversity of American ideas. San Fran—younger, more venture-oriented, with beautiful natural vistas. New York—the classic, bustling private and public equity concrete jungle.

What do they have in common? It costs a kidney to pay rent for a closet. Continue reading

Leave a comment

Filed under 1871, angel, angel capital, angel investor, big money, chicago, Chicago Startup, Chicago Ventures, Economics, Entrepreneur, Entrepreneurship, Heartland Angels, Innovation, Internet, Internet Marketing, Mobile, Mobile App, Mobile Marketing, new companies, Software, Startup, startup company, Taxes, the chicago machine, vc, Venture, venture capital

KIDNAPPED

Clamps and Bone TBy Mark T. Wayne

Weeks have passed since my last conscious memory.  Weeks, I say!  A man can lose his hat and perhaps even his pants, but to lose several weeks is inexcusable.  Think what mischief might transpire over such a span of time!

I find myself crammed in the back seat of a slow moving vehicle on an unfamiliar and crowded freeway.  How did I get here?  I know the date by the prominent display on that infernal wireless device issued me by my employer.

Big Beefy Bill Blaire the Giant and Jim Kren the Toady occupy the front.  Neither accosts me with the usual raucous humor or churlish inquiry.  Perhaps they assume I still sleep peacefully. I resolve to surreptitiously conduct an investigation on the mobile internet.

Not a single message from Jonelis since he left.  The man must still be on sabbatical—in Israel, I think.  He left me in charge of this yellow rag of a journal and nobody has heard a peep from him since that day. That, sir is not good for troop morale.  Men will lose their discipline under such circumstances.  My last memory is a wild party at our offices behind Ludditis Shots & Beer.  I recall watching that execrable Lonogan fellow crack open another bottle of vintage Scotch and pour it into a dish for his trusty bull terrier, Clamps.

Now I sit in this automobile with no memory of circumstances since that time.

Mark T Wayne

Bill Blaire, the Paul Bunyan of Chicago, grips the mangled steering wheel of this automobile with his sausage-sized fingers.  That man knows how to fill space.  His head protrudes through a hole in the ceiling colloquially known as the sunroof.  The driver’s seat jams against the back, clearly off its rails.  Big Bill blocks any view to that side, but at least I feel secure in the knowledge that he is comfortable and in full control of the vehicle.

.

Where Are We?

Kren gesticulates wildly at an overhead sign.  A glance reveals the surprising fact that we are driving away from Newark Airport toward the Holland Tunnel.  I have no recollection of the flight and from his plaintive squawks, I am given to understand that he does not wish to go in that direction.

I consider the possibilities and grit my teeth.

Perhaps we are running from the law.  I steel myself with the thought that whatever damning evidence comes forward at our trial, even if I gain back my personal memory of it, we can blame Jonelis for everything that has transpired.

Perhaps the magazine staff has kept me in a drug-induced coma all these weeks to accomplish some foul purpose yet to play out at an undisclosed but diabolical destination.  Even now, they run rampant down the public highway, my helpless body in the back of their car, kidnapped!

I stop this line of thought because there is no profit in such dire speculation, I choose to assume we are indulging in a sightseeing excursion.  I will enjoy the view.  Here we are in New Jersey and it is a fine day!  And such scenery, sir!  If I remain very quiet, those two may let me alone to enjoy it.

Yes, scenic wonders hold a peculiar attraction for me.  I will cross any wasteland on horseback, donkey, or camel and sleep in a tent to catch a glimpse of a marker of dubious historical import.  Travel in this comfortable little automobile seems a luxury by comparison to other excursions I have expounded upon in my writing.

We cross a high bridge fringed by a continuous line of blowing garbage.  I take that as the source of New Jersey’s fertile moniker, The Garden State.  The vista features a spectacle of belching smokestacks along with the other evidence of this nation’s industrial might, stretching all the way to the horizon.  I am in awe, sir!  Awe, I say!

Smokestacks

The two in front are still unaware that I have aroused from my slumber.

.

Wireless Travel

We escape the Holland Tunnel and exit to Staten Island.  I receive my first clue to the real points of interest in the area. The sign directs us to Freshkills Park, New York.

Freshkills!  Every muscle pulls taught as I consider the possible motives for a destination with such a name.  But no—I quickly recover my equilibrium.  We are probably bound for some historic battlefield from the Civil War.  Lacking a travel guide, I turn again to my infernal device to consult Google, the fount of all modern knowledge.

My search reveals alarming locales such as Arthur Kill and Kill Van Kull.  According to Wikipedia, these are bodies of water separating Staten Island from New Jersey.  Also listed are Dutch Kills, English Kills, Bronx Kill.

Here I see references to the Whorekill River and the Murderkill River.  Who can explain such rude use of the English language?  I live in a city known far-and-wide as the murder capital of the world, but we have no such violent names associated with our waterways.  I believe I can travel to foreign lands and experience less culture shock!

My interest in this excursion is piqued and I cling to the hope of keeping these revelations alive in my mind.  Now that recent events have proven my memory faulty, I write everything down.

Further investigation reveals that Kill as a corruption of the Dutch word for creek.  I look up English Kills and find it feeds into Newtown Creek, an estuary that separates Brooklyn and Queens.  Wikipedia identifies that important waterway as the most polluted industrial site in the country, containing decades of discarded toxins, thirty million gallons of oil, raw sewage from New York City, arsenic, cesium-137, and polychlorinated biphenyls.  I leave the definitions of those ominous titles to your imagination.  The main point is the anthropological significance.  Yes sir!  It helps explain various behaviors and escapades the citizens perform in this area of the country.

But I believe we are headed for Freshkills Park.  I punch that name into the infernal device.

.

The Park

What one can learn on the internet is staggering!  I say it again—staggering!  Freshkills Park is a 2,200 acre site—twice the size of Central Park.  Long before ecologists corrected our opinions of such property, the area was deemed an undesirable swamp.  Those were wilder days when intrepid men did not shrink from massive and daring exploits.  In 1947, the city began to improve the place by filling it in.

Their ingenuity gained admiration from municipalities everywhere.  This was the main destination of those daily barges of Manhattan refuse—barges that apparently did not always dump their cargos at sea, as other cities in the world do.  Why, with twenty barges a day, each loaded with 650 tons of material, this landfill has become the largest man-made structure in the world!  The Empire State boasted that it would one fine day become the highest point on the East Coast!  Consider that colossal achievement, sir!

Artist's Conception - Wikipedia

Artist’s Conception – Freshkills Park – courtesy Wikipedia

What better landfill material than garbage?  Garbage is the single biggest commodity produced by man!  It is readily available and inexpensive.  People actually pay their city haul it away!  Now, with merely another twenty years of planning and many billions of taxpayer dollars, this dump will become the second-largest park in New York City!  I call that progress!

I address the individual sitting ahead of me in my magnificent baritone.  “Mr. Kren,” I pause for effect. “Did you bring the camera?”

.

The Awful Truth

The man looks back at me and drops his jaw.  “Yer awake!”  He punches the giant.  “He’s awake!  Hey Blaire, Mr. Wayne’s awake!”

Just then we turn into the Staten Island University Hospital.  I sense the worst.  Running my hands through every pocket, I fail to turn up my pistol.  There is no taser app installed on my infernal device.  I am entirely at the mercy of these men and whatever foul operation they intent to perform at this institution.

Big Bill pulls to a stop at the curb.  His door creaks loudly and he extricates his head from the open sunroof.  Then he smiles at me, wide enough to display the gaps in his dental work, and utters in a deep, slow rumble, “Hi…Mister…Waaaayne.  Hope…yer…feelin’…oh…kay.”

They wheel me into the clinic and Kren explains the circumstances to the doctor who is apparently some relative of the execrable Lonagan.  I sit aghast at the account of the staff party—my last memory of home—Clamps happily lapping up good Scotch from his dog bowl and I, innocently reaching down to scratch the coarse fur behind his ear when he abruptly lifts his massive head—

Clamps & Bone

Have you ever been clocked on the jaw by an 85 pound bull terrier?  The dog means no harm and I understand it’s a common enough occurrence among those that own the breed but there is nothing to recommend the practice.  No sir!  I cannot recommend it!

read SABBATICAL

Mark T. Wayne is acting managing editor of Chicago Venture Magazine.

Photo Credits – Wikipedia, MS Word, 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 © 2015 John Jonelis – All Rights Reserved

.
.

3 Comments

Filed under angel, angel investor, App, Bill Blaire., Characters, Entrepreneur, Entrepreneurship, loop lonagan, Mark T Wayne, Mobile, vc, venture capital, wireless internet

WHAT MAKES IT GOOD

Techweek Part 4 –

Two Points T

by storied business consultant, Joe Perogi,

as told to John Jonelis –

Been hearin’ complaints ‘n’ controversy about Techweek this year. People gripe so you figure there’s gotta be a good reason, right? Yeah, I hear you. Yer sayin’, where there’s smoke there’s fire. But all them critics completely miss THE HIDDEN ROOM that you and me stumple upon—the hidden room that makes this thing truly amazing. Now the dust is settled, lemme take you on a tour o’ what I seen.

First, permit me t’ introduce myself. Name’s J. P. Pierogiczikowski, but you can call me Joe Perogi. Everybody else does. They say I have way too much fun. Maybe they’re right. Confidentially, there’s alotta money in it, too.

Da Speakers

We meet at the office in the backroom o’ Ludditis Shots & Beer.

Ludditis Shots and Beer 3

It’s just a good stretch o’ the legs from here to the Chicago Merchandise Mart and we get there in fifteen minutes easy. This event takes up a whole floor and gets a special elevator.

On this tour, you and me start in a room packed with chairs and people eager to hear Sal Khan of Khan Academy—one o’ da featured speakers. I wanna hear this guy. His company solves problems in education. Uses technology to help the kids learn ‘n’ helps the teachers make better use o’ their time. That’s huge. I’m figure this is gonna be good.

Khan Academy’s gonna partner with big business—a move that’ll give ‘em a longer reach. None of us know about that at the time—all we wanna do is hear the guy talk.

Look at that outrageously pretty lady on stage. Now she’s tellin’ us how great the speaker is. Now she points out the big screen. Hey, Sal Khan ain’t even here. You’re here. I’m here. We paid to be here. All these other people are here, too. But no Sal. He’s on Skype. So I’m a little bit offended, but whaddaya gonna do? They call it Techweek, so I figure we’ll give it our best shot.

All the computers crash at Sal’s office out in California or wherever he really is. But Sal’s no quitter. He carries on—with his smartphone. Ever notice how people believe them smartphones can do anything? Maybe it’s ‘cause they call ‘em smart when they’re really just pocket-size computers waitin’ to go wrong.

THE MERCHANDISE MARTWe look at the big screen and see this faded picture of Sal Kahn. You can tell he’s holdin’ the phone too close to his face. That’s why he looks kinda distorted. And he’s got a lousy connection—maybe one bar, tops. Truth be told, none of us can get our phones working here in the Chicago Merchandise Mart. Too much concrete. But apparently the organizers think smart phones is a smart move. So we sit through snips and swipes o’ Sal’s voice, cutting in and out. Nobody knows what the hell he’s saying. It creates a feeling of suspense, doncha think? I mean, the way that distorted face skips and jerks across the faded auditorium screen.

Why don’t anybody get up and walk out? Easy. It’s that gorgeous gal on stage—she’s really somethin’. Class. Intelligent-looking. Businesslike. She apologizes. Now she’s promising they’s gonna fix the problem. Now she’s watching that big screen with such intense interest—like she can understand what he’s sayin’ and she’s hangin’ on every word. She creates in us what they call a sense of suspended belief. (I read that somewhere.) And it keeps everybody in their seats.

Sal keeps cutting in and out till his battery dies and that means, lecture over. It teaches me a lesson: It’s usually more about marketing than technology. But you don’t know that till the technology breaks down.

Did I mention that the Blackhawk’s rally is going on downtown today?Blackhawk logo You don’t wanna go? Hey—they won the Stanley Cup. It’s a big deal. Okay then, let’s crash a few more presentations.

So we take in summore lectures. Seems like every speaker talks in some important-sounding corporate lingo. It’s all meaningful stuff, right? Maybe it’s what they call high-elf—I dunno. I’m wishin’ I can be with the Blackhawk fans. So you and me ditch the lectures and hit the booths.

.

Da Booths

There’s rows ‘n’ rows o’ these little islands o’ commerce packed side-by-side, with all sortsa people plugging up the floor and it all seems to go on forever. Pretty soon I get turned around and confused and everything’s a blur. Don’t it hit you that way, too? This place is so big, a guy can get lost in here real fast.

Look around. Everywhere it’s corporations hawking their wares. (There’s that word Hawk again.) Notice how most people just mill past the booths. Except fer that one—the one serving free booze. We stop there for a while. Pretty good, huh?

FREE BOOZE

So I learn a second lesson, but it don’t hit me till later: Big corporations waste lots of money. But they help an event pay the bills.

Then, just when I’m about to give up and say goodbye, we find the hidden room.

startup city logo

Da Hidden Room

See that wall with the huge Startup City logo painted on it? Looks like a dead end, don’t it? We walk up and take a closer look at the artwork. There’s a small door on our right. We go through there and WHAM! It’s a whole ‘nother room packed with booths ‘n’ people ‘n’ lotsa noise. These is all startup companies. Seventy of ‘em. Ambitious entrepreneurs, brilliant inventors and gutsy financiers ready to take a risk on a new idea. This is where the action is. So let’s do the rounds. Hey, I know summa these people! I like this place!

And whaddaya know—they got a competition goin’. The judges go from booth to booth and try to pick out the five best startups. Which o’ these folks is the judges? I can’t tell. It’s kinda like a benched dog show.

Now we find out the winners are gonna get announced at a special event with the mayor. Our tickets ain’t good enough to get in—those tickets musta cost thousands! No problemo. We crash it.

We’re in and now the mayor’s up there giving a speech:

“…I think the city of Chicago will become the mecca of the Midwest in startup cities,” he says. IMG_9067“The city of Chicago is building the digital economy as the fifth pillar…” I gotta ask you: Where’d he get all that mecca and fifth pillar stuff? I mean I like the guy but them terms don’t feel right coming outa him. Maybe if he wore a keffiyeh or a turban er somethin’. Naw, that ain’t never gonna happen.

.

Da Shortlist

Then they announce the winners. But I’m an investor and I got my own short list. Lemme tell you about ‘em:

cervia diagnostic logoCervia Diagnostic Innovations is gonna wipe out cervical cancer by replacing the age-old pap smear with a better test. They got all the research and their team’s fulla PhDs and Nobel Prize winners.

.

PaletteApp logoPaletteApp is bringing architects and interior designers outa da closets and into the digital world and saving companies a whole lot of money.

.

youtopia logoYoutopia is gettin’ high school kids emotionally involved in those service projects they gotta do and documenting the results fer the colleges they wanna get into. You got a high school kid? Then you know that’s something worthwhile.

.

faspark logoFaspark is helpin’ us all find street parking for our jalopies. It’s based on data analytics and probability of success and reduces time cruising the streets by 70%. Shows up as a map on your phone. They’re setting up in Chicago and Munich at the same time.

UPDATE – Faspark now gives you parking garage information in addition to the street parking.  Check out this article in Crain’s Chicago Business.  

None o’ them great companies made the finals ‘n’ that makes me scratch my head. And now they announce the winner:

.

Da Official Finalists

.

wedeliver logoWeDeliverFirst Place. I gotta say, this one’s on my short list now I get to know ‘em, and there’s an article about them in this magazine. But this is my first look at ‘em. You ever see these guys before? Great business model. Terrific CEO. Tech enabled same-day local delivery for brick and mortar businesses. These guys is gonna level the playing field with Amazon and create a buncha jobs right here in Chicago—and that’s just fer starters.

.

Crowdfynd LogoCrowdFynd is a lost-n-found service that uses crowdsourcing to find yer stuff.

.

Furywing LogoFurywing is is a gambling play. I don’t like online gambling, but it ain’t my place to judge.

.

.

24Fundraiser logo24Fundraiser is a one-stop solution fer online auctions.

.

.

neststepio logoNextStep.io helps you get yer daily workout by usin’ yer daily routine. I like that idea a lot. Gotta find out more about this one.

.

.

trinet logoThe whole Startup City production is sponsored by TriNet. I talked to them folks at length and came away impressed.

Then I get a big surprise on the way home:

.

Da Hawks

I ride the water taxi to the train and it turns out I don’t miss the Blackhawks celebration after all. The train’s loaded with drunken smiling people singin’ songs, makin’ a whole lotta noise, and generally havin’ a great time. Now it’s my turn, so I belt out The Wreck of the Edmund Fitzgerald.

IMG_9086-001

..

Back to Part 3 – BNC TUESDAY NIGHT SMACKDOWN

.

Photos courtesy Techweek, The Chicago Blackhawks, John Jonelis.  Logos courtesy companies.

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

.
.

9 Comments

Filed under angel, angel capital, angel investor, App, big money, Characters, chicago, Chicago Ventures, city, Donatas Ludditis, Education, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, Innovation, Internet, Internet Marketing, Invention, investor, Mobile, Mobile App, Mobile Marketing, new companies, Nobel Prize, pitch, Software, Techweek, the chicago machine, The City, the machine, vc, venture capital

THE BUM IN ME

Funding Feeding Frenzy – Part 2

VERBATIM by Loop Lonagan—investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here. I’m headin’ out to this year’s Funding Feeding Frenzy. It’s the big event if ya wanna see all o’ Chicago’s best startups in one place. This time the FFF is happenin’ at a place called the Chopin Theater northwest o’ downtown and I wanna see how that’s gonna work out. Will there be a string quartet? They yusta hold it at a huge automobile showroom which seems weird but worked out. It had about half the floor space of McCormick Place and plenty o’ room fer hordes o’ people to roam. But this is gonna be a lot different.

One thing I wanna impress on your readers, John, is about Chicago itself. You know I love this place but face it—it’s a city with all the usual warts ‘n’ barnacles. And every neighborhood is different, so yer either at home here or yer not. Nobody never gave me no trouble. Maybe I’m no pushover, so I got an advantage. But if I’m gonna tell this story, I gotta give you the whole picture. And I’m gonna give it my best shot.

Clybourn

The Street

I’m comin’ in by train and can’t resist gettin’ off at the old Clybourn Station. From here, it’s only a mile walk to where I’m goin’. That looks real good on a map. But my advice to you is don’t do it. Get off all the way downtown and take a nice comfy cab to the event. This ain’t a bad part o’ town. Nothin’ like that. Just take my advice.

Once I’m on the Clybourn platform I draw in a lungful o’ cold air. It’s feelin’ like the Christmas season just gettin’ started up here and I got a wad o’ money in my pocket. I get my choice o’ passages down to street level. That always feels like descending into the bowels of hell. Mincing little concrete steps winding through grimy concrete tunnels. Once-yellow paint peeling off the walls. And the best part is you get yer choice o’ tunnels! They’s all the same!

It’s still early and the usual crowd is layin’ about the sidewalk. I step over Old Man Percy, ‘cause I don’t wanna disturb his sleep, but the others is startin’ to rise’n’ shine. I give a hearty good morning to Fred and Big Bubba and ignore Merry ‘n’ Pippin huddled in a corner—those two give me the creeps. Summa these people are new to me but you can’t never know ‘em all. Familiar faces go missing but still, there’s never no shortage. I got it on good authority that the poor will always be among us.

People tell me these guys makes Fifty Gs just panhandling. I say it’s a buncha hooey. The idea got invented in that Sherlock Holmes story, The Man With the Twisted Lip, ‘n people been repeatin’ it ever since. If it was true these guys’d find a warm place to sleep. Ever try an icy Bridgesidewalk ‘round about Christmastime? And there’s more ‘o these people hangin’ ‘round than ever. That means more competition. That means harder times fer all o’ them. Sure, any profession’s got it’s elite that strike it rich, but that leaves the multitudes, scrablin’ fer crumbs.

The Professionals

I always say there’s a lot to bein’ a good bum. You feel so warm inside when you drop a buck in his hat. ‘Specially near Christmas. Makes your whole day. Some ‘o these derelicts play musical instruments and summa them is pretty good at it too. Come to think of it, these guys fill an important role in society. They’re public servants. Maybe the city should fit ‘em into their patronage system. It’d mean more votes for The Chicago Machine. After all, The Machine is politicians.  And politicians is people paid to be bums.

Hell, when you get down to it, there ain’t much difference between these guys ‘n’ me. Maybe I invest alota money, drink good liquor, sleep in a warm bed. But whadda I really do for the world? I been givin’ that some thought lately and all I comes up with is this—I provide liquidity. Sounds pretty shallow, don’t it? Let’s just imagine some day I make a big mistake and lose it all. They throw me on the street. In no time, I’m part o’ this crowd. Makes a guy think. Maybe I got a talent for it, though—who knows? But it’s a profession without nobility.

Of course there’s gangs and outright criminals in the mix. Then there’s a lotta homeless people with no hope. Alcoholics, drug addicts, and whack jobs. Minds gone over the edge. They say Old Man Percy’s got millions stuffed in the bank but he’s sleepin’ here on the pavement whenever they shove him outa the loony bin. You think you can change him? Think again.

The Scholar

Everybody’s awake now. I always ask if one of ‘em can recite a famous quotation. Gotta keep up the level o’ education here. So I calls for somethin’ Christmassy. I give ‘em a choice—Isaiah 7:14 or Matthew 1:23, whatever their preference—theys exactly the same text. And Fred rattles it right off while Big Bubba stares him in the face, mouth hangin’ open. Fred’s a real intelligent guy. He’d be a good addition to my team.

Note to John – Why not make him a reporter?

Note to Loop – Bring him around for an interview.

Anyway, Fred’s recitation earns a C-Note for every one of ‘em that’s present—even Old Man Percy and the two Hobbits. Except I peel off ten fer Fred. Hell, it really is almost Christmas. I know most of ‘em is gonna waste it but I ain’t tellin’ these guys what to do with their own money.

Then Big Bubba rumbles to himself in a deep bass, “Emanuel—I thought dat was da name o’ da mayor.” Whadaya gonna do with guys like that?

Note to John— I ain’t had no coffee yet this mornin’ after a real rough night. Too much booze and no sleep, so maybe you oughta clean up my copy. I think I’m runnin’ on like the old days—I mean before I got some college. Understand what I’m sayin’?

Note to Loop— I find your account lucid and concise. I’ll publish it as is. And a graduate degree in finance at the University of Chicago is more than “some” college.

Overpass

Stumbling over the Truth 

Fred and Big Bubba take me up on my offer of breakfast. There’s a good old diner along the way. That’s the real reason I picked this station. But before you get to the gentry part o’ town, you gotta walk under the overpasses. The Kennedy Expressway bridges make natural roofs fer the homeless and the piles o’ rubble at the sides reek somethin’ horrible. Yeah it’s raw but so is any city.

Another thing about cities is potholes. In good times there was always holes in the street. Now, with this economic depression it’s worse than ever. So we’re walkin’ down Ashland Avenue at a brisk clip, enjoyin’ each other’s company and I’m scannin’ around like any careful city dweller when the next thing I knows I’m on my face. Lousy pothole—right in the sidewalk of all places.

Fred and Big Bubba haul me back to my feet and brush me off and I check for damage. Maybe a guy can get away with slashed knees and filth on his rumpled blue jeans but it don’t look right on a $2,000 suit. In an instant I go from Mr. Bigshot to a reject from the Salvation Army. But now I fit in with my companions, so I shrug it off. And I got a mile ahead o’ me to walk off the sprained ankle. But in a couple blocks we reach the nice section and the diner I told you about.

The Private Room

The cashier at the restaurant tries to push us out the door like we’re the Blues Brothers or somethin’. Probably thinks we’ll drive off the clientele. Phooey. Maybe this is a classier joint than Julio’s House of Jalapeños but hey—it’s still a diner, not the Chez Paul. So I ask for Lonny, the owner, and he leads us to a back room stacked with boxes. They lay a nice table for us and the room is perfect for planning out crimes and runnin’ poker games.

Big Bubba orders three stacks o’ pancakes. He butters every one of ‘em and drowns ‘em all in maple syrup. Fred sticks with a piece o’ pecan pie. But I dig into steak ‘n eggs with toast and A-1 Sauce ‘n’ bacon. And more important—a big pot o’ coffee for each of us. Round about the fifth cup I’m feelin’ a whole lot better. Fred smokes a cigarette. We talk. Lotsa stimulating conversation. It cheers me up. Now I’m ready—ready to meet with big money at the FFF.

Back on the street, Big Bubba and Fred part ways with a wave and a Merry Christmas. When I suck in the brisk air, I feel more coherent and alert—ready to pick winners, negotiate terms. Less than a mile left to walk off this sprained ankle. I think about them that puts their heads down on a frozen sidewalk and the ankle don’t seem so bad no more.

Note to John—Do I sound more coherent and alert now that I had my coffee?

Note to Loop—You’re always alert.

The Gentrification

Here’s another thing I find interesting about the city. Here in these gentrified sections you can never tell what’s inside a building. Alotta these are new construction or complete makeovers with big-time brands on their signs. Those buildings are nice inside—most o’ the time. But the others can surprise you. The outside of the Chopin Theater looks like a dump that’s been a dump for the last hundred years. Turns out completely different once you walk in the door. This place is gorgeous. A great spot for the FFF.

Chopin Theater

Chopin Theater

A beautiful lady greets me like royalty. I check the layout. Nice lobby. Nice coffee bar. Nice theater space for the companies to present. Steep stadium seating so everybody can see. Doors and windows floating around the stage give it a class look. I figure them’s props for some production but it’s a bonus for us.

Chopin Theater Lobby

Chopin Theater Lobby – photo courtesy of theater

I take in the morning’s presentations. Then I go bummin’ downstairs. Wow! A huge room with a great spread of food and drink. This is way better than the old place. People can talk and strike deals while they feed at the trough and make all the racket they want. Meanwhile, the presentations go on in the kinda setting they deserve—quiet and focused. Kudos to David Culver and company for finding this spot and nailing it down.

Chopin Theater Stage

Chopin Theater Stage – photo courtesy theater

So what’s the FFF all about? One o’ the most important things in the world—starting brand new companies! That means keepin’ as many people off the streets as we can! So here I am wolfing down food, crackin’ jokes, and talkin’ to intelligent company. Lotsa stimulating conversation. It cheers me up. Just like breakfast with the bums. Now I’m ready—ready fer the rest o’ the day.

Chopin Theater

Chopin Theater – photo courtesy theater

Listen John, I went off on a tangent and didn’t even cover the event yet. Now my batteries is gettin’ kinda low. I’ll buy some fresh ones and get back to ya later. Fer now, have a joyous Christmas.

.

Continue to Part 3

Go back to Part 1

Links

Chopin Theater

http://www.chopintheatre.com/event.php?id=2275&pageId=soon

Funding Feeding Frenzy

https://www.facebook.com/FundingFeedingFrenzy

Find Chicago Venture Magazine at 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. I do not guarantee accuracy. It’s not my fault if you lose money.

.Copyright © 2012 John Jonelis – All Rights Reserved

.
.

9 Comments

Filed under Characters, Chicago Venture Magazine, Chicago Ventures, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, FFF, Funding Feeding Frenzy, Innovation, Innovation and Culture, jobs, The City

CHICAGO’S NEW SOUTH SIDE

Brazil from WikipediaThe City of Broad Shoulders is looking to the south. South of 119th street. South of Springfield. South of Mexico. Way south

They’re looking to Brazil where GDP is 6th worldwide and growing. And consumer confidence?  Up.  Infrastructure investment?  On the rise.  Interest rates?  Decreasing. Unemployment?  Only 5.6%.

And Brazil encourages business growth: An open-door trade policy. Aggressively lower tariffs.  Lower taxes. Their complex regulatory environment is getting easier to navigate.  Not surprisingly, international investment is moving to Brazil.

IERG

IERG

This is the 2nd International Forum of IERG — The Intenational Executives Resouces Group—a one-of-a-kind organization—a not-for-profit group made up of volunteers—senior business executives from around the world whose careers have been enriched by broad experience in the global arena.  And no economic mumbo jumbo at this conference.  Everything’s solid.  Everybody comes away with a better understanding of what it takes to do business in Brazil

Brazil is the world’s 5th largest economy and Illinois’ fifth-largest export market.  In 2011, they bought more than $2.55 billion of our goods and we could do a lot more.  Even our politicians are taking junkets there. 

Think of it as Chicago’s new SOUTH South Side.

.

SPEAKERS:

  • The honorable Paulo Camargo, Consulate General of Brazil in Chicago 
  • Ernesto Ramon, former CEO, Dow Chemical in Brazil 
  • Michael Ross, VP & General Manager, Encyclopaedia Britannica
  • Dr. Yara deAndrade
  • Roland Dietz, Chicago Chairperson, IERG

MODERATOR: Bruce Montgomery, Executive Producer, IERG

LOCATION: The Chicago offices of Baker & McKenzie

..

Brazil ClubIERG logo.

This summary is adapted from an article by Brazil Club with permission of IERG.  For the full text, go to – http://brazilclubusa.com/blog/chicagos-business-with-brazil-forum-a-success.html

.

Brazil Club –  http://brazilclubusa.com/index.php

IERG –  http://iergonline.org/
.

GO TO PART 2 – WHERE IS CHINA’S STEVE JOBS?


.

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

.

.

8 Comments

Filed under Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, Financial Markets, Free Trade, IERG, Innovation and Culture

WORTHY OF AWARDS

The Chicago Innovation Awards – Part 3

John Jonelis

Time Share Gulfstream JetI’ve jumped aboard a Gulfstream G450 to interview the legendary Loren Bukkett. I want his take on the Chicago Innovation Awards. He finally puts away his phone and turns to me. “Okay, let’s talk,” he says.

I take that to mean he’s already finalized all the deals that peaked his interest. Nice to have a large staff to handle the details. But here in the jet cabin, it’s just Loren, his wife Aussy, and me.

Aussy is doing some form of shorthand on a tablet computer. That woman hasn’t spoken since I climbed in the plane. Maybe Loren asked his wife to keep it buttoned. Maybe he wants to control what information gets out. At this point, I’m afraid to ask her a direct question. I even wonder if this is their secret strategy to keep outsiders off balance. If so, it’s working.

They give out so many honors at the Chicago Innovation Awards tonight that I can’t keep it all straight. So much glitz and pizzazz. Jumbo screen. Music. Entertainment. Applause. Streaming internet content. I appreciate the way they present a standardized set of videos to highlight the mission of each winner. A professional job and it moves things along nicely. With sponsors like Disney, Comcast, and Wrigley, they can afford to do it right.

Chicago Innovation Awards

Chicago Innovation Awards – jaj

I pull out my notes. “Let’s do the ‘Up-and-Comer’ category first.” I proceed to read off the list but Loren waves me to a halt.

“We’ll do it my way,” he says. And he goes on to tell me about every company that won an award at that event. He does it in depth. No notes. No prompts. At his age, that kind of memory astounds me.

“Now John, keep in mind that for twelve years, every company with an award from this group is a success. And there are a lot of them. That’s impressive and gives an old investor like me a feeling of confidence. Of course my people check out these companies in depth, but you can’t help but come away with some degree of certainty—a belief deep down that every one of them will find a way to make it.”

“You said they’ll break that perfect record this year.”

“That’s the awards to those two politicos, not the companies. No as I see it, what we have here is a large pool of opportunity. I already set some wheels in motion. Don’t ask me which ones.” He clasps his hands behind his neck and leans back. “When you get to be my age, you either turn into a curmudgeon or you win back some of that idealism you enjoyed as a youth. These days, a big part of my strategy includes companies that are doing-well-by-doing-good. I saw a few tonight. One of them is BriteSeed.

I nod. “I saw them pitch earlier in the year—at BNC I think. They made a big impression on me.” I splash three fingers of his excellent Hennessy into each of our snifters. Maybe the combination of spirits and altitude will keep him loose.

“It’s a hot sector,” he says. “Their SafeSnipstm technology could be life-saving. Imagine it on a large scale. No more surgical accidents. Billions of dollars saved.” He leans toward me and lowers his voice. “Keep your eye on Northwestern Global Health and their rapid HIV diagnosis. And Recall-Connect built an automated system to match defective medical implants with patients. No more wading through reams of paper files. Medline came out with an anti-viral face mask. Preventing disease is real attractive to me, but this one’s a family company, so…”

“No need for investors?”

“We’ll wait and see. My only concern with Feeding America is scalability. But they won the Social Innovator Award so people need to take that group seriously—very seriously. Any way we can fight hunger, we oughta do it.” He gingerly takes a tiny sip of his cognac as if he’s already had enough to drink. “I’m interested in the People’s Choice Awards winner,” he says. A little company, New Futura, wants to help Latinos achieve the American dream. Naturally I’m attracted to those kinda offerings. Then there’s Moneythink helping high school kids with their careers. That’s about it for the do-gooders.”

“What about Belly?”

He pauses a moment, pats his stomach, then grins. “That’s another hot sector. That company is off and running in 10 markets with half a million customers already. I’m sure they’ll do well. But I’m not in the mobile app or social media space.”

“Doesn’t that limit your exposure to startups?”

“That it does, John. That it does.” He takes another tiny sip of cognac. “Anymore,” he says, in his Midwestern idiom, “Anymore there’s so much money chasing mobile. So many new startups and only a few will pay off. The good ones get bid-up. Way too high for my liking. New York, Boston—all those great centers for venture capital are in love with mobile and social media. Maybe it’s good for Silicon Valley but it doesn’t fit my strategy. That’s why I come to Chicago. Of course I make exceptions.”

“Do you see a bubble?”

“Well, you always need to keep that in mind. For me it’s more a problem of value.”

Anybody that follows Loren Bukkett knows that deep value is his favorite strategy. Then he shifts gears. “Do you know anything about NuMat Technologies?

That catches me off-guard and I fumble over my words. “Some. I saw them present at another Chicago event–can’t recall where. Seemed like a winner to me but with so many great offerings, the judges at that event looked elsewhere. Do you think the technology is practical? Can they actually store and transport natural gas in bulk the way they suggest?”

“Keep your eye on them,” he says. And suddenly I wish my investment portfolio could stretch that far.

“And Coyote helps trucking avoid dead runs by sharing between companies. That’s the same thinking that put you and me on this beautiful jet. I like that business model.”

He takes more from his snifter and my hopes of getting him to comment on the awards to the governor and mayor are one step closer to reality. “1871,” he says. “That is without a doubt the most significant incubator I’ve come across. They made up their minds to do it right. 50,000 square feet with an option to double. Three universities keep offices there. Venture capitalists too. A successful startup from Northwestern keeps two big rooms to teach folks to code in new languages. Lots and lots of aspiring companies—and you gotta pass their standards to get in! This is one of the new hybrids—part incubator, part accelerator. Most of their companies are outside my investment horizons but every one of them is highly interesting. It must be a great resource for you.”

“Sure, I’ve been there a number of times. They run a lot of events and always invite the community. If they expand, I may take an office there. What’s your opinion on Options City?”

Loren lifts his feet back to the tabletop. “That one hopes to cure a sore point of mine. They want to help the little guy fight back against high frequency trading syndicates. We’re talking trading in-and-out in nanoseconds. Nowadays these guys own 70% or more of the volume on most of the exchanges. And naturally, the exchanges reciprocate by giving them the same privileges as market makers. But they don’t carry any responsibility like market makers. Or risk. They don’t make orderly markets. No, they hit and run. They’re speculators. Why should they get the first look at all the trades?  It’s all driven by greed on the part of the exchanges. I think it should be illegal.”

I’m leaning forward and nodding vigorously. “It’s the High Freaks that changed my approach to trading. I had to slow my timing way down and widen my stops—take on more risk.”

“Well alotta people are going broke because of it. These operations spend upwards of $100,000 a month for the fastest hookup and shortest wire to the exchanges and then run everything by computer algorithm. This new company wants to level the playing field.”

“Can they do it?”

“The jury is still out.”

Loren talks another twenty minutes to cover it all. Food Genius, mentormob, and mobcart, all leverage the Internet to aggregate information and communication. Cummins Allison of all people is selling a document scanner for banks. Borealis makes a light that takes 90% less energy and lasts 30 years.

That leaves Bright Tag, Catamaran, Littelfuse, and SMS Assist.  An impressive event in execution, scope, and promise.  It amazes me that so many fine businesses are right here in Chicago.  All they need to succeed is a boost in the economy. 

We clink glasses. “So Loren, I still want to talk in-depth about the awards to the governor and mayor.”

He flashes me a dirty look.

.

Continue to Part 4

Go back to Part 1

Comment on this article — Your name and email is 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

.

.

6 Comments

Filed under 1871, BNC Venture Capital, Characters, Chicago Innovation Awards, Chicago Venture Magazine, Chicago Ventures, Conflict, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, Innovation, Innovation and Culture, Internet, Internet Marketing, Invention, Kellogg, Marketing, MIT Enterprise Forum, MITEF, Mobile App, Mobile Marketing, MobiM, Northwestern, Software, University of Chicago