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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.

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Copyright © 2012 John Jonelis – All Rights Reserved

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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

FAMILY FIRST

The Story of Ray Markman-Part 11

by John Jonelis

Ray MarkmanFriday, 4:30 pm

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

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

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

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

Hanna-Barbera Video Cover

Hanna-Barbera Video Cover

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

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

Dominicks Foods

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

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

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

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

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

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

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

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

 

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Comment on this article — Name and email optional

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

Copyright © 2012 John Jonelis – All Rights Reserved

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