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CLEANTECH TRUTHS DEBUNKED

Pigs TGenerally Accepted Truths of Cleantech Investing – Debunked

Laurance K. Hayward – The Venture Lab

It is generally accepted in Cleantech investing that:

(1) the companies are capital intensive,

(2) there is a sustainability premium associated with buying the companies’ products and

(3) the adoption of the companies’ technologies requires a change of behavior.

All three can slow adoption and negatively impact scalability and internal rate of return. Certainly this can be true for many Cleantech companies, but it isn’t true for many others.

There has been an evolution and broadening in the definition of Cleantech, call it 2.0. Cleantech 1.0 involved funding solar, wind, battery and biofuel technologies. Many drew parallels to biotech investing in which large sums of capital and extended timeframes preceded product viability. Then add in the need to build factories and infrastructure. The faint of heart don’t change the world.

Often these 1.0 technologies required the end user to pay more for their use, many required subsidies, or incentives to be competitive. For example, there is a generally accepted “sustainability premium” associated with receiving power by solar relative to coal or natural gas. The technologies also required a change in behavior, such as installing new infrastructure on the roof of your building. Ironically, many of today’s demand response applications require the consumer to monitor or use energy in response to new information (i.e. creating more work).

So, these three so-called truths have validity, but now let’s debunk them with some real life examples in the world of Cleantech 2.0.

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Self-Healing Polymers

Every year billions of dollars in corroded metal hit the scrap heap. Some gets recycled. Besides filling our landfills with pollutants, these metals and their coatings require enormous inputs of energy to create and recycle. (Been to a steel mill lately?)

Various coatings are added to metals to help them last longer; there have been remarkable improvements. The old rust-bucket automobile is a rare sight today. But, coatings get damaged after which corrosion ensues. What if the coating could last several times longer? It would reduce the need for chemicals used in cleaning and recoating metals and keep more items out of the scrap heap.

Today, self-healing polymers can be added to a coating in small quantities to prolong the life of the coating and underlying material. Manufacturing can be outsourced to established suppliers and the paint can be applied like any other without a major behavioral change. The sustainability premium is small relative to the performance gain.

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On-Demand Technology

When a 500-bedroom hotel wants to heat water, how do they do it? They typically keep large tanks of water hot with a boiler system. These systems are large, expensive and redundant. They keep large quantities of water hot even during times when little is being used.

Enter on-demand technology, which only heats water when it is being used and has no storage tanks. On-demand technology is now available for use in commercial and industrial environments. Interestingly enough, the system can be less capital intensive than the system it replaces. It can cost the hotel the same or less to buy and install, avoiding the sustainability premium. And, it doesn’t require a significant change in behavior as it uses the same natural gas and connects in a similar fashion. It actually can be a little easier to install due to a smaller form factor and cooler exhaust.

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Chemical Advances

Beta Glucan is used to promote animal (and human) health and as an alternative to the potential overuse of antibiotics in our food sources. The conventional method of production involves extracting beta glucan from yeast. It is costly, messy and involves harsh chemicals.

There is now a proprietary method to produce Beta Glucan from algae in sterile fermentation tanks (not too dissimilar to the ones used to brew beer). It is a cleaner and more energy efficient method of producing Beta Glucan and results in a product with greater purity and lower cost.

The sustainability comes with a discount rather than a premium. The end product is used essentially the same requiring no change for the end user. And the production tanks are inexpensive – just as it is relatively inexpensive to start a craft brewery today.

These are just three examples of technologies that contradict commonly accepted truths; there are many more.

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Cleantech 2.0

Cleantech 2.0 isn’t better—it’s just different. Many disruptive and important technologies come with aforementioned truths and our world needs the investors who support them. A Tesla automobile doesn’t exist without major capital investments and a willingness of consumers to change the way they source fuel for their cars. (The sustainability premium is dropping).

The objective of this article is to cast light on generally accepted truths that have scared away many an investor or acted like blinders covering the eyes of others. The unaccepted truth is that there are numerous options to positively change the world without having to settle for a less attractive investment profile. As Cleantech investors ourselves, we don’t necessarily want too many investors back in the game, but a few additional kindred spirits wouldn’t hurt.

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Larry Hayward 2

Larry Hayward is a Chicago entrepreneur.

This article was adapted from TheVentureLab blog

Copyright © 2015 TheVentureLab

Photos – Larry Hayward

VentureLab logo

theventurelab.blogspot.com

This article appeared in News From Heartland

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

.Copyright © 2016 John Jonelis – All Rights Reserved

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GIVING BACK

DSC_0911 TTechBash – Part 2

by Loop Lonagan

as told to John Jonelis –

Seems to me Christmas is all about givin’ to other people and I say we keep it that way. I love Christmas. Ever’ year I start my celebration on Thanksgiving and don’t take the tree down till January the Fifth. That’s Twelfth Night fer youse guys that don’t know. That night I throw a big party, hire cooks, a piano player, ‘n’ ever’body burns a branch from the tree before they leave.

There’s an outfit right here in Chicago that keeps the spirit o’ giving alive all the yearlong. They find people with talent, creativity, intelligence, hard knocks ‘n’ plenty o’ moxey. Then they pay ‘em to train fer big-time jobs. That’s one o’ the nicest gifts you can give a person with them kinda attributes—a chance to use what they got inside themselves. Think about it—all that potential just waitin’ to burst out so bad a guy could explode.

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And the corporations is eatin’ it up, ‘cause they need them kinda people more than anything else, and it ain’t easy to find ‘em. They need ‘em so bad they’ll pay for it in time and money. I think this outfit is gonna be one o’ the most successful self-sustaining social entrepreneurial ventures that ever started in Chicago. They call themselves i.c.stars.

Here I am at their huge TechBash party where I expect to find hoards o’ ravenous, greedy corporate Scrooges. What I really wanna find is a story about giving. The food and bar is open and maybe I take more’n my share of them good things ‘n’ by now I got lotsa Christmas cheer inside o’ me. But hey—it’s a party. I can be just as greedy as the next guy and I’m havin’ such a good time at it.

DSC_0909 B

Da Passion Project

I hold my MP3 recorder at arm’s length and stick it in the middle of a buncha i.c.stars alums. It’s a weird-lookin’ gadget and these guys freak out like I’m one o’ them Men in Black. I gotta tell ‘em, “It isn’t gonna erase yer memory.” They see I make the movie connection and that brings peals o’ laughter all around.

Two of ‘em stick with me—Nkosi White (Nik) and Christopher Butler. IMG_9829 BChris works fer WGN and the Chicago Tribune, which is a helluvalot bigger rag than this one.

“I love doing graphic design for them. It’s great,” he says. “What i.c.stars was able to do was show me the business end. I didn’t know how to market myself, how to present myself—just to be able to look at an interviewer and figure out what they’re looking for in that time. So they teach you how to assess those things very quickly and how to act on the fly. They put you on the spot but you learn how to rebound and jump into position faster than you could before.”

Nik landed a big-time IT job with WW Grainger just a month outa i.c.stars. We hang out a while and I find out he makes Craft Beer. Then he tells me something that grabs my attention:

“Passion projects,” he says. Passion projects are huge. That’s one thing they teach us at i.c.stars. Have a desire to learn technology, but then in addition to that, identify with what your passion is. Understand that you have a civic duty to fulfill—whether it’s from the neighborhood you came from or whether it’s highlighting others that don’t really get the visibility that you get. Have a passion project—have a civic duty. And then be great in technology as well. It’s a combination of the two. That’s what makes i.c.stars special.”

Now THAT—that right there is what I call the spirit o’ giving.  That’s what we need more of.

icstarg 4 B

Da Sponsor

I talk to one o’ the Big Honcho Sponsors—Jon Mathews from BridgePoint Technologies. (Yeah, he spells his name with one ‘t’.)

“We do a lot with i.c.stars,” he says. “Especially with the interns they take on—teaching them development. We work with a lot of companies who need young developers and need more people going into this avenue.”

So I ask him straight out: “D’ya find these interns come out fluent in programming?”

“Yes, they’re trained very well. It’s amazing what i.c.stars does for those who weren’t brought up in IT. We’ve had positive feedback from clients where we placed them.”

So that’s good news right from the source.

I wanna talk summore to Vera Shabazz. (See Part 1 of this series.) So I hunt till I find her ‘n’ ask just what i.c.stars did for her—personal-like.

icstarg 17 B“They teach you how to think technically—not just thinking—but thinking technically,” she says. “It’s just a great place to be. It’s a great place to learn. Through i.c.stars, I was able to re-invent myself from being in banking to now working IT at United Airlines. I don’t know where I would be if I hadn’t gone to i.c.stars. I don’t.”

Quashe׳ Granville joins our little circle: “i.c.stars is a place where you can bridge the gap between technology, business, and leadership skills.” That’s a good businesslike description. Just one line. I’m impressed. I drink down the last o’ my Scotch ‘n’ Soda and ask, “How d’they do that exactly?”

Vera smiles. “After the first few weeks of training, the purpose is to do a large project with a major company, build teams and camaraderie, and to get you in the mindset. It’s like a boot camp. Once you’re done here, you can secure a job.”

The music gets louder and I lean close to Vera. “So you do a simulation or some kinda practice project?”

“No, it’s real. When I was at i.c.stars, our company was TTX. You know who they are, right? Well if you ever ride the Metra, those are their cars. The CIO and two others were the mentors that helped us through our project. Their CIO was the one who helped me get my job at United Airlines.

Quashe׳ leans-in closer too, but even in all this noise, I don’t have no trouble hearin’ his deep voice. “Right now, our team is working on a mobile app that’s going to help UL with brand awareness.”

That catches me off-guard. “UL asked i.c.stars to do somethin’ that big?”

“Actually, WE put the project together. UL just told us they needed help with brand awareness.”

“The interns figure out the project,” says Vera. “What is it the company wants? What do they need? From the time you’re doing that project, they’re analyzing you. Asking questions. They want to know how well you handle yourself.”

I study these two. Both hard survivors—both soft hearts. “Sounds to me like a tough kinda program.”

Vera nods. “It is tough. But i.c.stars makes sure about you. If you think about it, they’re putting us back into the community and asking us to give back. If we’re not prepared, then what do we have to give back?

icstarg 8 B

Giving Back

“Everything is about giving back,” says Vera. “They let you know that if you don’t give, you can’t get. So once I graduated, whatever I have, whatever I can do, whatever I can give—I give it because I know that it’s coming back tenfold.“

This gal makes a wonderful spokesman ‘n’ she’s a terrific lesson in gratitude—somethin’ most of us just don’t seem wired for.

“I love i.c.stars!” she says. “ Whatever I can do, they’ve got my help. I think all of us who are alums still give back to i.c.stars. We volunteer for whatever Sandee needs.

“I also give back through Virginias House – a non-profit organization, which is for victims of domestic violence. My goal is to provide traditional housing for 1000 survivors and their children by the year 2025. I want to build a facility on the south side of Chicago that will allow them to leave their abusive homes and also stay for a year, getting themselves prepared to move on”.

“Whats the chance o’ gettin’ that off the ground.?”

“We’ve already got the programs together. We already did one function and we’re doing more. Since leaving i.c.stars, we have helped 50 families. They might need food. Their children might need clothes or school supplies. We help them with that as well. We have partnerships from Jewel and Dominick’s. Gift cards. Food. Clothing.”

Gettin’ In

I ask Vera, “How hard was it to get into the i.c.stars program?”

“The first thing I thought when I did the application process was, ‘What the heck? What is this for? Why do I need to fill out so many pages?’ It didn’t make sense to me. But I think it’s to see how badly you want it. I could have been discouraged and just said, ‘Forget it.’ But just because it was so lengthy, I decided, ‘I’m going to do this and they’re going to take me.’

“After the application, there’s a newbie puzzle, and that is a real brain twister. Then you go down for the written assessment and the technical assessment. And then once you’re done with that, they call you back for the interview.”

icstarg 0

Da Mobile App

I snag myself a snack from a passing tray and ask Quashe׳, “What’s with all these booths scattered around the place—all them people waitin’ in line?”

“Interns are trying to talk to CIOs,” he says. “Consulting firms too. They’re trying to get their idea out there and CIOs of all sorts are right here to listen.”

“So what about your mobile app?”

“It’s designed for 5-9 year olds to become junior scientists. Kids create an avatar. They’ll see science projects based on fire, water, electricity. Everything about it is going to be virtual. You get to play around with these things and the beautiful thing about it is that when you want to mix two compounds together, you can just shake your phone and you’ll be participating. Let’s say two sets of wires are not UL safe—that’s out of spec. So your avatar goes to touch the wire and gets a shock.”

“D’ya shock the kid’s hand?”

“Oh, no . . . no-no-no.” That deep bass again.

“Maybe give ‘em a vibration?.”

“We can do that. There are a lot of things we’re going into but at the same time we have to focus on one key area: You know how you always tell your kid, ‘Don’t touch the stove, because it’s hot.’ Well now we have to deal with, ‘Can you touch the stove handle? Is it UL safe? Is it UL approved?’

“Sounds kinda elaborate as a mobile app. So what’s your personal goal when ya graduate?

“My personal goal is to find a decent company that has a solid culture that will actually cultivate what I already know. Basically somewhere I can grow.

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Da High Tea

I asks Vera, “When you was at i.c.stars, what was yer favorite part o’ the day?”

“We have what we call High Tea. Celebrities come—we call CIOs celebrities—and they tell us their stories. But first, each team member pours tea for the team member on their left and introduces that team member to the CIO and it goes around the table. We don’t talk about ourselves—we talk about the person whose cup we fill—what he does, what his likes are, what his super thoughts are, what he’s going to do when he graduates i.c.stars and why they should hire him. Just to go through that phenomenon, it will blow your mind. It is just something that you do not get used to. You need to come to see a High Tea for yourself.”

“Well, I dunno…  That’s all they serve?  Tea, I mean?”

“Just tea.”

“Hmff.” I stroke my chin to make her feel like I’m thinkin’ real hard about it, but to me it’s a no-brainer. I wanna check the place out anyhow. “Okay, you got me. Lemme know when I can come.”

GO TO PART 3 – THE APPRENTICE MEETS DIGITAL BOOT CAMP

GO BACK TO PART 1 – TALENT HIDES

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Da Contacts

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

.Copyright © 2013 John Jonelis – All Rights Reserved

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5 Comments

Filed under App, big money, Characters, chicago, Chicago Ventures, Christmas, city, Education, Entrepreneur, Entrepreneurship, Events, i.c.stars, Innovation, Innovation and Culture, jobs, loop lonagan, Mobile, Mobile App, Mobile Marketing, Social Entrepreneur, The City

THE TWO WHEELS OF CHANGE

Impact Engine – Part 2

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

Impact EngineLoop Lonagan here at IMPACT ENGINE Investor Day. This is the new Chicago incubator fer companies that do well by doin’ good—and doin’ it profitably! Think of it—we’re gathered here to get richer by makin’ all them other poor slobs around the world prosper! This I like!

The keynote speaker is FK Day. (He calls hisself  FK fer short.) And he tells us a story that knocks us outa our seats. This is a real unusual chain of events that speaks about the virtues of capitalism doing alotta good by helping folks raise their own well-being.

Buffalo Bicycles

Here’s the shortlist:

  • The story starts with SRAM that makes high-end bike parts.
  • Then FK starts World Bicycle Relief—a not-fer-profit.
  • That leads to Buffalo Bicycles—a self-sustaining company.

Impact Investing

The Chase Auditorium’s packed with serious investors. Them’s the only kind they let in the place today and this hall seats over 500 of them rascals. They’s all squealin’ ‘n’ squirmin’ to get a piece o’ the action. Sheesh—I ain’t seen so much money in one room since I…well I ain’t s’posed to talk about that so lemme move on. I’m here to do summa that Impact Investing, just like da rest o’ these clowns. But first lemme get back to the keynote speaker

(Note to Editor—All that coffee I swilled down‘s got my eyes buggin’ out ‘n’ I feel a whole lot more coherent. I’m gonna give you the skinny on this thing. But I want you should cut me some slack—just in case I get something out o’ order.)

(Editor’s Note—Nobody’s perfect. I’ll print it just as you dictate it.)

Okay, so dis story starts after FK pioneers bicycle shifters ‘n’ brakes at SRAM. His stuff’s in high-end bikes AND in all the big international races. Even poor disgraced Lance Armstrong uses SRAM components so you gotta figure that FK knows a thing or two about bikes.

Hey—this is a Chicago company, okay? Don’t get no better ‘n’ that, right? Well actually it does as you’ll see in uno momento.

Bicycles WBR 1

World Bicycle Relief

Remember that big tsunami in Indonesia? FK and his wife go there to lend a hand. They’re lookin’ for a better solution than the NGO relief organizations. So they asks people lotsa questions.

Turns out nobody can earn a living or make any economic progress ‘cause there’s no transportation. Everybody’s on foot. That ain’t too efficient. There’s kids spendin’ six hours a day walkin’ to school ‘n’ back. Mothers carryin’ groceries long distance. And get this—businesmen haulin’ their wares to market 5 or 10 miles on foot.

You think da rush hour here in Chicago eats into yer day? It’s nothin’ compared to this. This is no way to do business. This keeps folks in poverty.

The Power of Bicycles 3

FK’s a bike guy, so he shows up pre-loaded with the natural solution to the problem. He runs experiments and finds out alotta things. Turns out a bicycle can increase the income of a poor family in a big way. Looks like it’s the single best way to fight poverty in these primitive areas.

So he creates the not-fer-profit organization, World Bicycle Relief, which is a real big deal. They partner with WorldVision and alotta other organizations.  They give out 24,400 bicycles in Indonesia.

Bicycles WBR 2

Africa

FK starts a buncha 9-day trips to Zambia to fight HIV/AIDS and creates a special bike for it. Bicycles WBR 10

His folks first task is to assemble their bikes so’s they can get around. Their last task, before they leave, is to turn over their bikes to the villagers.

Bicycles WBR 9 FEELING GOOD

FK gives out 90,000 bicycles this way and learns a lot more about the problem.

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By now he’s got three well-defined areas he wants to impact:

  • Education
  • Healthcare
  • Economic development

Bicycles WBR 3

I think education tugs at him strongest.  Kids in these countries gotta travel a real long way to school and still have time to do chores not to mention homework.  With bicycles, they can get to school more often.  That builds up the whole culture by givin’ these people a future.  Givin’ ’em hope.  Summa these folks wanna be teachers, doctors, engineers.  Somethin’ as simple as a bicycle can make that happen.

Lemme get you started with a terrific video. Have a look at it ‘n’ then I’ll tell you more.

Pretty good stuff, doncha think? Bottom line—bikes carry more weight farther and faster than shoes. Bikes get kids to school, people to clinics, and they get businessmen to markets!

Bicycles WBR 11

FK tells the story of a dairy farmer in Zambia. With a bike, he can get to the co-op twice a day insteada just once.

That instantaneously doubles his income! 

Summa these guys mount homemade cargo boxes on these bikes and use ‘em like trucks.

Bicycles WBR 6

According to FK, the most powerful bike in the world is one in the hands of a mudder feedin’ her family or a fadder making a buck fer his family or a kid gettin’ an education to claw his way outa poverty. All o’ these takes transportation. And education is real important. You gotta learn readin’, ‘rightin’, and ‘rithmetic and how to speak yer language da right way or yer never gettin’ nowhere in dis here world.

Bicycles WBR 7

Buffalo Bicycles

Lemme go back to the hardware development phase. FK takes this jeep trip down them things called roads in Zambia. Whadaya think he sees? Busted bikes in the ditches ever’place he goes—every brand ‘n’ model on the planet. Says it looks like somthin’ outa The Andromeda Strain. (That’s a movie in case you fergot.)

Bicycles WBR 8These bikes come from well-meaning charities. But it’s all wasted. People in Zambia take to callin’ ‘em Chinese Junks. Off-the-shelf bikes is way too flimsy fer this kinda terrain.

So whadaya think the average lifespan is for yer typical off-the-shelf bike? 30 days! That’s it! And there’s no way to fix ‘em neither! Too many different brands. No parts. No mechanics.

FK figures what they need:

  • Standardized bicycle
  • Standardized parts
  • Real, real rugged
  • Trained mechanics
  • Supply Chain

Bicycles WBR 14 THE BIKE

The Buffalo Bicycle is a rugged design like no other. It can withstand rough roads while carrying a load o’ trade goods to market.

Here’s a video of FK in Africa riding the roads with folks:

Da Business

Charity’s a good thing.  But how do ya make it self-sustaining?  How do ya make it grow like a hockey stick?  You turn it into a business.  Business can be a helluvalot more powerful than an outstretched hand.  A little capitalism can be good fer da soul and FK’s a capitalist at heart.  

FK sells the Buffalo Bicycle to third-world businessmen at a profit.  That makes the project self-sustaining.  He trains and supplies mechanics.  And that maintenance network is self-sustaining too. So far they got 124,754 bikes out there where they can do some good. 

He shows us graphs ‘n’ charts. He’s gonna be building 100,000 bicycles in eight African-based supply chains in 2015.  This program is scalable and sustainable.

Bikes from website 2

Remember all that research I told you about? FK makes a key point about that. He learned everything he ever needed to know from the end user. We need to stay deeply in touch with these people. The answers almost always come from there.

Bicycles WBR 13 Wrigley FieldAnd to me, the amazing thing is that he went and figured out da problem and da solution ‘n’ engineered such a wonderful outcome.  He bootstrapped all o’ this starting with lotsa fund-raising drives like the annual Wrigley Field Road Tour which is a part of Chicago Cubs Charities. 

Here’s a candid video of FK thanking his volunteers after a small fundraising drive–one of many:

Next up is a company called ThinkCERCA. Meanwhile, check out summa the other articles about Buffalo Bicycles below.  Ω

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CONTINUE TO PART 3

Go back to Part 1

More Reading

Wrigley Field Road Tour

http://worldbicyclerelief.org/pages/wrigley-field-road-tour

World Bicycle Relief on Wikipedia

http://en.wikipedia.org/wiki/World_Bicycle_Relief

Article in Forbes

http://www.forbes.com/forbes/2010/0510/creative-giving-sram-zambia-charity-armstrong-bicycle-economy.html

BBC Article in TON

http://timesofnews.co/2012/03/15/can-the-buffalo-change-africas-bicycle-culture/

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Da Contacts

FK Day

FK Day

World Bicycle Relief website  http://worldbicyclerelief.org

WBR on Facebook  www.facebook.com/worldbicyclerelief

SRAM Logo

SRAM Corp.  http://www.sram.com/

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IMPACT ENGINE website  www.TheImpactEngine.com

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[ Photos and video courtesy of World Bicycle Relief ]

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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Filed under 1871, angel, angel capital, angel investor, big money, Characters, chicago, Chicago Venture Magazine, Chicago Ventures, CORE Insight Story, Economics, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Impact Engine, Impact Investing, Innovation, Innovation and Culture, Invention, investor, Kellogg, loop lonagan, Social Entrepreneur, vc, venture capital

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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15 Comments

Filed under 1871, angel, angel capital, angel investor, App, big money, Chicago Venture Magazine, Chicago Ventures, Data, Entrepreneur, Entrepreneurship, FFF, Funding Feeding Frenzy, Impact Engine, Impact Investing, Innovation, Innovation and Culture, Invention, investor, Kellogg, Marketing, Mobile, Mobile App, Mobile Marketing, new companies, Northwestern, Social Entrepreneur, Think Tank, University of Chicago, vc, venture capital

THE RESUME IS DEAD

Funding Feeding Frenzy – Part 4

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here at FFF and we’re in for a treat. Mitch Schneider is pitching his new company, Kauzu. I like companies that do well by doin’ good fer people. And this one’s all about local jobs that keep people off the streets.

Say you got a business in an urban setting and need to hire an employee. You want somebody local. Hey, everbody wants local. Kauzu logoMcDonalds, Wal-Mart, Pace, Cook County—they want local people too. Local’s always better. Local employees stay longer and save the business alotta money.

Just by way of example, I’ll explain this from the point o’ view of a small guy—a shop or restaurant or somethin’.

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Da Old-Fashioned Way

You wanna put out feelers. But how you gonna do that? Monster? Whoa—they’re expensive and you get buried by applications from all over the place. So what else can you try? How about Craigs List? Usta be pretty good—my own daughter got a job thru them about five years back. But they’re still not as local as we’re talkin’. Then there’s the classifieds, but that’s expensive and in a city of millions, that’s not really local either. You can post a help-wanted sign in yer restaurant window, but then you gotta interview anybody comes in off the street, like my pal Big Bubba. Can’t picture him workin’ tables unless yer runnin’ a racket and need an enforcer or somethin’.

So those are all old-fashioned methods. If you decide to use one o’ those yer gonna get tons o’ applications to wade thru. Lots ‘n’ lotsa paper. Most o’ those’ll be the wrong people for the job. Ever try ‘n figure out which is best by lookin’ at paperwork? Good luck to you!  Far as I’m concerned you might as well throw darts.

Then after you pick a buncha people you think look good, you gotta interview ‘em. All of ‘em. There’s laws. Are you a professional in the use of modern interview techniques? Probably not. So yer wastin’ alota time and money. And it’s all happenin’ when yer short on help. I don’t know about you, but I don’t like it.  What if we could dump the resume and the application too?

.The Resume is Dead

Da New Way

Now, when I’m picking a stock, I use modern filtering and modern analytics. Why not apply that technology to jobs? So where do you go to get that?

Tablet

Along comes Kauzu. Here’s what they do:

  1. A business posts a digital help-wanted sign on Kauzu’s website for next to nothing. Kauzu uses filters and analytics and automatically matches the right people with the right jobs. And you get to set the filters yerself. No need to study hundreds of resumes or interview scores o’ people.
  2. Job-seekers fill out profiles on the Kauzu site for free. One and done. They see the close-by jobs that fit them right on their cell phones.
  3. The result? Businesses save time and money. You only interview pre-screened local candidates that are more likely to stick. Job seekers get a hyper-local job search with fully mobile functionality. The resume is a thing of the past.

Text Feature

“But,” you say, “What about people that don’t have smartphones.” And that’s true for about 70% of the unemployed. But hey—you don’t need no smartphone. Text works just as good. Just input yer location ‘n’ it shows you the nearby jobs.

If you got one o’ them newfangled smartphones or tablets, it gets evenSmart Phone better. Geo-location shows you the jobs right on a map. Of course you can always go to the public library and use their computer fer free.

Pretty slick. I like it a lot. So do chambers of commerce and city colleges that are pushing Kauzu. The timing couldn’t be better. Check out this video. And there’s lots more on their site.

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Da Business

Mitch, Paul, & GlennThis Mitch Schneider guy is super smart.  I had lunch with him not too long back at One North.  When we got done four hours had blown by.  I guess I like talkin’ to intelligent people and I’m impressed with Mitch.  I think this guy’s got the know-how, the drive and the creativity to make any startup sit up and bark.

They’re asking $500K for a 30% equity stake and expect to break even in month 17 with a 10X multiple in five years.  Translation—they’re investable.  So far they’re bootstrapping, but along with Paul Cusimano, they already built a nice team, a great website, and they got a big advisory board that includes—get this—Glenn Gottfried.  So they got the management, the tools, the channels.  Now they’re raising the money.

Mitch Pitch

Da Judging

So how did the judges respond to a terrific offering like this? Yer not gonna believe it. They didn’t get it at all. Mitch got four o’ the dreaded GO FUND YOURSELF signs and one STILL FISHING. Not a single FUNDABLE. Strange—real strange. Why didn’t the judges get it? The audience sure did—no question. People watching the Q&A got so frustrated, they kept calling out answers to the judge’s questions. That’s against the FFF rules but hey, it was kinda like a revolt. And these judges are guys I respect, so I ain’t got it figured out.

So afterwards I ask Mitch about it and he seems strangely unconcerned about it all. Turns out he’s using a different pitch every time he presents. He videotapes every one o’ them and runs comparisons. What a terrific strategy. Like I said, this guy’s smart. So he found a pitch that connects with an audience but not judges. He won’t repeat that one, but it might be good advertising fodder.

Glenn Gottfried at Lunch

Glenn Gottfried at Lunch

So I go downstairs fer some lunch and ask Glenn Gottfried how come the audience understands it but the judges don’t. He’s got alota good ideas fer fixing it but no real answer to why it happened. Guess we’ll wait fer the video analysis.  I’m still scratching my head, but it is what it is. If any o’ you guys can offer a suggestion, feel free to leave a comment.

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Continue to Part 5

Go back to Part 1

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Da Contacts

Kauzu  www.kauzu.com

Funding Feeding Frenzy

www.facebook.com/FundingFeedingFrenzy

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

.Copyright © 2013 John Jonelis – All Rights Reserved

.
.

7 Comments

Filed under angel capital, angel investor, big money, Characters, chicago, Chicago Venture Magazine, Chicago Ventures, chopin theater, CORE Insight Story, Data, Entrepreneur, Entrepreneurship, FFF, Funding Feeding Frenzy, Innovation, Innovation and Culture, Internet, Internet Marketing, Invention, investor, jobs, loop lonagan, Mobile, Mobile App, Mobile Marketing, new companies, pitch, Social Media, Software, vc, venture capital