Tag Archives: Entrepreneurship

THE NAME IS IN2

by John Jonelis

What happens when you give kids—highly gifted in math and science—a state-of-the-art facility entirely dedicated to entrepreneurship? This could be the best-designed business incubator on the planet and the students are going to create real businesses here. Hey—this is too much fun! It sure doesn’t look like high school to me! Where did they put the usual long halls walled by the usual rows of lockers? Where are the standardized rigid rectangular classrooms?

This is IN2, the new entrepreneurship center at IMSA—the Illinois Mathematics and Science Academy—the Statewide high school for the best and the brightest. It’s located near Chicago and students live on campus, as if attending a university four years too soon.

IMSA will host a big party and ribbon cutting for the new IN2 innovation space on the 30th of the month—that’s the 30th anniversary of the school’s founding. I had the unique opportunity to preview this amazing facility. Here’s a sneak peek:

IN2 at IMSA (Note the unique tables and ping pong net)

Britta McKenna is the Chief Innovation Officer here, and led the team that put this together. As I fumble to get my recorder going, I ask her how they pulled it off. Without any hesitation, she pours out an amazing story—so here it is, verbatim:

[First of all, I asked about the name—IN2. What does it mean?]

“Innovation and Inquiry. When people were in focus groups and asked about IMSA, those were the two words that came up over and over. So the company we worked with used Inquiry & Innovation as IN-IN. That’s why it’s called IN2. So you can say, ‘What are you IN2?’ It can be playful.”

Britta McKenna, Chief Innovation Officer

“The story actually goes back 10 years. It was decided an innovation hub would be built—a physical space and a virtual space.

“Three and a half years ago, we got a gift of one million dollars from Steve Chen to build the innovation center, so then the work really began.”

[Chen is an IMSA alum and co-founder of YouTube and AVOS. I asked Britta how they came up with such a wonderful design]

“I got tapped, as chief innovation officer, to figure out what this would be, what it would look like, how it would operate, how it would be funded. It would have to be a private revenue stream to support this.”

[ALERT—All you budget hawks. She’s talking private funding—and she’s got the corporate connections and alumni to do it.]

Maker Space

“So I brought along students to Silicon Valley—15 of them. We went through Chicago to spaces like Northwestern, IIT, University of Chicago, Fermilab, Argon, 1871, Private Industry Chicago, Next Door, and we also went out to Boston to visit MIT Media Lab, and other spaces out there, including artist colonies to be inspired to by what people were doing coast-to-coast in innovation spaces.”

Multi-use conference rooms

“That was a 2-year research project and included the students all the way. They worked in three teams—Developing Technology, Programming, and Facilities. They helped co-design the space, because they are the users, and too many times, we design things in a box outside of the users. So we implemented a user-designed thinking approach.”

Lab space

“We went to Facebook, Google, Dropbox, AVOS, which is Steve Chen’s newest startup, WeWork, which is a co-working space, and Stanford’s StartX, so we literally have done our due diligence.

“And I asked, ‘What space gets used the most? What’s your favorite thing? And what did you do wrong?’

“It doesn’t mean that those things will all work here, but it’s likely that we might have success if somebody else already has. So we synthesized all of that and I became what is known as the ‘hashtag’ Super-User. And the Super-User is the one that funnels all of this information to the architects, because now it actually has to be designed.”

Idea space

“We went to the community. We came together—58 of us—anyone from a Chicago Public School teacher to a city administrator with City of St. Charles. We got public, private, parents, past parents, teachers—everybody came together and literally built models of this space. We went through the design process with architects, we used Cordogan Clark in Aurora, and we built this—it took about a year to build from the time we broke ground and now we’re opening up.”

Sharing space

“So all the spaces here are influenced either by student ideas or places coast-to-coast that we visited. And so we’d probably say that we’re the first secondary school innovation center in Illinois, and dare we say the United States because we haven’t been able to find something like this. First-to-market is great for Illinois, great for Aurora, and puts IMSA on the map. We invite people to come in and see what we’ve built here.”

Collaboration space

“This is really meant as a convening space. Innovation doesn’t happen unless there are people here. We learned from going coast-to-coast that you can have the coolest space ever, but if there’s nobody there, there’s no innovation happening. There’s nothing happening. It’s all about connecting people.”

Coffee Bar

“One of the biggest places we found is around food. So we have a built-in cafe around the corner because you want to meet somebody for a cup of coffee. You just want to have a casual conversation. You want to have a back-of-the-napkin sketch, that can happen there or it can happen in our idea bar.

“We have Idea Baristas that we’re training. They actually wear aprons, and will help people advance their ideas here. They’re all volunteers.”

Idea Baristas.

We’ve got a mentoring office like 1871. We hope by the fall to have regular office hours. So I am a non-profit mentor. On Tuesdays from 4-6:00, I volunteer my time to mentor non-profits in the community. I can go to them. They can come to us.”

Mentoring Office

“Mike McCool, who’s an alum and a software engineer, wanted to donate and I said, ‘How ‘bout we get the McCool View?’ So he funded the beautiful windows that we have.”

The McCool View

“Our reach—about advancing the human condition—can, I think, really be actualized through this space. Not that we weren’t doing it—it just gives us that new front door. The space is just literally right by the front door.”

A huge competition between student startup companies— POWER PITCH—is going on here today. I’ll give you an inside look at that in the second article in this series.

Moises Goldman – Judge at POWER PITCH

I run into an old friend, Moises Goldman—angel investor, a big driver at MIT, and an important contributor at IMSA. Today he’s one of 17 judges at POWER PITCH. I ask him what he thinks of the new facility. Moises responds in his gentle, deliberate, and old-world manner, condensing his thoughts into a few words:

“I think it’s always been the desire to be in a type of space that recognized talented students. This is our recognition of these students. That makes a difference to me.”

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Notable IMSA Alums

The school’s alumni reflect its excellence. Browse through a few:

Steve Chen – Co-founder/Chief Technology Officer of YouTube and AVOS. Early engineer at PayPal.

https://en.wikipedia.org/wiki/Steve_Chen

Steve Crutchfield – Chicago Trading Company. CBOE Advisory Board, Head of Options, ETPs, Bonds at NYSE Euronext.  2012 Crain’s Forty Under 40.

http://marketswiki.com/wiki/Steven_Crutchfield

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Dr. Julia Comerford – Astronomer. Discovered several supermassive black hole pairs—occurring in the merger of galaxies.

http://www.sci-news.com/astronomy/pair-black-holes-distant-galaxy-03546.html

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Dr. Scott Gaudi – Astronomer, discovered over a dozen new planets and a new solar system.

https://www.imsa.edu/news/releases/2012/08/06/president-obama-honors-dr-b-scott-gaudi-91-highest-honor-early-career-scien

http://www.astronomy.ohio-state.edu/~gaudi/

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Nathan Gettings – Co-founder of Palantir. Founder of robotics company Robotex.

https://en.wikipedia.org/wiki/Palantir_Technologies

Also – http://www.robotex.com/

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Ramez Naam – Software developer and international bestselling author. Developer at Microsoft Outlook and Internet Explorer projects.

https://www.amazon.com/Ramez-Naam/e/B001IOH84S/ref=sr_tc_2_0?qid=1489516515&sr=8-2-ent

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Mike McCool – Software Engineer at Google, Robot Invader, Aechelon Technology, Netscape, and many others.

https://play.google.com/store/apps/details?id=com.robotinvader.fooding&hl=en

Rob McCool – Software developer and author. Developed the original NCSA Web server, later known as the Apache HTTP Server. Part of original NCSA Mosaic team with his twin brother Mike.

https://en.wikipedia.org/wiki/Robert_McCool

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Tim Meyer, PhD – Chief Operating Officer, Fermilab

http://www.fnal.gov/pub/about/timothy-meyer.html

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Yu Pan – Co-creator of PayPal and the first employee at You Tube. Co-founder of kid’s kraft company Kiwi Crate.

https://en.wikipedia.org/wiki/Yu_Pan

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Dwan Prude – Financial Analyst, Boeing Company. Motivational speaker.

https://www.imsa.edu/news/releases/2012/08/20/dwan-prude-97-gives-passionate-and-motivational-2012-convocation-address

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Russel Simmons – Co-founder of Yelp. Early developer at PayPal.

https://en.wikipedia.org/wiki/Russel_Simmons

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Clara Shih – Bestselling author, THE FACEBOOK ERA. Founder of Hearsay systems. In 2010, she was named one of most influential women in tech.

https://en.wikipedia.org/wiki/Clara_Shih

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Kevin Wang – Founder of TL;DR Legal. Theil Foundation fellowship recipient.

https://www.imsa.edu/academics/talent/kevin-wang-new-thiel-fellow

Also – http://www.geekwire.com/2012/kevin-wang/

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Sam Yagan – American internet entrepreneur. Co-founder of SparkNotes and OkCupid. CEO Match.com. Named in Time Magazine’s 100 most influential people in the world list.

https://en.wikipedia.org/wiki/Sam_Yagan

 

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Hope you enjoyed Part 1 – THE NAME IS IN2

Read Part 2 – POWER PITCH

Go to Part 3 – INQUIRY & INNOVATION

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IN2 Contact Info

Address – 1500 Sullivan Rd. Aurora, IL 60506

Website – https://www.imsa.edu/

Carl Heine – heine@imsa.edu

Britta McKenna – bmckenna@imsa.edu

Tami Armstrong – tarmstrong@imsa.edu

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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 © 2017 John Jonelis – All Rights Reserved
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Filed under Chicago Startup, Chicago Ventures, Education, Entrepreneur, Entrepreneurship, IMSA, Innovation, Innovation and Culture, Invention, new companies, Public Schools, Social Entrepreneur, Startup, startup company

WHIZ KIDS

You Don't Want to Compete with this Kidby John Jonelis

You don’t want to compete with this kid.  Believe me.  Just watch his intensity as he pitches his business to some of the private equity luminaries in the city.  I’m a judge at this event and try not to show my feelings of awe as he answers all the tough questions in a pressure-cooker environment without so much as a flinch.  There’s an intimidating team behind him too.  They’re all in middle school.  Middle school!

These guys offer a new white-label web browser that’s secure from hackers at WiFi hotspots.  It’s up-and-running and they’ve got the moxie to ask $100K for 15% of their company!  These are potential recruits for IMSA – the vigorous live-in statewide high school for the best and the brightest.

You don't want to compete with this kid 2

And that kid over there—the one quietly sitting in the background?  The IT department at IMSA is afraid of that one.  “Some IMSA students try to hack the system,” says Carl Heine of TALENT, “but if this kid comes to the academy, we’ll have to keep him close.  He’s the real deal.”

SecuritumFive other teams like this one pitch today and they’re all wonderful.  I’ve seen IMSA students put adults to shame but hey—this is way over the top!  Once again, the TALENT program proves that children can outperform adults in one of the toughest games in town—a grueling pursuit that demands everything you can put out and then asks for more.

I ask you—can you imagine doing that when you were in 7th or 8th grade?  At that age, a pop quiz seemed like a big deal.  I certainly had no dream of running a business back then.  What we have here is a roomful of truly extraordinary individuals coached by wonderful teachers.  I’d like to hire them to create and build the next big company.  Problem is they’re still minors.

PitchThis event is part of an intensive one-week immersion camp held at 1871—a program geared to teach what an entrepreneur goes through by personal experience.  These kids pitch real companies only 3 days into the program.  Three days to form a group, put together a business plan and prepare the pitches we hear today.  Three days!  When I look at the quality of the output, it seems impossible.  But I’m here watching it happen.  Give credit to IMSA’s selection process.  Give credit to Carl Heine, Jim Gerry, and a brilliant TALENT organization with their finely crafted template.

It’s our job as judges to challenge these kids with real business questions.  And we do.  All of them respond well.  We’re asked to rate them on specific categories, and yes, TALENT provides us with an organized matrix to keep score.  Here’s their Pitch Rubric:Judges

  • Pain Point – Do they understand and describe it clearly? Yup.
  • Market Research – Is it clear and complete? Looks that way to me.
  • Competition – Have they identified and clearly expressed their competitive advantage? Yes sir.
  • Product – Do they have a compelling prototype? A prototype? After 3 days! Hey, these kids already have working products! This ain’t your science fair back home, Chumley!
  • Business Model – What’s the go-to-market strategy? What is the likelihood it will be profitable? Chances look pretty good from here.
  • Presentation – Does it convincingly cover all the bases? Yeah. That it does.
  • Questions – Do the answers make you want to invest?

Yes, yes, and yes!  The event ends and we meet everybody.  In a moment of irrational exuberance, I hand my card to a boy and say I’d like to see him pitch to my angel group.  Forgive me.  I sometimes forget myself.  First school, then the business world.  Gotta keep those two straight.  ♦

 

Photo credits IMSA.

To contact IMSA TALENT:  Britta McKenna, Chief Innovation Officer bmckenna@imsa.edu

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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 © 2014 John Jonelis – All Rights Reserved

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2 Comments

Filed under 1871, angel, angel capital, angel investor, chicago, Chicago Ventures, Entrepreneur, Entrepreneurship, Events, IMSA, Innovation, Invention, investor, new companies, pitch

7 TIPS FROM A WINNER

Funding Feeding Frenzy – Part 5

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here. I’m gonna go full circle at dis Funding Feeding Frenzy.

No, I ain’t drunk—well maybe I am by now—but what I mean is, I’m goin’ back to the start o’ this event. After all that stuff I already talked about, I’m finally gettin’ ‘round to the first speaker at the FFF—Palette App—the company that won last time.

Like I said, I seen the pitch before. I also seen them at BNC Venture Capital and later at their corporate offices. Research. A guy’s gotta check stuff out fer himself.  Anyhow, here I am at the FFF in the Chopin Theater to hear what he has to say.  And as it turns out, I’m very glad I to be here.

Chopin Theater Lobby

Lobby – courtesy Chopin Theater

The speaker is Jerry Freeman, founder of Palette App, and the guy’s real smart. He’s doin’ his pitch fer us as a demo—to break the ice before all the poor slobs face the judges.

So I’m sittin’ here next to Jay Kinzie, a colleague o’ mine from Mastermind Advisory Board in this cushy seat in the Chopin Theater. Rong Mayhem ain’t gonna wheel up behind me and start yellin’ like he did at that car barn they held this thing at last time. And the noisy crowd is banished to the trough downstairs.

Feeding Trough

Feeding Trough

That means I’m free. Free to concentrate on findin’ the companies I wanna follow up on. But first comes Jerry Freeman. He starts by giving his own pitch. I know it by heart so I’ll paraphrase:

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Da Pitch

Palette App logoPalette App helps architects and designers do their job better, faster, cheaper. (Jerry doesn’t actually say better, faster, cheaper, but that’s what it amounts to.)

They take away them old-fashioned sample binders that designers and architects been blowin’ their money on for 150 years. They hand ‘em this beautiful digital palette. It’s easier to put together, better organized and more efficient to use. You can make changes fer free! That’s a big deal in this industry.

Palette App

Palette App

It saves a designer about 30 business days a year. That’s alotta man hours. And that kinda time’s worth a few bucks. The digital palette’s better for the client too. That’s why I been excited ‘bout this company right from the first.

Palette

Palette

The software usta be just on iPad ‘cause that’s what designers and them kinda people use. But now it’s on Android too. There’s a version for architectural design schools, which turns out to be a big deal. You can read all about it at https://chicagoventuremagazine.com/2012/07/16/150-years-of-waste-meets-technology/

The company is up-and-running and generating revenue. They already got 35,000 products loaded in their system. They got multiple profit centers. They make money whenever a designer orders a sample. And they make money through subscriptions.

Far as capital goes, they already raised $700K and the first round is gonna close pretty quick. 70% of that came from the last FFF. You can read about that at https://chicagoventuremagazine.com/2012/11/23/shark-tank-meets-the-apprentice/

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Da Interview

So after his sample pitch which I kinda butchered—but hey—how ya gonna spoil something as good as that? Anyhow, Jerry sits down with David Culver and does an interview about what it’s like to run a startup. This is good stuff and I learn something.

Jerry Freeman and David Culver

Jerry Freeman interviewed by David Culver

Raising Money

This seems to be the biggest question on ever’body’s minds. Jerry says, keep pitching at every event you can ‘cause it’s the best way to get connections to lotsa investors. Raising money is a full time job. As CEO, raising capital turns out to be his #1 job.

Then there’s cold calling. You start by pitching on the phone to some junior-level gatekeeper. Then to the next one up, then the next. Then maybe you gets a face-to-face with a decision-maker, fly way out somewheres and run up the old expense account.

All that takes months. Then maybe you get a commitment. Whoa—the money ain’t in the bank yet, fella. Gotta go thru due diligence. Paperwork. It takes six months to get the check, if it comes at all. People drop out. Meanwhile, how you gonna pay yer staff? So you gotta watch yer cash flow real close.

So he says to keep entertaining small investors till the big checks come through—just to pay the bills. The little guys come through quicker.

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Crowd Funding

Glenn Gottfried

Glenn Gottfried

Let’s talk about the new self-directed IRA. Lotsa baby boomers got millions stashed in their IRAs. All those add up fast. There’s five trillion in investment dollars hidden away in these accounts. That’s right—I said five TRILLION dollars—almost a third as big as the national debt! It dwarfs private capital. Blows it away! And deals like that close in thirty days—not six months like with VCs and Angels.

This is a form o’ crowd funding. Usta be only charities raised money that way. Now there’s brand-new laws that open it up to investors. So far it’s only for accredited types—people with a million bucks plus. That’s gonna change but the government is draggin’ its toes—nothin’ new about that.

So fer now, friends ‘n’ family ‘n’ Kick Starter is still the best way for small cash, then

Loren Minkus with Jay Kinzie

Loren Minkus with Jay Kinzie

millionairs with self-directed IRAs. Pretty soon we might see the dam burst on crowdfunding and money’ll flow all over the place.

Jerry gives 7 more tips on how to run a startup:

7 Tips

  1. “The shorter your pitch, the better,” says Jerry. If you think yer gonna get through it in eight minutes, cut it back ‘cause it’ll always take longer. “Practice 21 times,” he says, “so you’re not nervous.”
  2. “Simplify. If you’ve got twenty ideas, narrow it down to three,” he says. When Steve Jobs came back to Apple, he cut down their product line to about five. Now they’re huge.
  3. “Challenge is important.” He asks himself why he ain’t tripling his users every month. You gotta find creative ways to reach that target.
  4. “The dot bomb era is over.” Start raising revenue ASAP. That helps attract investors way better than flashing yer goofy projections on PowerPoint. “When you can say, We already started generating revenue, it puts you in a different pile from the rest.”
  5. “Crank up sales fast because sales sell. Get to risk mitigation ASAP.” That’s important ‘cause investors is more risk-averse than dey ever was before. And the banks ain’t lending. Actual sales sounds a lot less risky.
  6. “Keep your people motivated.” Use every success to get your people rejuvenated. Tell ‘em stories from the road. Celebrate small successes.
  7. An entrepreneur is somebody who goes from failure to failure to failure without getting discouraged.” It’s good to come from a sales background so yer already used to rejection. “If you’re a wallflower, get over it,” he says. Then David Culver follows that with, “The fortune is in the follow-up.”
Chopin Theater

Stage – courtesy Chopin Theater

Gotta Go

I gotta catch a cab to another meeting, so after plenty o’ good food ‘n’ drink, I say g’bye to the FFF kinda early. Two guys tag along to share the ride. One’s an investment banker, the other a VC.

And wouldn’t you know it—I trip on another pothole, right there on the sidewalk. Now my suit’s slashed in both knees. Neither o’ these guys helps me up like the bums did.

And when I drop ‘em off, neither offers to share the cab fare.

Happy New Year to all o’ youse out there.  Cheers from da merry land of Shark Tank Meets the Apprentice.  

NOTE TO JOHN – I seen your articles on a buncha sites.  One o’ dem usta be a real good tech jounal run by the Huffington Post.  It went through a buncha changes.  Now it’s runnin’ third-rate soft porn right along with da articles.  Don’t know what’s with that but thought you’d wanna know.

NOTE TO LOOP – Thanks for the heads-up.  I’ll check it out and maybe put a stop to it.

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Continue to WHAT’S GOOD?

Go back to Part 1

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Da Contacts

Palette App – www.paletteapp.com

Funding Feeding Frenzy – www.facebook.com/FundingFeedingFrenzy

The Chopin Theater – www.chopintheatre.com/event.php?id=2275&pageId=soon

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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 angel, angel capital, angel investor, App, big money, BNC Venture Capital, Bums, Characters, chicago, Chicago Venture Magazine, Chicago Ventures, chopin theater, Christmas, city, Conflict, CORE Insight Story, Entrepreneur, Entrepreneurship, Events, FFF, Funding Feeding Frenzy, Innovation, Internet, Internet Marketing, Invention, investor, loop lonagan, Marketing, Mastermind Advisory Board, Mobile, Mobile App, Mobile Marketing, new companies, pitch, Software, The City

THE POLITICS OF INVESTING

The Chicago Innovation Awards – Part 4

John Jonelis

Time Share Gulfstream JetI’m at 40,000 feet on Loren Bukkett’s Gulfstream G450 trying to squeeze out his views on two accolades at the Chicago Innovation Awards—the ones they gave to Governor Pat Quinn and Mayor Rahm Emanuel. So far Loren is holding out on me.

I splash the last of the Hennessy into our snifters when this doggerel runs through my head: Loren pontificates that prizes to politicians will puncture their perfect performance and I ponder what precisely he proposes.

The plane bucks in turbulence and I almost fall out of my seat. The altitude and liquor sure are working on me—as you probably noticed.  Even in a pressurized jet, you’re effectively at 8000 feet or more and liquor packs a terrific wallop. I hope it loosens up Loren before it claims me entirely. My strategy is to get him jawboning on one thing and then slide into the main issue.

Gulfstream G450

Gulfstream G450

I take a deep breath of thin, dry air and get Loren’s attention.  “Let’s talk about the keynote speaker, Andrew Mason.  He won a Chicago Innovation Award back in 2009.  Groupon had only 100 employees at that time and now it’s got 12,000 people all over the world and 1.6 billion in revenue.  Not bad for a music major from Northwestern.”

The plane yaws and I continue: “Groupon was an amazing pick for the Chicago Innovation Awards.  That year, the company was still in its infancy.” I might have added, in all this turbulence I feel like a baby rocking in a cradle.

Loren sizes me up before answering in his acerbic tone. “Most of what Andrew said was just a short version of the same talk I heard him give several times.”

“Really?  I only heard it once before.”

Loren pauses a long moment. “One part of it is new to me—his admission that in 2009 he campaigned to beat Abbott Labs for the People’s Choice Award. He used false negative attack ads and now he’s bragging about it! Maybe he’s joking—I hope so. I’m just glad it didn’t work.”

“It earned him a big laugh from the audience.”

“Well, I don’t think it’s funny.”

“Don’t you like anything about Groupon?”

Again, he takes his time responding. “I like it that his customer service comes out of the Chicago Improv. That’s highly creative.” He pauses again. “He sometimes just throws tidbits like that out there without explaining the significance.  To me, this one is striking. If that kind of thinking is systemic—and I believe it is—then the company should succeed.” He goes silent then blurts out: “And naturally I like the acceleration in growth.”

I’ve been keeping an eye on Aussy. She’s still taking notes but I notice her quick worried glances at her husband.  He’s taking longer and longer to join his ideas together and I sense that it’s time to drill down to the core:

“Loren, what did you mean when you told me the Chicago Innovation Awards just ruined their perfect record?”

He knits his formidible brows.  “I warn you, John. Don’t go there.”

“Is it that you don’t think political awards are appropriate?”

Loren tightens his lips and finally responds. “Actually, on one level, I agree with it. I like to see local government throw its weight behind entrepreneurs as much as possible. Bringing in the governor and the mayor to this event draws a bigger crowd and that’s positive too. But Rahm’s been popping up at these things a lot, I have to ask myself why. If he’s really contributing something, that’s fine. But if he’s just riding the backs of these hard working young people for political gain, I don’t like it.”

Mayor Rahm Emanuel at the Chicago Innovation Awards

Mayor Rahm Emanuel at the Chicago Innovation Awards – jaj

He swallows his Hennessy and sets the empty glass down hard. “How can they can give the 2012 Visionary Award to a mayor?  They should’ve used the politicians as keynote speakers and left it at that!”

“Maybe they won’t count those awards in the stats.”

“That would render the whole event meaningless!”

“You mean like giving the Nobel Peace Prize to Yasser Arafat?”

He jerks his head to the side as if he’s been jolted, then turns back and glares at me. “I choose to take that as hyperbole.  But yes, that’s it precisely.”

“But you still endorse these guys?”

He passes a hand over his unkempt brow. “I like Emanuel’s sentiment when he says investors create all the jobs. And when he says that government only helps create the atmosphere for success, I agree with him. He may be the only progressive politician I ever heard rub those two ideas together. But entrepreneurship in this town is driven by the whip of massive unemployment. At the same time, the banks won’t lend. I scarcely call that an atmosphere for success.”

He draws in a sharp breath of rarified air. “I know, I know–I told you these cruel circumstances are forcing the creative renaissance that we see. It’s true. They are. But that’s not any way to sustain growth. So many of these fervent young entrepreneurs will start out with initial success only to have their hopes dashed.”

I’m amazed at Loren’s intellectual capacity. And he holds his liquor a lot better than I do even though he rarely drinks. I have to admit it, even when he’s sloshed he’s the sharpest knife in the drawer.  So I try a dig: “People like it when Rahm says he’ll lengthen the bike path. You can’t deny that thunder of applause.”

Loren thumps the table with an angry fist. “A bike path! Pshaw! Civic projects! He’s mayor—that’s all he is. Don’t expect more than that.”

“He lengthened the school day so kids don’t have to pick between math and music.”

Loren stops and smiles. “That I like!”  He waves a finger at me slowly.  “That takes backbone!”

“Tell me about the governor.”

Governor Pat Quinn at the Chicago Innovation Awards

Governor Pat Quinn at the Chicago Innovation Awards – jaj

He snorts. “He’s a party guy. What did Quinn ever do to merit—what do they call it? The Distinguished Innovator Award. Did he invent anything? No—he raised taxes because the state is going bankrupt. While he drives business out, he talks about the state investing in companies. On whose dime? That’s not free enterprise. That’s messing in my backyard.”

“Do you withdraw your support?”

He winces. “A governor should lean on the banks to free up capital. I’d applaud an effort like that. But he talks about education reform, high speed rail, clean water—the usual high-ticket malarkey. You want to know what really happened tonight? They propped those two guys up front like carved idols and bowed down in homage! It’s the golden calf all over again!”

“Loren, it’s a political season and this is still Chicago. These guys are trying to get in front of any crowd they can.”

“This is a distinguished event! There’s no reason to encourage that kind of behavior!” He shakes his head. “The old political machine grinds on and on, year after year–I can’t get involved in that!” Then he yawns and says something unintelligible. “I’m tired.  Interview over.”  He closes his eyes.

I figure he just got something off his chest—he relieved the pressure—and now the liquor and altitude can take over.

Just when I think he’s asleep he speaks softly, eyes still closed: “John, did you ever see the Great McGinty?  The motion picture…Preston Sturges…written and directed…brilliant…such a long time ago…it still tells the whole story…nothing has changed…”

See it on Amazon

Again I think he’s asleep when he mumbles, “Next time you want to interview me, pick a different topic.”

I give him a salute as he drifts off to sleep.

Aussy tucks a blanket around him and then turns to me with an accusing look. “I hope you’re satisfied,” she says.

Those are the first words I hear from her the whole flight and it’s all scorn. Then she tosses a blanket in my face. As I make myself comfortable, I get a nasty feeling that she’ll arrange a slow plane with lots of layovers for my return trip.

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Go back to Part 1

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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.

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Copyright © 2012 John Jonelis – All Rights Reserved

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Filed under 1871, Chicago Innovation Awards, Chicago Venture Magazine, Chicago Ventures, Conflict, Entrepreneur, Entrepreneurship, Entrepreneurship and Politics, Events, Innovation, Innovation and Culture, Internet, Invention, Northwestern, University of Chicago

I NEVER WORKED A DAY IN MY LIFE

The Story of Ray Markman – Part 1

Ray Markman

by John Jonelis

“What he says is—” I pause to confront the two men across my battered old WWII Air Force desk.  “What he says is this: ‘I never worked a day in my life.’  Far as I can tell, Ray Markman never stopped working a day in his life.  Should’ve retired years ago and he’s still working.  Day and night he’s working.”

“It is merely a paraphrase from ze great inventor, Thomas Edison.” Alexander Harbinger PhD, sits erect, speaking in his German baritone.  “Most likely, Mr. Markman does not intend such a statement to be taken seriously.”

Loop Lonagan slams his fist on the scarred maple desktop.  “No.  I heard ‘im say it.  Two times I heard ‘im.  That guy always says what he means and I believe him.”

I smile.  I believe Ray, too.  I glance at my notes and read Ray’s words: I loved what I did.  To me working was the greatest things in the world.  I still average twelve hours a day.  I never felt I worked a day in my life.’  How can you argue against that kind of heart?

Ray Markman

Ray Markman – Bachrach Photography

Again the baritone from the tall man, but more animated:  “Voicing such an outlandish opinion does not make it fact.  The very idea iss… what is ze word…”  He pauses.  “Vimsical.  It iss vimsical.”

It tickles me to hear Alex’ accent thicken when he gets excited.

“Proof,” he says.  “I cannot accept it vithout proof and I do not believe that you can produce evidence that vill convince an educated person that such a statement is…that it iss justified.”

“Waddaya mean educated?  You callin’ me illiterate?”  I don’t like the look Lonagan gives Harbinger.  Dangerous.  Personally, I never want to find myself on Lonagan’s bad side.

For a moment, the tall PhD appears nonplussed.  Then he stammers, “No—no.  Present company excepted, of course—of course.”  An amazing concession from the tall, cold scholar.

I roll my chair out of the way, stoop to the floor and work my fingers under a cardboard box, remembering what I learned working in factories as a boy—lift with your legs, not your back.  The massive old desk shifts when I drop the first box on the scored maple top.  I dump the second next to it.  Then the third.

Still standing, I heave a sigh. “Glad you’re taking it that way.  This is everything I have.  I’d appreciate each of your perspectives.  It’s short notice but I need your opinions by Friday.  Will you take it on?”

The room goes silent as the three of us stare at the bulging boxes, each with the name, RAY MARKMAN, printed in neat letters.  I know I’m asking a lot. Gazing down at Alex and Loop I am unable to read their eyes.

Loop is first to speak.  “You want I should dig through all this stuff by Friday?”

I lean forward on my fists.  “Listen—you are two of the smartest guys I know.  Loop, you traded huge money on the floor of the CME and later funded a lot of winning companies.  Your street smarts and business savvy make your opinion beyond value to me.  Alex, you’re academic credentials are legendary but at the same time you keep your feet solidly on the ground.  I trust your judgment—trust it thoroughly.  I’m hoping we can put our heads together on this.”

After a pause, Harbinger stands tall.  “I vill begin immediately.”  He turns to Loop.  “I meet you here Friday.”  Then he lifts a box of documents and ducks as he marches out the door.

Loop grunts when he hefts a box.  “Lug dis.  Lug dat.”  Leaning well back, he steps out of the room with the heavy burden.

I park my duff in my chair and stare at the remaining box.  A lot of documents to examine.  But I link my fingers behind my head and lean back into the plush leather, lifting my feet to the desktop, smiling to myself.  I’ve just succeeded in lighting a fire under two divergent thinkers.  I wonder what they’ll bring back with them.

Continue to Part 2

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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

18 Comments

Filed under Biography, BNC Venture Capital, Chicago Ventures, Midwest Renaissance Fund, Nobel Prize, Northwestern

THE GROUPON EFFECT – “Throw yourself into the fire”

Throw Yourself into the FireVERBATIM – Transcribed recording from Bill Blaire – as told to John Jonelis

This is Bill Blaire reporting on the keynote event at the Second Annual “entrepreneur @ nu” Conference.  Why they call it that, I dunno.  No capital letters.  So how come everybody complains about the way I talk?  You figure it out.

I’m here with John but he told me I should cover the big interview myself.  Pretty good, huh?   Well we’re gonna give it a shot.  Hope this gizmo’s recording my voice, ‘cause I ain’t gonna memorize this stuff.  That’s fer sure.

They open a wall and make the room bigger but the place is still packed.  I’m sitting with a crowd from the Levy entrepreneur group, so I gotta keep my voice down.  If I get any of this wrong, just write a comment and let me know about it.

The setup seems kinda strange.  It’s Andrew Mason from Groupon interviewed by his own VC, Peter Barris of NEA, who’s also on his board.  Kinda chummy to my way o’ thinking.  Barris is a smooth talker.  Makes me wonder which one of ‘ems really the boss.  He sez there’s gonna be two sets of questions.  Puffball and deeply embarrassing.  We’ll see.

Groupon

Turns out Andrew Mason starts college in engineering then transfers to music. Barris points out, “The best and most creative programmers were music majors.  I haven’t yet figured that out.”  Me neither but I heard it in other places too.  In college, Mason holds fake auditions for a fake play.  Then he stages a fake annual university event called ‘Mattress Day,’ where everybody brings their own mattress and they create the tallest stack.  He quotes Ben Franklin as saying he sees mattresses all the way from Chicago—as if there were a Chicago back then.  (Hey—check out that subjunctive verb.  Yeah, I can do that.)  The school shut Mattress Day down good ‘n hard, but he had a great time.  I guess the point is you gotta be playful and ready to take risks to succeed at this startup game.

Mason goes through a long trail of failed startups but keeps trying.  He loves music and he’s a computer geek—started building websites in high school.  It’s not till he graduates from Northwestern and he’s recording music and working as a freelance developer at the same time when he discovers that the Internet is a more wide-open creative space than music.  Not so congested with talent.

According to Mason, “I always assumed that people who developed companies were vastly smarter than me but I found out that’s just not true.”  So does he mean he’s smart or the other guys are dumb?  I give him the benefit of the doubt and call him an egalitarian.  (Hey—I can spout three-dollar words with the rest of ‘em.)

He gets, an idea for a website called Policy Tree and gets a scholarship to the University of Chicago to learn public policy.  Then in after few months o’ school he gets this idea for a different website and drops out to start a company called THE POINT.  Turns out a cell phone company wants to charge him 150 bucks to cancel their service.  That after being a loyal customer for five years. He figures a lot of people must be having the same problem.  “I wanted to make it possible for people to come together to accomplish something that no one of them could accomplish alone.  Because people’s ideas aren’t coordinated, they can’t cross the finish line.  I needed a way to coordinate a lot of people with the same problem.”  So that one idea grows from an irritation to an actual company, kinda like a tumor, I guess.

Barris’ boss hates THE POINT.  Sez it’s the worst idea he heard in 35 years in the VC business.  But he likes Mason’s enthusiasm so he invests in it anyway.  Sounds like another example of a jockey who’s more important than the horse.  That make any sense to you?   We can argue it out later.

The problem with THE POINT is it’s too abstract—too hard to explain to people.  As he put it, “How do you convince people that the idea matters to them personally?  It turns out that the best ideas are just a baby step away from something that already exists.”  Another problem—if the idea isn’t tangible, it’s hard to find other backers.  He wasn’t gonna be able to fund every good idea he planned.  Does he quit?  No, he picks the best element—the one that’s easiest to explain—and starts Groupon.  Barris made a good call after all.

Mason: “Groupon snuck up on us.  So many companies wanted it that I knew I must be solving a problem.”  He finds out that local businesses don’t have a good way to reach their local customers and that’s the pain point he works on.  Merchants have TV, radio, newspaper—traditional stuff—all expensive, all paid up-front whether it works or not.  So this solves a consumer problem and a merchant problem, too.

GROWING PAINS
Groupon takes off big time like everybody and his mother knows.  Forbes calls it “The fastest growing company in history.”  Meanwhile, Mason faces his biggest challenge.  He never managed people before.  Now he’s got 12,000 employees.  He used to write code, design stuff, and personally answer customer calls.  That just don’t scale.  Now he’s gotta delegate, build teams, set goals to keep those teams aligned—it’s a big role change.  Think about it.  Amazon is in 9 or 10 countries in 15 years.  Groupon is in 43 or so in just a few months.  According to Mason:  “Going public has been a stress test.  It forced us to get stronger.”

Mason calls Groupon an operating system for commerce.  Their biggest problem?  “When it works too well it’s like concentrated detergent—when you put too much in…  Merchants get too many customers—a completely new problem that they’ve never had to deal with and we’ve had to adjust our operations to solve it.”  Hey, that’s the kinda suffering I can get comfortable with.

New ideas?  Lots of ‘em.  Now 30% of their sales are mobile.  They’re test marketing a pull strategy where you say, hey, I’m hungry.  Where can I get a good rack o’ ribs?  And you go on the mobile Internet and find a deal.  That’s different from their email push strategy.

This year, I been hearing a lotta startups say they’re gonna be better than Groupon because of this or that dingus they offer.  Turns out it’s harder than people figure and Groupon’s not done inventing itself either.  These people are very smart.  And as Mason tells it, it’s a very intense business that needs a lotta operational excellence.  As he puts it, “We built our moat inside the castle walls.  People get up to the walls and say, ‘Sweet.’  But once they get inside they find out there’s a big scary moat and all the gold’s on the other side.”  That’s brings up a great picture in my mind and tells me all I need to know about the barriers to entry.

Groupon
COMPANY CULTURE

People read stories like them hiring a guy dressed in ballerina outfit to walk around the grounds for a week without talking to anybody.  Then when Mayor Bloomberg comes, they got a pony in the office.  Mason doesn’t think about culture that way.  “Culture as the element that helps get work done.  And that has to get stronger as we grow.”  So they hire entrepreneurs.  They give ‘em goals but also the freedom to pursue those goals the way they want.  That approach has launched a bunch of new business segments.  Hard to compete with a big and fast-growing company that acts like that.  Reminds me of Google.  Anybody agree with me?

Has Groupon contributed to the growth of entrepreneurship in Chicago?  Mason doesn’t feel comfortable with the question but when Barris asks the audience, everybody shouts out “Yes.”  Myself, I think Groupon is the biggest morale-booster this city ever saw.  Entrepreneurship is exploding here because of one spectacular success.  Finally Mason answers the question. “We couldn’t have built Groupon in Silicon Valley.  Hundreds of our customer service people have come out of the Second City improv tradition.   We solve problems using people—not always technology and self-service which is the bias in Silicon Valley.  In Palo Alto you get a lot of mission driven people who are good at the one thing they do.  And the cost of an engineer has tripled.  Chicago has just as much talent.”  Amen to that, brother.

The universities in Chicago are teaching entrepreneurship big time these days.  Three important messages:

1.) It’s okay to fail. 
2.) Be persistent.
3.) Surround yourself with other talented people. 

Mason wishes there was more entrepreneurship training when he went to school.  “I learned more in an internship on music technology—actually doing things—than I ever learned in class.  Throw yourself into the fire.  Go to a company and offer yourself cheap or for free so you get a lot of latitude to fail.”

Q&A

How will they stay ahead?  He wants to be the operating system of ecommerce and talks about how all their new ideas support each other.

Is there a social media bubble?  Not compared to the 90’s.

Does Groupon do social good like THE POINT meant to do?  They’re making things possible for millions of people.  Companies have grown because of it.  That’s business enabling business—a nice slant on the do-gooders.

How do you isolate Groupon employees from media criticism?   “The employees know what’s really going on in the company so they have thick skin and stay focused on long term while this new industry is being built.”

AFTERWARDS
John takes me for a walk around campus.  Beautiful place. No wonder he went to school here.  But they’re tearing down parking lots to make more buildings.  Digging up others to make green space.  Those numbers don’t add up.  I dunno if I believe this but John claims he avoids campus events any more.  After a long drive he gets a rhino boot on his car. This time they sell a parking pass online, so he shows up.

We stop at the Allen Center and run into the Wildcat Angels just starting a meeting.  I like that group.  After grabbing some refreshments, we go down the halls.  Funny thing:  The gift shop is open and John buys one o’ them silver cases holds business cards.  Real class, too—sez ‘Kellogg’ on it.  Never had one before.  But he can’t wrangle a Kellogg nametag lanyard.  Go figure.

Find Northwestern’s entrepreneur program at http://entrepreneur.northwestern.edu/
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GO TO – SIX REASONS WHY TECH BELONGS TO THE YOUNG

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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.

46 Comments

Filed under Chicago Venture Magazine, Chicago Ventures, Kellogg, Northwestern