Tag Archives: interview

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

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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?

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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

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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