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THE FRENZY

Funding Feeding FrenzyBill Blair – special correspondent –

as told to John Jonelis

Bill Blaire here.  Mr. Jonelis wants I should go to this FUNDING FEEDING FRENZY thing. Says I’m gonna give a completely different slant compared to the resta this crowd here. I cut my teeth in the Local #1 Boilermakers, then as a Cement Contractor till I packed up my tools fer good.

Me? I’m always open to new ideas. I make loans to all kindsa people. John says I’ll see someFFF Logo real sharks at this place and that strikes me as a nasty crack but I let it slide.

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The Sharks

So I get here and whadaya think? Deeze guys is all legit investors. I glad-hand every one o’ them and their little mits all disappear between my hairy fingers. But I gotta give it to ‘em—these guys got balls. They throw money at raw startup companies and win maybe only 3 outa 10—and that’s just if the investors is real smart. They don’t get paid back by the deadbeats neither.

I don’t like them odds at all. Hell—the stuff I put money in gets a guaranteed payout or else, see?

Glenn Gottfried

Glenn Gottfried

Then I meet Glenn Gottfried—real smart guy. He explains it all to me. These is all private equity deals. Not a loan in the house. The ones that come in can make it big—REAL BIG. I’m talkin 10 times return—sometimes 100 times or more. It’s the stuff they make dreams outa. That gets my juices flowin’ and it’s all legal! Hoo boy, I’m gonna have some fun here!

I remembers catchin’ an episode o’ Shark Tank on TV and so I got the general idea.

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The Hideout

Chopin Theater

Chopin Theater

I don’t usually get caught dead at no place with a name like Chopin Theater but I always help my friends. And it turns out real nice. This thing goes on all day so they got coffee, booze, food, good seats—my big butt laps across two o’ those.  Nobody’s breathin’ down my neck ’cause none of ’em can see over my head. Yeah, it’s all good.

So here I is with my buddy Rocco Spumoni of the Pierce O’Shea Mob. Oops—maybe I oughta call it an investment firm, get the picture? Anyhow, Rocco goes after some gal and I ain’t seen him since. I think her name’s Jane Pickling or something, but I dunno fer sure. Lemme get down to business: Ludditis Shots and Beer

I wanna give you the whole picture first, so in a minute I’m gonna show ya a hard-hitting video from Blackline Review.  My buddy David Carmen is part o’ that outfit. They got that catchy name cuzza the L trains here in Chicago. There’s a Blue Line and a Red Line but there ain’t no Black Line. If there was, you can bet they’d build another Ludditis Shots & Beer right under the tracks.  Chicago’s best potato pancakes too. 

Anyhow, this video gives ya the flavor o’ the whole thing and it’s short:

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Check out Blackline Review fer more o’ that kinda stuff.

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The Companies

Phil Murphy of Call Potential  was the winner last time. He gives the keynote along with some guy that makes goofy looking glasses that cost an arm and a leg. But hey—people buy that stuff like crazy so who am I?  Murphy’s real smart. When he’s done speaking he sits down as one o’ the judges. I’ll get back to him later.

The companies is all kinds: There’s the Bomboard jet ski that fits in my trunk and I want one.  John West and Anders Stubkjaer put that one together. Then on d’other sida things there’s Nature’s Little Recyclers, a worm farm that can solve alotta pollution problems.  Blame that one on Ed Hubbard.

Jerry Freeman of PaletteAPP

Jerry Freeman of PaletteAPP

We get an update report from a Jerry Freeman’s company, Palette APP. They’s gettin’ traction now and it’s off to the races.

I’m comin’ back with a lot more on this event so keep yer heads up.  Meanwhile, lemme give you the winners: 

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The Winners

1stSmart GardnerCarl Alquire

Uses high tech to help city people grow their own healthy food.

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2ndPortapureGeorge Page 

We seen this guy before and he’s good. Won alotta awards.  Clean water fer the third world.

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3rdCardoonaColin Robertson, Jeffrey Herrington

Making it super-easy for restaurants to place orders with ALL their vendors.

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The Crowd Favorite – Geek Bar – David Zoltan

And yeah—this one’s a real riot. A bar that celebrates geekdom.

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Photo and Video Credits – Royalty Free Images, Glenn Gottfried, Wikipedia, Blackline Review, Donatas Ludditis, John Jonelis

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Go to – THE BUSINESS PLAN POLICE

Back to – MY KRAKEN ENCOUNTER

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Our logo proclaims “Chicago is the World.” We believe creativity is spawned by adversity. That makes Chicago a growing center for thought leadership in the world.
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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.
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Copyright © 2013 John Jonelis – All Rights Reserved
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Filed under angel, angel capital, angel investor, big money, Bill Blaire., Characters, chicago, Chicago Venture Magazine, Chicago Ventures, chopin theater, Donatas Ludditis, Entrepreneurship, Events, FFF, Funding Feeding Frenzy

THE BUM IN ME

Funding Feeding Frenzy – Part 2

VERBATIM by Loop Lonagan—investor and man about town,

as told to John Jonelis

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

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

Clybourn

The Street

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

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

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

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

The Professionals

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

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

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

The Scholar

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

Note to John – Why not make him a reporter?

Note to Loop – Bring him around for an interview.

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

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

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

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

Overpass

Stumbling over the Truth 

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

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

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

The Private Room

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

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

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

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

Note to Loop—You’re always alert.

The Gentrification

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

Chopin Theater

Chopin Theater

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

Chopin Theater Lobby

Chopin Theater Lobby – photo courtesy of theater

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

Chopin Theater Stage

Chopin Theater Stage – photo courtesy theater

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

Chopin Theater

Chopin Theater – photo courtesy theater

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

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Continue to Part 3

Go back to Part 1

Links

Chopin Theater

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

Funding Feeding Frenzy

https://www.facebook.com/FundingFeedingFrenzy

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

.Copyright © 2012 John Jonelis – All Rights Reserved

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8 Comments

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

SHARK TANK MEETS THE APPRENTICE

Funding Feeding Frenzy – Part 1

VERBATIM by Loop Lonagan – Investor and man about town,

as told to John Jonelis

FFF LogoLoop Lonagan here. I’m at the Funding Feeding Frenzy ‘n’ there must be more’n 1000 people here and lots more goin’ in and out all day. If you wanna see what’s happening in the Chicago Startup Community, this is the place to be and you can do it all in one single day. But don’t ferget—there’s sharks in them waters and they bite.

This is the place where the judges hold up cards like they used to at the Olympics way back when. They say either FUNDABLE, which almost nobody gets, KEEP FISHING, which I see a lot, or the dreaded GO FUND YOURSELF. Plenty of those too. I watch one company get the thumbs down from the judges but later in the day that same company finds itself an Angel Investor right here at the event.  I’m trolling for a couple good companies myself.   And maybe some fun on the side.

It takes all day before I see any blood in the water. And I’m sittin’ here with a big grin. I always like a good fight.

The Setup

FFF is so big they hold it in this enormous indoor car dealership – almost as big as McCormick Place.  I crawl into a hot new Camaro and ogle the red Corvette.  In past years, with room to spread out, they ran three stages at once.

This year for the first time, the FFF runs just one stage—not the usual three. This poses some pros and some cons. It allows David Culver & Company to put together a large panel of distinguished judges—all recognized Chicago investors. That’s on the good side. I get to see every company that presents. That’s good too. They already weeded out the weak companies and lotsa these presenting here bear a deeper look. I’ll check into those. These companies seem like they’re coached better than ever before and I appreciate the professionalism. All o’ that is on the good side.

But some things don’t work so good on a single stage. You gotta picture the situation. This event goes on ALL DAY. Sure, you can walk around but with only one stage, there’s nowhere else interesting to go. And it’s a hot day. Real hot. The AC keeps going till afternoon, then it gets nasty. But I like investing in startup companies and I like fireworks. I expect to see some of both. So I show up bright and early and stay late. And so do the judges—the whole day. That’s what causes all the trouble.

FFF Corvette

FFF

Just like any good event, they save the best fer last. That means the big show happens late afternoon. By this time I see lotsa shiny faces. The audience gets kinda thin. Most of ‘em are feedin’ their faces and indulging in various liquid cravings and raising a terrific racket in back—so loud it’s hard to hear the panelists. Like I said, these judges been workin’ their tails off all day and barely time for a pit stop. Anybody can see they’re all wrung out. And cranky. For what it’s worth, I figure this thing needs to start at 10:00 am and end at 3:00 pm max. That gives time for a couple two-hour sessions and a nice break.  But that ain’t the way it is.  No it’s every minute all day.

I think it’s crazy to pitch to a buncha investors suffering the miseries, but I see that’s just what’s about to happen. I prick up my ears and lick my chops. I wanna see what develops.

The Donnybrook

After four o’clock, the panelist’s questions are gettin’ kinda testy. They’re attention spans are probably at the breaking point too. I figure some promising offering is about to get chewed up.

Lemme tell you what happens but first, remember my rules:

  1. Tell a good story.
  2. Don’t get the judges mad.
  3. There ain’t no third rule ‘cause three strikes and yer out.

The next company is real special. After hearin’ their pitch over lunch, I believe they’re the real deal. But the guy I talked to at lunch ain’t the same guy givin’ the presentation right now. No, this presenter comes off as a know-it-all. What’s the word? Arrogant. Could be the heat because I meet him later and he ain’t that way at all. But right now, it’s painful to hear. He’s breaking rule #2.

And sure enough, the first judge turns nasty right away.

FFF Speaker

FFF Speaker

“I don’t understand your value proposition.” That’s the opening salvo. Then he starts firing off questions at the poor guy like a machine gun and when he’s done, you can sweep the pieces off the floor. This judge is an investor I respect. He’s the kinda guy I call the sharpest knife in the drawer. Some people think he’s intimidating. This time as it turns out, it’s the kiss of death. No way the other judges are gonna say anything positive after this guy turns vicious. No—they all fall right in line:

It’s like lecturing a schoolboy when the next judge says, “Within the million dollars, how do you see using that money?” Hey, the presentation covered all that stuff. Was he asleep or what? Like I say, it’s late and these guys attention spans are all shot to hell.

They could rattle off the rest of the objections in their sleep:

“You spent virtually no time on the business side.”

“Can you describe in more detail…?”

“How is that justified…?”

“I have a concern…”

Then back to the first judge. “There’s some big players in the marketplace. Some BIG, BIG competitors. One is coming to Chicago probably this year. It’s gonna—they’ll crush you!”

It’s all a buncha hogwash. But now the poor guy is back on his heels. He’s shot his wad.

Here’s the problem: He’s fielding questions all alone—something I like to avoid. He let himself get caught up in details and he don’t recognize these questions is coming at him from an entirely different perspective. Naturally he gets defensive.  Naturally that offends the judges. What he needs is a colleague to observe and step in when there’s a problem. But he’s all on his own.

FFF Speaker

Then we hear objections shouted from the audience.

Can you move so I can see?” Sheesh, I been sittin’ here all day. I’m tryin’ to pay attention to the shellacking going on in front of the big screen. I don’t even need to turn around to recognize the loud, harsh voice of Rong Mayhem. Why’d he wheel himself behind me?

“Somebody make him move.” I don’t budge. Rong can take a flyin’ leap fer all I care. Then he calls out to the speaker—as if the guy didn’t have enough trouble. “What happened to your last venture? I heard it went bust.” I have no idea what he means by this remark. Their last venture is a film that turned out real good.

The moderator interferes before another word gets out: “Don’t talk to him,” he says, meaning the speaker and audience shouldn’t oughta talk to each other. That’s the rules but it seems kinda rude given the circumstances. I like Rong but he gets banned from alotta these events. Can’t keep his mouth shut.

Then there’s a burst of noise from the beer drinkers in back ‘n’ that gets a response from the audience.

“Turn up the speakers. I can’t hear anything,” shouts Rong Mayhem.

“Who cares?” yells Sheldon Tommygun.

“Shuttup Sheldon,” booms Rong.  This delightful interchange leaves me wondering if I’m gonna see an old man and a guy in a wheel chair duke it out. That’d be somethin’ to see.

Another judge goes on as if there was no interruption: “What does adopt the platform mean? C’mon, whaddaya think it means? Then he suggests a major change in the business plan and the poor guy is so beaten down he accepts it—even calls it “smart.”

Time’s up. The presenter limps off.

Next!

This comes as a big surprise – the very next company,  Pallette App, gets a nice warm and friendly reception and takes first place fer the whole event.

bnc-pallete-app

The Winner

I gotta admit, they’re good. Real good. But where’d all that irritability go? Maybe the shark’s bellies are full. To my mind, they just butchered a promising offering and missed a shot at a great investment.

The Happy Ending

I always say: If you tell a good story with passion and don’t personally offend the investors, they’ll gleefully fill-in the holes in your business plan using their own imaginations. Without a good story, they’ll pick you apart like vultures on a carcass. Well it isn’t hard to offend the investors this late in the afternoon. And that’s what just happened here.

So here’s what I do the next day: I run off a transcript of the Q&A. I go to the company’s offices and present it to them. There’s nothing like seeing something in black and white to get your attention. Then I encourage ‘em to show up at a couple other events. And sure enough, the next time these guys present, they do great. And I watch ‘em get fully funded. So this story has a happy ending.

A Promising Company

A Happy Ending

Upcoming FFF Event

So’s I’m goin’ to the next FFF.  It won’t be like this one was.  Probably strictly business. They’re holdin’ it in an auditorium where they can keep tighter control. All the noisy food and venders is gonna be separate. I’m sure David Culver’s got it figured out. It’s his show and he knows what he’s doin’. And I’ll be there ‘cause I’m always ready to pick up another great company or two.  And it’ll be ALL DAY again, so maybe, just maybe, we’ll get some fireworks on the side.  If not, I’ll see what I can stir up.

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Continue to Part 2

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Hey, you wanna know how it actually feels to give a pitch to this kinda crowd? Check out “My Kraken Encounter.” Just click da link.

My Kraken Encounter

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Continue to Part 2

Contacts

Find the Funding Feeding Frenzy at https://www.facebook.com/FundingFeedingFrenzy

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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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8 Comments

Filed under Characters, Chicago Ventures, Entrepreneur, Entrepreneurship, Events, FFF, Funding Feeding Frenzy, Innovation, Innovation and Culture, Internet, Invention

WORTHY OF AWARDS

The Chicago Innovation Awards – Part 3

John Jonelis

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

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

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

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

Chicago Innovation Awards

Chicago Innovation Awards – jaj

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

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

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

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

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

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

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

“No need for investors?”

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

“What about Belly?”

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

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

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

“Do you see a bubble?”

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

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

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

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

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

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

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

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

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

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

“Can they do it?”

“The jury is still out.”

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

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

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

He flashes me a dirty look.

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Continue to Part 4

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

SIX REASONS WHY TECH BELONGS TO THE YOUNG

entrepreneur@nuWhy are young entrepreneurs taking over the tech world? Who gets these kids charged with the kind of passion that induces investors to open their tightly held wallets?  They lick their chops like old men lusting after eager young virgins. We’re going to take a closer look at this phenonemon.

I’m at Northwestern’s all-day conference put on by “entrepreneur@nu,” their in-house accelerator for student startups.  This session is called “Tech for Non-Techies.” I asked Bill Blaire to cover the keynote address. I want to be here, at this session. I want to hear Mert Iseri who’s on the panel. I’ve seen him present at the Levi mastermind group with his parner Yuri Malina and I already visited their skunkworks on the Northwestern campus for a closer look. These guys are recent grads, young and untested. But I’d be pleased to work with them no matter what the venture. (Well, almost.) Right now, they have something exciting by the tail. But if it morphs in an entirely new direction, it’s a good bet they’ll succeed just as well at whatever that is.  Consultants are gathering like wolves but Mert and Yuri don’t need them–not yet, as you will see.

So here I am to hear Mert but I’m in for a surprise. I see what looks like an entire panel of Merts. Yes, every one of them is as electric as my favorite young entrepreneur. They each come from a different background, a different expertise, a different culture. But the reckless abandon is there in all five of them—and it’s addictive. I love it. Truly I do. So do the investors.

THE JOCKEY OR THE HORSE?

My belief in two young entrepreneurs begs a familiar question. Which is more important—the jockey or the horse? I’m backing the jockey this time. Am I right?

I mention this to David Culver of Extraordinary Success – www.extraordinary-success.com. He responds with an interesting comment: “Last time I checked,” he says, “nobody won the Triple Crown, finishing without a horse.” He goes on to say he’s seen plenty of enthusiastic entrepreneurs flame out. But I’m rooting for these two jockeys anyway.

Mert

I believe the entrepreneur is more important than the product or service at the very early stages. I believe this to be true especially if the leader is young.  There’s no doubt these young entrepreneurs are smart–scary smart.  But more than that, they’re having a whale of a good time.  They think business is a blast–a rush.  They’ve found a new drug.  Instead of greed, they’re driven by joy.  Look into their eyes and tell me you want to compete with them.  I believe that the young have earned a number of advantages over those who call themselves “seasoned.” I can cite a few good reasons for these beliefs:

1—An early stage product and an early-stage business model will go through multiple iterations during the maturation process.  I’m talking huge changes happening fast. Seasoning doesn’t prepare you to handle that kind of rapid change—quite the reverse. But the young seem wired for it—especially students who have no responsibility outside of their class work, their venture.

2—These kids bootstrap on the shoulders of a university-provided ecosystem. Free labs. Free PhD-level advisors. Free prototypes. Plenty of collaboration. We’re talking about a new kind of accelerator. As lean startups and with modern technology they can get up and going quickly. It no longer takes 20 years and millions of dollars to get a company on track. Old folks are financially responsible. These kids have little to lose.

3—They live in a Bohemian community of highly intelligent and creative people, wild new ideas, and a spirit of shared innovation. They feed on each other’s ideas and enthusiasm. They multiply each other’s output. Avaricious old men don’t do that. We chain ourselves to our desks. If we ever come up with a new idea, we immediately build fences. And how many of us want to go back to our college-day living standards? University students don’t live under such burdens. Hey, they finally got out of Mom and Dad’s clutches—that’s enough for the time being, right?

4—The university now teaches them an important lesson: Permit yourself to fail. Failure merely affords the opportunity to change direction. It’s called “pivot.” Under circumstances like those, the process isn’t that scary. Philosophically, it’s a paradigm shift. I was never told to fail anywhere between kindergarten and grad school. Were you ever told such a thing?

5—These kids are untamed and impulsive. They learn a lot and learn it fast. But it’s what they don’t know that makes them fearless.   Old farts know better. Knowledge breeds risk-aversion.  That’s why we don’t start companies such as Google, Facebook, Apple, or Microsoft.

6—Do any of you recall the malaise of the ‘70s? No gas–no jobs? Cottage industries sprang up all over. It was a practical way to earn the money to buy peanut butter. That phenomenon is happening again. Unlike computer games and other labor-intensive projects, mobile apps and web-based services are a kind of cottage industry. So this isn’t really new—it’s just different. And it’s a whole lot more exciting than selling macramé at an art fair.

A NEW CLASS OF ENTREPRENEURS

These kids are wildly enthused—their creativity is launched by the fuel of an adrenaline rush. Sparks fly around them. Fireworks. One commented that he’ll probably live only another 15 years because he never sleeps. Is this sounding like a recipe for a new class of successful entrepreneurs? I think so. I’ll ask again:  Do you expect to compete with them? Think again.

NorthwesternHas Northwestern found a way to teach the joy of creative drive? Sure looks that way. And why shouldn’t these kids be enthusiastic? They don’t know any better. They’re fresh. Untried. No tire tracks across their backs. For the most part, they have yet to get knocked around by the world. And here they are—at one of the most prestigious schools on the planet, and they’re learning the entrepreneur game from professionals with every possible resource at their fingertips.

When I attended this school they taught venture capitalism. I remember the day they brought in a couple VCs. Those guys had a peculiar message. It was their job to steer us away from venture capital and point us in safer directions. The LBO was the big thing back then. Debt was cheap and easy. Times change. It’s not so simple to borrow any more. I’m convinced that the lousy economy is stirring up the recent explosion of new ventures. And it’s plenty lousy right here in Chicago. Adversity breeds creativity. Northwestern is nurturing it.

If youth is winning out over age and experience in this one arena, I cheer them on. What they’re doing was unthinkable when I was their age. And you have to admire them—they’re doing it so well. This is a highly creative response to tragic circumstances. Jobs are scarce. For many, entrepreneurship is the only career path open after graduation.

OUT OF THE MOUTHS OF BABES

I’ll give you the takeaways from what was a wildly dynamic session:

1 – BUILD A GOOD TEAM—You don’t have to be a tech wizard to work for a tech startup. The purpose of being technical is to build a scalable product that works. A good initial team is made up of three elements: a developer, a designer, and a “Husla” (the business end). These are complimentary skill sets. Each personality type is actively seeking the others. A world of opportunity opens up when you view the future this way. For example, a pure developer focuses on building a solid product but may not be sensitive to other issues. A startup also needs a designer to translate that code into a good customer experience. It also needs a businessman that can sell product and run the operation. Fill out your team with all three elements. One panelist admitted that he hadn’t taken math since HS. He stayed up all weekend and got help from students and a prof for a math test. He failed utterly. Then he visited a huge conglomerate and found his talent in the marketing process. Where do you fit? You need to discover what value you bring—your CORE competency. Work on that element. Translate it into language that customers and decision makers understand. Find somebody smarter than you are in the other areas you need—people that are passionate about your idea. Friends if possible because co-founding a new company is a close relationship. If you don’t know who to bring onboard, get a team of advisors to help you vet people. The university is a great resource for that.

2 – LEARN AS MUCH AS YOU CAN—One panelist developed a mobile app. But when he started out, he didn’t know anything about coding. So he learned all he could. Lots of listening. Lots of reading. Lots of playing with other apps. Another had to learn about payment processing to be able to empathize with customers. Another needed to learn about the medical industry and spent a lot of time searching on Google. If you know a little about disciplines outside your expertise, you make a good team leader. Don’t despair. Just knowing Java is awesome. Yes, top developers know lots of languages, but new languages come along all the time. Keep learning so you’re ready for the next opportunity. How technical do you really want to be? Learn the foundation. That understanding helps you find the tech people you need.

3 – GET A TECHNICAL CO-FOUNDER—You don’t need to be the company tech guru. Find a technical co-founder. Outsourcing all the development just doesn’t work. You need a CORE capability to do itty-bitty things and reduce the need to hire outsiders. Outsourcing everything uses up seed money too fast and isn’t the most efficient way to make small changes. It’s especially not a practical way to create a winning unified design. In-house technical competency allows you to put out fires on the spot. You can orchestrate your outsource money more intelligently. You stand a fighting chance of building an end product that isn’t a hodgepodge of aimless code.  Also, a co-founder can hear ALL of your ideas–every one of them.

4 – DON’T KEEP SECRETS—Inventors are typically afraid to tell anybody their idea. These kids believe that’s the wrong way to think. They say, there are ten people already working on your idea and they’re smarter than you. If your idea is so simple that it’s easily stolen, then it’s already been invented. These kids believe you should tell everybody your idea and get as much help and feedback as you can. In their world, entrepreneurs love helping each other. Any one of them may have 63 ideas here and 64 ideas there. Impossible to work on them all. They actually need to filter their ideas. What kind of company do YOU want? Are you passionate about solving THAT problem? Get yourself involved in the crazy growth of the Chicago tech community. If you have an idea, go for it. Here’s how far they’ve carried this philosophy: They say, “It’s better to grow the pie as a whole than to fight over individual slices. Instead of taking a fighting stance, gather a community and be the hub. Keep your friends close and your enemies closer. Make your competitors your friends.”

5 – HAVE A LARGER PURPOSE—Out of all the insights, this one startles me the most. It goes like this: It’s easier to get people excited about saving 100,000 lives than to get them to believe in a device. Be committed to the PURPOSE not the SOLUTION. Otherwise, when you fail you’ll give up. I’m talking about a cause—something you believe in passionately—a larger purpose that keeps you trying when others fail. It’s crucial to hold strong beliefs, loosely held. Go to the customer. Show what you have. If the response is, “I won’t pay for that.” go back and find another solution that serves the PURPOSE. Before working on an idea, ask: “Am I solving an important problem?” The problems that you have in your own life are probably the same ones other people experience. Learn from your personal pain and passion. If you’re working on a larger PURPOSE, other people have the right to work on it too. You will actually welcome it.

6 – TELL A GOOD STORY—Somebody at Northwestern is teaching these kids to tell to do that. They’re poised. They’re concise. They’re on message. I will add to that, “WRITE a good story.” In consulting, I use a complex mindmap that asks one embarrassing question after another. If a client can answer all the questions, I know it’s a real business. One question in particularly seems extraordinarily difficult for entrepreneurs and nobody had ever answered it to my satisfaction. Then Mert did, and got it right—an immediate and strong response—just as if he’d rehearsed it. Amazing.

CLOSING QUOTES

“My entire life, I wanted to solve problems.” – “A lot of people don’t want to be consultants—do what you love.” – “When you’re a student you can take big risks and try new things without knowing what you’re doing.” – “Are you scared? JUST BUILD IT. You’ll be depressed for a little while because you’ll fail, but when you finally succeed, there’s no feeling like it.”

My thanks to Northwestern’s entrepreneur@nu entrepreneur.northwestern.edu for a brilliantly organized event, all the way from advance parking to orange-vested staff that pointed me in the right direction to a conference sparkling with excellent planning and execution.

And special thanks to the young panelists of this session—a group of people who can teach us all:

Elizabeth McCarthy, Moderator

Jeremiah Serapine of GrooveBuggroovebug.com

Stella Fayman of Entrepreneurs Unpluggd and Fee Fightersentrepreneursunpluggd.com and feefighters.com

Zach Johnson of Syndio Socialwww.syndiosocial.com

Mike McGee of Codeacadamywww.codecademy.com

Mert Iseri of SwipeSenseswipesense.com

Check out their sites carefully. They’re just as polished as big money but kids on a shoestring built these.

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GO TO – THE GROUPON EFFECT – “Throw yourself into the fire.”

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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

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