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WORTHY OF AWARDS

The Chicago Innovation Awards – Part 3

John Jonelis

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

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

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

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

Chicago Innovation Awards

Chicago Innovation Awards – jaj

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

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

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

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

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

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

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

“No need for investors?”

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

“What about Belly?”

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

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

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

“Do you see a bubble?”

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

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

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

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

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

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

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

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

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

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

“Can they do it?”

“The jury is still out.”

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

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

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

He flashes me a dirty look.

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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

THE RIGHT WAY TO FAIL

The Story of Ray Markman – Part 6

by John Jonelis

Ray MarkmanFriday, 3:30 pm

The hour of the duel is closing fast.  Can I get the information I want out of these two hotheads before they beat each other senseless? If I prove one or the other right, will that snuff out the fuse?  At this point, I can’t be sure of anything.

This conflict hinges on some ill-chosen words by Loop Lonagan during heated debate with Alexander Harbinger, PhD. Fuel for the fire is an interesting research assignment—Ray Markman’s assertion, I never worked a day in my life.   We’ve all done our homework and given each other our reports, but it’s turned out to be far from routine.  Lonagan and Harbinger will fight a duel this afternoon.

I reach across my scarred WWII Air Force desk and refill their empty tumblers.  The bottle of single malt is more than half-gone.   They sip their scotch and for now, remain peaceful.  It brings to mind a picture of diplomats at a negotiating table—polite, formal, with seething hostilities hidden beneath a veneer of protocol.

Finally, Lonagan begins. “Da thing impresses me most about Ray,” he says, “is he knows howta take a loss. Ray says, ‘If you never lost money, you never did anything.’  And he’s dead right.”

That makes me smile. “Sounds like trader talk to me.”

“It’s da truth. I don’t care if it’s a trading floor or a corporate office.  Don’t matter.  It cuts against ever’body’s logic.  It ain’t easy fer a guy to learn but it’s a proven fact.  Winners know howta lose.”

Lonagan swallows a slug of his whiskey. “So Ray comes across this big fantastic product. Some sorta skin lotion—solves all kindsa problems ‘n’ feels great on yer hide.  He uses da stuff himself and thinks it’s terrific.  He falls in love with it.”  Lonagan shakes his head.  “That’s always a mistake. It’s an axiom on da trading floor:  Never let yerself fall in love with a deal.  You get burned.”  He blows on his fingers in pantomime style.

“Can’t blame ‘im.” Lonagan displays a toothy grin.  “Hadda learn it the hard way myself. Anyhow, here’s what Ray does.  He wants to mass market dis product.  The inventor ain’t got no money so Ray buys an option on it.  Now he owns it on the cheap.  Then he puts his heart ‘n’ soul in it.  He makes the rounds of all his advertisers—real rich men.  One thing for sure, Ray’s got contacts. 

“But for one reason or another, they all turn him down—every one of ‘em.”

Lonagan forms a fist and squeezes like he’s crushing a walnut. “But he ain’t givin’ up. He reads how the Tony Company—the outfit created da first home permanent—just sold for 20 million bucks to a big-time player.  That’s like maybe…”  He squints, “…maybe half a billion in today’s money. So then this Big Player makes it known he wants to invest in risk businesses.  Well, Ray’s figures—‘Hey, I got a risk business’—so he goes and sees duh guy.  Doncha love it?  He just goes out and sees dis guy dat spends half a billion like nothin’!

Half a Billion Dollars

“And it turns out, da guy’s impressed with Ray’s pitch. But does he fund da project?  No!  Instead, he offers Ray a job!”

Lonagan takes another slug of scotch before going on.  “Naturally, Ray turns da guy down so’s he kin laser-focus on his startup project.  But after a while, with no real capital, he’s gotta give up on that. So he takes da job after all, ‘n’ bides his time.”

Harbinger holds up a finger.  “Ziss! Ziss is yet another example of what I am saying.  He works as an employee!  He cannot claim he never worked a day in his life!”

Lonagan drains his whiskey and slams the tumbler on the desk so hard, the glass cracks.  “Shuttup, Mr. PhD.  I’m tellin’ dis story my way. Sure it’s a job, but I don’t think Ray sees it as work.  What about you?  I bet them universities pay real good, but whadaya think about it yerself?  Is lecturing work?  Is research work?  When yuh publish, is it work?  It’s a challenge, right?  There’s plenty o’ rewards and ya love it.  Gettin’ up early mornings.  Can’t wait to get started.  Is that work?” 

Lonagan cocks his head.  “‘Course maybe you’se is waitin’ for tenure so’s you can loaf da rest o’ yer career away.”

“Back off, Loop.”  I feel an urgent need to intervene before things get prematurely violent.  “Alex has a right to his opinion.  You two get to maul each other at five o’clock.   Right now I want to pick your brains while you both still have brains to pick.”  I slide across a new tumbler and the bottle.  “Think you can hold off hostilities till five PM?” It looks to me like Harbinger’s blood pressure is rising fast.

Lonagan sloshes whiskey into the glass.  “Could be you’re right.  Maybe I set my sites too high.  Maybe that big-time education, don’t leave no room in a guy’s head fer the common sense we’s all born with—‘specially a big German goon like Alex.”

 “Loop!  Can’t you stick to the point?”  It comes out louder than I expect and my voice seems to ring in my ears.  I sneak another glance at Harbinger.  He looks like his eyeballs might explode but he sits there and takes it, jaw clamped shut, arms crossed tight.

Lonagan smiles—a grin with real malice behind it. “Okay, I’ll play along.  Where’d I leave off?”  He leans back and his chair lets out a grinding squeak as he raises his feet to my desk.  “Oh yeah.  Ray gets busy and makes good on a buncha projects for Mr. Big.  Does a real fine job. Model exec.   So he figures, the time’s right, and he pitches that old product he’s in love with one more time.  After all, da guy owns the Tony Company and dis product’s a great fit.   Ray never gives up, see?  Just waits for the right time.”

Lonagan chuckles.  “Dis gets good—Big Shot makes up a survey, right there on the spot.  Sends Ray out to do consumer research.  When Ray comes back, his results are unbelievable—way too good to be true—like batting a thousand.  Ever’body loves dis thing.  All of ‘em do.  Hey, I’d like to invest in it myself!” He licks his lips and rests the tumbler on his belly.  Some whiskey sloshes on his shirt.  “Now, da boss says they’ll form a company.  Ray’s gonna be president and run it.  His boss brings in brand managers from the Tony Company.  Also a muckity-muck from a big ad agency.  Then he goes away on a trip—expects everything’ll be ready when he gets back. So Ray works the team.  Gets a lawyer and draws up the articles of incorporation.  Writes a national plan with the brand managers.  Gets everything buttoned up in three weeks—before the boss comes back—”

“You continue to use zee word ‘boss.’  You again identify Mr. Markman as an employee, not an entrepreneur.”

Lonagan looks at Harbinger out of the corner of his eye, clearly telegraphing an insulting sentiment.  His voice comes out in low sarcastic tones.  “He pitched a product venture, Alex.  He built a management team, made a business plan. Any time my meaning ain’t precise enough, just lemme know, okay?” 

Loop turns back to me.  “Now, Ray’s got ever’thing set for a big meeting. But nobody shows up.  Nobody!  Can you picture that?  Right away, Ray knows somethin’s really wrong.  I mean wrong in a huge way.  Ever’body knows somethin’ he doesn’t—but nobody’s talkin’ to him about it.  It’s what yuh call ‘big corporate office politics.’

“And sure enough, when Big Shot comes back he decides NOT to do da project, even though ever’thing looks great.  Ever’thing’s ready.  Don’t give no reason for it—just dumps the idea.  Maybe somethin’ on his trip made ‘im change his mind.  Maybe he didn’t wanna be in that line o’ business—maybe alotta things—I dunno.  End result, Ray gets stiffed.”

Lonagan swallows more scotch.  “You know as good as I do, after a thing like that a guy’s gotta move on.  Mr. Big offers Ray a position with another one o’ his companies, but Ray says no.  So the long ‘n short of it is he’s outava job, his wife is pregnant with their second kid and he’s stuck with this product nobody’ll fund.  All ‘cause he fell in love with a deal.”

I’ve seldom heard Loop go on that long—at least in a coherent manner—and it takes me a moment to get my thoughts together.

Harbinger is scowling down at Lonagan.  “Can you please come to zee conclusion?”

“Yeah, Loop.  What are you driving at?”

“It’s like I said—da loss don’t get to ‘im—it don’t make ‘im give up—he just starts another company, and he keeps on makin’ companies.  He ain’t got no quit in his body.  If he can’t make one thing fly, he finds another.  There’s plenty other ways to do business.”

Harbinger and I don’t say anything and Lonagan looks from one of us to the other.  “Don’t you guys get it?  Ray knows yuh gotta fail a lot to succeed. He puts his losses behind ‘im.  He knows da right way to fail—with style.”

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Continue to Part 7

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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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Filed under Biography, Characters, Chicago Ventures, Conflict, CORE Insight Story, Entrepreneur, Entrepreneurship, Innovation, Invention