Tag Archives: starting a company

FASCINATION OF A THOUGHT LEADER

rocket-fuel-labs-launches 2Michael Pollack of Rocket Fuel Labs

Verbatim – John Jonelis

I always enjoy the scenic water taxi ride to the Chicago Merchandise Mart where the huge high-tech incubator known as 1871 lives and breathes like a sleeping dragon in a cave full of gold.

Michael Pollack, CEO of Rocket Fuel Labs is waiting for me. His firm provides the technology to launch new companies.

Turns out, I’m in for a treat—a conversation with a genuine thought leader. Mike is a highly intelligent man exploding with enthusiasm. I get the preliminaries out of the way, then sit back and simply say:

“Tell me about Rocket Fuel Labs.”

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Rocket Fuel Labs logo - Large

Mike – Let me take a step back and give you some background on myself and Lance Ennen, then how Rocket Fuel came together.

In my career, I’ve lived at the intersection of sales and technology. I started my first business when I was 12 or 13—I was building and selling computers. I used my mom’s credit card and bought a tremendous amount of individual pieces of hardware. This is in the early 90’s, at a time when a desktop computer is about $4,000 to $5,000.

Michael Pollack LinkedIn2

Michael Pollack

Note – Not only does Pollack organize his thoughts, they burst forth at a phenomenal rate of speed.

John I personally bought a computer for $5,000 about that time. And it seemed real pricey a year later.

Mike – Okay, so there you go. My competition, Gateway, was charging $5,000. I, as the kid down the street, was charging about $4,500. I was making great money on that. The margins were phenomenal. I was 12 years old and that was more money than I knew existed in the world, right? That was such a tremendous sum.

And I learned a fascinating lesson in my life and my career as well. I was buying all this equipment and keeping it in my room. Stacks of motherboards, processors, video cards, cases, and all the pieces. I’d say, hey, you want a new computer? I’ll build it for you and be your free tech support. It was great. It was a very good business.

But it was right around that summer when Dell said, “We’re gonna do a back-to-school special and cut the price down from $5,000 to $3,000.” My margins went completely upside down and I learned a very important lesson about managing your inventory properly. I had all this stuff that was bought at the wrong price. My prices couldn’t sustain a market, and that was the first lesson I learned about keeping as lean as possible. All those profits I made on the first five or six computers I lost on the following nine or ten. At that point I said, “Wow, this is a tough business. Michael Dell is killing me.” As a twelve-year-old, I just couldn’t compete with what he was doing in Texas and so it was an important lesson.

From there I did programming for a bit. As a kid I took things apart. Vacuum cleaners, VCRs, anything I could find. I had great parents. They gave me a tremendous amount of opportunity and I probably took advantage of it a little too much when I was younger. Maturity is recognizing your mistakes and operating within those bounds.

John – Just like Richard Feynman. As a kid, he made a business of taking apart radios and fixing them. I used to read his books to my son as bedtime stories.

MikeRichard Feynman is a personal hero! I think he’s an absolutely fascinating man. An important physicist of enormous stature. His books, Surely You’re Joking Mr. Feynman and What Do You Care What Other People Think both make for great reading.

Note – It seems that Pollack is not only brilliant, but well-read.

Surely You're Joking Mr. Feynman

See it on Amazon

Mike – I started a number of businesses and my personality pulled me in the direction of sales but I could also understand technology. As a kid, I did everything from sell Cutco knives door-to-door to being a PC tech at Best Buy.

But my career moved into an interesting avenue. A very good family friend started a freight brokerage. If you know people that work at C. H. Robinson or Echo Global Logistics—these companies that manage the trucks that you see on the road—it’s a really big business, and it’s a business that most people don’t think about.

Consider this room. Everything gets here by truck, right? In America, the domestic trucking industry is $300 Billion.

$60 Billion—with a “B”—of that goes to domestic truckload brokers. To walk you through that world, there are about 3-4 Million full truckload shippers. These are the manufacturers who put stuff inside of trucks. Take the company that manufactures this couch, for instance.

On the other end of the equation, there’s a hundred thousand trucking companies. Ninety six percent of those companies operate 10 or less trucks. A lot of mom-and-pop outfits. There’s those big orange trucks you see on the road from Schneider or J. B. Hunt or Werner or Swift, but those big companies are actually in the minority. Only about a hundred of them.

In the middle, there’s fourteen and a half thousand brokers. Those brokers consume that $60B and effectively, those brokers are like glorified travel agents.

John – They’re routing all the trucks. Are they making all the money?

Mike – Not all of it, but a lot of it. Very little overhead. They’re doing this mostly over phones. It’s an old-fashioned travel agency model.

I started as a salesman and realized our tracking software just wasn’t very good. You need to make sure you assign the right truck and get the best price. Then when the truck is actually moving, make sure it gets from Point A to Point B. If the truck encounters an issue, it needs some way to facilitate that.

So we designed a software platform called Autobahn, which was a freight brokerage trading system. The name invoked something sexy, like a Mercedes Benz cruising down the highway at high speed when in reality we’re moving trucks around the country.

John – Did you know that the German Autobahn helped us win WWII?

Mike – Yes, it’s interesting. When you read Eisenhower’s memoirs, one of the things he’s most proud of is the Eisenhower interstate highway system, which is a direct replica—a rip-off—of what he saw in the Autobahn.

NoteOnce again, I’m taken aback by Pollack’s intellect and enthusiasm. 

JohnHe did that?

Mike – That’s correct. He saw the Autobahn and said, “Wow, the ease in which we could move through the country—the effectiveness of their mass transit system was so eye-opening…One of my first initiatives when I come back to America will be the Interstate Highway System.”

I worked on logistics for a long time and know a couple facts about the highway system that will blow your mind.

1.) The reason bridge heights are set at thirteen and a half feet, is that at the time, in the 50’s, the United States had nuclear mobile-launched missiles. That was the height at which they had to be to get under the bridge and that’s where bridge heights come from to this day in America.

2.) The other thing that was mandated was for every ten-mile stretch of highway, there had to be a one-mile strip of straight highway so in the event that airfields all got destroyed by nuclear war, we could land airplanes on the highway.

Pretty clever, actually, how they did it. It’s a really well thought out bit of technology. It’s a fascinatingly cutting-edge technology for the 50’s. It’s infrastructure. Like a platform. Like we do software now.

Think about that. What I find fascinating about logistics in particular is that good infrastructure is, effectively, a platform. And you can build on it. If you think about the highway system in this country, it provided the platform on which McDonalds could provide roadside dining. Hilton and Marriot could build massive hotel chains.

When I think about that infrastructure, I think about our business; I think about Rocket Fuel Labs.  It’s about providing technology infrastructure to allow businesses to build on. That’s where I get really excited about what we’re doing here.

rocket-fuel-labs-launches

Note – I don’t know how you readers feel about it, but I find this conversation fascinating and don’t want to shred a single paragraph. I’ll pick up where we left off in a future article. Verbatim.

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Contacts

Rocket Fuel Labs

  • Specialties – Startups
  • Industry – Computer Software
  • Type – Privately Held
  • Company Size – 1-10 employees
  • Founded 2013
  • Expertise – Web Development & Deployment, UI/UX, Online Marketing, Product architecture, E-Commerce.
  • Headquarters – 222 W Merchandise Mart Plaza #1212 Chicago, IL 60654 United States
  • Website – RocketFuelLabs.com
  • Email – Info@RocketFuelLabs.com
  • Phone – 855-4FR-LABS
  • Fax – 312-620-9655

Photos courtesy Rocket Fuel Labs, NASA, LinkedIn, Amazon.com

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GO TO PART 2

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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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STARTING COMPANIES WITH STYLE

The Story of Ray Markman – Part 3

by John Jonelis

Ray MarkmanFriday 2:00 pm

A boxing match! I promise myself to be there to see Loop Lonagan and Alexander Harbinger PhD settle their differences in a modern-day duel. I know Loop as a tough street fighter but he gives away a tremendous advantage in reach to the tall German and at the Union League Club, the Marquess of Queensberry Rules are enforced—way out of character for Lonagan. No gouging, no rabbit punches, no kicks to the groin. And unlike here in my office, nobody can pull a gun and start blazing away.

Now I need these two to set their differences aside and give me their reports on Ray Markman. Under the circumstances, that’s asking a lot. The atmosphere is way too tense. So I pull a bottle of single malt out of my drawer, produce three heavy tumblers and pour till they’re all half full.

Actress, Lee Remick

Lonagan and Harbinger are still glaring at one another until the scotch gets their attention. Loop takes a seat and downs his in one gulp then pours another. Harbinger and I sip at ours.

As Lonagan’s color slowly returns to normal, he goes on as if nothing happened: “Like I was sayin’—bottom line, Ray always has two lives happenin’ in parallel. During the day it’s his corporate career, but nights ‘n’ weekends he’s starting companies. So he hedges his risk but pays da price of super-long hours. He puts together a team o’ five investors. Dey start a life insurance company, a real estate company, a bank, a wealth management company. Lotsa others. Some of ‘em big-time. He’s part of a group startin’ a venture capital fund as we speak. Now here’s my point. A guy don’t do that unless he gets a thrill—a real blast outa what he does!”

Harbinger sips his drink—aloof and silent.

Lonagan goes on: “Lemme tell you ‘bout da life insurance company first. Names it Mayflower to give it a feeling of history. And that works real good—people think it’s an old, established firm. Here’s da point I wanna make: He brings in a charismatic leader who lines up all the major agents. Ray’s always forming teams! Yer gonna see a lot o’ that with him. It’s what you might call his modus operandi.

“Anyhow, business just pours in with dis insurance company. Dey take it public! Then private again! Then dey sell out! Then buy it back! Then, when things go bad, just when dey think dare broke, somebody comes along and buys it!”

Lonagan leans back in his chair. “Ya gotta understand. Ray’s one o’ them guys dat loves da game—any game. He knows where money wants to go. He feels it—it’s a natural talent. He can make it flow and channel it. And he does it with style!   And if yer smart, ya hitch a ride with ‘im! I used to do that all da time on da trading floor—hitch a ride with a winner.”

I hold a finger to my lips and think about what I’m hearing so far. It calls to mind a favorite old movie—James Garner and Lee Remick in, THE WHEELER DEALERS.

Lonagan’s ears are red and I see he’s not done. “Ever see da show MAD MEN?” he asks. (I haven’t, but I stay quiet as he goes on.) “I think dat’s what it’s like for Ray.”

Harbinger sets his empty tumbler on the desk. “I do not believe an insurance company qualifies for what is referred to as risk capital.” After downing the scotch, he seems calm.  His German accent almost disappears. I’ve noticed that about him a lot. When he gets excited, he reverts. When he’s poised, he speaks like an English scholar.

Lonagan’s the same way—except he never talks like a scholar. He gives Harbinger a quick glance and a derisive expression. “Whadda YOU know about it? Anyhow, summa his best action is in real estate.” Lonagan punctuates his words by thumping the table with his thick index finger. “Dis guy is one o’ da first syndicators. Lemme explain how dat works, in simple terms so Alex understands.”

Harbinger shows no reaction to that.

Lonagan thumps the table again. “Da company puts together a capital structure. General partners ‘n’ limited partners. The generals are da risk takers. The limited ones want a return and a tax write-off. Clear so far?” He thumps again. “Then dey buy land. Naples Florida on da Gulf right on Vanderbilt beach! And dey get it cheap! It’s one o’ dem early Florida deals.” Another thump. “They put up eight apartment buildings—on spec! Sell ‘em to people in da northern states.” Lonagan closes his hand into a dramatic fist. “So then they take it public and sell it!” He looks at each of us before going on. “Just like dat insurance company, da thing works because he finds a smart guy t’ run da show. Ray knows howta pick talent and howta delegate power. Dat’s always key. Get da ball rollin’! Ask lotsa questions! Ya don’t hafta know ever’thing yerself—always remember that!”

After this tirade, Lonagan takes in a lungful of air. “Now Ray’s group is playin’ with more money. So whadda they do they do? Invest in a bank! What a sweet deal! And Ray stays on as director fer a long time. They eventually sell that, too. Great investment!”

Harbinger looks somewhat stunned. I don’t know if he’s losing the argument or if he’s worried about the upcoming boxing match. I can only guess. If he doesn’t know how to box, there’s only 3-1/2 hours left to learn. I top off everybody’s glasses.

Lonagan swallows a healthy slug and keeps rolling. “He starts Salespower—yeah dat’s right—da bigtime company, Salespower Inc! Ever’body knows dat one. He starts it over a disagreement with Manpower Inc, his corporate client. Ever’body knows dat one too.  Manpower, dey wanna sell product outa their own offices. But Ray says ‘Offices don’t sell products. People do.’ So he sets up dis separate entity t’ market stuff. His theory goes like dis: ‘You produce the product, we do everything else.’ And by that, he means ever’thing—marketing, promotion, sales, financials!  Beautiful concept! Now ya don’t need t’ operate no business—all ya need is a factory ‘n’ a product. If you’re a manufacturer, ya just make yer stuff and no worries about da business details. Beautiful settup!”

I have to smile at that. Think of the opportunities! Lonagan swallows his scotch and keeps talking with enthusiasm in his voice.

“At Salespower, Ray gets hold o’ two hot products right away. One’s a bottled chocolate soft drink. Nothin’ like it on da market. Den he comes up with an idea fer using it in ice cream soda. He goes straight to da supermarkets and whips these things up ‘n’ hands ‘em out. Free! Nobody’s doin’ that back then ‘n’ people love it! And he goes to da tough neighborhoods, too. Guys come in—some of ‘em reeking o’ liquor—dis is Saturday morning—and dey taste da sodas and buy cases o’ da stuff! It’s flyin’ out o’ da stores! And get this—it becomes da third largest seller in Chicago next to Coke and Pepsi!

Ray Markman Serves Free Sodas

 “So den a bottler comes t’ him. Wants to own the product ‘n makes a good offer. What does Ray say? ‘Double it!’ Whadaya think happens? The guy doubles it! Now this is important: Ray’s got da moxie t’ make that deal! He makes it before he asks the manufacturer! When he finally does and the guy hears da terms, he’s so excited he starts stuttering!  Ray makes him rich! Da guy gets cash up front and gets to keep making his product with a cut on so much per case!”

Harbinger still sits in his chair looking dignified as Lonagan goes on.

“There’s anudder Salespower product called Lifeline Battery. It’s got more power and outlasts any car battery on da market. Ray goes straight to car dealers and does demonstrations. A couple dealers take it on and they outsell all da rest. Ray gives ‘em a big margin—three times what they’re use t’ gettin’! Orders start pourin’ in over da transom! Now deeze automobile manufacturers want to own dare own battery even if it means buyin’ his. So dey make ‘im an offer. He says, ‘Double it!’ And whadaya think? They do! Deeze guys is gonna pay anything!”

I need to understand more. “Does Ray always try to double the offer? When I sold my business, I multiplied the offer by seven—and got it.”

“Yeah, well maybe Ray leaves some money on da table on dat deal. But he’s still young and he’s learnin’.”

Harbinger seems to be brooding.

“Something on your mind, Alex?”

He starts, as if his mind is elsewhere, so I repeat the question. “Alex, do you have anything to add?”

He stares at me a moment then composes himself. “Yes. A story I find poignant and highly significant.” He folds his hands on his lap and goes quiet.

“And?”

Harbinger clears his throat and begins…

Continue to Part 4

 

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.

Copyright © 2012 John Jonelis – All Rights Reserved

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