Tag Archives: Startup

TOP OF THE LIST

by Mark T Wayne

“Admirable!  Superlative!  Top of the list!  Gentlemen, you are indeed fortunate that I invited you here!”  I study the greedy faces of my two compatriots—the estimable Donatas Ludditis (good old Don) as well as the execrable Loop Lonagan and his stinking bull terrier, Clamps.  (Claims it’s a therapy dog.)  We are here as judges, along with a crowd of luminaries from Chicago’s startup community for the finals of the tenth annual POWER PITCH competition.  Today we will hear pitches from a host of exciting new companies.  Yes sir!  The enthusiasm is riveting.

Clamps

Don bows politely and speaks like a gentleman.  “Am glad I come,” he says in his charming Lithuanian accent.

Lonagan leers at me.  “Lemme at ‘em,” he says in his gutter lingo.

The IN2 Accelerator

I scan the ranks of judges and note representatives of the Business Plan Police lurking in the wings.  We want no trouble from them. But I must familiarize my guests with the program.  “This, gentlemen, is IN2—potentially the greatest startup accelerator of its kind in the world, with facilities available at a mere handful of elite universities”  I sweep my arm in an arc to indicate our magnificent surroundings. “Offices here and at the huge 1871 incubator.” 

Clamps releases one resounding bark—basso profundo—and lolls a broad tongue out over enormous teeth.  From a suitcoat pocket, Lonagan produces a hunk of meat.  He tosses it into the gaping maw—just as the teeth snap closed in hungry abandon.  This animal and its uncouth owner make up a last-minute replacement, foisted upon me by the editor.

On stage, Dr. Carl Heine announces the first competitor.  With a cane, I prod my guests and lower my voice to a whisper. “Don’t make me ashamed, you two derelicts.”  Don straightens his back and faces front with all due alacrity and respect.  Lonagan slouches like the slob he is.  The round begins:

IN2 Maker Space

.

Flameless

Fifty percent of all residential fires are cooking related. This company uses sound waves—yes, sound waves—to extinguish fires automatically.  It is safe. It is neat.  It does not belch messy fluid or poisonous gas, as do other fire suppression methods.  We watch a video showing the system in action and the audience bustles with delight.   Amazing!

“Five minutes!”  The shout stops the speaker in mid-sentence.  That is the kind of strict discipline that warms my heart.  But even under the gun of limited time, their business plan is complete with financial projections, marketing plan, intellectual property, and go-to-market strategy.  Well coached, sir!  Very well coached!

Moises Goldman – Judge

Lonagan elbows Don and whispers:  “Deeze guys look kinda young, doncha think?”  The response to his juvenile utterance gets cut short when the next company is introduced:

.

The Oil Magnet

This is a new technology for cleaning oil slicks.  They disburse magnetic nanoparticles into the spill, and then recover black gold with a magnetic boom.  A demonstration unit elicits gasps from the crowd—the team pulls off this whiz-bang presentation with thoroughness and aplomb.  I believe I’m sensing a rhythm to this event.

Demo

The foul Lonagan leans over to me and mutters with his rank breath and wet voice: “How old d’ya s’pose dem guys is?”

“Shush! You, sir, are making a mistake. Mark your judging sheet.” I thump the document with a finger. “The next company is already speaking.” I cannot abide ludicrous interruptions during business hours.

.

Series

Ninety six billion dollars of crops are lost annually due to pests, standing water, and soil degradation.  This company uses drones and GPS to scan farm fields automatically, in both the visible and infrared spectrums.  They scrutinize images against a large computer database and detect damage down to the individual plant.  And they do it cheaply.  Their mentor is DuPont.

Don nudges my arm and leans close to my ear, speaking with hushed tones in his broken English:  “In old country, I not see anything like this.  Is just high school.  Am impressed!”

Judge

Apparently overhearing, Lonagan lets out a shout of desperation:   “Hey, yer sayin’ dis’s a high school?—a high school?” After this inane utterance, he buries his face in both hands and moans as if in deep pain.  “And youse guys dragged me outa bed!  On Saturday!”  His outburst elicits a perplexed expression from the speaker and rumblings of outrage from the judges and crowd.  Clamps leaps against his master and howls.  I am astonished—astonished I say—that the man only just noticed the fact that this is indeed a high school.  True, it does not look like one, but nobody can be that obtuse.

Judge

I am unable to restrain myself from delivering a rebuke, and do not spare any volume:  “Sir, your puerile reaction is entirely inappropriate to the situation!”  I fix my stare until the man squirms.

Clamps wags his tail as I continue:

“This, sir, is THE high school—IMSA—the Illinois Math and Science Academy—the statewide school for the highly gifted!  You may find other schools riddled with dropouts and illiterate stooges that quickly jettison whatever knowledge they accidentally absorb, but these students WANT to lead society! At this fine institution, 99.8% of the graduates go to college!  Many of the businesses you see here come to fruition and these students intern at actual startup companies around the city!” 

Mark T Wayne

As my gaze bores into his soul, the man appears badly stunned.  Dare I tell him that some of these teams are middle school students?  Those around us seem well satisfied with my lecture, but I cannot be certain that any real ideas penetrate Lonagan’s frontal lobe.  From under my shaggy brows, I pin my friend Don with a meaningful glance and tilt my head in the general direction of the foul perpetrator and his dog.

Don immediately comes to my rescue:  “Loop!  Is great place!  Not gangs here!  No drugs!  No fear!”

“Whatsa funna dat?”

Don keeps at him.  “Faculty 47% PhD!”

“Piled Higher ‘n’ Deeper.”

Clamps barks.

Dr. Heine spares us further histrionics by introducing the next pitch.

Judge

iCane

What grandpa is ever without his cane?  This company makes a smart cane with medical reminders, loud SOS alarm location tracking, geo fencing, pedometer, and Bluetooth.  It folds up and is easy to use.  My walking stick seems inadequate by comparison.  What an excellent idea!

Judges

.

epilEXPERT

Fifty thousand people a year die from epileptic seizures. It’s a $27.8B market.  This company makes a device that detects the problem, alerts the caregiver’s phone, and keeps a trail of raw data.

Lonagan slurrs out a belligerent question:

“How y’gonna run a business ‘n’ finish yer education at da same time?”  The man has gone from judge to heckler and I find myself acutely embarrassed for him.  The team covered this point in its presentation.  Like most of these companies, it will license its technology—in my view, an elegant and fully reasonable solution.

.

Rethink Numeracy

This is a new way to teach numbers to children with disabilities, and the team seems to have cracked the problem.  They’re already working with neuropsychology experts and marketing their methods through a reputable center for the care of children with Downs Syndrome.

Finals

Lonagan scratches his monstrous dog behind the ears and puts another question: “How y’gonna scale a thing like dat?” 

This slurred interrogatory barely precedes the flashing of a badge. “Business Plan Police.  Please come along quietly, sir.”  Lonagan immediately balls a fist and clouts the officer to the floor.

Clamps licks the stricken man’s face. The officer regains consciousness and blows his whistle.

From out of the crowd, three musclebound agents pile onto Lonagan and hustle him out of the room like a roll of carpet.  I catch a glimpse of his feet kicking and hear him spew a few choice and utterly foul invectives as he disappears out the door.  Clamps bounds after them, tail wagging vigorously.

The crowd hushes a moment, then shrugs off the incident and Don lets out a sigh.  “Is bad.  I wonder do we ever see Loop again.” 

I also feel somewhat perplexed about such a questionable privilege.  In any given year, the Business Plan Police arrest a number of startups—never to be seen again—but I have never known them to abduct a judge at a pitch competition.  I can now relax.  It makes me most grateful.

.

Finals

Three high school teams will advance to the regionals.  (Lower grades compete and are rewarded, but they cannot advance.)  Last year, IMSA won the top three slots at the regional competition.  Here are the results of today’s event:

Jim Gerry – IMSA

1st Place –  $1500 – award sponsor: Charles Whittaker

  • OIL MAGNET – Marisa Patel-O’Conner, Eden Gorevoy & Sol Hwangbo (Juniors at IMSA)
  • iCANE – Umika Arora (7th grade at St. Catherine Laboure School)

2nd Place – $1000 – award sponsor: Deliciousness

  • FLAMELESS – Sivam Bhatt & Nikhil Madugula (Seniors at IMSA)
  • RETHINK NUMERACY – Akshaya Raghavan (Junior at IMSA)

3rd Place – $500 – Award sponsor: After the Peanut

  • epilEXPERT – Monika Narain (8th grade at Mead Jr High) & Jayant Kumar (7th grade at Grainger Middle School)

Alternate

  • SERIES – Andre Wiedenmann & Tommy Neidlein

Britta McKenna – IMSA

Other Companies (alphabetical)

  • 21 C2 – Maryam Mufti, Erika Ezife
  • ACTIV8 – Anusha Trivedi
  • AMENITY – Sonia Edassery, Milica Barac
  • COMMUTE – Natalie Sanchez
  • BRIDGE TUTORING – Armando Pizano, David Gonzalez, Cain Yepez & Stefany Boyas
  • ENABLE EQUITY – Rachel Mason, Shikha

Adhikari

  • GOGO RIDERS – Rishi Modi
  • IDEAL SUGAR – Maya Wlodarczyk
  • IDROGENY TECHNOLOGY – Sricharan Sanakkayala
  • IMMERSION – Neil John, Samuel Anozie, Samantha Alexis Lehman
  • INSPIRULINA – Meghan Hendrix, Kanika Leang, Harsha Nalam
  • INSTA-VILLAGE – Catelyn Rounds & Julian Kroschke
  • INTELLIFIT – Steven Andreev
  • INTELLI-TEST – Akash Basavaraju
  • PHOCUS – Matthew Selvaraj, Louise Lima, Vaishnavi Vanamala, Eric Errampalli, Arthur Lu
  • POCKET PASS – Ajay Jayaraman
  • PROMETHEA – Ayush Bhalavat, Ian Son
  • SAVE OUR STARVING SOULS – Shreya Parepally, Sofie Heidrich
  • SCHOOLBOARD – Samuel Anozie, Aryan Walia, Mary Ashley Tenedor
  • SHINDIG – Nikita Elkin
  • TAKE HOME – Aliah Shaira De Guzman, Michelle Sia, Aryan Walia
  • TRANSSPEED – Atharva Gawde
  • THINKING CAP – Nishant Bhamidipati, Ryan Talusan, Micah Casey-Fusco
  • VIRTUPEACE – Michael McKelvie, Max Knutson
  • UNITED 5 AEROSPACE – Levi Raskin, Duncan Osmund, Wyatt Funkhouser, Ethan Tse

Dr. Carl Heine – IMSA

IMSA IN2 Contact Info

Address – 1500 Sullivan Rd. Aurora, IL 60506

Website – https://www.imsa.edu/

Dr. Carl Heine – heine@imsa.edu

Britta McKenna – bmckenna@imsa.edu

.

Photography – John Jonelis

GO TO PREVIOUS SERIES ON THIS TOPIC

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. Please perform your own due diligence. It’s not our fault if you lose money..Copyright © 2018 John Jonelis – All Rights Reserved
.
.

Advertisements

1 Comment

Filed under 1871, angel, angel capital, angel investor, App, Characters, Chicago Startup, Donatas Ludditis, Education, Entrepreneur, Entrepreneurship, Events, IMSA, Innovation, investor, loop lonagan, Mark T Wayne, Mobile App, new companies, Startup

STARTUP OF THE YEAR

by John Jonelis

Here’s a Chicago Area startup that brings pleasure, relaxation, and satisfaction to tired business people, gets them out in the open air, away from the pressures of the big city, and teaches them to smile again. Does that sound like a worthy goal?

.

I think so.

Now imagine you’re in waters bounded by trees of all kinds—not a house or building in site! No water skiers. No high-powered outboard motors. Not a boat of any kind!

Well, can you imagine that?

Ah!

You see the flight of the blue heron, the bald eagle, ducks and geese. A couple of otters. Nobody in your boat sets eyes on another human being all day long! Sound good so far?

Ah!

This is nature in the raw. You’re drifting a wild river—in strong current—strewn with huge boulders. As you make your way downstream, you shoot several rugged rapids. But due to the skill of your guide and his specialized boat, the ice in your martini glass is never disturbed. You feel at ease the entire day.

Ah!

You bring along a hat, polarized sun glasses, a rain jacket, but no fishing gear. Your guide hands you an expensive Orvis 8-weight fly rod. It feels surprisingly natural and light in your hand.

Maybe you never cast a fly rod before, but your guide gives you a few pointers and moves the boat a little closer to the target—just to make it simpler for you. Now you’re casting hand-made six-inch streamers at the banks with ease. Soon you find out why the fly rod is favored on the river. It’s the most efficient tool for the job.

And fly-casting is therapeutic and highly relaxing.

Ah!

Soon you thrill to strikes from trophy smallmouth bass that fight like a tigers. The fish here grow fat as footballs. Landing one in the heavy current on a fly rod takes all your skill and strength. I can think of nothing else that gives this kind of peace and satisfaction.

Ah!

Ah!

Wahoo!

Hooray!

Yes, we all dream of exotic trips to faraway places. But this one requires no passport. No airplane tickets. All this is happening on the Wisconsin River—a three-hour car ride from Chicago!

Wanna go?

.

Hoo-boy!

You gain entry to this paradise in an unusual little boat—a specially designed dory—incredibly maneuverable—easily able to withstand these rocky rapids.

Motorized aluminum rowboats and jon boats risk ripping open their bottoms and ruining their props and lower units on submerged rocks. Electric trolling motors are useless. These rapids swamp canoes and challenge kayaks. A $75,000 bass boat wouldn’t last an hour.

But the diminutive dory makes for safe passage and provides a comfortable and stable platform for you to cast your line with accuracy. It makes the raging water seem calm.

Ah!

Your guide controls the boat with incredible precision using oars.

Yes—oars!

The specialized equipment and the guide’s skill allow you to gain entry to this paradise. Almost nobody else can get in here. That makes for very little fishing pressure. That means abundant game, eager to attack your offering. And the bass here are much larger than those found on famous rivers out east.

Now, THIS is what I’m talkin’ about!

Abe Downs—a chemist by profession—runs Great Northern Fly Fishing out of Stevens Point Wisconsin—just three hours north of Chicago. He’s an Orvis-certified guide and brings his scientific training and businesslike professionalism to bear alongside his extensive fishing knowledge. He’ll even get you a discount at a local restaurant.

Abe switches to musky with the fly rod in the Spring and Fall and scores a good percentage of the time. I love fishing musky but they’re called “The Fish of a Thousand Casts” with good reason. In contrast, these huge smalleys seem always voracious for a meal—even after a cold front! They fight harder than pike. And they bite in the summertime!

Okay, I hear the objections. This ain’t no startup because—because what? Because Abe doesn’t plan to grow like Uber?

Bosh! This little company may not present an investment opportunity for your venture capital fund, but it’s a startup all the same—and quite a successful one. He’s booked most every day of the season. Like a tech startup, he makes use of specialized technology and proprietary knowledge to operate the business. Few can compete in his niche.

And he brings pleasure, relaxation, and satisfaction to himself and his clients. Does that sound like a worthy goal?

I think so.

.

On one trip this summer, my fishing partner was my son. On another, it was my friend, Rod Erickson. Neither fished with fly rod and streamer ever before. Both learned quickly and—truth be told—out-fished me. I think Abe is a good teacher.

Photography by John Jonelis, Robert Jonelis, and Rod Erickson

.

Great Northern Fly Fishing

Abe@GreatNorthernFlyFishing.com

715-572-3225

1020 Tree Lane, Plover, WI 54467

 

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. Please perform your own due diligence. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
.
.

Leave a comment

Filed under chicago, Chicago Startup, Chicago Ventures, Entrepreneur, Entrepreneurship, Fishing, fly fishing, Innovation, new companies, pike fishing, smallmouth bass, Startup, startup company

INQUIRY AND INNOVATION

by John Jonelis

What happens when you invite the community into your high school and send your high school students into the community?

Amazing things! You create a THIRD SPACE in people’s lives.

[Britta McKenna is the Chief Innovation Officer at IMSA.]

Britta – “You have your home and you have your work and you have third spaces in your life where you feel comfortable and find a community. Robert Putnam believed in third spaces. He has a book called Bowling Alone 1. It used to be that bowling leagues were that third space. People at the bar. Cheers. We want IN2 to be that third space in people’s lives.”

“Look at the ceiling. Look at the lights. Do you see the pattern?

IN2 – Symbolism in Architecture

It’s that intersection of outside and inside. Community coming together to make this a real learning laboratory experience. We want to come in and work on real-world problems and opportunities.

“People can bring problems and opportunities to us and say, let’s figure out how we can work together. Like the State of Illinois with the hackathon we just did—finding solutions to childhood lead poisoning.

“Think about all the things kids are doing that are not helping. Here’s a great place. I hope IN2 can be a third space in people’s lives.”

[The grandness of the idea and the imaginative scope hit home, but ask Britta how IN2 will implement it.]

.

Innovation

“We can’t stand still. Education—if it’s doing the same thing over and over and over—is not moving ahead—it’s falling behind.

“IN2 is the intersection of what we do at IMSA and the community. We’re partnering with Invest Aurora, the Woman’s Business Development Center, the Fox Valley Entrepreneurship Center—they are all resources to help what we’re doing here grow and scale.

Business Mentor

[Britta anticipates my next question and gets even more specific.]

“We’ve opened up a cohort of LINKubators 2 These are actual startup companies.  We have three working in the space as a pilot.  Our students intern with them and our network can help them grow.  Our MENTORS, our IDEA BARISTAS, our SUBJECT MATTER EXPERTS can all help them grow. 

“Next fall we hope to have ten LINKubator startups working in the IN2 space during the day when the kids are in class. We’re trying to see what we’re good at and get a rhythm to the space.

“So whether it’s somebody in the community with an idea or a problem—whether it’s students that want to accomplish something new—whether it’s mentors from the community coming here to help the next generation of learners—whether it’s subject matter experts helping a non-profit grow—we want IN2 to inspire students and community to go on and be entrepreneurs and develop their ideas.

“Our goal at IN2 is to blend in with IMSA and be that resource for students and community beyond the classroom. That’s what this is all about.”

Student Entrepreneur

Inquiry

“I think one of our signature programs is our STUDENT INQUIRY AND RESEARCH program or SIR. That really distinguishes us because we don’t have class on ‘I-DAYS.’ Those are inquiry days—that happens most every Wednesday. Traditional class shuts down. We have class Monday, Tuesday, Thursday, and Friday.

“‘I-DAYS are meant for independent exploration—inquiry or research. On ‘I-DAYS, student go down to 1871 and other locations to intern for startups. Now, with the new IN2 facility, our students can work with entrepreneurs right here as well. Either way, through the SIR program, they’re doing research with mentors and business teams.”

Sue Fricano & Tami Armstrong

[I’m joined by Sue Fricano—IN2 site coordinator, Tami Armstrong—Director of Public Affairs]

Sue – “MONDAY NIGHT LIVE is an event put on by Dr. Carl Heine each week. He brings in speakers and he develops programs for entrepreneurs.

Carl Heine

“He puts external students on his TALENT board—entrepreneurial students coming in to learn the different stages of building a business and different skills used in building businesses.”

Tami – “A lot of the students here are part of that as well as members of the community that come to learn more about entrepreneurship.”

Sue – “At IN2 we are trying to give them the expertise to go out and make the initial steps of developing.”

.

[Betty Hart is the Innovation Center Program Manager.]

Betty – “We have girls in the STEM program, which is a mentoring peer-to-peer program for girls in 6th to 12th grade.  We have events such as IMSA DAY OF CYBER, which focuses on encouraging students to seek cyber security careers.” 

Betty Hart

Betty – “We have TEAM STEM CAFE, which is a network of local high school students who host quarterly events focused on STEM related topics. And we have THINK CAFE, which is a community initiative that invites organizations to come in and pitch a problem or an idea.”

Britta – “Our charges really are this: The first is to be a STEM teaching/learning laboratory for our best and brightest students across the state. Then we have the FUSION programs.3 These are after-school programs at schools, grade 4-8, all around the state. And we also have the charge of educating the educators. We bring the teachers in and give them professional development, which helps them in science and math.”

.

Bring Back Socrates

[I pose a thorny question:  Why teach entrepreneurship at such an early age, rather than prepare the students for college or jobs?]

Tami – “What we’re doing is launching the students so when they leave here, they’re prepared. There’s a big demand for ideas and innovation. Innovation is valuable, and very coveted. We’re supplying that to the workforce.

“We’re also launching research. How can students advance the human condition and solve the world’s grandest challenges?

“That’s what comes from IN2—the ability to make very difficult innovations. When you can harness them, bring them to a place like this, and connect the students with business and industry, dream and idea become reality.”

[Suddenly I get it. I asked the wrong question and now realize the goal is really quite straightforward—to encourage students to think for themselves—to let them discover how to learn. IMSA does it the same way it was done almost 2,500 years ago—self-directed inquiry and innovation—the Socratic Method.]

Student Entrepreneur

Possibilities

Britta – “People think we’re just this gifted school for 650 sophomores, juniors, and seniors from around the state, but we’re not. And people think we’re a private school and we’re not—we’re public. We don’t want to be the best-kept secret in Illinois.”

“And we have a student team called IMSA ELEMENT that teaches the lean startup methodology. Build—measure—learn. Students developed a whole curriculum and teach it to each other. We’re entertaining possibilities.”

  • “We need to be open to ideas, be able to move quickly, and say YES.”
  • “And have FAST FAILS.”
  • “And move toward SUCCESS and ITERATE.”

“We’re not afraid to do that here. In a world where you’re dealing with high-caliber students who don’t fail often, failure is a difficult concept. But once they get the hang of it, they actually become quite good at fast fails.”

Entrepreneur with a solution

The 17%

Britta – “We’re not looking for the vast majority to really understand this space, because we can’t hold everybody. But about 17% in the world are innovators. That’s who we’re looking for—that 17%. Once we get a few of those, they bring their networks. Those are the early adopters, innovators, and they see things much earlier.”

Those are the people IN2 was built to serve.

.

This is the final article in this series.

Go to Part 1 – THE NAME IS IN2

Go to Part 2 – POWER PITCH

 Go to next series – TOP OF THE LIST

 

References

  1. BOWLING ALONE – Robert Putnam
  2. IN2 Launches LINKubator for Fox Valley Startups
  3. IMSA FUSION

.

IN2 Contact Info

Address – 1500 Sullivan Rd. Aurora, IL 60506

Website – https://www.imsa.edu/

Carl Heine – heine@imsa.edu

Britta McKenna – bmckenna@imsa.edu

Tami Armstrong – tarmstrong@imsa.edu

 

Chicago Venture Magazine is a publication of Nathaniel Press www.ChicagoVentureMagazine.com Comments and re-posts in full or in part are welcomed and encouraged if accompanied by attribution and a web link. This is not investment advice. We do not guarantee accuracy. It’s not our fault if you lose money.
.Copyright © 2017 John Jonelis – All Rights Reserved
.
.

2 Comments

Filed under 1871, angel, angel capital, angel investor, App, Chicago Startup, Chicago Ventures, Education, Entrepreneur, Entrepreneurship, Impact Investing, IMSA, Innovation, Innovation and Culture, Invention, investor, Mobile App, new companies, Public Schools, Social Entrepreneur, Social Media, Software, Startup, startup company, Venture

ENGINEERING YOUR PITCH

jockey-and-horse-t-ms-officeInsights from the Cornerstone Angel Meeting

by Stephanie Wiegel

Angel investment deals aren’t made on the spot as the TV show Shark Tank suggests. Instead, entrepreneurs are excused from the meeting after delivering their pitches. If you’re vying for early investment money, what’s said behind these closed doors can make or break a deal. Continue reading

Leave a comment

Filed under angel, angel capital, angel investor, big money, Chicago Ventures, Cornerstone Angels, Education, Entrepreneur, Entrepreneurship, Invention, investor, McCormick School of Engineering, Northwestern, pitch, Startup, startup company, vc, venture capital

DON’T GET DOWN—GET BUSY

Howard Tullman Double Gulp Tby Howard Tullman

If you run a startup you’ll hit a wall or screw up big-time at some point. It goes with the territory. What doesn’t is letting yourself get stopped. Adversity doesn’t need any help. There are things you can do to right the ship—and the first is to right yourself.

The bond between the best entrepreneurs and their businesses is often tight and all-encompassing—so much so that they can make the easy mistake of confusing who they are as people with what they do for a living. They can lose sight of some of the more important things that distinguish earning a living from having a life. And because they typically take the ups-and-downs of business so personally, there’s virtually no separation between work and what little time is left for the rest of life. Family, friends, everything suffers.

If the business takes a hit, which startups do on a regular basis, the tendency is to feel like a personal failure—to feel fundamentally worthless. If that sounds overly dramatic or overwrought, come live in my world for a few weeks and you’ll change your mind in no time. The external stresses of business creation are nothing compared to the mental beatings and recriminations we administer to ourselves. It’s not healthy, it’s not smart, but it’s common to what we’ve chosen.

Frustration from Getty Images

Getty Images

Having said that, I want to be clear that I believe that there’s no such thing as “just business.” It’s essential to take your business personally if you want any chance of real success—if you want to build something that matters and makes a difference. But, at the same time, I don’t think that you can let your identity and your sense of self-worth be entirely subsumed by the day-to-day crises and fire drills and the many setbacks that we all deal with. The ups and the occasional wins are nice; but it’s the downs and learning how to deal with them that makes all the difference in the long run.

We all get depressed from time to time because—and I hope this doesn’t come as a complete surprise to anyone—life isn’t fair. Even the nicest people get knocked on the head from time to time. The very best of intentions are scant protection from the vagaries of the startup world. And especially in the startup world, few things work out the way you planned. Sadly, and far too often, just being in the right time and place, or catching some other lucky break beats out a lot of better ideas, a bunch of long hours, hard work, and even much better technology and solutions. Bill Gates is a spectacular example. That’s just how it goes. But where things go after something good happens is up to you. How do you handle the bruises and blisters that are all an essential part of growing any business?

I’ve watched hundreds of entrepreneurs handle every kind of adversity, and lived through more near-death experiences myself than I care to recall, and I’ve concluded that there’s a right way to proceed and a lot of ways that are wastes of time, leading nowhere. Some of these approaches are just common sense ideas, but it’s easy to look past them when you’re feeling down and troubled. So here goes.

 

What Won’t Work

Playing the Blame Game

There’s always someone or something to blame. Usually it’s the people not in the room or circumstances you can’t do anything about. It doesn’t help to whine. Worse, by putting your fate in the hands of circumstances or third parties, you give up your own power to change things. Sitting back and feeling sorry for yourself isn’t ever a viable solution.

 

Settling for a Situation that Sucks

Nothing I know gets better by itself. If you want a better outcome or result, you have to take control of the situation and make things better. Standing still means you’re sliding back while others are racing ahead. As often as not, when you settle for less than your best, you end up with even less than you settled for.

 

Trying to Ignore the Problem

If you don’t want to believe or accept something, no amount of evidence will change your mind. But, if you ignore a serious problem long enough, you’ll eventually have a crisis on your hands and then you’ll have no choice but to take action. It makes much more sense to get started on a solution before things get out of control. Ignoring the unhappy facts doesn’t make them go away; they just fester.

 

Trying to Be Superman

You can’t solve everything by yourself regardless of how many all-nighters you pull. Important problems are complex and require a competent team to address and resolve. A team distributes the burdens, stresses, and makes for a much better result.

 

Trying to Distract Yourself

You may think that you can re-direct your focus on trivial things—see a show, a movie, take a run or workout, have a few drinks—and magically you’ll stop worrying about the elephant in the room. But that’s not the way an entrepreneurial brain works. It never shuts down completely. Convincing yourself that you don’t care isn’t as easy as you might imagine, regardless of what a great sales person you are. And even if you momentarily get your head out of the game, your stomach will still keep score.

 

What Will Work

Do Something Now to Fix the Problem

Nothing beats now. You may not get it totally right but you won’t get anywhere if you don’t get started. Better to do something constructive and move the ball forward than to sit in a pile of pity. People who work hard and still can’t find the right answers don’t come to a screeching halt. They bend the world to their needs and desires. They create their own solutions. They make conditions and circumstances that succeed.

 

Raise Your Sights and Expectations for Next Time

At 1871, one of our favorite mottos is: “It’s Only a NO for NOW.” The most critical skill of any successful entrepreneur is perseverance. Get knocked down. Get back up. Try again. While you’re at it, aim a little higher the next time because selling yourself short is stupid. Ignore all the people who tell you why things can’t be done.

 

Focus on What is Working and Build from There

I call this “eating the elephant one bite at a time.” Not every problem can be solved all at once. But you can build off the foundation formed by the accomplishments and successes that you’ve had to date and then break the remaining barriers down into manageable, bite-sized challenges. Take tasks on one at a time. A lot of small steps, pushes, and the occasional shove—as well as a little bit of patience—will get you there.

 

Acknowledge that Things Could Be a Lot Worse

People who aren’t living this life think that all entrepreneurs are cock-eyed optimists who view everything through rose-colored glasses and believe that trees grow to the sky. But we know better. Serial entrepreneurs will tell you that it’s never as bad or as good as it looks. Every day you must put on a brave and excited face for the world and your team. Deep down inside, it may pay to be a little paranoid, but it’s essential, in the privacy of your own mind, to be proud—proud of how far you’ve come when so many others never could, proud of what you’ve built so far and all the people you’ve benefited along the way. There are much worse ways you could spend your time and your life. Admit it and get on with it.

 

Remember Why You’re Doing This in the First Place

We didn’t come this far to quit or to only come this far. We didn’t come to play; we came to win. And we wouldn’t be doing this at all if it wasn’t important and likely to make a difference to a lot of people in addition to ourselves. That’s why we come to work; put our noses to the grindstone; and try to get better every single day. If it was easy, anyone could do it. It’s not.

 

Howard Tullman is the father of Chicago’s 1871 incubator.

Read his bio on Wikipedia: https://en.wikipedia.org/wiki/Howard_A._Tullman

Check out his websites at http://tullman.com/ and http://tullman.blogspot.com/

Or just type his name into your favorite search engine.

 

Photo credits: Howard Tullman, Getty Images

This article is abridged from the version appearing in INC.

 

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 © 2016 John Jonelis – All Rights Reserved

.
.

Leave a comment

Filed under 1871, angel, angel capital, angel investor, App, big money, chicago, Chicago Ventures, Entrepreneur, Entrepreneurship, Howard Tullman, Innovation, Innovation and Culture, Invention, investor, Mobile, Mobile App, Mobile Marketing, new companies, vc, venture capital

TOO MANY FOUNDERS

Seth Temko

A new company is always short on cash and long on tasks. Right from the start an excited pot of people gather together and someone puts a stake in the ground “We’re doing this”. From that point forward a business entity is formed and shares are issued. From this, founders are born.

1989400_orig2

I’ve come across a number of startups with 3, 4, 5 and even 7 founders involved in various startups over the past year. It’s always debatable about the right number of founders but there definitely can be too many. Too many founders significantly affects the success of the company, the happiness of the founders and the financial results the founders may achieve personally.

​How so? Read on!

Many founders focus on their percentage ownership in the startup. They tend not to talk about shares but percentage ownership. I own 100%, I own 50%, etc. Usually the more founders the less percentage of ownership each founder will have right at the start. This may seem obvious but think about this in the context of dilution over time.

.

Personal Dilution

Dilution Over Time – Assuming you’ll be seeking financial backing and assuming you’ll be giving up equity for money, your share of the company will be reduced with every investment of cash. This effect is cumulative in your reduction of company total ownership unless you intend to maintain personal anti-dilution rights. This means you get to put in your own money along side new investors to maintain your percentage of ownership. Most founders aren’t in a personal financial position to do this. Most founders are “tapped” financially by getting the company off the ground and working for little or no money in the beginning. Even if you can afford to put in money it means your co-founders will get even more diluted and chances are they will not be happy with you.

The percentage you start with is not going to be the percentage you end with. Let’s look at some scenarios so we can get a definitive feel for this.

test tubes

.

Dilution Examples

Let’s say you start a company on your own. You own 100% of the shares.

Investment 1- Let’s say $1 million will be invested for 30% of your company. You will not be handing over 30% of your shares, instead the company will issue 30% additional shares and they will be assigned to the new investor. So your absolute number of share remains the same but you now own 70% of the total shares after the investment.

Result – You own 70% of shares. Investment 1 owns 30% of shares.

.

Investment 2 – Now that you’ve successfully grown your business with the first investment you now raise a second round of investment. You get $2 million and give up 20% of the company for the money. This is real progress from your first investment. You’ve double your money raise and give up 33% fewer shares for the investment.

Result A – You own 56% of shares. Investment 1 owns 24% of shares. Investment 2 owns 20% of shares. If you’re scratching your head wondering why investment one is lower it’s because we’re assuming they don’t have anti-dilution rights. This means they lose the same percentage of share you do. They didn’t put any new money in with the second round of investment so they diluted like you at 20%. The net effect is it saved you a percentage of the company. Also, you retain voting control. At 56% of the company you still have the majority of voting stock. This means you control the company.

Result B – Now let’s look at the second investment assuming the first investment has anti-dilution rights. This means they get to put in money alongside with the second investor and maintain their percentage of the company. THIS IS VERY COMMON. Most sophisticated investors will force you to accept anti-dilution rights as a term of their investment

You own 44% of shares. Investment 1 owns 30% of shares. Investment 2 owns 20% of shares. Guess what? You just lost voting control of your company.

.

So what happened here? Well, in this case investment #1 said “hey I want to maintain my 30% ownership” so they put in additional investment along with investment 2. So you didn’t bring in $2 million, you brought $2.6 million. The extra $600,000 was invested by investment 1 to not get diluted in the round. So you, the founder, took the additional dilution.

If you wanted to maintain voting control then you’d needed to have taken in less money from investment 2, say $1.5 million, and restrict them to getting 16% or less of the company’s total shares. Then the match from investment 1 would have kept you keeping over 50% of the stock. BUT, some investors won’t accept less than the percentage they want. It’s just not a “meaningful enough” ownership stake. If investment 2 insists on 20% you have a tough choice. Maybe you can convince investment 1 to not maintain anti-dilution rights but it’s highly unlikely.

small business

Now Bring On the Extra Founders

We saw in the simple example above the dilution of a single owner. Let’s now assume there are five founders and each has 20% equal ownership of the stock to start with.

We’re going to stay focused on you for this set of examples but keep in mind that all the founders are in the exact same boat. I’m assuming here that all five founders are fully vested in their 20% stakes to begin with and none of them have anti-dilution rights or the personal finances to invest additional money with the subsequent investors.

It requires the pool of three of the five founders to have voting majority of the company. 20% times 3 founders = 60% of the shares and therefore voting control.

.

Investment 1 – $1 million comes in for 30% of the shares, anti-dilution rights are in place.

Result – You now own 14% of shares. The other four founders own 14% of shares each. Investment 1 owns 30% of shares. It requires four of five founders to pool enough shares for voting majority with the company.

.

Investment 2 – $2 million is invested by a new investor for 20% of shares.

Result – You own 7.9% of shares. The other four founders own 7.9% of shares. Investment 1 owns 30% (they invested an additional $600,000 to not be diluted). Investment 2 own 20%. You took in a total of $2.6 million total. The founders now have lost voting control of the company.

.

At this point, subsequent rounds of investment dilute you personally even more. If your company hits a problem and experiences a reversal of fortunes you’re pretty much obliterated in your ownership percentage.

Theoretically, on the total value of your shares the 200,000 shares you own keep going up in value. This is a good thing and any general shareholders should be happy. As a founder you may have a very different outlook on things. After all, it’s your baby.

 

Founders Not Pulling Their Weight or Leaving

The romantic notions of a startup and the realities are very different things. If the founders involved have started other companies, their eyes are wide open and everyone should have a good idea of the general effort, stress and dynamic pace they’ll encounter. MOST HAVE NOT.

Those who have not started a business with no other means of financial income are in for lots of surprises. This is not for the faint of heart. Some will abandon the effort. Some will not be adequate for the task. Some will just be impediments to success and must be removed.

What happens to the share ownership of those that prove not valuable and not worthy? Nothing, unless you plan for it. Once stock is issued, they own it. Period. Founders shares are usually very cheap. They may be a penny a share of less. So even if a million shares are issued to the founders only $10,000 is paid by the founders to own the shares. That usually is far short of the capital that’s going to be required to get the business off the ground.

The value to the company is going to be the fruits of their labors. That can be organizing and fundraising, creating operational plans, writing code, leveraging business networking, etc. The impact should be ongoing NOT just one-time. A startup is a marathon, not a sprint. You shouldn’t have someone permanently and significantly benefiting from company ownership for running a short fast “dash” of effort.

Peter Thiel of Paypal founder fame likes to see two founders in a company. No more and no less. In his personal funding he finds that to be the magic number for execution and effectiveness.

​In the groups of four to seven founders (yes, I’ve come across a startup with seven members) it tends to be a democracy, kind of like a band. One or two founders will have the strongest voice and front facing effort but decisions tend to be “group think”.

When one of the principle advantages startups have is being nimble, group think slows things done. Also, quite frankly, it’s a pain in the ass to work with a large group of founders as a coach, adviser, partner or investor. Hassle is friction and no one likes to get burned.

.

Resentment Waits for Low Value Producers

Nothing breeds more contention with founders than the guy who “doesn’t pull his own weight”. When a couple of founders are putting in major time and taking on major stress while another founder just isn’t executing with the same passion, commitment and investment – resentment builds.

True Story – A dynamic duo had launched a hosted Ecommerce platform in the late 90’s called Apollo Solutions. These young guys mortgaged their condos and went full steam ahead. The pair felt they needed an MBA involved so they brought in a third partner to write a detailed business plan to present to investors and bring in money. They felt his plan was terrible and he just didn’t fit into the company. They fired him and moved on. They said he didn’t do anything meaningful so they denied his stock grant. Within 12 months along came CNet to buy them out. Guess who came out of the woodwork, yep, MBA guy. He sued which put the sale on hold. This leveraged the founders to pay out a large settlement just so they could sell the business.

Short Timers – What happens when initial founders want out? They leave and they take their shares with them. The guys left are doing a ton of work and usually for reduced or no pay. Most founder shares are very, very cheap so there was no real cash contribution. What happens? They get to benefit from the remaining founders’ efforts.

Some Remedies to Prevent Short Timers from Benefiting – First off, nothing says founder shares need to be fully purchased and handed out on day one. Instead you can carve out all or a large portion of shares and keep them in the “treasury” of the company.

Instead of handing out a big wad of shares on day one, you can divvy up stock options that vest over time. This would be similar to what you’d do with employees. I recommend three or four years to fully vest with a portion vesting immediately and upfront. So for example, if a founder is going to get 200,000 shares in total over three years then have 50,000 share vest immediately and 50,000 shares per year for the next three years. To keep people more on the hook you can have the shares vest equally every month at 1/36th of 150,000.

You’ll have to work out some of the “what ifs”, i.e. what if the company is bought (vest immediately), etc. What this does is allow people who want to leave, to leave, but it keeps a large pool of shares held by the company to give to employees, investors or new founders without having a big dilution effect on everyone overall.

.

Phantom Shares and Warrants

For minor partners or those recruited late to the game, sometimes phantom shares are useful although most investors won’t like them. This is a contractual promise to issue shares to people if they meet contract goals and objectives and often there are restrictions. So these persons often get upside financial gain if the company sells for example (phantom shares turn into real shares and are automatically converted into the sale). Phantom shares have no voting rights and no immediate dilution impact. Warrants are similar. They give someone the option but not the obligation to buy shares of the company stock at a set price. Often there is an expiration on this right. They aren’t good forever.

Get it right from the beginning. Don’t have too many founders and put a vesting plan into place for all the founders to start. This will get commitment and best efforts and still allow people to leave on agreed terms if something doesn’t work out. You’ll all feel better about your role as a founder and have better odds of personal success.

.

Copyright © 2015 Seth Temko. All rights reserved.

Images from Seth Temko, MS Office.

This article previously appeared in ATTACK PLAN – www.attackplan.com

Attack Plan Logo
.

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 © 2016 John Jonelis – All Rights Reserved

.
.

Leave a comment

Filed under angel, angel capital, angel investor, dilution, Entrepreneur, Entrepreneurship, investor, vc, venture capital

THE HIDDEN DANGER IN YOUR DATA

Howard Tullman B&Wby Howard Tullman

From the Journal of the Heartland Angels

Today, entrepreneurs have tools and technologies to collect, monitor, and document more data than ever before. You’re likely swimming in data, since customers leave a trail of it everywhere to be captured and analyzed in real time. As I’ve often said, in business, what gets measured (and acknowledged and rewarded) is what gets done. I haven’t changed my belief about that, but I have come to see that we are putting too much emphasis strictly on the numbers. Numbers don’t lie, but they never tell the whole story. They can only take you so far before they top out and you need something qualitative and experiential to get to the right conclusions.

Pie Chart Hesitation

Peter Drucker’s dictum “if you can’t measure it, you can’t manage it” has created a whole generation of leaders so focused on perfecting their company’s processes that they lose sight of the company’s purpose. I hear managers all the time talking about the need to get more work out of their people when they should be trying to get the best work out of them. Optimizing (not maximizing) the team’s output is what matters most to the ultimate success of a business. Working smarter and more effectively—not necessarily longer or harder—is how you ultimately move ahead of the competition.

You need to be exceedingly careful these days that you don’t let the ease of access and the ubiquity of massive amounts of quantitative performance data cause you to over-emphasize the math and measurements—and thereby lose sight of the far more important qualitative attributes of what’s going on. Not everything is easy to measure or quantify, but that doesn’t make these things less important; it just makes your job as manager tougher. But when you get so wrapped up in the measurement process that it becomes the goal itself, it loses its effectiveness. It’s easy to confuse movement with progress, but not all motion is forward. And lots of activities that run up the numbers aren’t remotely productive. Measuring is easy; measuring better is tough.

When you let the numbers drive the train, you give up two important advantages that are critical to your success. First, the goal isn’t to be the thermometer; it’s to be the thermostat. It’s not about measuring the heat; it’s about generating and controlling the heat. You don’t want the analytics to lead you; they’re a useful benchmark and a guide for course corrections, but it’s your job to set the direction and move the business forward. Second, when you get so focused on specific and concrete financial results (sales targets, growth rates, etc.) and you direct all your team’s energies toward getting as close to achieving those numbers as possible, you actually limit your ultimate upside because you lose the ability to think and see beyond those immediate goals. When a game-changing opportunity arises or a quantum shift occurs in your sales prospects, your team will likely be so heads-down chasing those numbers that someone else will come along and grab the new brass ring.

Black Hole of Data

Here are three principles that have helped me resist the temptation to get too caught up in the numbers—and focus on what truly matters at my company:

.

Elaboration is a form of pollution

Tell your team to keep it simple. No one gets paid by the page, and shorter is almost always better. I’ve found that when people expand and extend their plans, proposals, and presentations, there’s a high degree of likelihood that they’re concerned about the value of their pitch, so they try to bury it in a boatload of facts, figures, charts, citations, and everything else that just hides the hard truth. It’s better for everyone when your people put things right out there—front and center—and take their medicine if that’s what’s called for. If you torture the numbers long enough, they’ll say whatever you like, but that’s not any way to get to the truth or the right result.

.

Not everything is worth doing well

Tell your team that everyone’s always on the clock. There’s an opportunity cost associated with everything you do, so choosing what not to do (and how extensively to do the things you need to do) is critical in any startup which has scarce resources and time. Some things just don’t warrant the full-court press, and it’s important to make sure that everyone knows that that’s okay with you. Other things shouldn’t be done at all, and you should never try to do things cheaply that just aren’t worth doing. It’s never easy to turn people down or say, “No,” to marginal choices, but it’s part of the job.

 .

No one’s ever measured how much the heart can hold

Ultimately, the value of the critical connections your people make every day with your clients and customers can only be roughly approximated by even the best math. But it’s those daily personal and emotional interactions with your empowered employees that build crucial engagement as well as the lifetime value of those buyers for your business. You need to give your team permission to do what’s best for the customer in the moment that the opportunity arises. If they need to consult a rule book or have a calculator handy to do the math, they’ll lose the value of the moment every time. The best businesses don’t worry about the number or sheer volume of moments–they work to make each moment matter.

Ω

.

Howard Tullman is a philosopher, investor, and Chicago entrepreneur.   For more from Howard, go to

http://tullman.blogspot.com

www.1871.com/

Read his bio: http://tullman.com/resume.asp

.

This article appeared in the following publicatons:

News From Heartland  http://news.HeartlandAngels.com

INC Magazine  http://www.inc.com/

.

Graphics: Getty Images, MS Office, H Tullman

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 © 2015 John Jonelis – All Rights Reserved

.
.

Leave a comment

Filed under angel, angel capital, angel investor, big money, chicago, Chicago Venture Magazine, Chicago Ventures, Entrepreneurship, Innovation, Innovation and Culture, Internet, Internet Marketing, Invention, investor, Marketing, new companies, philanthropist, philanthropy, Social Media, Software, vc, venture capital