Tech Talk: A great IDEA in South Bend Region

South Bend Mayor Pete Buttigieg participated recently in the granddaddy of idea-sharing events – South by Southwest, now more popularly known as SXSW, in Austin, Texas. Later this month, people will come to the South Bend-Elkhart region for a similar-themed showcase in IDEA Week 2018.

The IDEA Center at the University of Notre Dame is the lead organizer with a wide variety of partners. Between April 20-29, more than 30 activities (programs and entertainment) will take place. Innovation, entrepreneurship and commercialization are the primary themes.

A few of the highlights:

  • National presenters such as Zappos CEO Tony Hsieh, Shark Tank’s Daymond John and Tony Award winner Patti LuPone
  • Venture competition, TEDx program and start-up showcase
  • Entertainment in the form of concerts (The Chainsmokers), comedians (Gabriel Iglesias) and more

Various Notre Dame venues, as well as sites throughout the region, will serve as hosts. That is important as regional cooperation has been taken to a new level in recent years.

The mission of IDEA Week 2018 is twofold: Celebrate ongoing/developing successes (Notre Dame, technology park developments, recreational vehicle industry prowess to list just a few) and provide knowledge and inspiration for entrepreneurs, students and others in the community to build the next big thing.

Rich Carlton of Data Realty touched on the momentum in the region during this recent EchoChamber podcast. We’ve shared more than a few business success stories from the area in BizVoice® magazine: sidebar on Ignition Park here and focus on Goshen as 2017 Community of the Year to name two.

Kudos to all involved in developing this first-time event. Telling our story, in northern Indiana and throughout the state, is critical.

Tech Talk: McDonald Lights Economic Fire

John McDonald, CEO of ClearObject and chair of the Indiana Chamber’s Tech Policy Committee, is proficient in many areas – including crafting analogies.

In the current BizVoice® magazine, he authors a thoughtful column titled “Indiana’s Economy: Great for Business, Not Yet for Entrepreneurs.” On the analogy side, consider this excerpt:

“If the spark that ignites an entrepreneurial company is initiative, then what are the other necessary components that fuel the fire of innovation? Like we learned in elementary school, fire requires fuel, oxygen and heat, and if any of these elements is removed, the fire stops.

“Similarly, entrepreneurship requires three elements: ideas, capital and skilled people, with the spark of initiative to light the flame. Take any of these away and the fire of an entrepreneurial company ‘flames out.’ “

Check out John’s full column.

The focus of the March-April issue is on Outstanding Talent. Nearly 20 stories outline programs, initiatives and people making a difference in the worlds of education and workforce development. Among the features:

  • The Excel Center, where adults gain the assistance and pair it with their own motivation to reach new heights in education and career opportunities
  • The Crossing Schools, where high school students in need of direction find it in the form of hands-on learning and work experiences
  • The International School of Indiana, where a challenging curriculum is only part of the mix for high-performing students

The Indiana Chamber is highlighted through the Foundation’s Business Champions Advisory Network, Indiana INTERNnet’s 12th annual IMPACT Award winners and an overview of the organization’s workforce development efforts.

View the full issue.

Developing the Entrepreneurial System – Here and There

ecosystem

A professor from the University of Michigan’s Ross School of Business is writing from his home state’s perspective, but sharing insights regarding Midwest entrepreneurial ecosystems and how they might differ from international efforts. He notes four key elements, including the always popular capital and worker skill aspects:

  1. The most important step is connecting with your customer

While understanding the basic fundamentals of cash flow and knowing how to manage a staff is important, businesses everywhere must put finding the customer first if they want to be successful. For Midwestern businesses, that might be a challenge for marketing. For startups in some developing economies, the search can be less abstract: Infrastructure challenges can make connecting with customers more difficult. For example, in Vietnam, the single biggest platform for ecommerce is Facebook — but in rural Morocco, a lack of infrastructure makes ecommerce virtually impossible. Interpersonal connections and marketplaces remain indispensable.

  1. Success begets success

In the United States, the story of every successful startup cluster begins with capital — and one of the best sources of capital is another company’s exit. We’ve also seen that for every $1 a Michigan startup receives from a Michigan VC firm, it attracts $4.61 of investment from outside of Michigan. Cash is the fertilizer, and the more of it in the environment, then the more likely the economy will grow.

This logic doesn’t always hold in developing economies, one of the hallmarks of which is no middle class and a huge income disparity. When wealth is created in these environments, there are many places that the money can be reinvested in besides another startup: to fund education, for example, or to buy more land. That being said, more wealth generated by new venture activity has the potential to lift the income threshold and lead to a more stable, flourishing economy. 

  1. Give your talent the fulfillment they need

A major challenge for small communities is talent, no matter where they are located. But talent isn’t just about having smart people — it’s about having people with the skills needed to build a business, and a community that can support them. In the Midwest, that talent gap often takes the form of local workers who are educated, well-trained, and experienced in running a business, but who might not choose to stay and work in their communities if there aren’t opportunities that appeal to them.

Robust entrepreneurial ecosystems with more activity have the potential to attract top talent away from more metropolitan areas. It can become a self-sustaining cycle once it gets going, but may take a significant event or local unicorn to get it kicked into action. In developing countries, that more often looks like workers who have limited skills, who need the determination and resources to invest in themselves — and who need an ecosystem that can provide them with that base.

  1. Take local differences into account

What works in Silicon Valley doesn’t always work in Chicago — and what works in Kosovo might not work in Vietnam. When it comes to translating what has worked in one place to another, the details become local, and critical. Some business climates trust banks and credit lines; others operate solely in cash. In some places, the local language is widely spoken; in others, that local language could be six different dialects. Just as the National Venture Capital Association has local chapters to better understand and focus on the small ecosystems being built all over the United States, context is everything for entrepreneurs looking to get off the ground no matter where they are.

While languages, customs, and currency differ from country to country, one thing doesn’t: When entrepreneurs and innovation win, it can lift the outlook of an entire economy. With the right resources and support, the Midwest has stepped up to create the jobs and standing it needs to survive in the modern economy — and developing ecosystems around the world are doing the same.

Video: BizVoice Focuses on Education, Workforce in New Edition

Our Tom Schuman gives a two-minute look into the new March/April edition of BizVoice® magazine, detailing stories on education and workforce initiatives, as well as a peak into Indiana’s political history with a new entry in our yearlong Road Trip Treasures series. Additionally, a guest columnist tackles the needed ingredients for Indiana to ignite the entrepreneurial fire.

Watch:

Survey Shows Small Business Optimism for 2018

Small business entrepreneur

There are any number of things that can derail a small business owner’s dream, particularly external issues that are out of an owner’s control such as an economic downturn, shifting consumer habits, or technology changes rendering products or services outdated.

But small business owners are optimistic, according to a late 2017 survey conducted by Staples. The survey showed 86% of respondents were optimistic and four in five reported that their businesses were thriving or surviving in 2018.

There are business matters that small business owners point to as cause for concern, as outlined in the survey. Those issues include disorganization, tax preparation challenges and a lack of marketing knowledge.

A Staples press release announcing the survey results offer a closer look at the challenges:

Disorganization Kills Productivity

  • 53 percent of thriving/surviving small business owners describe their workplace as very organized, while only 23 percent of struggling/failing small business owners say the same
  • 1 in 3 business owners believe that workplace disorganization leads to less productivity
  • 3 in 4 owners with struggling or failing businesses believe disorganization has affected their company’s productivity

Tax Preparation Challenges

  • More than half of small business owners view tax preparation as complicated
  • Nearly 50 percent of small business owners handle their business’s taxes themselves
  • 2 in 5 believe that leaving tax preparation to the last-minute causes complications
  • Nearly 40 percent are not good with numbers or do not have accounting expertise

Professional Marketing Advice Makes All the Difference

  • More than one third of thriving business owners face challenges designing effective marketing materials for their business
  • Fifty percent do not know how to reach new prospective customers on their own
  • Thriving small businesses are more likely than others to use all forms of marketing; 63 percent of thriving small businesses use social media advertising, 59% use online advertising, and 46 percent use print advertising

Tech Talk: Life After Unicorns

Editor’s note: Author Christian Beck is principal design partner at Innovatemap. This is excerpted from a more extensive post on “5 Trends Transforming the World of Venture Capital.” 

As a designer with no formal business training, I could be the last person qualified to write about the world of venture capital (VC). However, over the last several years of working with dozens of start-ups seeking seed funding and scale-ups pitching for Series A, I’ve taken it upon myself to learn the language.

To learn more about investing, I highly recommend Neil Murray’s newsletter, Series F. But for those start-ups trying to get a handle on macro-level trends in the world of VC, I am going to share how I see it from an outsider’s perspective.

One helpful piece of context is that my VC education is driven largely by witnessing first-hand how these firms work in the Midwest, contrasting with what I read from the SF-area firms. As with most things tech, Silicon Valley is the most mature market and often provides a glimpse of the future for other emerging markets. It’s also true that emerging markets can learn from the missteps of those pioneers and chart different paths.

I’ve been following a few trends in venture capital that I think are exciting and possibly transformative. One of those is zebras.

“Zebra” is a term created to contrast the unicorn, which has typically referred to companies valued at $1 billion or more. Zebras represent companies that are profitable, sustainable, and beneficial to society. As I’ve been digging into this trend, I can see the need to insert a new metaphor in the start-up world.

zebra

Unicorns are being chased at all costs, and it’s had a negative effect on entrepreneurs. What may start as an idealistic passion to change the world can easily get bastardized into chasing user acquisition, monthly recurring revenue (MRR) and hockey stick growth … at any cost.

At the heart of this is the notion that VC firms are chasing 10x returns. I’m no financial analyst, but that seems a bit like overkill. You might want to be Lebron, but if you could settle with playing in the NBA, you’d probably be just as happy.

And that’s what is really behind the Zebra trend: a reality check that every start-up doesn’t need to be a unicorn. Indie.vc proves this with a long list of companies they fund and other companies that have scaled based on revenue rather than funding (also note how simple their own web site is: the zebra mentality is carried through top to bottom).

It’s not that becoming a unicorn is inherently bad, but the mentality to get there can create a series of bad decisions that lead to failed products like the Juicero – a SaaS-based juice start-up – when simply making a better juicer would’ve been sufficient.

What it means for the Midwest

The Zebra trend is particularly relatable to Midwest tech hubs that are trying to evolve older industries like agriculture and manufacturing. Creating unicorns is less attractive than creating strong companies with the goal of establishing a healthy local economy. Pumping start-ups with cash in hopes of a 10x return may be fun in the short-term, but it doesn’t provide long-term stability and healthy growth.

Ultimately, tech products should solve problems, but businesses should help local economies. Nowhere is this more pronounced than the Rust Belt. Here, it’s less important to roll the dice on unicorns and more important to establish strong companies that strengthen local economies. As the Rust Belt continues to emerge as a key player in the tech industry, this trend will become the norm.

Takeaways for start-ups

Focus on jobs over profits: Maybe it’s just the Heartland in me, but I tend to believe that while tech companies can service customers around the world, they can still have a local impact. The Fortune 500 is full of companies that grew slowly, created long-term value for investors and provided amazing places to work. Tech doesn’t need to be different. SaaS products can still grow by focusing on employees as much as they do their profits.

Set realistic revenue targets: The path to healthy growth starts with realistic targets. Given enough time and creativity, every start-up can plot a path to unicorn-land and often VC’s may feel the same way. But setting realistic expectations early on will lead to better product decisions down the road. Ultimately, you may find that early on you might have more revenue-based growth opportunity than you realize and wait to take on more investment (if at all).

Fewer Are Taking the Start-Up Route

Lower unemployment is just one of the factors a declining number of Americans are looking at starting their own businesses.

In the first half of 2015, an average of 5.1% of job seekers decided to begin a new business, according to global outplacement and coaching consultancy Challenger, Gray & Christmas.

CEO John A. Challenger notes, “While many Americans love the idea of being their own boss, we consistently find that 95% of those who are in-between jobs do not take that route. Most don’t even consider it to be a viable option and those who do contemplate entrepreneurship often conclude that the risks are too numerous and significant to pursue.”

The latest data from the U.S. Bureau of Labor Statistics shows that nearly 5.2 million Americans were hired in June 2015. Furthermore, there were still more than 5.2 million unfilled job openings at the end of the month.

But it takes more than just industry knowledge to pursue entrepreneurship. Challenger offers some of the other necessities required for those considering a start-up venture.

A Plan
Having a plan can help the would-be entrepreneur map out his or her vision. It does not have to be the 50- to 70-page formal plan taught in MBA programs. It can just be a few pages. Though something more detailed and formal might be required when it comes time to seek funding from banks or investors. The key benefit of the plan is that helps to focus one’s efforts.

A survey of more than 800 people in the process of starting businesses by the University of Michigan found those who wrote a plan were two and a half times more likely to actually go into business.

Savings
It takes money to make money, as they say. Not only is there the initial investment associated with starting a business, whether it is buying computers or business cards, but the fact is that it could take several months before the new business makes any money.
Unless one is trying to get a business up and running while holding down another full-time or part-time job, which is an entirely different challenge altogether, substantial savings are absolutely necessary to make up for the loss of income that occurs during the initial phases of the start-up.

Time
The reason it would be challenging to start a business while holding down a traditional job is that most new businesses require a substantial amount of time to get up and running. Entrepreneurs can expect to log 60 to 80 hours a week in the first two years.

Self-Discipline
The biggest challenge for entrepreneurs coming from a traditional workplace may be the lack of a manager giving you tasks and deadlines. Especially for those working from home, there are a lot of distractions that can pull your attention away from the task at hand. Some would say that telecommuters face the same challenge. However, they are still accountable to a supervisor, so there is more motivation to stay focused on work.
Until a new entrepreneur has that first customer, who then provides the motivation to set and meet deadlines, the only person an entrepreneur must answer to is himself. So, are you going to do the work necessary to find that first customer or fix that leaky faucet? If the faucet takes precedence, you may need to rethink entrepreneurship.

Strong Sales Skills
Regardless of the primary skills you are ultimately plan to provide through your new venture, whether it’s financial planning consulting or cupcakes, the first order of business is to get customers. In order to do that, you need to be a salesperson. As an entrepreneur, you should expect to spend 75% or more of your time on sales as the business is getting off the ground.

If you do not feel comfortable selling, your business is probably doomed before it even begins. No business can succeed without sales. A strong sales commitment is necessary, especially in the first 12 to 24 months.

VIDEO: A Look at the Latest Indiana Vision 2025 Report Card

Indiana Chamber President Kevin Brinegar discusses the latest Indiana Vision 2025 Report Card, which was just released this month.

The state’s highlights include improved reading and math test scores for fourth and eighth graders, progress toward a long-term water resources plan and promising research and development rankings. Struggles continue with postsecondary credentials and a dearth of entrepreneurial activity.

See the full report card.

Ivy Tech ‘Switchboard’ to Help Grow Businesses in Monroe County

The Switchboard is an online portal designed to connect entrepreneurs and business owners to the local resources they need to start or grow a business in Monroe County.

It was created through a partnership with The Gayle and Bill Cook Center for Entrepreneurship at Ivy Tech, Bloomington Economic Development Corporation, the City of Bloomington and through grants provided by the Community Foundation of Bloomington and Monroe County and Duke Energy.

Anyone interested in being a part of or contributing to Bloomington’s entrepreneurial ecosystem is encouraged to list yourself or your organization as a resource on The Switchboard to allow entrepreneurs to access your business or service (or just connect with you over coffee). To create a profile, just visit the site and click the “list a resource” button on the home page.

Furthermore, see the video below to learn more about The Gayle and Bill Cook Center for Entrepreneurship at Ivy Tech’s Bloomington campus:

Look at Indiana Entrepreneurship Offers Mixed Signals

Cam Carter, our VP of small business and economic development, talks with Tom Schuman about the state of entrepreneurship in Indiana.

For more on recent developments on this topic, see these articles from the latest BizVoice magazine: