The Great Migration

Was reading some data from the Cato Institute.  It has to do with Tax Reform and Interstate Migration.  The problem is the data is a little too fresh.  Tax reform was only passed in 2017, so 2018 is really the first year that people are feeling the effects of it.

One of the major effects is SALT.  That’s the ability of citizens to deduct state and local taxes from their federal taxes.  In the past, it’s always been allowable.  Now, it is not and high tax states are trying to find an end run around it.  They have even resorted to the courts, trying to characterize taxes we pay for public schools as charities.  Of course, the other tact might be to act responsibly and reduce the tax burden on citizens but who knows a politician that would want to do that? There is no clear relationship between the level Continue reading "The Great Migration"

Sometimes It Is Just Luck-But You Still Have to Take Risk

When people tell me I am “lucky” I get a bit offended.  I took a lot of personal risk and continue to take a lot of risk.   I worked super hard and put in long hours.  I did stuff few other people would have done at the time.  Who runs orders to a pit and takes the abuse that comes with it, with a business degree from college for three months, no insurance for $150/wk gross?  No one handed me a money tree or a success tree.  Throughout various parts of my life, I have assumed risk.  Especially in my 20’s-50’s.  Outsize stupid risk on some occasions.

To tell you the truth, since 2009 it has been a total grind for me.  I have had a few ups but mostly downs and battled a lot of demons internal and external.  Some people took advantage and were shitty.  I would

Continue reading "Sometimes It Is Just Luck-But You Still Have to Take Risk"

School Spirit That Leads to a Cult

Went to the Notre Dame vs Michigan game yesterday.  A good friend of mine went to Notre Dame Law and had tickets.   I love to go to college campuses.  Always have.  It’s always interesting to me and sometimes campuses say a lot about the culture that comes out of the university.  Sometimes, it doesn’t.

For example, if you go to Emory in Atlanta, there are a lot of signals that Coke put a lot of money in that school. The building rock was quarried nearby.  At Davidson, the buildings are very traditional looking and it’s a traditional liberal arts undergraduate experience.  Classic college.

Love or hate them, many schools spawn a cult among their alums.  Both Michigan and Notre Dame are like that.  I am not using the word “cult” in a derogative sense.  I am thinking about it in a positive sense.

Usually, to create a community like Continue reading "School Spirit That Leads to a Cult"

Transition is Scary

One thing to keep in mind as your startup firm grows is transition can be very scary.  You had two founders who became ten employees who became fifty employees and now all of a sudden you are a company.

For some of those early employees, the transition might be scary. They might feel out of place.  The new employees, new role, new responsibility might make them feel hamstrung.  Might make them feel uncertain.  Maybe they have never been in a role like this before?  Maybe instead of having a focused team in one spot, you are opening up branch offices in different cities so coordination and communication will be totally different.

I don’t think you need to be a “B Corporation” to treat employees well and to manage transition.  Just lead with some emotional intelligence and transitions can be seamless.

I was thinking about transition today because of our puppy

Continue reading "Transition is Scary"

Professor Harry Davis, on Leadership

Leadership is hard. There are no classes in school for it unless you go to certain schools. Military academies actively train leaders. At those schools, the first step is learning how to follow.

One of the reasons I signed on with Raman Chadha and his ideas around The Junto Institute is that there is a gap in education around leadership. As Raman pointed out and found, we teach people to pitch. We teach people accounting, marketing and finance. We teach them operations. We don’t teach them to lead.

I never realized the wisdom behind Schofield’s quote until later in life. It’s pretty succinct and genius. It helps to know that it came at a time when the military was learning new ways to lead.

Not Continue reading "Professor Harry Davis, on Leadership"

Health Tech Conference in Chicago

Chicago’s startup community has made a lot of progress in medical startups over the last few years.  There has been a good emphasis and my friend Jordan has a dedicated fund for medical seed stage startups.  I am not a med tech investor, but I am very supportive of the community.  We talk a lot about changing lives with different startups and I think medical startups offer you the most tangible evidence of that.

There are a lot of resources for med tech in Chicago and the surrounding area.  Labs, wet labs, bench space. Chicago Innovation Mentors does a great job mentoring and fostering small companies.  The University of Illinois in Champaign just started its first ever, and the US first ever, medical school dedicated to engineering.  There is a cutting edge Jump Simulation lab in Peoria, and another in Champaign.  We have a couple of top med schools and Continue reading "Health Tech Conference in Chicago"

Compete Compete Compete

You have to want to compete if you are going to be a startup entrepreneur. If you don’t like competition, don’t even think about doing it.  Go work for someone else.

Competition is underrated today.  Kids are raised to think they are all “special” and everyone gets a trophy.  Each human has an attribute that is indeed special but you have to spend a lot of time figuring out what it is.  Every kid on the soccer field isn’t special and as a matter of fact it’s rare to have even one special kid in an entire league.

Brian Urlacher played for the Chicago Bears.  I saw him play a bunch.  I couldn’t believe how fast he was.  A friend of mine played middle linebacker for the Bears.  His name was Tom Hicks and he started in the mid-70’s. After Butkus and before Singletary.  He wore #54 too!

I was Continue reading "Compete Compete Compete"

Our Investment in Holberg Financial

We met Joe Holberg through Rob Topping.  Rob is another Chicago investor.  I never asked Rob how he met Joe but my guess is it was through the Michigan network since they are both alums.

Joe grew up in western Michigan.  He paid his way through school and went on to work for Teach for America and Google.  One day, he woke up with an idea, a cell phone and a computer and started Holberg Financial.  Ironically, my father spent his teen years in western Michigan.  I still have some family there in Three Rivers.

Holberg Financial is a financial health and wellness platform that helps employees reduce financial stress. 85% of Americans are financially stressed and 62% have less than $1,000 in savings. HF is 100% free to employees and 100% unbiased since they don’t sell data, products, or financial services. They just get people the unbiased info Continue reading "Our Investment in Holberg Financial"

Your School

Fred Wilson wrote a post today about where you went to school and the VC biz. He’d like to see some things change and he’d like it sooner rather than later. I don’t disagree but I also know that inertia, network effects and networks are hard to change.

Fred’s post came out of Richard Kerby’s post on Medium. My friend Rick Zullo is partners with Richard and was tweeting about it yesterday. They have a VC firm in NYC. Jason Rowley of TechCrunch wrote a series of posts about where VCs went to school and what they studied.

Unfortunately, it does matter.

It’s reflected in the cost of tuition and the difficulty in getting in. There is only one Stanford. There is only one Harvard. I think it will change but change will be slow. There are factors outside of network that bear on the reasons why.

In my own Continue reading "Your School"

When You Fail, Try To Have Fun

Failure is a part of the startup world.  It lurks around every corner like a Turk at a football training camp.  It’s gonna happen you just hope it doesn’t happen to you.  However, how the team deals with failure mentally is a game changer.  It can mean the difference between winning and losing in the long run because it’s certain there are things that are not going to work in the short run.

Aaron Klein of Riskalyze built a big part of his business on failure.  He says, “The challenge is that humans react to risk in the short-term. That approach is all about pushing back against human nature.”

Short term failure looms large for people.  Kahneman showed how short term events really impacted our thinking and adjusted how we’d perform over the long term.  Of course, startups are built for the long term but you get there Continue reading "When You Fail, Try To Have Fun"

There Is Life Beyond The Bay

This whole post by Semil was fascinating.  I spent a month in SF and Silicon Valley in February of this year.  Met with some people, and learned a lot.  An interesting thing that I learned working with my partner Kenny at West Loop Ventures had to do with the psychology of engineers.

Virtually every seed fund I spoke with didn’t invest outside the Bay.  If they couldn’t get to a board meeting in 30 minutes, they didn’t do the deal.  When I co-founded Hyde Park Angels we zeroed in on a “day’s drive”.  That Continue reading "There Is Life Beyond The Bay"

Here Is A Terrible But Irreconcilable Idea

Yesterday the news broke that Alderman Pawar wants basic income in the city of Chicago.  This is a horribly misplaced idea.  Interestingly, on the same day, former President Obama made a speech endorsing the idea of a basic income for everyone.

Let’s disregard the fact this is a socialist policy reminiscent of failed nations across the world.  Let’s also ignore that the US has many large government transfer payment programs that assist the less fortunate.  The cost is 65% of the federal budget, and growing.

Instead, let’s think about the core of the issue.  What’s the problem that is being solved?

Fear, for sure.  We are heading into a lot of unknown territory when it comes to innovation and jobs.  How are people going to earn a living in the future if our future is full of robots?  The answer is hard to digest.  We don’t exactly know.  However, Continue reading "Here Is A Terrible But Irreconcilable Idea"

A Metaphor For An Investor

Went to Jimmy Buffett at Wrigley last night.  He played the first ever concert at Wrigley back in 2005 and it was pretty good. It was a great concert if you were a long time fan. He played this song and I thought it was a metaphor for any investor that takes risk.

Deep in puppy housebreaking so no real time to blog this morning!

The Startup Grind at mHub

Last evening, I was invited to participate as a judge for Startup Grind.  The event was held at mHub. If you don’t know about either of them you should.  mHub is a cool spot.  A lot of people think these events are hype and don’t add to the community.  I disagree.  I don’t think they are the be all and end alls, but they give people a chance to come and get to know each other in person.

They also give startup entrepreneurs a chance to pitch to a room full of people.  It’s sort of like open mike night at a comedy club.  That three minutes in front of people might be the first time an entrepreneur has done this and that’s good for them.  If you are an entrepreneur and you get the opportunity to pitch, take it.  You will learn.

I respect people that try, even if Continue reading "The Startup Grind at mHub"

A Slight Pivot

Startups talk about pivots. Sometimes they are radical but most of the time you can think about a pivot like a person going on a long trip.  You run into unexpected construction on a road and you take a detour.

Venture funds sometimes do the same thing.  Andreesen-Horowitz recently announced a brand new fund dedicated only to cryptocurrency.  Other funds raise “opportunity funds” as their situations change.  People forget that VC funds are often as entrepreneurial as the companies they invest in.

Our fund started out as a B2B Fin Tech fund.  It still is.  We don’t invest in anything that is consumer facing. Our wheelhouse is Big Finance.  When we started out, we hypothesized that our deal flow would come from places like Chicago and New York City.  So far, we have invested in two Chicago based companies and one New York based company.

However, we have seen a Continue reading "A Slight Pivot"

Cut It Out; Chicago Can’t Win Without Champaign, Champaign Can’t Win Without Chicago

The other day, Governor Rauner made the statement that once a company gets to a point where it needs to scale, it cannot do it in Champaign, IL.  He’s mostly right.  While Champaign has gotten significantly better since I went to school there, it’s not high on the places to move for most talented tech people with choices.

I bleed orange and blue but recognize the reality.

Rauner is the incumbent Republican governor and losing in the current polling by a wide margin.  But, who knows about polls anymore?  I am not sure pollsters have their pulse on anything except the fees they charge Continue reading "Cut It Out; Chicago Can’t Win Without Champaign, Champaign Can’t Win Without Chicago"

Faux Networks

In my daily routine, I get the opportunity to chat with college students.  They are both undergrads and graduate students.  Usually, they are business school students but sometimes they are engineering students and sometimes they are just liberal arts students.  I enjoy meeting them.  I get to learn about things as much as they do so really, it is a two way street.

I always ask them how their school’s network is.

When I went on college tours with my children, every single college that we toured said they had a great network that would help your kids.  It might be possible but I doubt it.  Some networks are better than others.  In the Midwest, Notre Dame has a tremendous network.  So does Michigan.  They hew to the “blood is thicker than water” ethos.  No questions asked.

The Ivy League schools have legendary networks.  The service academies are called “ring Continue reading "Faux Networks"

Did The Supreme Court Just Save Brick and Mortar Retail?

Yesterday in a momentous 5-4 decision, the Supreme Court of the United States overturned a precedent and made new law.  It will have reverberations around the country.  It could help Megalytics, a startup our fund is invested.

The precedent they overturned was known as the “Quill” case.  Ironically, it involved a good friend of mine Steve Miller.  Steve started and runs Origin VC here in Chicago.  His family had started Quill and states wanted them to collect local and state sales taxes from customers when they sold in areas where they didn’t have a physical presence.  At the time it was really arduous to collect those sorts of taxes and would have increased the costs to the company making it extremely difficult even to execute the business.  Quill’s case paved the way for internet ecommerce.

Back then, the nascent internet technology hadn’t taken hold.  Most over the border commerce Continue reading "Did The Supreme Court Just Save Brick and Mortar Retail?"

What’s Real?

In all the excitement about fake news these days I see that most people are in two different tribes.  They see the same information and process it differently.  Sometimes it’s because of their own confirmation bias and sometimes it’s because of the way it is served up.  I am going to give you an example of that as it relates to my own city and state.

I am concerned because we cannot have a brain drain out of Chicago if we want to have an entrepreneurial community.  We need to be attracting people like a magnet.

Chicago has always had a natural draw for Midwesterners.  I think it can be a draw for people from all across the globe.  I am typing this outside on a beautiful summer day.  I am on a balcony looking at a fantastic skyline with a city abuzz.  I am blocks from a lake.

It Continue reading "What’s Real?"