Thursday, July 17, 2014

Tullman's way: Up or out, corporations welcome

Tullman's way: Up or out, corporations welcome
By John Pletz  July 17, 2014

Howard Tullman is rarely at a loss for words.

And he told anyone who would listen how he planned to change 1871 once he took over as CEO: forging closer partnerships with companies, providing move-up space for start-ups that outgrow the co-working facilities, weeding out companies that weren't getting traction. In general, he said he wanted to give the place more “rigor.”

Six months in, Mr. Tullman has moved from words to action:

With $2.5 million from Gov. Pat Quinn, a 25,000-square-foot expansion is under way.

The first of several accelerators designed for specific areas are in the works, including real estate, as well as women in tech and military veterans.

Recent hires and new job postings give a picture of what's to come: George Vukotich, a former dean at Concordia University and department chair at Roosevelt University, is vice president of programming, charged with creating a more formal structure for educational programs for entrepreneurs. Laura Fendrich joined as in-house recruiter from Hirewell. And Mr. Tullman is about to hire a head of business development who can “determine new verticals for growth and new financial opportunities,” according to a job posting.

A startup grows up

The two-year-old hub at the Merchandise Mart is home to nearly 250 entrepreneurs and start-ups. It's staffed by about a dozen people and run by the Chicagoland Entrepreneurial Center.

The idea behind its founding was to give Chicago's start-up tech scene a focal point, and to address the pragmatic need among start-ups for a place to set up shop near other entrepreneurs with flexible terms on real estate. It showed initial success on both fronts. But as with any start-up, the goal posts began to move, and it was time for version 2.0.

"When 1871 started, no one really knew what to expect. Now it's more of a real business," Mr. Tullman told me. "We're expanding dramatically, making a lot of commitments. We need to grow the team, and bring on people who can take on more responsibility.”

There's more gray hair around, starting with Mr. Tullman, 69. Mr. Vukotich is 56.

The pace of change at 1871 reflects Mr. Tullman's track record as an entrepreneur.

“Howard is great at sizing up organizations, spotting gaps and holes in structures and fixing them,” says Dan Lyne, who helped set up 1871 and now is a senior vice president at real estate firm CBRE Inc. “He has the chops to keep it innovative and sustainable for years to come.”

Making a list, checking it twice

Mr. Tullman moved quickly on his promise that 1871 would take an “up or out” approach to managing the entrepreneurs and start-ups who are building businesses. One of the criticisms of 1871 has been that it sometimes seemed more like a college dorm than a place where real work was getting done.

A team from Accenture plc did an evaluation and inventory of the 250 or so entrepreneurs and companies at 1871 to figure out their goals and benchmark their progress.

“The idea is to figure out whether they should stay, whether they should move on,” Mr. Tullman said. “We wanted something objective.”

He also wants to rely more heavily on corporate partners to make the operation self-sustaining financially, which shows in the plans for staffing and new programs.

"There's a big difference in interacting with Fortune 100 corporations,” he said. “I don't want to do dog-and-pony shows with companies. I want to do something that makes sense for them.”

One idea is to host customized “demo days” for companies. He points to a recent three-hour session on innovation for a group of senior managers at North Chicago-based drug maker AbbVie Inc. In addition to Mr. Tullman's presentation, he brought in six start-ups from 1871 to meet the company. AbbVie paid for the event, though Mr. Tullman declined to say how much.

He's tapping into the need and fear among large corporations that they have to come up with new products and revenue ideas while keeping an eye out for the next Uber that's going to turn their businesses upside down.

Mr. Vukotich will be responsible for upgrading the education component, one of the primary draws for entrepreneurs, who are paying $150 to $450 a month for memberships.

“The fifth or sixth time you hear an anecdotal story about 'Here's how I did it,' that wears out. I'm focused more on a really solid curriculum," said Mr. Tullman, who previously ran Kendall College and Tribeca Flashpoint Academy. “One goal is to have a strip of five classes over the course of a year: everything you need to know how to grow and run a business.”

We'll know soon enough whether Mr. Tullman's plan is working. Either way, the one thing you can be sure of is that 1871 will still feel and act like a start-up: the only constant will be change.

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