Monday, July 06, 2015

1871 CEO Howard Tullman Interviewed by Daily Whale

Q&A with 1871 CEO Howard Tullman

The Chicagoland Entrepreneurial Center selected Howard Tullman to serve as CEO of 1871 in November 2013, and since that time his dedication to the 1871’s success has been undeniable.
Founded in May 2012, the non-profit technology incubator 1871 was named after the year of the Chicago Fire and offers startups co-working space at the Merchandise Mart. 1871 encourages engineers, innovators and entrepreneurs to come together to build their businesses. Membership at the incubator, which is available in three different levels, provides access to networking events, educational opportunities and workshops.
A longtime advocate for “disruptive innovation,” Tullman has extensive experience shaking up the technology industry. Tullman founded his first public company, CCC Information Services in 1980 with the goal of creating “a computerized database for auto insurers to value wrecked or stolen cars based on dealer inventory,” Chicago Magazine reported in 2011. Since then, he has dedicated his talents to over a dozen companies that he says have helped create thousands of jobs. Tullman currently serves on several boards and is managing partner for both the investment firm G2T3V LLC and Chicago High Tech Investment Partners.
During a City Club of Chicago address two weeks ago, Tullman noted that Illinois was ranked second in the nation for new job growth, explaining, “Startups are really the only thing that’s driving the recovery.”
In a recent conversation with the Daily Whale, the 1871 CEO discussed the future of the Chicago technology industry, which he says will create tens of thousands of jobs over the next few years. An edited transcription of that conversation follows.
DW: During your recent City Club of Chicago address you talked about how 1871 started just three years ago and already supports around 2400 jobs. To what do you credit this success?
HT: I think we have focused on building sustainable businesses that are B2B businesses, which means they’re serving a population of larger corporations - stable businesses. They’re helping them use technology to improve the way they are doing business. The significance to that is that those aren’t one in a million moon shots. Those are regular occurring businesses that service industries like logistics and tourism and insurance and automotive. I think that part one of success in terms of results is because we picked the right sweet spots to aim the companies for, and then part two is in this environment the companies get so much support, so much advice, so much direction, and so much help that they’re much more likely to be successful over the life of the time they’re here. We’ve seen that as well, which is that the average size of the company [at 1871] continues to increase and the number of companies is increasing as well.
DW: What is your favorite part about working at 1871?  
HT: My favorite part is every morning I get here at the crack of dawn and I watch as a million very excited and enthusiastic people come and go about changing the world. It’s a lot of fun to see that taking place every day.
DW: 1871 was at the front of the boom in utilizing co-working spaces. Where do you see the future of this co-working model headed?
HT: I think most of them will fail because it’s not really about how good your coffee machine is or real estate. It’s really about making a commitment to education and providing resources and networking and funding and all the things that we do fairly uniquely at 1871. It’s very, very hard to replicate this model. … Most of the for-profit companies in the co-working space discover it’s very difficult working with young and new companies to make it a profitable model of work because those companies don’t have a high success rate. They’re going to be forever challenged by that.
DW: Are there any new innovations or developments coming out of 1871 that you’re excited about? 
HT: [Recently] we announced the Gramovox vertical turntable. … It raised a quarter of a million dollars in a day and a half in sales. It’s amazing. It’s a turntable, but it plays vertically rather than horizontally. So we’re excited about the new Gramovox floating turntable. … We also showed to some major clients one of our platform applications called Magic Tags. That makes hats and clothing and books and signs and everything talk and play videos. So we’re very excited about Magic Tags. … We also announced one of our companies We Deliver was acquired by a large local delivery firm based in California. That’s kind of a nice exit for those folks as well, to fold themselves into a bigger business.
DW: What makes Chicago special in the startup world? 
HT: First of all, Chicago has an enormous history with technology between Motorola, which was the first cell phone, and Zenith, which was the first TV. So it’s not like we haven’t been a tech center, it's just in the last two decades a lot of the talent here from the University of Illinois and elsewhere has gone to the coast, and the coast has done a really good job of engaging in the tech space. What changed really is that the cost of technology has come down dramatically, so it’s accessible, and the availability of capital has increased dramatically. I think the last thing is we have a substantial economy in Chicago with a lot of customers across a very diverse group of industries. There are a lot of opportunities pretty much in any area that you want to pursue, except maybe media. I would say if I were building a video media company I would still go to the West Coast. If I were building a fashion business, I would go to the East Coast. But other than that, I wouldn’t think of a reason you wouldn’t want to start your business in Chicago.
DW: What impact will local tech startups have on Chicago’s economy over the next few years? 
HT: We expect to see another 10 or 20 thousand jobs created. They’ll be good-paying jobs. They’ll be jobs for people of various ages. Given that we’re number two now in the country in terms of creating new jobs, I think we’re looking forward to a substantial improvement and impact on the economy – not simply in the city, but at the state, because these are businesses that aren’t geographically located in any respect
DW: You’re an adjunct professor at both Northwestern Graduate School and Northwestern Law School. Tell me about the subjects you teach. 
HT: At the law school I teach about entrepreneurship and about how lawyers really have to be problem solvers instead of naysayers and how they also have to take into account business considerations, not just legal considerations. At Kellogg, at the graduate school, in business I teach change management, innovation and entrepreneurship. Those are all basically everything we do every day at 1871.
DW: What do you enjoy about teaching?  
HT: I’ve been doing this myself for a lot of years, 50 years, and I really like the idea that there are some lessons that I painfully learned and hopefully can share the results of those lessons so people don’t have to go through the same pain. That’s part of what we think is making 1871 successful: we have experienced serial entrepreneurs who are able to give really constructive and valuable advice for people going through many of the same kinds of issues.
DW: What are some of your proudest accomplishments from your career? 
HT: In the last ten years or so we focused a lot on schools. So I’m really happy we transformed Kendall College, which was a failing college, into a successful school and moved it downtown to Goose Island. I’m really happy that we formed Tribeca Flashpoint and made that into a high-end vocational school in the digital arts areas. Then in the middle of those two, we had a program to teach fourth, fifth and sixth graders in Chicago Public Schools to be scientists and entrepreneurs. That whole decade of education was very rewarding. But honestly, I’ve been building businesses since 1980 and it’s also great to create jobs and give people an opportunity they can be excited about to make a living as well.
DW: Who do you consider to be your role models?
HT: I think my mother was a pretty good role model. In terms of business, … I worked really closely with a guy named Bill McGowan. Bill McGowan was the founder of MCI, which [are] the people who took on the phone company and really the original technology disrupter in a lot of ways. So Bill McGowan is certainly someone I had a tremendous amount of admiration and respect for.
DW: What do you enjoy doing in your spare time?
HT: I enjoy working. Actually I write a lot. I write a column every week for Inc. Magazine. I really do enjoy that.

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