Thursday, March 31, 2016

Cubii and Gramovox Featured on WTTW


Crowdfunded Businesses Get a Running Start
Chicago Tonight
Nick Blumberg | March 31, 2016 3:31 pm

Watch the full segment here:

Crowdfunding – small, individual investors pitching in to fund a product or a project – has seen massive growth over the last several years.

According to one industry analyst, in 2016 crowdfunding could surpass venture capital as a source of cash for entrepreneurs.

Here in Chicago, some very successful startups have used crowdfunding to get their businesses not just off the ground, but off to a running start.

Still, while a successful Kickstarter campaign is undoubtedly a good sign for what's to come, it's hardly the full picture for the company or the consumer.


Phil Ponce: Sitting at a desk all day is the reality for many office workers, but it’s also a well-documented source of health woes. So, three University of Chicago grads came up with the idea of a small, under-desk elliptical to keep active at work. It launched on Kickstarter in the summer of 2014 to what co-founder Shivani Jain calls an overwhelming response.

Shivani Jain, co-founder of Cubii: We had raised three-point-five times our goal, and we were over the moon, and we were just really happy that this was a success. But then, very soon reality started to kick in. We had 1,100 people who had trusted us, who had invested in us and wanted to see us deliver a product that’s going to make a difference in their lives.

Ponce: The product went through several iterations and several months of delays.

Jain: We ended the campaign in August and we had promised the backers that we’re going to deliver by January 2015. That was not going to happen.

Ryota Sekine, Cubii co-founder: Because our volumes weren’t too large, a lot of manufacturers hesitate to work with a smaller company because of the initial investments involved.

Ponce: Cubii finally shipped in December, 12 months after their target. Its founders freely admit Kickstarter gave them cash, but not all the know-how they needed. A lot of advisers helped them get up and running. Those advisers don’t come built-in with a crowdfunding site, like they might with venture capital. But they’re often key for startups.

Waverly Deutsch, University of Chicago: Advisers do things like help them not make the mistakes that everybody else has made, help them correct mistakes quickly and learn from them, help them really think about strategy and execution. So it’s not just, what’s the right thing to do, but exactly how are we going to do it, and connect them to resources – so make introductions to potential hires, potential funders, potential customers, things like that.

Ponce: So, here’s some free advice from Deutsch, for investors and entrepreneurs – things take longer than you think.

Deutsch: I’ve participated in many Kickstarter campaigns, and not a single one of them has shipped in the deadline that they thought they would ship by. Everything takes longer.

Ponce: Patience might not have been Pavan Bapu’s strongest quality. He’s the guy behind Gramovox, a company that aims to blend vintage design and modern technology in home audio. He was so eager to get started he quit his job with just $10,000 in the bank.

Pavan Bapu, founder and CEO of Gramovox: Pretty embarrassing. Probably should have saved more money.

Ponce: Gramovox’s first product was a Bluetooth-enabled gramophone-style speaker, which launched on Kickstarter in November of 2013.

Bapu: It was tough to get hardware venture capitalists to invest in a product that didn’t exist, didn’t have any market traction or validation, so they’re betting on it blindly.

Ponce: After huge success with the Bluetooth gramophone and an influx of cash from bigger investors, Gramovox went back to Kickstarter to help launch the floating record vertical turntable. You might wonder, why go back to crowdfunding when the company’s up and running? Bapu says it’s not just money. It’s market research.

Bapu: Their validation of your product gives you great forecasting ability into the viability of the product long term.

Ponce: And you get valuable feedback from people who feel invested in your product – no pun intended. Here’s an example.

Bapu: We had a volume knob in the front and we had an on-and-off switch in the back, and there were lots of Kickstarter backers that said, ‘You know, you really should simplify that experience.’ So we incorporated the on-and-off with the volume controls in the front. When you turn it on, it clicks on, and then as you continue clockwise the volume increases, or decreases as you go counterclockwise.

Ponce: So, crowd-funded startups get money, exposure, and feedback – but they face a lot of competition for dollars. Waverly Deutsch says the next big frontier is equity crowdfunding. Basically, buying stock in startups, which she says raises some concerns.

Deutsch: You’re getting a relatively unsophisticated group of investors trying to do what angel investors and venture capitalists spend a lot of time, energy, and due diligence doing, which is investing in startups. Well now we’re getting the everyday man on the street who can put $5,000, $10,000 into an equity deal when startup failure rate is pretty high, are we going to get another bubble, and this one that’s going to more directly affect individual consumers?

Ponce: And just as equity investing isn’t right for all or even most people, Cubii’s Shivani Jain says crowdfunding for startup capital isn’t right for every business.

Jain: You get a lot of exposure, and you’re out there, and your brand is out there, and you have all these great customers, but because it’s so high-profile, if you fail for whatever reason – just because, nothing to do with your product, maybe the time is not right – then you fail on that scale as well. So, really evaluating when is the right time and whether it’s the right thing for you.

1871 CEO Howard Tullman Speaks at City Club

Did It Actually Happen?

Support Your Own Community

Kevin Allodi - Philo Media

Kevin Allodi is the CEO and Co- Founder of Philo Media. Prior to Philo, Kevin was Corporate Vice President at Portal Software, a pioneering billing and revenue management solution. He also held a Vice President position at Computer Sciences Corporation for 9 years. Allodi is also a board member at FNBC Bank & Trust and a managing partner at KBA Holdings LLC.

Where did the idea for Philo Media come from?

Philo was conceived by a serendipitous meeting; in 2011, I was invested in another branded content startup building mobile apps for athletes, celebrities and brands in the early days of the iPhone/smartphone era. Turned out we had great content and tech chops but zero knowledge of the app distribution game – it was a “build it and they will come” strategy…not surprisingly no one showed up. My son A.J. who worked for the company had a chance meeting with Jeff Tetrault, then VP of Sales for branded entertainment company Digital Broadcasting Group (“DBG”). DBG was focused in the desktop/online space and had a robust digital distribution network; I initially thought the two companies might complement one another and possibly partner in some way. Coincidentally, Jeff had been after DBG execs to expand into the mobile branded content space but was told they were readying the Company for sale and had no interest in pursuing anything. Jeff suggested we start a new branded content company that would bring TV quality production and storytelling to clients with a mobile-first distribution strategy because that’s where people we’re increasingly going to be spending their online time. It took some convincing, but Jeff was persistent and finally won me over; we raised some seed capital and launched the Company in January of 2013 and have since experienced both the ecstatic joy and unexpected horror of the entrepreneurial start-up life, but mostly joy – it’s been a fun ride so far and only getting better as the market is now embracing our value proposition.

What does your typical day look like and how do you make it productive?

Up around 7am, do a quick scan of industry news headlines on the train to our Chicago office. Once there I split my time between bigger picture activities such as direction/strategy and the balance trying to be helpful to the team in whatever way I can that gives them the opportunity to succeed. That mainly means staying out of their way – of late I’ve been spending a lot of time on fundraising for our B round and a potential acquisition.

How do you bring ideas to life?

In our business there are many people that touch ideas and bring them to life; since we’re a small team we’ve encouraged an “all hands on deck” culture that ensures we get as much brainpower and creative input as possible from everyone when we’re working on an assignment, no matter what functional role they play. Having involvement from all disciplines upfront rather than moving sequentially through functional silos really helps inform our creative process and results in a much better outcome for our clients in terms of creative/production and distribution performance.

What’s one trend that really excites you?

I’m extremely excited about the convergence of video content, social platforms and data in an omni screen environment – the boundaries between linear video (broadcast TV) and digital outlets (smart phones, tablets, gaming consoles, smart TVs, etc.) have been blurred. Old models of communicating brand messages don’t work in the new “information/content anywhere-on-demand” paradigm. Truly transformational possibilities now exist where brands can use video content to inform/entertain and actively engage their target audience as opposed to interrupting them and forcing “one way “buy this” messaging. It’s a whole new ball game – fortunately, for us brands are quickly realizing how powerful this can be, but it takes a change in mindset and willingness to break out of formerly tried and true methods. I’m fond of a phrase my friend Howard Tullman uses – “Ignorance is curable, indifference is fatal…”. Companies that don’t recognize the rules have changed and remain unwilling to adapt will be left in the dust.

What is one habit of yours that makes you more productive as an entrepreneur?

I like to think my habit of being brutally objective, always trying to see both sides of a situation, helps me make better decisions and as a result, be more productive. I try to avoid “paralysis by analysis”, but by simply stepping back for a moment to ensure I’m seeing the problem/opportunity from all sides and not rushing to judgment gives me confidence that I’m making more informed decisions.

What was the worst job you ever had and what did you learn from it?

Freshman year of college, working in the equipment room after football practice handling everyone’s sweat-soaked uniforms as part of my partial football work/scholarship. Nasty, but instructive. I learned you sometimes have to do things you’d rather not in order to attain certain goals.

If you were to start again, what would you do differently?

I’d take advantage of learning/instruction more than I did coming up. Of course in my early professional life, it was a hassle to get “continuing education”. You had to travel to night classes, seminars/conferences or training classes, which took you out of the field for days/weeks at a time. I was in sales so that was a non-starter for me. But now the world is at your fingertips – literally. There’s no longer any excuse for not being a life-long learner.

As an entrepreneur, what is the one thing you do over and over and recommend everyone else do?

Long ago I took to heart a quote from INTEL co-founder Andy Grove’s book which was, “Success breeds complacency. Complacency breeds failure. Only the paranoid survive.” Now I’m not so paranoid that I don’t stop to smell the roses and enjoy successes when they come, but I’ve found it’s wise to have a healthy dose of it in your consciousness to ensure you don’t rest on your laurels – and that’s more important today than ever; entire industries are being turned upside down (if not demolished altogether) due to technology enabling completely new ways of doing things better, faster and more efficiently. Look no further than Uber, Tesla and Airbnb. So I strongly recommend a healthy dose of inquisitiveness, if not paranoia, at all times and to regularly ask yourself how someone might leap-frog what you’re doing.

What is one strategy that has helped you grow your business? Please explain how.

It’s a selfish one, but it works – I always try to surround myself with people that are much, much smarter than me. I know there are people with more talent or experience in areas I don’t have expertise in that are needed for our business to reach its full potential. Welcoming people with strong knowledge and different points of view makes challenges everyone to be better. It’s a true win-win.

What is one failure you had as an entrepreneur, and how did you overcome it?

More of a “pivot” than outright failure has to do with a renewable energy partnership I’ve been involved with for 10+ years. My partners and I tried unsuccessfully to launch a green biofuels project in a Caribbean country; good intentions, plenty of need but in hindsight facing insurmountable odds in the face of political apathy and a challenging economy. We’ve since overcome that by pivoting to a more traditional project infrastructure – no new technology to prove out – and simply de-risking the project. While the former had potential for much higher returns, we learned that you can’t overload a deal with too many variables that could be perceived as unproven. Having repackaged the project with fewer perceived liabilities we’re now positioned for success.

What is one business idea or concept that you’re willing to tell our readers?

Drawing a blank here – I’ll try to think of something if it’s critical…

What is the best $100 you recently spent? What and why?

His and hers pedicure appointments for my wife and I…seriously! It’s a terrific one-hour getaway – no phones or distractions and a great environment for a chat the old-fashioned way, actually talking and not texting/emailing. Highly recommended.

What software and web services do you use? What do you love about them?

I’ve found Dropbox and DocuSign to be life-savers. With Dropbox I have access to all my documents, presentations and media/content on literally any device I happen to have available – it’s a fantastic app. DocuSign has really made my life easier – I sign and send out for signature a lot of documents to people all over the place, often times requiring several signatures. It’s wonderful to be able to route a document to multiple people for review and signature without the hassle of printing/signing/faxing multiple times. iTunes and Spotify are my music go-tos.

What is the one book that you recommend our community should read and why?

I highly recommend Howard Tullman’s “Perspiration Principles” series – the latest of which is “Launching a Startup in the Digital Age: You Get What You Work For, Not What You Wish For (The Perspiration Principles Book 4)”. Howard speaks from experience in a straight-forward, no BS way that is at once informative and easy to read and assimilate. He just makes sense and tells it like it is from experience.

What people have influenced your thinking and might be of interest to others?

Phil McKinney, former CTO of Hewlett Packard and currently CEO at Cable Labs; writes/blogs/vlogs on “how to harness the power of innovation to radically improve their personal, career and business success…” through his Killer Innovations media platform. Phil is an award-winning innovator of technologies and products used by 100’s of millions of consumers and businesses worldwide. He has been credited with forming and leading multiple teams that FastCompany and BusinessWeek have listed multiple times on their annual list of the “50 Most Innovative”. His recognition includes Vanity Fair naming him the “The Innovation Guru”, MSNBC and Fox Business calling him “The Gadget Guy” and the San Jose Mercury News dubbing him the “chief seer” . His work has been covered by 100’s of news, business and technology publications and broadcast organizations including Wired, New York Time, Wall Street Journal, Fox Business, Chicago Tribune, PBS All Things Considered, FastCompany, Inc., BusinessWeek, Vanity Fair, Rolling Stones, BBC, International Herald Tribune, USA Today and many others. One of the smartest guys I’ve ever had the pleasure of working with.
Howard Tullman – Howard is the CEO of Chicago-based 1871, where, at the moment, 325 digital startups are building their businesses every day. He is also the general managing partner of G2T3V and Chicago High Tech Investors, both early-stage venture funds; a member of Chicago mayor Rahm Emanuel’s ChicagoNEXT Innovation Council; and Illinois Governor Bruce Rauner’s Innovate Illinois Advisory Council. He is an adviser to many technology businesses and an adjunct professor at the Kellogg Graduate School of Management. A hugely successful serial entrepreneur, Howard has founded 12 companies, including Tribeca Flashpoint Media Arts Academy, CCC Information Services,, the Rolling Stone Network, Imagination Pilots, Experiencia, and others. He has also been tapped for senior executive positions at established institutions such as Coin Inc., Worldwide Xceed and Kendall College, where his expertise in turnarounds saved the school from going into bankruptcy in 2003.
Bob Lefsetz – author of “The Lefsetz Letter”
The Lefsetz Letter” has been publishing for over 25 years. First as hard copy, most recently as an email newsletter and now in blog form. While mainly offering observations/commentary on the music business, Bob’s I often find Bob’s insights extremely pertinent in business in general, and in media related business in particular.
“Famous for being beholden to no one and speaking the truth, Lefsetz addresses the issues that are at the core of the music business: downloading, copy protection, pricing and the music itself. His intense brilliance captivates readers from Steven Tyler to Rick Nielsen to Bryan Adams to Quincy Jones to EVERYBODY who’s in the music business. Never boring, always entertaining, Bob’s insights are fueled by his stint as an entertainment business attorney, majordomo of Sanctuary Music’s American division and consultancies to major labels.” –Rhino


Total Pageviews


Blog Archive