1871 Has A New Boss, And He’s Ready To Crack The Whip On Chicago’s Startups

1871 Has A New Boss, And He’s Ready To Crack The Whip On Chicago’s Startups

[LEADERS]

The incubator is a little comfy for Howard Tullman's tastes.

BY MATT PRESENT

When the board of the Chicagoland Entrepreneurial Center tapped serial entrepreneur Howard Tullman to run tech incubator 1871, the dynamic surrounding the tech incubator changed immediately.

Tullman brings decades of experience and a litany of proven business successes, but his greatest benefit may be his irreverence. He’s made plenty of money — two of his companies sold for nine figures — and at 68, he is “not looking for my next job or a big score.”

If Tullman has his way, the tech incubator will transform from a feel-good community hub into a rigorous boot camp that’s hard to get into and harder to get out of. We talked with the new CEO about his efforts to ensure graduation from 1871 is a strong credential in the tech community.

The party line on 1871 has been pretty rosy. You come in and you’re not pulling any punches. Have you gotten any pressure from the powers that be to rein your criticism in?

They knew what they hired. I’m not sugarcoating anything here. I don’t work for Rahm, I don’t work for the Governor. There’s nothing without warts, there’s nothing that can’t be better. My entire life is about iteration, so I just want to keep raising the bar.

There’s going to be stuff that’s going to be hard and different and changed, but we’re going to tell it like it is because in today’s world, if you’re not transparent, someone will do you the favor of ratting you out anyway.

What kind of things will be ‘hard and different and changed’?

The largest single issue has been who’s doing the selection for people coming in and who’s doing the ongoing evaluation, if it’s even occurred. I’m not sure to date that anybody’s been asked to leave or move on.

I don’t think that can be done on a random basis. I think that the current thought is that we’ll find people who have domain expertise and maybe every 90 days or six months, we’ll have a group of the [1871] companies that are in an area meet with evaluators in that area. I don’t want some guy from Abbott Laboratories evaluating a donut business.

What kind of reactions have you received to taking that harder line?

One of my favorite expressions is everybody wants to change the world, they just don’t want to change themselves. I’ve had at least 20 different emails saying, ‘so glad you’re going to throw these guys out,’ whoever these theoretical dirtbags and posers are. And if you wait long enough, everyone in the joint will send you the same email. So I’m sure there’s a feeling that, everyone has their own favorite candidate for who shouldn’t be there, this guy is too loud, this guy’s not serious. There’s no magic to this. To a certain extent, as you improve the culture and make it a little more serious place, I’m not sure we’ll have to be pushing people out, they’ll just find it’s not an environment that makes sense for them after a certain period of time, or their money will run out.

There’s a spatial challenge here. 1871 is a big place. Would you rather see a full joint or some empty desks but everyone there has a shoulder against the wheel?

I’d rather have 50 successful companies than 250. If you have a highly selective, challenging and difficult place to get into, you have a much higher likelihood that the companies coming out of it are going to be successful. It’s not a student union and it’s not an entertainment center. It’s great that there’s a lot of community — I’m trying to figure out how to phrase the idea that community is not an umbrella for every kind of activity, it’s community in a way that’s additive and helpful to the core mission, which is building successful businesses – not to be the JCC.

What’s the downside to having 250 companies if among them are those 50 serious successful companies you’re talking about?

Noise and distraction are very challenging. Focus is everything - you can't be a mile wide and an inch deep. There’s a sense that, if you talk to [former Obama campaign CTO] Harper Reed or [MarklTx CTO] Ben Blair, who are more hardcore engineer, programmer types, they would tell you that their vision of a work environment is a bunch of people who are head down, ear pods in, working. We need to try to get those people back to take an active role in 1871. Their perception, right now, is that 1871 is not a serious place, and that’s horrible. If there are just too many people wandering around the place, you get a different feeling. I’d be more than happy to have just 50 serious companies and have this be a place where every single company had a solid story, good team, a business that might not succeed but at least, if you ran through the standard components of what a biz needs to have a shot at succeeding, you could state with a straight face that everyone here is doing it. I don’t mind if you're here for 60 days for a fantasy, as long as they’re not here for two years.

What’s your ideal acceptance rate?

Maybe one out of ten. It’s not that we want to turn down anyone who’s viable. We just want people who are passionate, committed and working their butts off. I don’t see a huge number of the existing people at 1871 being there well into the evening. It empties out. I don’t know what the deal is other than the fact that I do a lot of speaking about wiki work, the idea that you can work anywhere. It’s perfectly fine to say that the 1871 model is you spend your day there, eat dinner, work more from home. [But] I hope people don’t think you build a successful business on 35 hours a week. I just don’t think that works.

Is that what you think is happening at 1871 now?

I don’t know. We’re starting to do more surveys and get better info about what is going on, but I think that if everybody is leaving and thinks you put in a finite amount of time and then you get to go home, they’ll be rudely awakened as to the success of their businesses. I’m not going to say you need to burn the midnight oil every night. But it’s a very tough time to start a business. It’s a great time because the barriers to entry are very low, but the barriers to success are 10x.

I go into 1871, and in no way does it reflect the diversity of the city. It’s mostly a lot of young white guys who dress pretty well.

Here’s what I would tell you. Smaller community incubators that have been started, like the one in Pilsen, I don’t think we want to say to their people, leave Pilsen and come downtown. What I want to figure out how to do is to let them have access and reciprocity. That’s what I’m interested in. If they have a meeting downtown and they want a space and they don’t think 40 people will come out to Pilsen or Englewood or wherever, I want to help them have a presence here.  But if they’re working in a former church and there’s five little businesses, the truth is you want them there because you want them to connect and enable those communities. So the way I’d like to initially work with them is to welcome them and make them a part of what we do, invite them to come down for these evening educational events or things, without saying, the only cool place to be is downtown and we need four token black guys and five Hispanics and three more women or whatever.

ABOVE: Sun-Times Media file photo 

PACKBOOK featured in GRID CHICAGO

Make The All-Nighter Pay With This Chicago Startup

[NEWS]

Students have a new incentive to get all their studying done in a day.

BY MATT LINDNER

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Five dollars can still get you a lot of things on a college campus even in 2013.

But a textbook?

“You buy your music off of iTunes, you rent your movies from Redbox and Netflix, why not rent your textbooks for $5 a day?” says Kasey Gandham, 23.

It’s an idea that Gandham and fellow recent Illinois State University graduate Mike Shannon are banking on.

The pair founded Packback, a pay-as-you-go digital textbook rental service that enables students to download e-textbooks and use them for as little as 24 hours. They’ll launch a pilot program on Monday at ISU, offering e-textbooks for 25 courses. (The school estimates the cost of traditional books and supplies at $996 this year.)

The patent-pending platform has safeguards in place to ensure books can’t be pirated.

“Similar to how your CD or DVD can’t be ripped off, our textbooks are completely locked down,” Shannon says. “We restrict copy-pasting, printing and screen-shotting of the text to certain extents.”

Gandham says the idea was born after noticing most of their course materials amounted to nothing more than overpriced paperweights by the end of the semester.

“(Students) carry a laptop and five physical, heavy expensive used books as well,” he says. “We’d see some of the books were still in the plastic wrapper that they came in if they were new, some of them were in the same orange box that (online retailer) Chegg ships them to you in and they just stayed there unused.”

Of course, Packback isn’t the first to go down the digital textbook rental road, with Amazon established in the market and Google entering the fray last week.

But Packback is the first to offer digital textbook rentals on a 24-hour basis, a concept that has its skeptics.

“What I’m questioning is if it’s more of a gimmick than a business model,” says Kathy Mickey, senior analyst and managing editor at Simba Information, a publishing industry research firm. “The toehold, it might be a service. It’ll be interesting to see whether it catches on.”

Investors and publishers seem to think it will.

Packback has raised more than $300,000 in funding and established partnerships with textbook industry heavy-hitters McGraw-Hill and Sage despite the fact that they haven’t launched the program yet.

The publishers are intrigued by Packback’s microtransaction model, Shannon says.

Adds investor Howard Tullman, founder of Tribeca Flashpoint Academy: “We live in an à la carte world and everything about fixed pricing for anything is over.”

Gandham and Shannon acknowledge that their peers have been slow to transition from traditional to digital textbooks.

“There’s not really an affordability play in e-books right now,” Shannon says. “We’re looking to, with at least getting students’ feet wet by trying $5 rental, expedite that e-book adoption rate.”

And therein lies the issue, Mickey says.

“The bottom line problem is students are not flocking to digital textbooks,” she says. “Until that comfort level or the demand is there, a rental really doesn’t solve anything if you’re renting something that kids don’t want to begin with. I’m just not sure that this is the model that’s going to change it.”

Mickey says whether Packback becomes a long-term solution depends on its ability to generate revenue for publishers, something Gandham says he and Shannon are acutely aware of.

“Our goal would be a national product and ultimately we’re going to be working hand in hand with publishers,” Gandham says. “Whatever we do, we want to work hand in hand with the publishers to make sure they’re on board and comfortable with everything going on.”

A new video game takes flight at Tribeca Flashpoint Academy’s Avarice release event

The fully functioning, multi-level game is the work of Flashpoint's students.

BY AMANDA SCHERKER

 

It’s a world driven by greed and governed by ruthless CEOs with dollar-shaped holes where their hearts should be.

No, this isn’t the Occupy playbook — it’s Avarice, a video game created by students at Chicago’s Tribeca Flashpoint Academy.

Building a fully functional multi-level video game might not be a classic college assignment, but Flashpoint isn’t a classic college. Founded by serial entrepreneur Howard Tullman, the digital media arts school has students cut their teeth on the sort of work they’ll encounter as professionals.

Last Thursday, Avarice debuted to a crowd of students, teachers, and Chicago techies. Alan Reck, the Flashpoint professor who crafted Avarice’s initial design, led the audience through game’s virtual world. Players assume the role of a corporation’s hired mercenary, build a combat craft, and fly increasingly dangerous missions.

For more than a year, Flashpoint students have been developing Avarice in collaboration with Reck and his Chicago-based gaming company, ZoopTEK Studios. Reck thought up Avarice’s basic plot and the game’s weaponry, while students built each level’s narrative and designed the world, filling in everything from the texture of cacti to the colors of the ships.

The event allowed attendees to play the game to a live score provided by Miguel Kertsman, the composer of Avarice’s soundtrack, and Chicago-based drummer Ernie Adams. The musicians improvised to suit the game’s action, while audience members battled to the death in Avarice’s world.

The program has results: Steam, the leading producer of PC gaming technology, is releasing Avarice over the summer. Kertsman’s soundtrack will be released in tandem with the game.

   

TRIBECA FLASHPOINT ACADEMY CEO HOWARD TULLMAN INTERVIEWED BY SPOTHERO CEO JEREMY SMITH FOR GRID CHICAGO

WATCH THE VIDEO HERE: http://www.chicagogrid.com/people/flashpoint-howard-tullman-shares-his-wisdom-with-spothero-cofounder-jeremy-smith/

 

WATCH THE VIDEO HERE: http://www.chicagogrid.com/people/flashpoint-howard-tullman-shares-his-wisdom-with-spothero-cofounder-jeremy-smith/

Deemed “The Most Accomplished, Best-Connected Entrepreneur You’ve Never Heard Of” by Inc. Magazine, Howard Tullman has founded more than a dozen high-tech companies and Chicago’s Tribeca Flashpoint Media Arts Academy. Jeremy Smith is the cofounder of online parking spot rental marketplace SpotHero, founded in 2010.

JS: Wanted to talk to you about hiring. At what point do you determine it’s right to start bringing somebody in?

HAT: I always say that the CEO is the last person who should do any hiring at all. Because CEOs are a) really busy, b) always focused on selling, not great listeners. And then, if that wasn’t bad enough, CEOs by and large believe that if it’s a great person, they can find a job for them. And that is a not a good strategy for a startup.

The issue with [hiring] more experienced people is they have a different approach to everything. Everything isn’t a fire drill [to them], which isn’t necessarily startup culture. You’re bringing them in because they’re middle management and they’re a little more mature. But that culture clash with the young people who have been doing everything and running around is something that’s really complicated to manage.

JS: So let’s say it is a senior position. You can tell in interviews that this is somebody who’s very intelligent, but keeping them challenged is going to be difficult. How do you go about that?

HAT: If you’re worried about how to keep somebody busy, they’re probably the wrong person. You’ve got to find somebody, whether they’re senior or not, who’s excited about the opportunities. It’s almost impossible to think that anybody would be bored or wouldn’t be challenged if they were the right person. Smarts is really important. Attitude, way more important. Energy, probably even more important than that.

JS: My company is dealing with major parking companies. We’re the small fish in the sea right now. We’re not in a position of leverage over them. What gives you tipoffs that, OK, now we have some real bargaining power?

HAT: When we were building one of our businesses that serves insurance companies, which are monsters, there [was] what I called FOMO — fear of missing out. If you convinced them that the other big players were doing it, and they were going to be left behind, then lo and behold, they got on the program.

JS: What sets great entrepreneurs apart from your average business owners?

HAT: It’s like we say about movies: If you’re in the movie business to make movies, you’re going to be really happy. If you’re in it to make money, you’re in the wrong business. I think that’s absolutely true of great entrepreneurs. The money is nice. But they’re in it because they want to change things. They want to do important work.

JS: If you sit back and see somebody that’s in my shoes, what would be the best piece of advice about growing and continuing to be an entrepreneur?

HAT: First of all, I almost never sit back. No. 2, I would say, learn to sleep really fast. Then, I would say, understand that we’re not umbilically connected to any business — it’s not your family, it’s not your life, it doesn’t define you. The minute you take venture capital money, you have to understand that one of the [potential] outcomes is that the company could go on without you, [it] could be sold whether you like it or not. So you have to have this attitude that if this is the way I want to spend my life, it also may be in a different business. The question is always the same, and that is, is this something I want to be doing? Is it important work? Is it something I can get excited about?