BIG IDEAS for 2015 from 1871 CEO Howard Tullman - Blue Sky Originals

Emphasis on device-charging; outsourcing customer service to customers

BLUE SKY ORIGINALS: http://www.chicagotribune.com/bluesky/originals/chi-big-ideas-2015-howard-tullman-1871-bsi-story.html

   Howard Tullman, CEO, 1871 

Tullman divided the Big Ideas question into two categories: products and services.

This may be the year that battery makers solve the problem of lightweight long-lasting batteries. If it isn’t, the growing array of technology that relies on battery power will be in trouble, Tullman said.

Manufacturers of wearable devices are finding that users abandon them quickly if battery recharging is problematic, Tullman said. One option may be refinement of kinetic charging devices that use motion to generate power.

“We could create portable chargers and we’ll be in a position where this stuff never goes out of style,” he said.

As for services, Tullman sees companies continuing their effort to delegate more service tasks to customers themselves.

“We’re only beginning to understand how much of the work of every transaction is going to be imposed on the customer,” he said. “If they do it right, we really appreciate it. If they do it wrong, we get very frustrated.”

Tullman said Amazon is “way on top of this” and suggested that consumers will move toward automating their regular, commodity-type purchases — soap, detergent, etc. — which will change the way in-store retail outlets look.

WHAT PREDICTS SUCCESS IN A STARTUP?

Do you need an MBA to succeed at a startup? Not really, say people well connected in Chicago’s startup world. And woe to the job applicant who walks in the door with a stiff roll of parchment and an even stiffer personality.

MBA holders sometimes will be met with suspicion, founders warn. Entrepreneurial shoptalk abounds with tales of MBAs comporting themselves with plodding arrogance when what they really need is humble agility.

But founders also say there are times — when businesses get rolling and things get complicated — that they think it would be helpful to have someone who could see the big picture, which should come with an MBA.

“But capabilities can similarly be attained through a good old-fashioned array of mentors that set high expectations early in peoples' career,” added Hoffman, who got an MBA from the Stanford University Graduate School of Business before a career at Boston Consulting Group, Motorola and United Airlines — and then Groupon and Rocketmiles.“The biggest predictors of success at a startup are the leadership team, their focus and a simple concept,” said Jay Hoffman, co-founder and CEO of Rocketmiles.com, a presenting company in the October Chicago Venture Summit. “An MBA is often part of the recipe, but doesn’t have to be … (it) can provide the ‘long view’ and reference points for many of the challenges that arise.”

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Blue Sky Innovation reached out to connectors in Chicago’s startup community and asked three questions: “What predicts success in a startup?” “How often is an MBA part of that mix?” and “When is it helpful, and when not?” We received several email responses, which we share (edited for length and clarity) one question at a time.

MICROSOFT'S SONAL MANE - 1871 BOARD MEMBER - ON STARTUPS

WATCH THE VIDEO: http://bluesky.chicagotribune.com/originals/chi-sonal-mane-microsoft-20140529,0,0.premiumvideo

WATCH THE VIDEO: http://bluesky.chicagotribune.com/originals/chi-sonal-mane-microsoft-20140529,0,0.premiumvideo

BLUE SKY ON THE TECH BUBBLE

THE WORST ADVICE

Tullman: Startups underestimate corporate culture at their peril

1871 CEO Howard Tullman speaks at IBM's Global Entrepreneur Day in Chicago on Tuesday. (John Carpenter / Blue Sky)

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By John Carpenter, @ScoopCarp , Blue Sky Reporter
Feb. 5, 2014, 12:40 p.m.

The elusive corporate contract may seem like the Holy Grail to a founder looking to make the next payroll, but startups often stumble by mishandling big-company culture, 1871 CEO Howard Tullman told a group of entrepreneurs.

Tullman, the keynote speaker at IBM's Global Entrepreneur Day in Chicago on Tuesday, said navigating the corporate culture is almost as important as getting the product right.

"The startup culture is more about survival and existence," he said. "In the corporate culture, peace is more important than progress."

As an example, he said startups shouldn't charge into a meeting with a large organization and talk about what a radical change their product will bring about. The corporate bureaucrat hears that, Tullman said, and thinks about risk and high costs to re-train people.

"Tell me how easy, familiar and fail-safe it will be," Tullman said.

Still, landing corporate partnerships is worth the effort, precisely for the same reasons it is so difficult. Tullman said that once a small company's product or service becomes integrated into a large corporation’s strategy or systems, it becomes entrenched.

"Integration is the last great lock-in," he said.

Big companies don't want to be pioneers and are more comfortable being fast responders, Tullman said. This means a savvy entrepreneur can play upon what he called "FOMO" — fear of missing out.

Howard Tullman's big ideas for 2014

"You might have to wait" is a great thing for a startup to say, Tullman joked.

Tuesday's event was part of an IBM program aimed at helping entrepreneurs and letting IBM hear their ideas, said Kurt Peckman, who manages IBM Innovation Centers in Chicago, Dallas, Austin and Silicon Valley.

"Gone are the days of us just preaching to them," Peckman said of startups. "We want to learn from them."

Tullman extolled the virtues of the "strategic partnerships and collaboration" that can grow out of events like Tuesday's, but he also noted that corporate innovation departments often aren't the places to go looking for deals. They aren't where you find the real money and real decision-making power, he said.

He said he tells anyone who will listen that "the scarcest resource for the entrepreneur is time." Endless meetings with people who aren't in a position to make the deal is a potentially fatal waste of time, Tullman said. This idea was at the heart of the title for his talk: "You don't want to be dealing with the monkey when the organ grinder is in the room."

Tullman also noted that entrepreneurs must guard against their own tendencies. He said they aren't always good negotiators and are "really good at self-delusion." This makes it very important to have experienced advisors who can offer valuable perspective.

– jccarpenter@tribune.com

BLUE SKY INNOVATION AND 1871 WELCOME MARK CUBAN FOR A DISCUSSION AND TOUR

Blue Sky Innovation kicks off its Innovators series with entrepreneur/investor Mark Cuban, in conversation with James Janega, Blue Sky Innovation reporter. The live discussion will examine Cuban’s wide-ranging experience with entrepreneurship, innovative business practices and more. Cuban is owner of the NBA’s Dallas Mavericks and is the founding chairman of the entertainment cable network AXS-TV, among other ventures. He is a regular investor on ABC’s “Shark Tank.”

$45 VIP (limited tickets; reserved front-block seating), $25 general seating, $30 if purchased at the door, 7 p.m., Merchandise Mart – 12th floor, Chicago

Chicago startup investors, leaders take stock of 2013, prepare for bigger 2014

The leadership team at Chicago-based venture capital tech investor Lightbank has put together a "Startup Guide" to Chicago, while the 1871 coworking center plans to ring in the New Year with a report on some of the companies that have moved up – and out – of the high-profile Chicago incubator and coworking hub.

Investors, advisors and entrepreneurs have expressed optimism that 2014 would build on the entrepreneurial energy 2013 brought to Chicago.

Under incoming CEO Howard Tullman, 1871 in particular hopes to see startups grow out of the space – instead of growing comfortable treading water there.

Nevertheless, Chicago is taking efforts to make itself a home for new generations of entrepreneurs.

Lightbank vice president Marina Dedes and associate Adam London this week released an online guide highlighting the productive autumn of 2013 that saw more than $846 million in high-profile sales of Chicago startups – part of more than $1.2 billion in 2013 sales and public offerings reported by Built In Chicago during the first three quarters of the year.

"The past five years have been a very exciting time for Chicago startups," Dedes said. "We've seen successes such as Groupon, GrubHub and Braintree, which have helped put Chicago on the map as a tech and innovation hub. We created this guide to help entrepreneurs, investors, students and outsiders alike navigate the growing Chicago tech ecosystem."

Meanwhile, 1871 is readying a Jan. 14 event honoring more than 20 companies that have outgrown the incubator.

Tullman has signaled that the New Year would be about results, and not hype – including an "emotionally honest" appraisal for 1871's entrepreneurs about their plans for success, Tullman said. Many may decide to leave after those moments, he added.

In an end-of-year interview with Blue Sky Innovation, he also elaborated on changes coming in 2014 for the Chicago startup community, including the possibility that 1871 would partner with the online crowdfunding service Indiegogo.

The service is listed in the portfolio of G2T3V, Tullman's early stage investment firm.

– jjanega@tribune.com