MINDING YOUR BUSINESS
Experience pays off for start-upsMany innovative leaders have paid their business dues
By Ann Meyer
Special to the Tribune
Published June 25, 2007
After decades of experience in the corporate world, Stephen Applebaum spotted plenty of gaps in the marketplace that needed filling.
Today, he and two other former executives of CCC Information Services Inc., including Dennis O'Mahoney, are targeting what they consider an obvious missed opportunity in the insurance industry, the chance to use computer technology to streamline the way insurance companies choose vendors to appraise and repair their clients' banged-up cars or homes.
"Working with the Fortune 500, it's not hard to spot the opportunities and the deficiencies," said Applebaum, president of ClaimForce, which has 19 full-time workers.
The Warrenville-based business acts like an Angie's List or Orbitz for insurance companies by scoring appraisers, repair shops and property restoration services based on service, cycle time, pricing data and other quantitative measures, said O'Mahoney, chief executive, who launched the company in late 2002.
The idea is to make it easier for adjusters to choose "the right provider at the right price and the right place," so policyholders are satisfied, O'Mahoney said. ClaimForce helps manage the process from start to finish.
ClaimForce was one of 13 companies, including four in the Chicago area, selected as Innovate Illinois winners last week by the Illinois Department of Commerce and Economic Opportunity. About 100 companies submitted applications, and the competition "was tougher" than in years past, said David Weinstein, president of the Chicagoland Entrepreneurial Center, which administered the contest. "Entrepreneurship is in vogue," he said.
Winners get a $10,000 grant, travel stipends and the chance to participate in mentoring and networking programs.
Growth engine
"The ultimate goal is providing an environment for Illinois entrepreneurs to succeed," said Jack Lavin, director of the Department of Commerce and Economic Opportunity. "They're our greatest engine for economic growth. We want to nurture them to succeed."
It turns out, this year, some of the most innovative entrepreneurs are also the most experienced. Like ClaimForce, the other Chicago-area winners were started by seasoned business professionals. Wayne Rothschild, president and co-founder of Neat-Oh, the Northfield maker of the ZipBin, a storage system for toys, has more than 50 patents to his name and has worked for Kraft Foods Inc., General Binding Corp. and WMS Gaming Inc. Shelly Sun, president of BrightStar Franchising, which sells franchises of a medical staffing business she started in 2002, previously was a senior manager at CNA Financial Corp. and Blue Cross Blue Shield.
Julia Stamberger, president and co-founder of GoPicnic, was a PricewaterhouseCoopers consultant in the '90s before launching start-ups WorldSpyder.com, a travel content dot-com, and Turn-about Inc., focused on networking techniques to find employment.
Stamberger got the idea for shelf-stable foodservice company GoPicnic while working in business development at United Airlines with partner Pam Volpe Jelaca. "We left United to see what we could do with it," Stamberger said.
GoPicnic provides fully assembled, shelf-stable boxed meals for airlines, hotels and other companies. The seven-employee company scours the world for products to include, working with manufacturers to customize the items, which have a minimum shelf life of six months, Stamberger said. All are balanced meals and free of MSG, high-fructose corn syrup and trans fats, she said. Popular items include tuna salad, whole grain and bean salad, cheese, pita chips and hummus, and gourmet cookies or chocolate.
Often, corporate experience leads to a breakthrough business idea when someone figures out a solution to a persistent problem, experts said. What's more, venture capitalists and other financing agents often look for a track record of business success.
"We're seeing more experienced folks start companies," said Steve Miller, principal at Origin Ventures, a Northbrook venture capital firm that has funded ClaimForce. The firm was attracted to ClaimForce largely because of the management team, Miller said. "We looked at what they had done previously," he said.
Miller recommends that novice entrepreneurs team up with more experienced managers, or build a team of advisers to help guide them. "They need to know what they can do, and what they can't do," he said. "Then they need to find some resources that can help them."
The trend toward seasoned executives starting entrepreneurial ventures in Chicago extends beyond the Innovate Illinois contest, experts said. "We're seeing some of the best deal flow we've seen in years in Chicago, and it's a direct correlation with more high-caliber entrepreneurs emerging over the past couple of years," Weinstein said.
Access to advisers
The key to cultivating successful entrepreneurs is in providing access to advisers who can help them overcome obstacles, avoid expensive mistakes and expand their businesses, Weinstein said.
All the Innovate Illinois winners will be paired with mentors. "The greatest service you can provide them is to link them up with great business advisers and mentors. That's the missing link," Weinstein said.
This will be the second time Sun has participated in a mentoring program at the entrepreneurship center. She also participated in the Athena PowerLink program, which she said was instrumental in getting her franchise operation off the ground. Now that her franchise business is expanding rapidly, with two to five new franchise locations opening per month, she is looking for help managing the growth. "We want to make sure we are staying in front of it," she said.
She started BrightStar Healthcare in 2002 with her husband, J.D., after his grandmother became ill and Sun experienced first-hand the challenge of finding quality medical care. The company, which has three company-owned stores in the Chicago area, provides home health-care and medical staffing services. It now employs 120 workers and has awarded 28 franchises in the past 18 months.
Neat-Oh, which has raised about $2 million in private equity, hopes a mentor will provide suggestions for long-term growth. "We're in here fighting the good fight every day," Rothschild said. "This will give us a chance to step out" and work on strategy.
"Our biggest challenge is finding ways to market on a very limited budget," he said.
Through networking, the company already has talked with Stamberger about the possibility of packing GoPicnic's food items in Neat-Oh's picnic-themed ZipBin to boost visibility of both products.
Other Innovate Illinois winners named include: Colorlab Cosmetics, K.W. Powell & Associates and Leading Edge Hydraulics, all from the Rockford/Northern Illinois area; Professional Swine Management, R Cubed Technologies and Vision Technology Inc. from Central Illinois; and Arthur Agency, Boon-Docks Equipment, and So iLL Inc. from Southern Illinois.
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Innovate Illinois program
Purpose: The state program was created to help innovative small businesses grow.
How it works: Each year, 13 companies from four regions of Illinois are selected for a six-month program administered by the Illinois Department of Commerce and Economic Opportunity.
Each winner receives a $10,000 grant and travel stipends and is matched with mentors and other resources to help them develop strategies for growth.
To learn more: www.innovateillinois.org