Set a Good Example, Or Your Team Will Follow the Bad One.

 

Set a Good Example, Or Your Team Will Follow the Bad One.

Your team will always be looking for clues about how to behave toward customers, vendors and each other. Right now, they’re getting nothing but bad advice from the highest level.

EXPERT OPINION BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS @HOWARDTULLMAN1

 

May 27, 2025

 

As a young lawyer, I was introduced to a custom in our firm in which the rookies had to handle the many strange and simple lawsuits regularly initiated by one of our most litigious clients. This gent was in the towel-and linen rental business and whenever a customer failed to pay their bill or to return all of his items, he would insist that our firm immediately file a lawsuit.

These were not substantial dollar claims, and it quickly became apparent that filing them made no financial sense because the hourly legal costs far exceeded the value of the claim. The older attorneys in the firm believed that the client was more than a little nuts and each had their own war stories about their time in the “towel tank” as it was called.

In truth, the “honor” of handling these largely frivolous cases was halfway between helpful (learning the ins-and-outs and the arcane procedures of Chicago’s civil trial courts) and hazing (making sure the newbies knew their place), which bordered on harassment. To be slightly fair, learning to cultivate friends in low places at the clerk’s offices and begging them to help you learn the ropes was an invaluable life lesson. More importantly, even though young lawyers quickly concluded that this work was just slightly above ambulance chasing, the client loved every battle and happily paid for the privilege.

In fact, he absolutely prided himself on his reputation as a lunatic who would sue anyone who crossed him. He wasn’t stingy or frugal in the rest of his affairs and, in fact, he owned a great deal of property and bought and sold many businesses over the years, which was clearly why the firm’s senior partners were happy to appease him. But he relished his reputation – well-known across the city and his industry – as a guy who would sue you for a song.

If this propensity to sue everyone for little or no reason sounds sadly familiar these days and reminds us of the daily, illegal threats and extortionate practices of a certain Orange Monster, it’s not an accident.

But the point of the tale isn’t about the stupid or ugly actions of the client. What’s interesting is the impact on his customers and how it changed their behavior. In the very same way that Trump seeks to have the entire country bend a knee and obey his every demand, the Towel Tyrant made sure that every single customer knew that he wasn’t someone to be trifled with, put off, or stiffed. Result: his accounts receivable balances and bad debts were a wonder to behold.

Unfortunately, it’s not easy or often even possible to control the scope, distribution or reach of these actions and philosophies, or the messages they send, or exactly whose behavior they impact. Suffice it to say that there were plenty of prospects who happily found other vendors rather than having to deal with this guy. And others in the industry who – taking a page from his playbook – treated him just as shabbily as he treated his customers.

Enough has already been written about the direct results of Trump’s illegal orders, actions, and schemes.  But we’re just beginning to see how his in-your-face actions and constant outright grifting have begun to change the behaviors of millions of consumers and customers. Any day now you can expect to start seeing the costly and unfortunate behavioral changes in your own businesses that we’re already seeing all over Chicago.

The Trump rot is spreading, and it seems that millions of aggrieved individuals – especially the younger generation of inner-city kids – have decided that, if Trump can do whatever he pleases and get away with it, then why should they follow the rules, obey the laws, respect their neighbors? Why shouldn’t they simply take whatever they can get their hands on?

If you’re in a consumer-facing business – food, entertainment, education, medicine or government service – you’ve already seen dozens of social media videos and news stories showing stores robbed and trashed by hordes of teens. They smash display cases and throw registers around malls, refuse to pay for fast food meals and attack staff.  At big box and warehouse stores, security teams have been overwhelmed, outnumbered and beaten by thieves and other troublemakers.  

Making it okay to behave badly.

In a word, Trump’s overt and shameless lawlessness has given permission – if not direct approval – to every kind of deadbeat, bad actor, teenage wannabe gangbanger, malingerer and criminal to act out, cheat, steal and attack people and property with an inflated, unfounded and arrogant sense of grievance, entitlement and reparation. Trump will never be a good example of anything, but at least his corruption and narcissism can serve as a horrible warning of where we’re headed.

As the videos convincingly demonstrate, these aren’t people to be reasoned with, appeased or placated. The turmoil and the thefts are all an intended and important part of the exercise and the entertainment. They start with the proposition that “what’s mine is mine and what’s yours, we’ll talk about.” Chicago’s own racist mayor tells these fools that they’re entitled to take back what was stolen from their ancestors centuries ago and that he’s happy to lead the charge.

So, what exactly is any business owner or manager supposed to tell their team about how to respond to these growing threats to their operations? Customer service takes a backseat every time to server safety. The last thing any employer wants is to have their employees injured as they unsuccessfully try to protect the company’s property and merchandise. This chaos and loss of control plays into the hands and demented plans of an aspiring autocrat who would love nothing more than to invoke martial law and send troops into our major urban centers.

We’ve already seen that major retailers like Apple have instructed their employees (for insurance and liability reasons) to just stand by and let the thieves abscond with whatever they can quickly grab. No one thinks that this policy makes sense, but other than intensifying their onsite security and securing their doors, it’s not clear that any vendor has come up with a better solution. Some of the high-end jewelry and clothing stores in major cities are reconfiguring their entries to resemble the sally ports that traditionally limited direct access to prisons, banks, and other secure facilities.

CVS has addressed its “shrinkage” issues by locking up the store’s expensive merchandise inside plastic cases which – as you would imagine – has adversely impacted the shopping experience for actual paying customers. The high security approach gives their own staff another set of distracting duties—they have to open the cases for customers– and time-consuming responsibilities. And, in those areas where things are really out of control, we’re seeing stores simply closing.

It’s easy to lose faith and feel that things are hopeless and getting worse and, worse yet, that there’s no solution in sight. But that’s not the way that good people and great entrepreneurs think. We’re able to see and honestly admit that the challenges ahead seem daunting, if not overwhelming, and that our current leaders clearly aren’t up to the task of making things better.

But we still put our heads down every day and move forward with the heart, the critical energy and the determination that it’s going to take to make changes for the better. Chicago has been reborn many times over its resilient history and it’s up to all of us to do it again.  

New INC. Magazine column from Howard Tullman

 

The Migrant Crisis Offers a Lesson for Entrepreneurs

Chicago and New York are struggling to handle thousands of new arrivals cruelly dumped in their towns by red state governors. But the proposed solutions show the downside of short-term thinking. As an entrepreneur you can't afford to act this way. 

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@HOWARDTULLMAN1

 

Right now, the Democratic mayors of every major northern U.S. city are facing a novel, overwhelming, and complicated migrant challenge that has been aggressively and immorally engineered by the governors of Florida and Texas, among others.  Busloads of misled, unprepared, and unsuspecting families of migrants are being shipped north to New York City, Chicago, Philadelphia, and other cities.

Overnight, they're expected to implement viable solutions to process, house, and care for an influx of vulnerable, often ill, and generally non-English-speaking civilians of all ages. In some respects, it's a repeat of the kind of entrepreneurial challenges posed by the pandemic. And there are absolutely no easy answers.

But even the newest and least experienced entrepreneur knows that not every step he takes will be productive and move the business forward. Nor will it be the best and optimal choice possible because no one has yet invented an infallible crystal ball for new business builders. The same concept applies to newbies in government positions of great responsibility -- for instance, being the mayor of Chicago or New York.

The most critical thing to do in these cases -- given the immense challenges and the inevitable uncertainties -- is to not make rapid, stupid, and expensive decisions. If you try to run before you walk, painful and costly stumbles are guaranteed, especially if you lack operating and administrative experience.

Small, slow steps that preserve and often maximize flexibility and optionality usually make the most sense. Whether you're talking about new strategic initiatives,  geographic expansion and rollouts or trying to do too many tough things at the same time, it's smartest to go slow as you scale. Grand and abrupt gestures, quick patchwork solutions, or leaping before carefully looking are sure to fail. You don't test the depth of the pond by jumping in with both feet.

And, given the scarce financial resources and competing demands which are always part of the puzzle, the one inviolable rule is to avoid costly choices and commitments that are certain to be temporary and short-lived and which are not foundational in any sense. Only dummies go deep on disposables or rush so far down a precarious path that there's no turning back.

You can get away with a lot that's not perfect if you can at least show that the actions you took and the funds you spent were directionally correct. And that the enterprise can eventually reuse, repurpose, adapt, or build on top of whatever you've done to date so that it's not a total waste of time and money. The trick is to make your investments and actions incremental, flexible, and additive.  

But Chicago's newly-elected, amateur mayor, Brandon Johnson, who's never built or run any business - much less a massive operation like the City of Chicago -- apparently never learned this lesson. It's already becoming clear that, even though he was an elementary school teacher for a few months, he isn't really interested in learning and that his position isn't one that's well-suited to on-the-job training.

Chicago's latest plan to buy and erect massive tent camps to deal with the surge in migrants being shipped to the city by Red State governors is ill-conceived, ridiculously expensive, impossible to implement and doomed to failure. New York's latest solution - handing these people vouchers to go to stay in other parts of the state is equally wasteful, short-sighted, and unworkable. It's no wonder that the voters in these places, who were never asked or voted to become "sanctuary" cities, aren't pleased to have these enormous concerns and costs heaped upon them as taxpayers.

The best that can be said for these efforts (and the equally ineffective solutions being attempted elsewhere) is that they provide some handy warnings for startups as to exactly what not to do.

The current Chicago plan is to buy tents and house migrant families through the dependably fierce winter in random outdoor locations across the city. Did I mention that the vendor quickly and quietly selected to be paid $29 million to begin this travesty is the same firm that has helped MAGA moron governors move migrants from Texas and Florida to Chicago and New York? You can't make this stuff up.

But the saddest part of the story and the actual lessons for all new business builders are quite simple. There were sounder, smarter, simpler, and shorter ways to do a much better job of attempting to solve this particular problem. Each of the alternatives -- which were apparently never carefully considered in the rookie mayor's rush to just do something -- offers lessons for every kind of entrepreneur.   

First, don't buy anything you can rent or borrow if you only have a short-term need.

The city and state (as well as FEMA and the Illinois National Guard) have rented and deployed large-scale tents for emergency purposes during the pandemic as well as for other natural disasters, and for numerous sporting events, races, and other recurring festivals for many years. While housing thousands of migrants essentially outside is foolish, buying expensive tents for temporary housing and then discarding them is an even dumber idea.  Smart people rent for a reason and try before they buy.

Second, ride on someone else's existing rails whenever possible.

There are hundreds of built facilities throughout the city that could be pressed into short-term service (much as McCormick Place was used as a COVID hospital) including armories, 50 empty CPS schools, libraries and hospitals, or vacant warehouses at far lower costs and more quickly and efficiently than trying to build tent cities across Chicago. Several vacant hotels in the suburbs, which were previously serving as shelters, are already being converted into  housing which may become permanent facilities for the city's unhoused residents.

Third, make the money you do spend matter for your long-term needs and requirements.

There are massive numbers of abandoned or underutilized apartment and industrial buildings in Chicago which could be repaired, rehabbed, and returned to the city's long-term housing and commercial real estate stock using the same funding now being committed to the tent cities. In addition to creating long-term housing, undertaking these projects would provide employment and training opportunities for unemployed residents in precisely the underserved and resource-poor areas which need the most help. Nothing could be dumber or more wasteful than paying these new arrivals (who may ultimately become productive employees and citizens) to go away.

Finally, focus and concentrate on your efforts and concerns; don't spread them out and dissipate them.

While putting tent cities in each of Chicago's 50 wards might be a wise political approach, what the city actually needs is a prudent solution with the best possible permanent benefits. Selecting several primary, large-scale locations where security, transportation, food, and even educational resources could be concentrated and effectively delivered makes far more sense. Put all the wood behind one arrowhead.

Creating a couple of these permanent care and comfort facilities -- as opposed to piecemeal and interim internment camps -- would change the entire perception and purpose of the program. We could be helping with our housing, supporting our newest residents, and rebuilding parts of our city as well.

NEW INC. MAGAZINE COLUMN BY HOWARD TULLMAN

  

Some Big Cities Need to Get a Grip on Crime

Or they're going to become small cities. In Chicago, the daily havoc is ruining downtown businesses and prompting some companies to leave town. "Progressive" policing isn't helping. 

 

BY HOWARD TULLMAN, GENERAL MANAGING PARTNER, G2T3V AND CHICAGO HIGH TECH INVESTORS@TULLMAN

 

Anyone who's been paying attention knows that you'd have to be a confirmed masochist to try to open a business or a new store in the central business districts in a number of the largest cities in the United States. Ground Zero these days for urban unrest and the constant dashing of good intentions is undoubtedly San Francisco, where even foolishly optimistic corporations like Whole Foods have basically given up fighting against the continued assaults on their people, non-stop and largely tolerated shoplifting and overt thefts, open-air drug markets and mentally ill homeless wandering the streets.

Only weeks after Whole Foods shuttered a nearly brand-new store in San Fran, Nordstroms, a longtime and legendary retailer, announced that it is closing two downtown locations as well. Seattle and Portland, Oregon don't even pretend any longer.  Their streets, sidewalks and parks are virtual war zones and no one running any kind of business there thinks they're going to be able to survive much longer. Street crime and drugs are rampant and basically ignored by the progressive municipal administrators; and the disease is spreading.

We're seeing the same kinds of issues and problems in Chicago, and we've also got insane levels of carjackings by armed groups of 13-year-old kids.  In addition to the retail marketplace collapsing in downtown and commercial real values plummeting, we're seeing a growing exodus of major corporations, which has even worse implications for the city's long-term health and viability. Having just elected a new mayor who has absolutely zero business, management, or operational experience  to follow in the footsteps of the last angry, nasty and grossly incompetent occupant of that office, we're seeing firms reducing their presence or leaving town, most recently Guggenheim Partners.

This should be a warning to the incoming mayor, Brandon Johnson, as well as to other "progressive" mayors across the country that the tech and business community's exodus to greener and safer pastures is moving forward at lightspeed. In fairness to Johnson, the rush to the exits started with Mayor Lori Lightfoot, who abruptly and aggressively turned her back on the business community and largely ignored the needs of the downtown business district whose stores, restaurants, hotels and theatres are among the largest drivers of the city's economic success. Companies are voting with their feet as they seek out safer, more corporate-friendly and better-managed communities.

Someone needs to reach out in a hurry to stem this tide or there won't be much of a CBD or an economy left in Chicago. To date, if anything, the confused and hostile messaging -- largely leftover threats and promises from the campaign -- which the mayor-elect has promoted has done exactly the opposite. Sadly, the more that these progressive and inexperienced novices pontificate about their grand visions and future (albeit undetailed) programs, the more difficult it becomes for any rational business leader to make forward-looking plans that include Chicago and cities like it in the equation. You can't build a solid business on a foundation of fast talk and fantasies.  

The COVID-19 pandemic and the largely irrevocable behavioral changes it precipitated have provided an amazingly convenient excuse for two or three different kinds of corporate action that in earlier times were simply not viable alternatives given the likely civic and political blowback they risked. Shrinking or entirely abandoning substantial downtown office spaces in the name of a newly liberated workforce that wants to work from home is one example. Which means that threatening to tax those commuters who were planning to return to the city for work is a stupid start if the goal is to rebuild a thriving downtown.

Not bothering to rehire entire middle-level tiers of white-collar workers - especially of a certain age - is another ongoing corporate process because the tasks those workers performed have been outsourced, compressed by new A.I.-driven tools like ChatGPT, or eliminated by automation. That turns out to be very convenient cover for headcount shrinkage as well as the conversion of large segments of the workforce from fixed infrastructure costs into variable and often outsourced expenses -- conversions that have direct and highly attractive impacts on the bottom line. The insane idea in this kind of environment of reinstituting an employee head tax, as Mayor-elect Johnson suggested, is exactly the worst kind of disincentive to encourage new entrants and retain the few big businesses we still have.

So are the convenient knee-jerk rationalizations for constant shoplifting and the wanton weekend trashing of city buses and police cars as well as looting of downtown stores.  Apparently, we don't want to run the risk of "demonizing" any of the little darlings who simply have no other way or place to express themselves. This is simply an invitation to a summer full of mischief and mayhem, which will also help to make sure that our downtown restaurants and hotels continue to suffer from the tourist drought that has threatened their very existences for the last several years.

When the small stores, shops and food outlets in the Loop close their doors at 3 or 4 in the afternoon and thereby forfeit what little homebound commuter traffic there might have been to avoid the risks of staying open, the message should be clear to even the most oblivious observers. Chicago is simply not the place to be after dark. When big store operators like Walmart, which just announced the closure of four Chicagoland stores, and Target start to determine whether it even makes sense to stay open in certain parts of the city, we know that we are on the cusp of even more challenging times.

But, to return to the ongoing departure of major firms in the city and  the direct and  indirect ways that they are hollowing out their offices, warehouses and other activities, there's an even bigger and far more impactful problem with their disappearance. Many of these firms are the very organizations, enterprises, and entities that funded, supported, supplied manpower to, and otherwise encouraged the very essential civic, charitable, and philanthropic activities designed to serve the underserved populations that the new mayor says are so critically in need of assistance.

As these companies, their people and their attention shifts elsewhere, Chicago and every other major urban city that doesn't respond effectively to these problems will be much the worse for their leaving, in ways that simple headcount and revenue numbers can't begin to calculate. 

INC. Magazine Piece on Chicago with 1871

Chicago gets some shine on Inc. 5000 list of fast-growing companies

Chicago gets some shine on Inc. 5000 list of fast-growing companies

By John Carpenter,Blue Sky Reporter  contact the reporter

Chicago holds 95 spots on the Inc. 5000 released Wednesday, second only to New York this year on the volatile list of America's fastest-growing private companies.

Protein Bar, AKTA and Insureon were among nine Chicago companies cracking the top 500, all for the first time.

The city's 95 companies of the 5000 placed it a distant second to New York’s 205 but ahead of startup hubs such as Austin, Texas (fourth with 87) and San Francisco (seventh with 63), according to Inc.

Chicago moved up from fourth last year, jumping over Los Angeles and Washington D.C., neither of which cracked this year’s top 10.

 “Chicago has always had a pretty strong presence on the list,” said Inc. editor Jim Ledbetter. “But the fact that (its presence) is 50 percent larger than San Francisco is pretty striking. It continues to be an innovative place that is obviously pretty friendly to startups.”

Howard Tullman, CEO of Chicago’s 1871 tech incubator and an Inc. contributor, said he expects some sort of celebration in September for the Chicago winners, likely at the Merchandise Mart-based facility.

Tullman said it doesn’t surprise him that Chicago did well on this list, since the growth metric favors companies generating revenue, which he said plays into Chicago’s typical business-to-business startup profile. The Inc. list measures revenue growth over a three-year-period, requiring firms to submit financial records, the company said.

“We’re just never going to be a place that goes for moon-shot businesses,” Tullman said. “We’re B2B, real businesses doing real innovation. That makes for steady growth with the metrics they (Inc.) use.”

This year’s list features a repeat No. 1 company for only the second time in its 33-year history. California-based Fuhu, a manufacturer of computer tablets for children, has charted revenue growth of 158,957 percent over the past three years, according to the list. Its growth rate last year was a mere 42,148 percent.

Because growth rather than size is the key metric, the list changes significantly from year to year and features spectacular growth numbers, Ledbetter said. Such growth rates are not typically sustainable. This year’s top 500 includes only 93 companies that were on the list last year and features growth rates ranging from 942 percent at the bottom to Fuhu’s staggering rate at the top, he said.

MAX Digital, which makes digital marketing tools for the auto industry, leads Chicago companies on the list. Founded in 2010, it generated about $100,000 in revenue that year, compared with $6.5 million in 2013. That’s a growth rate of 5,483 percent — 51st on the list.

MAX Digital CEO Pat Ryan said he’s especially proud that his company ranks third on the list among software companies, which he said California firms tend to dominate. Both software companies ahead of MAX Digital are California-based.

The top 500 includes nine Chicago companies, all of which appear on the list for the first time. The eight others are:

• Insureon (No. 107), which provides insurance coverage for small businesses;

• Paramount Lodging Advisors (No. 188), a hotel-industry real estate services company;

• Protein Bar (No. 200), which operates a chain of healthy-food/fast-casual restaurants;

• Restaurantware (No. 366), maker of disposable tableware for the hotel, catering and restaurant businesses;

• AKTA (No. 414), a mobile app developer and innovation and user-experience consultant;

• Response Team 1 (No. 422), an emergency recovery company;
   
• RIPT Apparel (No. 441), a T-shirt maker that sells limited-edition artist-designed shirts;

• Framework Communications (No. 442), a single-source provider of telecommunications, IT, voice/data systems and IT management support.

“I’ve wanted to make this list since we started,” said RIPT Apparel CEO Matt Ingleby, who launched the company in 2009 with two childhood friends, co-founders Paul Friemel and TJ Mapes. “I’m very proud of our team, and everyone that’s helped us along the way.”

Rich Rinella, COO and co-founder of Restaurantware, said his company is poised for continued growth.

“The market is massive compared to where we are now,” he said.

This year’s top 10 cities by number of companies on the list are New York (205), Chicago (95), Atlanta (94), Austin, Texas (87), San Diego (81), Houston (76), San Francisco (63), Dallas (55),  Denver (47) and Irvine, Texas (47).