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|[Actually 4/16/2012]: The May Report: 4/16/2012: Part I: This thing got so long, I decided to make it a two-parter: Chicago-based Unmetric, www.unmetric.com, raises $3.2 MM In Series A Funding From Nexus Venture Partners to Deliver Social Media Benchmarks Between Brands; There are more than 10,000 stories at Groupon and this is one of them: A guy in my building, Siddharth Patel, who works at Independent Publishers Group, has a friend who worked at Groupon until recently. The Groupon guy graduated from IIT and worked at Groupon in IT doing algorithms until a few months ago; He was bored since all they did at Groupon, Siddharth tells me, was drink beer and play on YouTube. Siddharth's friend left Groupon for Google (in the Valley) for a salary of $120K a year while he was being paid just $65K by Groupon here; Oh, and while I don't know the Groupon guy's name -- his first name starts with an "H" -- I guess with beer and YouTube, we can't exactly call Groupon a sweat shop, but we may be able to call it poorly managed and the staff somewhat underpaid :-); Remember that one reason entrepreneurs are attracted to starting firms in Chicago is relatively cheap labor; Friday, I hightailed it down to Gleacher for the Energy Junction event sponsored by the Chicago Booth Energy Club: the attendance was about 85 students and 110 total including panelists and speakers, and according to one organizer, they had far more night and weekend students than full-time students from Hyde Park (he wants to get the average age down from 38 -- I think that's a bit high); I met some alums at the reception as well and I noticed that a lot of current students have EEs from UIUC; I ran into Oak Stevens who's been at KPMG for 10 yrs. now -- he used to work for Wally Cornett; David Carman and Ada Nielsen (Booth class of '78) were there; the flashy dresser (bright blue suit) award goes to Okie John Penton of www.canaangas.com who had a swarm of students talking to him at the reception and the guy who looked like he just got off the golf course with Bubba Watson was Jared Rose of Octave Reservoir Technologies, www.octavereservoir.com; some energy firms represented included www.suzlon.com, and www.auxsable.com (Aux Sable Liquid Products) which 'owns and operates one of the largest NGL extraction and fractionation plants in North America... located in Channahon, Illinois about 50 miles southwest of Chicago near the eastern terminus of the Alliance pipeline. In operation since Dec. 1, 2000. ... facility is capable of processing 2,100 mmcfd of gas and can produce about 102,000 barrels per day of specification NGL products'; there were plenty of people from ExxonMobile, UOP, and the Big 4 consulting firms; one wind turbine co. has 1,300 turbines (mostly in Texas) at $1MM per megawatt if I understood correctly; Small world story -- Sadie Stotmeister, a Sr. Account Manager at Careerbuilder, knows Ryan Rudvitzki who runs the Chicago Booth Energy Club this year; both Sadie and Ryan hail from Milwaukee; both went to UW-Madison and Sadie used to date Ryan's brother A. J.; btw, she was an Irish dancer and appears to have great legs :-); micro scoop: Careerbuilder may sponsor the next Chicago Booth energy club event, and at Gleacher, that ain't cheap -- food/drink is at least $20/ person for drinks and $10/person for food; President Obama's picture has been added to the wall on the 6th floor of Gleacher showing all Nobel Prize winners associated with the University of Chicago; one good thing about this program was that they were not just focused on renewable and clean energy, but covered coal, natural gas, etc. and one guy told me he learned that Argentina has a lot of shale; and Starr Marcello, before you start complaining about my being there, check with Ryan and Holly -- I pre-registered and paid $30.99, plus the lamb shish kabob and the crab cakes were very good, so good that I did not have to eat dinner :-)|
|April 16, 2012|
The May Report: 4/16/2012: Part I: This thing got so long, I decided to make it a two-parter: Chicago-based Unmetric, www.unmetric.com, raises $3.2 MM In Series A Funding From Nexus Venture Partners to Deliver Social Media Benchmarks Between Brands; There are more than 10,000 stories at Groupon and this is one of them: A guy in my building, Siddharth Patel, who works at Independent Publishers Group, has a friend who worked at Groupon until recently. The Groupon guy graduated from IIT and worked at Groupon in IT doing algorithms until a few months ago; He was bored since all they did at Groupon, Siddharth tells me, was drink beer and play on YouTube. Siddharth's friend left Groupon for Google (in the Valley) for a salary of $120K a year while he was being paid just $65K by Groupon here; Oh, and while I don't know the Groupon guy's name -- his first name starts with an "H" -- I guess with beer and YouTube, we can't exactly call Groupon a sweat shop, but we may be able to call it poorly managed and the staff somewhat underpaid :-); Remember that one reason entrepreneurs are attracted to starting firms in Chicago is relatively cheap labor; Friday, I hightailed it down to Gleacher for the Energy Junction event sponsored by the Chicago Booth Energy Club: the attendance was about 85 students and 110 total including panelists and speakers, and according to one organizer, they had far more night and weekend students than full-time students from Hyde Park (he wants to get the average age down from 38 -- I think that's a bit high); I met some alums at the reception as well and I noticed that a lot of current students have EEs from UIUC; I ran into Oak Stevens who's been at KPMG for 10 yrs. now -- he used to work for Wally Cornett; David Carman and Ada Nielsen (Booth class of '78) were there; the flashy dresser (bright blue suit) award goes to Okie John Penton of www.canaangas.com who had a swarm of students talking to him at the reception and the guy who looked like he just got off the golf course with Bubba Watson was Jared Rose of Octave Reservoir Technologies, www.octavereservoir.com; some energy firms represented included www.suzlon.com, and www.auxsable.com (Aux Sable Liquid Products) which 'owns and operates one of the largest NGL extraction and fractionation plants in North America... located in Channahon, Illinois about 50 miles southwest of Chicago near the eastern terminus of the Alliance pipeline. In operation since Dec. 1, 2000. ... facility is capable of processing 2,100 mmcfd of gas and can produce about 102,000 barrels per day of specification NGL products'; there were plenty of people from ExxonMobile, UOP, and the Big 4 consulting firms; one wind turbine co. has 1,300 turbines (mostly in Texas) at $1MM per megawatt if I understood correctly; Small world story -- Sadie Stotmeister, a Sr. Account Manager at Careerbuilder, knows Ryan Rudvitzki who runs the Chicago Booth Energy Club this year; both Sadie and Ryan hail from Milwaukee; both went to UW-Madison and Sadie used to date Ryan's brother A. J.; btw, she was an Irish dancer and appears to have great legs :-); micro scoop: Careerbuilder may sponsor the next Chicago Booth energy club event, and at Gleacher, that ain't cheap -- food/drink is at least $20/ person for drinks and $10/person for food; President Obama's picture has been added to the wall on the 6th floor of Gleacher showing all Nobel Prize winners associated with the University of Chicago; one good thing about this program was that they were not just focused on renewable and clean energy, but covered coal, natural gas, etc. and one guy told me he learned that Argentina has a lot of shale; and Starr Marcello, before you start complaining about my being there, check with Ryan and Holly -- I pre-registered and paid $30.99, plus the lamb shish kabob and the crab cakes were very good, so good that I did not have to eat dinner :-)
Editor and publisher: Ron May, firstname.lastname@example.org, email@example.com,www.themayreport.com, 773-525-3944.
If you missed an article, go here:
(ALL REPORTS HAVE NOW BEEN POSTED ON THE TMRONLINE.COM SITE AND THANKS TO PROMINIC FOR FIXING THE PROBLEM)
Otherwise, just go to www.themayreport.com where all the articles are archived and the search function on the new site is now working
Louis Brandeis: "Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants."
frequently attributed to Edmund Burke: "All that is necessary for the triumph of evil is that good men do nothing." but the quote and its many variations have been the subject of dispute. See http://en.wikiquote.org/wiki/Edmund_Burke for more.
"Larsen E. Whipsnade": You Can't Cheat an Honest Man (1939), a comedy film starring and scripted by W. C. Fields
Andre' Gide (1869 - 1951) in his "Les Nourritures Terrestres. Envoi:":
"What another would have done as well as you, do not do it. What another would have said as well as you, do not say it; written as well, do not write it. Be faithful to that which exists nowhere but in yourself --- and thus make yourself indispensable."
April 17 - Annual Fair/Pair for Entrepreneurs
Come join us for a mini trade show combined with a mini Taste of Chicago. Our annual Fair/Pair features businesses who support small to medium sized companies paired up with a local food and beverage vendor. Attendees will circulate throughout the various "pairings" to sample great food and drink plus have access to businesses who can support your business all in one night!
Plus you can qualify to win a Kindle!
Current Food/Beverage Vendors Attending:
Scott and Lisa's Gourmet Pretzels
Spark of the Heart
Current Business Vendors Attending:
US Voice & Data
Productive Scheduling Solutions
Venture SHOT/Funding Feeding Frenzy
Open One Solutions
UBS Investments - Jeffery Tear
When: April 17th
Time: 5:30-8:00 pm
Where: IBM Innovation Center 71 S. Wacker 6th Fl
Fee: $10 for members $20 at the door
$35 for non-members $40 at the door
Click here to register
TABLE OF CONTENTS
The Scoop section:
-- Unmetric Raises $3.2 MM In Series A Funding From Nexus Venture Partners to Deliver Social Media Benchmarks Between Brands
-- Authentify makes Sun-Times article on Online banking, plus they get the video
-- From the Tech Cocktail newsletter
-- Forbes: Groupon: Where Were The Auditors?, by Francine McKenna
-- Chicago Tribune: Analysis: Groupon accounting problems put spotlight on board [May here. Note that this is actually a Reuters article, not a Wailin Wong article, as one observer quipped to me recently, "When it's good news for Groupon, they use Wailin, but when it's bad news, they use Reuters" and none of this gets at the possible conflict of interest that The Chicago Tribune has with Groupon, if you recall their relationship a few years ago, is it conceivable that the Trib. owns a small percentage of Groupon?]
-- Cook County and CTA Collaborate on Fiber Optic Broadband Agreement
-- How Chicago Is Becoming More Viable for Tech Startups!, by Richard Komaiko, a co-founder of AttorneyFee.com, an angel funded startup seeking to promote transparency around the cost of legal services
-- April 5: Crain's: Founders tell all at latest Entrepreneurs Unpluggd
-- Wednesday, May 2: 2012 Annual IVCA/NVCA Luncheon - The Chicago Club - 11:30am - 1:30pm
END OF PART I
-- Tom Brown on his site and app, http://livebytransit.com -- I've met Tom twice now, both times at Rockit
-- John Krause, Executive Director, Chicago Streetcar Renaissance, http://www.chicagostreetcar.com/ (whom I met Mon. night at CCEA), defends his idea
-- Kevin Willer: Everyone submitting an application for an 1871 desk must go through the application process [May here. See Briefly noted in this report for my longwinded comments on this.]
-- David Culver: Why Funding Feeding Frenzy moved to June 20th
-- Mike Fisher: Storymix Media, www.storymixmedia.com, and they're presenting Wednesday to BNC Startup
-- Josh London: His new idea vaguely described
-- Ashish Rangnekar: general update and "Watermelon Express" became "BenchPrep", www.BenchPrep.com 9 months ago
-- Jason Goodrich: www.getshortlist.com: Where his 1871 application stands
-- Kevin Willer: answers May's question about Tim Jahn [May here. KW, the reason I asked is that you told me on March 30th during my tour with you that 1871 will have no media firms, a polite way of saying I can't rent a desk, but is Entrepreneurs Unpluggd a media company? They don't just put on events, but they also have a blog, and as David Carman said to me Friday at Gleacher, he thinks the blogs drive the attendance. I told Carman that "the dirty little secret" of the Chicago entrepreneurial community is that some of the event organizers like Seth Kravitz, www.technori.com, Stella Fayman, and Tim Jahn, www.entrepreneursunplggd.com, are raking it in with mega-bucks being collected at their events. Stella and Tim are charging $150 a person, and figure 200 people per event, so that's $30,000 every two months or so, $180K a year. Seth Kravitz gets $25 per month times 400 (Seth claims 500, but I'd believe 400) and that's $10K a month, $120K a year, and he probably has a free auditorium from Chase, and no doubt Julian Pretto of www.chicagomicro.com is giving him free wi-fi services as he bragged to me after the last Technori event on March 27th that "I provided wi-fi services for 400 people tonight" and then he treated his guys to dinner at Gibson's -- he also brags that he now has 40 people -- never mind that 38 of them are sales guys; and Seth has flirtatious sycophants like Robbie Abed, www.rawdesignr.com, running around "representing" Technori and drumming up attendance when they should be seriously focused on fixing problems with web sites they developed :-). Kevin, even you told me that some organizations like Bernard Kappe and Lean Startup Circle are getting steeply discounted rates to hold events at 1871; now, I believe in capitalism as much as the next guy, probably more even if my money making skills don't show it, and if Seth, Stella and Tim can get that kind of traffic and money, the more power to them, but let's be honest about the fact that they are both event companies and media companies. I do feel that a lot of entrepreneurs, those who don't have trust funds or rich uncles Phil, have a hard time paying for things like Techweek. Much more can be said on this topic. I haven't even gotten to Frank Gruber, www.techcocktail.com, today.]
-- Kevin Willer: answers May's question about who Melissa is
-- Phil Tadros: The roast will be May 31st and
Zhenia Koval, Doejo's cinematographer told me Friday as he helped me put on my dress shirt and jacket so I could get down to Gleacher that they have the roaster already
-- Brian Connolly: The most litigious person I know?
-- Sonny Cohen
-- Stelios Valavanis
-- David Carman: One of 4 CCEA founders
-- Paul Goodman: About his company (we met at CCEA) and maybe he can write an article for TMR
-- Briefly noted, by Ron May
-- Retrofitme.com, www.retrofitme.com and the small world we live in: [May here. Now, here's a small world story -- way back in 1985, I was put on a protein sparring diet by doctors at Billings Hospital in the diabetes clinic at the University of Chicago and it resulted in my losing 65 lbs. in 70 days! I went from 295 to 229. But after about 6 months holding my weight below 250, I gained it all back; they sent me down the hall to the obesity clinic run by Dr. Robert Kushner and I worked with Dr. Kushner for about two years until Dr. Kushner kicked me out, telling me that I was a refractory patient (I didn't know what that meant, and he explained that I'm like a mirror, whatever they tried came back at them). Years later, Kushner left the University of Chicago and went to Northwestern. BTW, they got rid of me just as they were being deluged with requests for help from their obesity clinic and that deluge came because of Oprah's liquid protein diet in 1988. Just one more thing. I worked with a Ph.D. in clinical psychology in the program, Mike Alspaugh, and the approach was rooted in the behavioral model. One good thing that came out of that therapy was that I stopped going to No Hana on Broadway for their "all you can eat" sushi lunch deals. What they got me to realize that I was going to the all you can eat lunches to prove that I could get the best of the restaurant, to prove that I could "put them out of business." Once I understood that my addiction to all you can eat was rooted in my desire to be a big shot, I quit doing it. Overeating is not just overeating, it's a whole continuum of associated behaviors, just as smoking is about much more than the actual smoking with associated behaviors such as when a person does it, holding the cigarette box, playing with the cigarettes, etc.
Oh yeah, I almost forgot why I'm telling this story with that trip down memory lane.
On April 3rd at the Built in Chicago event at Rockit, I met Greg King who works for www.retrofitme.com.
Retrofitme.com is a weight loss plan focused on the modest result of losing 10% of body weight.
I looked at their site, as I often do at 2am and noticed that their chief advisor is none other than Dr. Robert Kushner!
It is a small world, a long life -- QED.]
-- Miscellaneous notes (3 messages)
Cyber Forensics & Security Conference & Expo
April 19 & 20, 2012
Illinois Institute of Technology - Wheaton, IL (Chicago Area)
Join us for this outstanding Cyber Security & Forensics multi-track, technical conference that attracts 200+ professionals, 50+ speakers, 20+ sponsors, for an intensive one- and a half-days. Sample presentations include:
Keynote - Dan Kaminsky - Securing The Future: Complexity and Simplicity
FBI and Cyber Crime - FBI Regional Computer Forensics Lab and Special Agent FBI Chicago Cyber Squad
Cyber Security: A New Frontier for Cross-Jurisdiction Alliances - Rafael Diaz - Illinois Terrorism Task Force: Chief Cyber Security Advisor, Central Management Services: Chief Information Security Officer
iOS Forensics with Open Source Tools - Katie Strzempka - Senior Forensic Engineer at viaForensics
An IT Professionals' Guide to Using Data Analytics to Prevent and Detect Fraud - Sandra J.H. Rolnicki - Federal Reserve Bank of Chicago
Non-Traditional Intrusion Detection For Non-Traditional Intrusions - Tom Liston - Senior Analyst for InGuardians, Inc.
Attend - $200 (Ron May reader rate - $100) Use discount code: MAY
Participants have included Cisco, Microsoft, IBM, KPMG, Computer Associates, the FBI, Fermilab, Argonne National Lab, Chicago Police Department, CompTIA, Motorola, Sungard and many others.
For more information, please visit www.cpd.iit.edu/forensecure, or contact Scott Pfeiffer at firstname.lastname@example.org or 630-682-6001.
The Scoop section:
Unmetric Raises $3.2 MM In Series A Funding From Nexus Venture Partners to Deliver Social Media Benchmarks Between Brands
Coke vs. Pepsi? Chicago Company, Unmetric, Watches Your Competitors' Social Media Presence + Announces Funding
Olivia Gallion email@example.com via xmr3.com
3:34 PM (20 hours ago)
I thought you might be interested in learning about a new Chicago-based startup, Unmetric, that is the first social media benchmarking company that helps brands understand and analyze their competitors' social media strategy. Today the company is announcing funding and an industry first benchmark, the Unmetric Score.
I've pasted the full release below, for immediate release.
Let me know if you have any questions, and I hope you'll consider the news!
Unmetric Raises $3 Million In Series A Funding From Nexus Venture Partners to Deliver Social Media Benchmarks Between Brands
Company to use funds to provide Fortune 500 brands with universal social media benchmarks and also announces the Unmetric Score
CHICAGO - April 12, 2012 - How do big brands stand up to competitors? Well, the old adage applies: keep your friends close and your enemies even closer. Today Unmetric Inc., the Internet's first social media benchmarking company tailored for Fortune 500 companies, debuts its Unmetric Score, a compilation of over 24 qualitative and quantitative metrics measuring online brand performance vis-à-vis competitors.
Today, Unmetric is also announcing it has raised $3.2 million in Series A financing led by Nexus Venture Partners. Unmetric will use the funds to continue developing its benchmarking platform, enabling companies to better survey and analyze the content strategy of a brand and the key terms that are triggering customer engagement. Unmetric will also be using the round to further expand its team in the U.S.
"Brands around the world today are witnessing an explosion in opportunities to reach customers through social media," said Jishnu Bhattacharjee from Nexus Venture Partners. "We've seen many social media monitoring and listening tools, but what impressed us most about Unmetric is that its technology platform uniquely mines the much-needed benchmarks from the deluge of social media data to provide firms with actionable insights on how they are performing against their competitors."
Using a combination of advanced algorithms and human computing power, Unmetric delivers data and benchmark insights for various industry sectors that were previously unavailable, such as content strategy, engagement, growth, timing and frequency of tweets and posts on Twitter and Facebook. Brands are finally able to answer the basic business question of "Are we doing well?" when it comes to their social media presence.
The Unmetric Score, announced today, is an innovative addition to the Unmetric platform, and is designed to take benchmark algorithms to the next level. The score gives marketing managers and Chief Marketing Officers a snapshot of exactly how their brand performs next to others within their industry.
Here's how it works:
• The Unmetric Score is a scientific blend of 24 quantitative and qualitative social media metrics, weighted and balanced to produce a single, benchmarkable score.
• The number is normalized to give brands a score between 0 and 100.
• The best performing brand within the sector is assigned a score of 100. All other brands within the sector are scored relative to this.
• Scores are unique to each sector and cannot be compared across sectors. A score of 80 in the Aviation industry is different to a score of 80 in the Banking industry.
• The scores are updated at the beginning of each month and calculated based on the previous month's data.
Each brand receives a separate score for its Facebook and Twitter profiles, and when used in tandem with the Unmetric platform, the Unmetric Score supplies brands with a snapshot of their competitors' performance. Unmetric even hosts a public scoreboard that presents the Unmetric Score in a table for each sector, making it easy to view how performance changes from month to month.
"The Unmetric Score provides intuitive and industry-first social media benchmarks," said Lakshmanan Narayan, CEO and cofounder of Unmetric. "With companies like Pepsi and Coke, or Ford and GMC hinging on their rivalries to drive business and engage their customers, the Unmetric Score is an intuitive, yet comprehensive way to gauge performance every month."
Since the platform was launched in September 2011, Unmetric has been aggressively acquiring new customers, targeting the largest brands in the world, and counts distinguished companies like Citibank and Nestle as clients. With IDC projecting that the social media analytics industry will grow by 38 percent through 2014, Unmetric supplies a distinct, high-demand service for brands that stops companies from flying blind with their social media efforts.
To learn more about Unmetric's social media benchmarks, visit: www.unmetric.com
About Nexus Venture Partners:
Nexus Venture Partners is a leading Venture Capital fund, investing in early and growth stage companies across sectors. Its principals, with extensive investing and operating experience in North America, India and across the globe, understand the unique challenges faced by startups and believe that it takes more than capital for a company to succeed. Its partner companies have access to the entire Nexus team for help in recruiting talent, forging new alliances, opening doors to new customers, shaping the strategy and connecting with best of breed advisors or board members.
Unmetric Inc. is headquartered in Chicago and works with clients across the world. The Unmetric platform was established to give Fortune 500 companies and other large global brands key performance data around which they could benchmark their social media efforts and answer the question "Are we doing well?".
For more information, visit www.unmetric.com, or check out the Unmetric blog at http://blog.unmetric.com.
VSCpr for Unmetric
Authentify makes Sun-Times article on Online banking, plus they get the video
Authentify - in the news! LOL
John Zurawski firstname.lastname@example.org
10:28 AM (3 hours ago)
Sun Times article includes Authentify, it also mentions Trusteer - HQ'd in Israel, and Iron Key - HQ's in the San Francisco/Silicon Valley area...
But we got the video and the photo's.
Online banking made safer
SANDRA GUY email@example.com April 13, 2012 5:37PM
TIPS TO SPOT ONLINE BANK FRAUDS
** Emails from banks with whom you have no accounts.
** Emails asking for personal information to be submitted by clicking on a link.
** Attachments and attachments with ZIP files; the latter can execute hostile programs when opened.
** Suspicious salutations such as, "Hello, dear."
** Beware similar emails from brokerages and tax-preparation firms.
** Don't publicly post any information you might use as a password, such as your mother's maiden name or your favorite pet's name.
Source: Christine Frietchen, editor in chief, Consumersearch.com
Updated: April 14, 2012 2:37AM
Chicago's tech community is helping develop solutions to protect online and mobile banking customers from hackers, phishers, cyberthieves, QR code fraudsters and a seemingly endless supply of criminals looking to steal people's identities.
The problem is so big, some experts believe 39 percent of all desktop computers are infected by malicious software, or malware, aimed at taking over people's bank account information. The problems make headlines daily: A security hack into a third-party processor of major debit and credit cards, unveiled March 30, may have put 1.5 million cardholders at risk, and in late March, Microsoft's Digital Crimes Unit confiscated several computer servers involved in infecting computers with the ZeuS malware, which steals personal information and log-in details.
Authentify, a Chicago-based software company with 27 employees that will grow by one-third by year's end, has introduced a free app that people activate on their computers and smartphones to link to their online bank accounts.
The service, called 2CHK and pronounced "two check," allows bank customers who enroll to review their transaction details in real time via voice or text message.
The 2CHK service is the latest version of Authentify's "out-of-band" innovation, which takes a customer off of the Internet to review his or her online banking transactions. The solution protects against "man-in-the-browser" attacks in which bad guys hijack a person's browser and make fraudulent transactions surreptitiously. Newly issued federal bank guidelines that call for stronger online security cite out-of-band technology as an effective countermeasure against online banking fraud.
"Over time, you'll see banks looking at what their customers are doing online to see whether they are staying in character based on their transaction habits and history," said Peter Tapling, CEO and president who co-founded Authentify 14 years ago.
Authentify ranked No. 1,729 on Inc magazine's list of the 5,000 fastest-growing companies in 2011 with three-year sales growth of 155 percent and 2011 revenues of $9.8 million. Its customers include five of the world's top 10 banks, three of the five largest e-commerce websites and two of the four largest insurance companies in North America.
The company is hiring software code developers, sales and marketing representatives and customer service representatives.
Several local banks, including Harris Bank, Private Bank and Bank of America, use a complementary service from Trusteer, a Boston-based firm that lets bank customers download a free app to provide an additional security layer on top of their computer anti-virus software.
Trusteer, with 140 employees nationwide, including "a handful" in Chicago, lets banks offer the download to anyone, regardless of whether the person is a bank customer, and helps protect people while they shop or bank online.
Trusteer President Rakesh Loonkar said the company expects to double its workforce by year end, hiring salespeople, marketing representatives and software engineers, because of the increasing need for the security solution.
Tina Hauri, a risk management professional who lives in the north suburbs, said she clicks on the extra information that Trusteer offers at Bank of America's website, such as whether Trusteer has blocked access to a suspicious website cookie or when it has validated a website address.
"It's another layer of protection on top of firewalls and anti-virus software," Hauri said.
Keith Gottschalk, chief operating officer at Old Second National Bank with 28 branches in the south and west suburbs, said the bank plans to give its customers an alternative solution - a secure, portable USB device that provides "secure tunnel" protection. The device plugs into the computer.
Old Second uses a product called Trusted Access from IronKey, Inc., a Sunnyvale, Calif., company. It isolates online banking activity from the rest of the computer, so even if the computer is infected, the online banking session remains private and secure.
The Aurora-based bank is also experimenting with a fingerprinting identity-verification system for people who cash checks, and closely follows customers' habits when writing checks, using debit cards and doing on-line and mobile banking.
"The overall fraudulent activity is up 500 percent from five years ago. We employ a security and fraud group who focuses on monitoring for everything," Gottschalk said.
People also must assume responsibility, especially as mobile banking becomes the "green field" of fraudster activity, said Jacob Jegher, senior analyst at Celent who specializes in fraud and digital banking.
A digital forensics study by viaForensics showed 25 percent of mobile banking apps provided inadequate security.
"We're in an environment where people can't play fully dumb - if you do something stupid online, it's partially your own fault," Jegher said.
Yet banks must improve their efforts to educate people.
One bank that flubbed is HSBC, which infuriated some of its online banking customers when it offered credit-card-sized security keys that customers found annoying and didn't want to have to carry in their wallets, according to Jegher and media reports.
Michelle Perry, a customer service representative who lives in Bolingbrook, had to complain to the Better Business Bureau when her former bank failed to recognize a deposit she had made and instead charged her a $35 late fee for failing to cover two pending charges.
"I checked the bank's automated system to make sure the deposit was credited," said Perry, a 32-year-old mother of two children. "It caused so much stress. That $35 would have almost paid for a full tank of gas."
Perry switched banks and got the penalty refunded.
Her experience shows how serious it is for banks to get smarter about making security easy to use and earning trust in the process, Jegher said.
From the Tech Cocktail newsletter
Poll: Who's The Top Angel Investor in the US?
12:39:28 PM Zach Davis
Angel investors play a pivotal role in the backbone of the early-stage startup ecosystem (note: understatement of the century). Not only do angels provide roughly the same amount of financing as venture capital firms ($20.1B versus $23.3B in 2010), but startups who acquire their funds from angels are more likely to survive the first four years as compared to obtaining other forms of early stage funding.
With President Obama's recent signing of the JOBS Act, crowdfunding is poised to change the landscape for early stage funding. What this means to the state of angel investing, however, has yet to be determined. According Glen Hellman, Chief Entrepreneureator at Driven Forward LLC and Tech Cocktail contributor, this new legislation will bring about two changes: "We're going to see more companies get funding, and we're going to see higher valuations. Overall we'll see more companies come through the pipeline - both good and bad. We'll fund these companies, we'll just fund them later and we'll have to pay more for them than we do right now."
Although the recent passing of the JOBS Act could mean a potential phase shift, change is nothing new and something all angel investors are used to. Regardless of what the future holds in store for angel investing, we want to know what you think about the present. If we took a snapshot of the market as is, and asked, "If you could choose only one angel investor to get on board with your startup, who would that be?" how would you answer?
Share your opinion by taking the poll below.
Forbes: Groupon: Where Were The Auditors?, by Francine McKenna
Francine McKenna, Contributor
I cover the accounting industry and accounting issues for investors.
+ Follow on Forbes
4/09/2012 @ 8:02AM |9,196 views
Groupon: Where Were The Auditors?
CHICAGO, IL - JUNE 10: The Groupon logo is displayed in the lobby of the company's international headquarters on June 10, 2011 in Chicago, Illinois. Groupon, a local e-commerce marketplace that connects merchants and consumers by offering goods and services at a discount, announced June 2 that it had filed with the Securities and Exchange Commission for a proposed initial public offering of its Class A common stock. The company, launched in Chicago in November 2008 now markets products and services in 43 countries around the world. (Image credit: Getty Images via @daylife)
Last week was Groupon's big week, although not in a good way. What happened? Well, the premier source of daily deal dish got knocked down a few more pegs after announcing a revision to 4th quarter earnings and the announcement by management that there was a material weakness in internal controls over financial reporting that was causing their disclosure controls to be ineffective. Groupon went public just a few months ago, last November, and the annual report was the company's first filing as a public company.
One of the few journalists who got the details right, Jonathan Weil of Bloomberg, explains why, in this case, the news was especially bad:
"...there is no requirement to disclose a control weakness in a company's IPO prospectus. Groupon would have had no obligation to disclose the problem until it filed its first quarterly or annual report as a public company - which is what it did. Sandbagging IPO investors in this manner is perfectly legal, it turns out.
The reason lies with a gaping hole in the Sarbanes-Oxley Act, which Congress passed in 2002 in response to the accounting scandals at Enron Corp. and WorldCom Inc. That statute had two main sections related to companies' internal controls, which are the systems and processes that companies are supposed to have in place to ensure the information they report is accurate. Those provisions apply only to companies that are public already, not ones that have registered for IPOs."
From the moment Groupon announced the revision on March 30, there were two important facts that almost all major media financial journalists got wrong:
1) The announcement of lower revenue and lower income for the fourth quarter was a revision of an earnings release, not a restatement. Groupon never filed a 10Q so there was no SEC filing to restate. Fessing up to the right numbers in the annual report was the first time the company was bound to report those numbers and, at that time, they corrected previously announced earnings for the 4th Quarter.
2) Management made the assessment of the material weakness in internal controls over financial reporting that caused disclosure controls to be ineffective, not auditor Ernst & Young. Ernst & Young deserves no credit for the announcement, nor any blame, just yet, for the fact that the weaknesses had to be finally admitted. There is no transparency regarding the auditor's agreement or disagreement previously with Groupon, any public documentation of their discussions or any reason to believe Ernst & Young either encouraged or discouraged Groupon to get their act together sooner.
We just don't know.
What we do know is that Ernst & Young signed the fourth clean audit opinion when it signed the audit report included in Groupon's annual report. With the three audited financial statements included in the S-1, we can assume that control weaknesses Ernst & Young was aware of, if they were aware of any, were not serious enough in their opinion to qualify the audit opinion.
I've written a more extensive post over at my own site re: The Auditors. That post also includes a bit about some solutions to this problem being proposed by the auditing regulator, the PCAOB. Unfortunately the audit industry is vehemently against giving investors more of what their experts know. The auditors, remember, are on the inside with access to all the information no one else, except for maybe the SEC, has.
The audit industry is against providing an Auditor Discussion and Analysis, similar to an MD&A provided by management, for three reasons:
1) The executives of the companies they audit do not want to pay extra for it.
2) The auditors do not want to upset the harmonious relationship they have with company executives and Audit Committees by publicly second-guessing their estimates, judgments, and assertions in the financial statements and in disclosures.
3) Additional disclosures by auditors that reflect and describe audit judgments potentially expose the auditor to additional liability when something goes wrong. More settlements, more money out of partners' pockets.
Page 2 of 2
One factor to consider is the auditor's responsibility right now with regard to disclosure or reporting of fraud and illegal acts - if errors and misstatements rise to that level even pre-IPO. I've written previously that auditors are not very quick to tattle-tale on the executives of the companies they audit. The audit firms prefer to work it out internally and over time. There's just too much money at stake both as an auditor and as a consultant. We do not know what Ernst & Young's fees from Groupon - or Zynga or Facebook - are yet. The first proxies are not out. But we do know how much money was at stake with some other clients that have had issues:
•Ernst & Young was paid more than $150 million in fees by Lehman for 2001 to bankruptcy in 2008 according to the New York Attorney General complaint against Ernst & Young for fraud regarding lack of disclosure of Lehman's issues.
•Google paid Ernst & Young $13 million in 2010 and 2009. Google's proxy did not explain how Ernst & Young could reduce its fee for audit services to this high-risk company by $1 million in 2010. Google is a serial subject of SEC investigations for its accounting for stock options and taxes. The company recently settled a Department of Justice criminal investigation over the illegal use of its AdWords program by Canadian pharmacies. Ernst & Young did charge Google $500 thousand more in 2010 to address those tax issues.
•UBS, home of a recent rogue trader scandal, paid Ernst & Young $63 million in 2011 for their the audit, $12 million for audit-related activities such as assurance and attest services, control and performance reports, advisory on accounting standards, transaction consulting including due diligence, and tax advisory. Ernst & Young also earns another $32 million for services performed on behalf of UBS investment funds, many of which have independent fund boards or trustees.
•News Corp, where executives are accused of paying illegal bribes and hiding those payments on the balance sheet, paid Ernst & Young almost $35 million dollars in 2010 and about $31 million in 2009. The increase equals about 10% more for more tax consulting services, which make up almost half - $16 million - of the total fees paid to EY by News Corp. That, to me, is a serious indictment of EY's independence as auditor.
Another factor to consider is how much influence the auditor has over its clients. Popular fiction and the latest business books often cast auditors as quiet toadies, working behind the scenes, speaking up only when it comes time to collect the check.
To run an industry that exceeds $100 billion revenue globally (that's just the four largest firms - Deloitte, Ernst & Young, KPMG, and PwC) does require some steely cojones, though. When in doubt, support your client - company management not the true client, the investor.
Here's a few more Ernst & Young examples of that:
The PCAOB imposed a $2 million penalty, its largest ever, on Ernst & Young this past February because it failed to properly evaluate Medicis' reserve for sales returns. (Same issue as at Groupon!) Medicis' management estimated returns and made reserves based on the cost of replacing products instead of the gross sales price. Ernst & Young, according to the regulators, knew or should have known that this method was not supported. Three years of results were eventually restated to reflect the correct treatment.
"These audit partners and Ernst & Young - the company's outside auditor for more than 20 years - failed to fulfill their bedrock responsibility," James R. Doty, PCAOB Chairman, said in a statement on the agency's website. "The auditor's job is to exercise professional skepticism in evaluating a public company's accounting and in conducting its audit to ensure that investors receive reliable information, which did not happen in this case."
Ernst & Young audits some of the biggest technology companies in Silicon Valley such as Intel, HP, and Oracle. Stock options are a very important part of compensation for technology companies, especially at the startup stage. Ernst & Young was a zealous advocate for its clients' position opposing stock option expensing until it became politically untenable in 2003.
As of the end of 2005, nearly 30 percent of financial statements audited by E&Y still included a "reliability disavowal" disclosure regarding stock option expense, according to an August 2010 study. "Reliability disavowals" are voluntary disclosures in audited financial statement footnotes that alert investors to management's concerns about the reliability of mandated fair value information. That compares to less than 8 percent for the other national audit firms.
Ernst & Young published a model " reliability disavowal" disclosure in its implementation guidance in 1995 to help clients mitigate the impact of the required disclosures under SFAS 123, a standard adopted by most firms in fiscal 1996. The firm also "encouraged companies to adopt the supplemental disclosure if they believed it would be useful to investors and creditors."
That is, Ernst & Young encouraged and aided its clients in telling investors, "We have to tell you this but we don't trust the calculations so look over here instead."
In 2003, Ernst & Young flip-flopped on its position in a letter to the FASB and removed the sample " reliability disavowal" disclosure from its implementation guidance. But it was too late. Even today, most disavowal disclosures-including those of non-E&Y clients-are almost identical to the original sample disclosure. The only variation is that more recent versions substitute softer language that casts doubt on the usefulness of the disclosures to investors rather than the reliability of the calculations.
Dr. Melissa Lewis, an Assistant Professor at the University of Utah and one of the authors of the 2010 study, says that the continued use of the "reliability disavowals" by Ernst & Young clients, "appears out of proportion with the number of their clients who may have a reasonable basis for questioning the reliability of the estimates, such as a lack of trading history."
Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.
Robert Shore19 hours ago
Groupon is in a heap of ironic trouble here. Hilarious.
Francine McKenna Contributor
To reach me email firstname.lastname@example.org. I am a freelance writer with credits in the Financial Times, Boston Review, American Banker, Columbia Journalism Review, Accountancy Age, Accountancy Magazine, Forbes, and others. I also blog at my own site, re: The Auditors a specialized news site about the business of the Big 4 audit firms. I was a 2010 finalist for the Gerald Loeb Award for Distinguished Financial and Business Journalism - online commentary and blogging category. I have been quoted in the New York Times, Wall Street Journal, Chicago Tribune, Financial Times, Forbes, BusinessWeek, American Lawyer, California Lawyer, American Banker, Columbia Journalism Review, The Times of London, Guardian, and the Financial Chronicle (India) and others.
The author is a Forbes contributor. The opinions expressed are those of the writer.
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Where Were The Auditors?
Chicago Tribune: Analysis: Groupon accounting problems put spotlight on board [May here. Note that this is actually a Reuters article, not a Wailin Wong article, as one observer quipped recently, "When it's good news for Groupon, they use Wailin, but when it's bad news, they use Reuters" and none of this gets at the possible conflict of interest that The Chicago Tribune has with Groupon, if you recall their relationship a few years ago, is it conceivable that the Trib. owns a small percentage of Groupon?]
Analysis: Groupon accounting problems put spotlight on board
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Employees and guests of Groupon ring the opening bell in celebration of the company's IPO at the Nasdaq Market in New York (BRENDAN MCDERMID, REUTERS / April 12, 2012)
5:52 a.m. CDT, April 12, 2012
NEW YORK (Reuters) - Groupon Inc, the online coupon company that floated just months ago in the strongest IPO in years, has had recurring accounting problems that critics say show a need for more financial sophistication on its board.
Groupon revised its fourth-quarter results last month, its first results posted as a public company, trimming revenue by $14.3 million. The company also said it found a material weakness in controls over its financial statements.
Fast-growing Groupon has said the latest accounting problems stemmed from a move into higher priced coupons, which led to more customer returns and refunds than anticipated.
The company sells discounted coupons online, keeping part of the money that customers pay for the coupons, with the rest going to participating merchants.
Groupon has asked an external auditor to look into the causes of its internal control weakness and has said it will beef up its own finance staff.
But corporate governance experts questioned the financial background of the Groupon board's audit committee, which is supposed to oversee both its auditor and the company's own accountants.
Groupon spokesman Paul Taaffe said the audit committee has met regularly to address accounting issues since the company discovered in February that the refund rate had increased.
Committee members "were in contact with each other, the audit firm and management continuously," he said.
Members of the audit committee declined comment.
Groupon already had been criticized by some analysts and investors for aggressive accounting before it went public in November. Under questioning by the U.S. Securities and Exchange Commission and accounting experts, Groupon changed its accounting practices twice before the initial public offering.
'MORE FINANCIAL EXPERTISE'
"Groupon needs a new audit committee with much more financial expertise," said James Post, a management professor at Boston University.
Some accounting experts said it would have been daunting to estimate the reserves needed for refunds.
"In a new business it's difficult to evaluate, because you don't know the behavior of your customer," said Wendy Stevens, a partner at accounting firm WeiserMazars.
Groupon's rapid growth also made it difficult to keep tabs on internal controls, accounting experts said. The company has expanded to 45 countries since it was launched in Chicago in 2008 and has increased its employees from a handful to 10,000.
With that much growth "there is little doubt that internal controls are not working somewhere," Edward Ketz, an accounting professor at Pennsylvania State University, and Anthony Catanach, an accounting professor at Villanova University, wrote in a blog post last week.
Groupon's audit committee is not lacking business experience. It includes heavy-hitters such as Howard Schultz, chief executive of Starbucks Corp.
Its audit committee chairman, Ted Leonsis, is a former AOL executive and chief executive of Monumental Sports & Entertainment, owner of several professional sports teams.
The third member, Kevin Efrusy, is an entrepreneur and founder of IronPlanet, an online market for heavy equipment.
Cook County and CTA Collaborate on Fiber Optic Broadband Agreement
Subject: Cook County and CTA Collaborate on Fiber Optic Broadband Agreement
Date: 4/14/2012 11:39:28 A.M. Central Daylight Time
Cook County and CTA Collaborate on Broadband Agreement
April 12, 2012
Cook County Board President Toni Preckwinkle and Chicago Transit Authority President Forrest Claypool today announced a collaboration that will advance the technological capability of Stroger Hospital, through new broadband infrastructure, at virtually no cost to taxpayers.
The new intergovernmental agreement (IGA) will allow the county to utilize eight available strands of the CTA's broadband fiber optic cable, which is in the rail right of way running approximately three miles from the James R. Thompson Center to the CTA Polk Street Station.
The fiber optic cable will connect Stroger Hospital to the county's downtown campus, creating a high-speed network that increases organizational bandwidth exponentially. In turn, the CTA will benefit from shared maintenance costs for the utilized segment of the network.
"This project is the first step in building a strong broadband infrastructure for the 21st century," President Preckwinkle said. "The Cook County-CTA collaboration is a committed partnership and will provide a positive impact for residents. This is a critical step to modernize the county hospital system through improved technology."
The CTA's fiber optic cable will allow the broadband transfer of digital communications, including internet, phone and video at a level necessary to meet the ever increasing demand for high-speed communications.
With the new broadband access, the county hospital system will be poised to join a leading national research network that allows institutions to connect with each other at speeds one-hundred times faster than commercial internet. This will directly benefit Stroger Hospital's research and educational goals, without additional spending on infrastructure.
Going forward, the new fiber optic cable will help in network and datacenter administration, including electronic medical records, health information exchange, and telemedicine and it will ultimately reduce IT costs by facilitating shared datacenters and cloud computing.
"The CTA is pleased to support this agreement because it will allow faster internet speed and capacity for one of the most vital institutions in the city and county, which will be of great benefit to the residents of Cook County and Chicago," CTA President Forrest Claypool said.
"We are proud to be a part of the collaboration between Cook County and the CTA," said Dr. Ram Raju, CEO, Cook County Health and Hospitals System. "This is a step in the right direction to further advance medical technology at the Cook County Health and Hospitals System. Not only do physicians and medical staff benefit, but more importantly, patients will benefit in the future from advanced technology."
This is the first time the CTA has worked with the county to provide fiber optic access. The inter-government collaboration optimizes the use of an existing public asset, and avoids the need for the county to build new fiber, or pay to lease more broadband capacity from private enterprise. Work on the expanded network is expected to be completed by the end of the year. This is the first in a series of anticipated shared fiber projects between the county and the CTA.
The IGA was approved by the Cook County Board on March 13th, and by the CTA Board on March 14th.
Bruce Eric Montgomery
Montgomery & Company, Inc.
Technology | Innovation | Commerce
9 West Washington Blvd., Suite 400
Chicago, Illinois 60602
How Chicago Is Becoming More Viable for Tech Startups!, by Richard Komaiko, a co-founder of AttorneyFee.com, an angel funded startup seeking to promote transparency around the cost of legal services
Subject: Fw: How Chicago Is Becoming More Viable for Tech Startups!
Date: 4/13/2012 1:13:57 P.M. Central Daylight Time
How Chicago Is Becoming More Viable for Tech Startups!
There has been a lot of chatter lately about Chicago's nascent startup ecosystem. Class action lawyers are beginning to swarm around Groupon as its share price has plummeted by double digits, causing some to question whether sustainable tech giants can really be born here.
On the other hand, Dag Kittlaus, the cofounder of Siri (Apple's voice recognition technology acquisition), decided to leave Silicon Valley in favor of resettling his roots in Chicago. And earlier in March, an editorial was published in the Pando Daily (the heir apparent to TechCrunch) highlighting the strengths and weaknesses of the Chicago startup community.
With so many people pontificating on the viability of Chicago's startup ecosystem, I decided to throw my opinions into the mix. My family is about as Chicago as you can get. We've lived in this city for more than a century, and my grandmother was the founding editor of Chicago Magazine. Yet, when it came time to launch my startup, AttorneyFee, I knew that the resources we needed could only be found out west. We launched at TechCrunch Disrupt in September 2011. Now, seven months later, we've returned to Chicago to open a second office in the second city.
What brought us back to Chicago? Talent. That's right - we had to leave Silicon Valley and come to Chicago to find talent. Popular wisdom says that the talent is all out in the Valley, but my experience suggests otherwise. When it comes to engineering, Silicon Valley definitely has the greatest accumulation of human capital of any city in the world - by orders of magnitude. But engineering isn't everything. If your startup requires sales talent, as we found ours does, Silicon Valley is actually an awful place to be.
Holding everything else equal, sales resources cost about 60 percent more in Silicon Valley than they do in Chicago. And even if you're willing to pay that price, sales talent out there is simply hard to come by. According to the Bureau of Labor Statistics, there are about 395k sales professionals in metropolitan Chicago, whereas there are only 97k in Silicon Valley. That's four times the amount of sales talent available to creative young companies! No wonder LinkedIn, Facebook, Google, and a myriad of other tech giants have chosen to make Chicago the epicenter of their sales operations.
That brings me to the other major insight that I've gleaned about the differences between the startup ecosystems in Chicago and Silicon Valley: you can only innovate on what you know. If you don't have exposure to the frontiers of an industry, you can't realistically be an innovator in that industry. The largest industries in Chicago are insurance, finance, education, and law. By contrast, the largest industry in Silicon Valley is tech.
Everything you need to understand about startup companies in those two ecosystems flows from this simple observation. When someone in Silicon Valley sees an opportunity to innovate in their industry, they're creating digital solutions to digital problems. When someone in Chicago sees an opportunity to innovate in their industry, they're creating digital solutions to real world problems. When both the problem and the solution are digital, the cost of distribution is minimal, the size of the potential market is global, and the speed of growth is exponential (think Instagram). By contrast, when the problem you're seeking to solve is rooted in real world stuff - stuff with matter, weight, and marginal cost - there is a lot more friction and expense involved in scaling (think Grubhub).
My prediction is that as more and more seasoned entrepreneurs return home to Chicago - or create homegrown successes in Chicago - the tech industry here will blossom, young Chicagoans will develop a stronger understanding of the tech industry, and the innovations that you will see coming out of Chicago will acquire an increasingly digital character.
Richard Komaiko is the co-founder of AttorneyFee.com, an angel funded startup seeking to promote transparency around the cost of legal services. He holds a degree in economics from the University of Illinois, and has studied Chinese language and culture at the University of Chicago. and the Beijing Institute of Education. He is proficient in English, Mandarin, Spanish, and Hebrew.
Bruce Eric Montgomery
Founder, Producer & Host
Technology Access Television
200 S. Wacker Drive, 15th Floor
Chicago, IL 60606-5865
April 5: Crain's: Founders tell all at latest Entrepreneurs Unpluggd
Founders tell all at latest Entrepreneurs Unpluggd
April 05, 2012
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By Andy Crestodina
Entrepreneurs, mentors and marketers filed into the Chopin Theatre in Wicker Park on a Wednesday evening late last month to hear three successful Chicago entrepreneurs tell their stories. It was Entrepreneurs Unpluggd and, as usual, the setting was intimate and the speakers were disarmingly open.
The theme was "Founding Team Edition," and the speakers selected represented a range of approaches to founding a company. Here's a (rather belated) recap:
Rona Borre, founder of Instant Technology
How does one woman take a tech recruiting firm from zero to $22 million in 10 years? Rona told us how. The key for her was a relentless focus on revenue. "Revenue trumps everything. You can get what you want later when you have the money to pay for it."
In the beginning, she knew that she had to get out there and sell. To push herself to go out and meet with people, she bought a hard metal chair for her office. No cushion. The idea was to keep herself from getting too comfortable, figuratively and literally.
Rona also talked a bit about how she hires for her own firm, which was interesting to hear from the founder of a recruiting company. Her process for hiring takes between three minutes and six months, depending on the role:
• Sales people: She hires based on a gut feeling. She knows within three minutes if she likes you or not. If you ever meet Rona in a job interview, be ready for this question: "Tell me something about my company."
• Executive team: This is a different story. She finds the absolute best and goes after them, probably with the same drive she brings to everything else she does. For one board member, "it took me six months to get him."
Rona reminded us all how powerful a single-minded focus can be. Her inspiring drive set the tone for the evening.
Mike Evans, co-founder of GrubHub.com
The history of GrubHub, as told by Mike Evans, is the story of two friends who were hungry . . . for food. It's a classic scratch-your-own-itch story. They just wanted ordering food to be easier.
Mike personally wrote the first version of the site, and Matt Maloney went out to try to sell it as a service. The Charming Wok in Uptown was the first to sign up with a check for $140. Today, GrubHub has 300 employees and sends more than $200 million in food orders to restaurants per year.
Mike listed three main benefits to having a co-founder.
• Differentiated responsibilities: Although the overlap in their roles may be as much as 80 percent, Matt is generally more involved technology, marketing and the internal company culture. Mike handles finance and communication with the investors.
• Decreased risk: Two partners means fewer blind spots. Mike told the story of the early talks during the possible acquisition of Dotmenu. They went in with the wrong attitude and the wrong tone. It didn't go well. But together, they realized why and changed their approach. The acquisition went through.
• Bigger upside: Mike says it's an advantage to have "twice as much brainpower" making an exit more likely. It's more important to have some kind of exit, than a big exit. But the real effort goes to being as good as they can be to everyone involved: diners, restaurants, investors and employees.
More than just advocating for partnerships, he had a few recommendations for how to do it right. "Three founders don't work, and anything but 50 / 50 doesn't work." The audience seemed to be taking careful notes when he said this. He ended on another key point: "Trust is more important than a good shareholder agreement."
Even the name GrubHub came from this collaborative relationship. Mike said "grub . . . " and Matt said ". . . hub" or was it the other way around? I was corrected via Twitter...
Either way it's a great story of a Chicago partnership. You can find them both on Twitter at @grubhub.
Joe Dwyer, venture partner at OCA Ventures
Listening to Joe Dwyer tell his story is like flipping through a scrapbook of Chicago tech scene history. He was here early, in 1994. Since then, he's been the founder, partner, president or CEO of at least nine companies in Chicago. In 30 minutes he covered 18 years of history with many booms and busts, sometimes because of the larger economy and other times caused by Joe Dwyer (no relation to the editor of this blog!) himself.
He was very candid in telling the story of Virtual Market, a complicated and very early ('95) specialty foods e-commerce platform. It didn't go well. When layoffs came, he felt totally responsible. You could almost feel his regret. "What did I do wrong?" He made a list, determined to learn from this mistake.
Then he started a consultancy to help others avoid making similar mistakes. But still the scrappy, driven, Chicago startup guy, Joe would sometimes find himself in boardrooms wearing flip-flops amid the suits and ties of VCs and CFOs. Now he warns against hubris with a very humble tone.
Joe's final suggestion: read the book "Mindset" by Carol Dweck. Seek to have a growth mindset, not a fixed one. He believes this to be the biggest factor in personal success. I'm going to read it.
Beers in the Basement
The reception that followed was held in the Chopin Theatre lounge, where the eclectic thrift-store couches and big Polish beers put everyone in a growth mindset. In the relaxed atmosphere of low-key networking, digital marketers, investors and the rest of the startup crowd made easy conversation.
Every time I go to these events, a speaker will sometimes hesitate before sharing an insightful but embarrassing story. Usually they pause and say, "Well, this is unplugged right? What the heck . . ." then they tell the story anyway.
That's what Entrepreneurs Unpluggd is about: the candid, behind-the-scenes telling of the real stories of successful Chicago startups.
Andy Crestodina is strategic director of Orbit Media, a Chicago web development firm. You can find Andy on Google+ and Twitter.
Crain's small-business editor Ann Dwyer is on
Read more: http://www.chicagobusiness.com/article/20120405/BLOGS06/120409879/founders-tell-all-at-latest-entrepreneurs-unpluggd#ixzz1sECkNuRo
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Wednesday, May 2: 2012 Annual IVCA/NVCA Luncheon - The Chicago Club - 11:30am - 1:30pm
Subject: 2012 Annual IVCA/NVCA Luncheon - May 2nd - The Chicago Club - 11:30am - 1:30pm
Date: 4/14/2012 1:39:51 P.M. Central Daylight Time
2012 Annual IVCA/NVCA Luncheon
Join us May 2nd as IVCA presents a discussion of the economic impact of venture capital and private equity investing explained through academic research. Mitchell A. Petersen, Glen Vasel Professor of Finance and Director of The Heizer Center at Kellogg School of Management, presents his conclusions after an exhaustive review of academic studies examining the true impact of venture and private equity on:
Investors (pension funds, endowments, foundations, etc.)
Net profit growth
We will also hear an "Update from the Hill" from
Mark G. Heesen, President, National Venture Capital Association
Brett Palmer, President, Small Business Investor Alliance
Date: Wednesday, May 2, 2012
Time: 11:30 a.m. - 1:30 p.m.
Location: The Chicago Club
81 East Van Buren Street
Chicago, IL 60605-1205
Please be aware that The Chicago Club has a jacket and tie policy.
This event is open to both IVCA members and non-IVCA members.
IVCA member cost: Free
Non-IVCA member cost: $95 per person.
Bruce Eric Montgomery
Montgomery & Company, Inc.
Technology | Innovation | Commerce
9 West Washington Blvd., Suite 400
Chicago, Illinois 60602
END OF PART I