We've got the horses; it's jockeys we need
April 3, 2006
BY MICHAEL KRAUSS
I don't like to disagree
with Prof. Steve Kaplan. Kaplan's a brainy Hyde Park kind of guy.
He knows his stuff. He ploughs through reams of data. He gets
his facts straight. He calculates the odds.
I have to say it. Steve, we need more entrepreneurial jockeys
in this town. There are plenty of good horses to ride.
No, this column
isn't about equestrians in the traditional sense. Jockeys and
horses are Kaplan's metaphors for entrepreneurs (jockeys) and
Kaplan keynotes the Illinois Venture Capital Association/National
Venture Capital Association luncheon at the Union League Club.
His topic: "Should You Bet the Jockey or the Horse?"
"Companies that go public almost never change their initial
business. If you have a bad business, you are doomed no matter
how good the management."
"Businesses that go public often have CEOs and managers who
are not the founders. A good business can survive a mediocre management
team if they are replaced with good ones.
should always want great businesses and great teams. However,
you can replace a mediocre team in a great business, but a great
team cannot make a mediocre business great."
I'm sure he's
right. Kaplan is the Neubauer Family Professor of Entrepreneurship
and Finance at the University of Chicago Graduate School of Business.
He's the foremost academic authority in the nation on the role
that venture capital and private equity play in the economy. Institutional
investors look to Kaplan for insights on how to make money. Entrepreneurs
turn to him for advice.
He's a great
teacher and a friendly, approachable, well-liked guy.
But he's wrong
on who to bet on in the entrepreneurial stakes. Chicago needs
jockeys to bet on.
to the Illinois Venture Capital Association's recently published
Private Equity Monitor, venture capital investments in Illinois
companies rose 10 percent in 2005 to $246 million. While that
sounds like good news, Illinois lagged the Midwest average.
region venture investments rose 18 percent last year. In Missouri,
venture investing rose 277 percent. In Ohio, it gained 109 percent.
In 2005, Illinois venture investment represented 31 percent of
the Midwest pie, down from 34 percent the prior year.
is not enough jockeys. There's plenty of cash out there to back
start-ups. There's a plethora of new products and new markets
-- horses to ride. Chicago is missing steel-eyed jockeys willing
to take the ride around the entrepreneurial race course.
A great jockey
will pick a great horse to ride, and the money will follow.
race for knowledge- economy jobs has already begun. If we don't
train more entrepreneurial jockeys, Chicago's going to be left
at the starting gate in the global jobs competition.
All that race-horse-quality
R&D developed at our local universities will be left grazing
in the fields. Or worse yet, it will get loaded on a horse trailer
and shipped to California, where there are lots of entrepreneurial
be a crime? Maybe it's time we fixed this race by developing more
are growing, and Northridge Group founder and CEO Therese Fauerbach
thinks companies need to stay alert.
may be overpaying for those minutes," Fauerbach says. "It
depends on whether you manage it."
Not only are
companies overpaying, they're not protecting their rights to information
on mobile devices.
sales execs own the phone and leave, your contacts go with them,"
get confused by the array of cellular plans. Fauerbach warns a
decentralized approach that allows individual employees to buy
their phones and funnel costs through expense reports can be costly.
can pay 25 cents per minute for overages if the employee chooses
poorly," adds Sue Platner, president and co-founder of the
Northridge Group. She says 5-to-8 cents per minute is more reasonable.
and Platner just helped a Chicago-based company save $2 million
annually in telecom costs.
to Fauerbach, better management can reduce costs by 20 percent
to 30 percent annually.
why Northridge Group's prospects look good. Wireless plans won't
get simplified anytime soon.
Krauss is a Chicago area tech writer and consultant.