Arora urges startups to skip venture funding
June 26, 2006
BY MICHAEL KRAUSS
Adarsh Arora is doing
it again. He thinks local entrepreneurs can succeed by running
a tight ship with little or no venture funding. He wants entrepreneurs
to take the plunge, because he knows startups are Chicago's future.
He sees cash flow as the make-or-break issue.
Arora, "Almost every early-stage company board meeting zeroes
in on burn rate, whether venture funded or not." As a successful
entrepreneur, Arora understands the benefits of containing costs.
He wants to pass the knowledge along.
Thursday, Arora, president
of TiE Midwest (The Indus Entrepreneurs) brings together three
tight-fisted Chicago entrepreneurs who have grown their businesses
by watching costs and declining venture funding.
To tell their tales
of successful boot-strapping, Arora has cast Mike Domek, CEO of
TicketsNow, with estimated annual sales of $142 million without
outside investors; Jason Fried, CEO of 37Signals, a Web-based
products company with more than 250,000 subscribers; and Lucas
Roh, CEO of Hostway, which generates nearly $100 million in sales
with no major VCs.
Arora has also landed
one of Chicago's top early stage VCs, Matt McCall, managing director
of Northfield-based DFJ Portage Venture Partners to moderate his
program on Capital Efficiency for Growing Businesses.
"It's very positive
to see companies growing their businesses efficiently," McCall
says. "We need to see as many 'horses' in the race as possible."
Pointing to the dot-com
boom, McCall adds, "These companies run their businesses
in a more rational manner than their predecessors."
Plus, McCall sees opportunity
for VCs: "Many of these businesses eventually need venture
capital when they want to accelerate growth."
Proving the point,
McCall recently invested in TicketsNow. "We're hoping for
big things," he says. "If TicketsNow can keep growing
70 to 120 percent annually, it will establish itself as a significant
e-tailer. It is already the highest-trafficked secondary ticket
site in the world."
Pointing to 37Signals,
McCall says, "Jason has built a great business, which has
been self-sufficient almost from the start. They are well-known
nationally, and continue to scale virally. Jason has one of the
top 100 blogs in the U.S."
McCall knows less about
Hostway, but adds, "Their growth is pretty amazing given
the shakeout from the hosting wars.
"All three companies
have strong prospects."
starts at 6 p.m. at the offices of Gardner Carton and Douglas.
Admission is free to TiE members, and $20 for non-members, who
can sign up at www.tie-midwest.org.
The event is a sure sellout and a bargain for any would-be penny-pinching
While Domek, Fried,
Roh and McCall are the reason to show up Thursday, take note of
Arora. He's making a difference in Chicago. His programs are inventive,
practical, timely, creative and educational.
Last October, he created
TiECON: Entrepreneurship in a Flat World. The event featured Motorola
CEO Ed Zander and Forbes-list billionaires Michael Krasny and
J.B. Pritzker sharing ideas on entrepreneurship and innovation.
In January, Arora conjured
up the Great Chicago Tech Debate to assess Chicago's slow pace
in entrepreneurship. In March, Arora proved Chicago is no fly-over
zone for top VCs by hosting a fireside chat at the University
Club with Norwest Venture Partners managing partner Promod Haque,
Forbes magazine's No. 1 VC. Last August, he even offered up 10
Chicago entrepreneurs presenting their stories in 10 minutes each.
In addition to his
work at TiE, Arora is a serial entrepreneur and founder of Lisle
Technology Partners. He's become a force on Chicago's tech scene,
and that's a good thing.
Microsoft Midwest General
Manager Janet Kennedy delivered Saturday's keynote at the Black
Data Processing Associates education competition and fund- raiser
at the Hyatt Regency. Kennedy believes diversity can propel innovation.
Says Kennedy, "To
be innovative, a company must be driven by a host of different
thoughts, ideas and experiences."
Adds BDPA President
and Allstate IT executive Yvette Graham, "This is about giving
back to the community by training our high school youth in technology."
The winners of Saturday's event proceed to Los Angeles for a national
Krauss is a Chicago area tech writer and consultant.