Venture Notes, May 11, 2015
Today: Steve Case gambit? | TN private equity contract | Sal Novin of Trizetto | Jim Lackey | Marc Guthrie | Dave Chapman
STEVE CASE is preparing to relaunch StartupAmerica as a standalone entity, this Fall, according to several sources. The Revolution LLC founder-investor and grassroots entrepreneurship champion who co-founded AOL has just completed his latest #RiseoftheRest tour, which highlighted Southern cities to demonstrate U.S. disruption capacity extant outside Silicon Valley and other venture bastions. Nashville was heavily touted by Case on his first #Rise tour in 2014 and last summer he urged Nashvillians not to be complacent, with respect to Healthcare opportunities, in particular. Earlier, Case praised Nashville after the city, the state and the Nashville Entrepreneur Center -- led at the time by Michael Burcham (recently succeeded by Stuart McWhorter) -- became active in Case's original StartupAmerica initiative, which in 2013 was melded into UPGlobal, a pro-startup nonprofit with global ambitions. In 2011, Case said StartupAmerica aimed to provide the Obama Administration a "roadmap" for igniting the entrepreneurial sector. Case Foundation CEO Jean Case visited Nashville in 2012 to help kickoff an unprecedented statewide startup database. More recently, Burcham was named Co-Chairman of the National Advisory Council on Innovation and Entrepreneurship (NACIE), of which Steve Case is a board member. NACIE is a program of the Economic Development Administration (USDOC). Responding to a VNC query on this matter April 28, Revolution SVP Allyson Burns said Case's team were then focused on the third #Rise bustour and had "nothing to announce related to Startup America at this time," adding "We are constantly looking for ways Steve can promote entrepreneurship throughout the country..." Other Case items are here.
PRIVATE EQUITY investment consulting services is the subject in State RFP 30901-28515, in support of the Tennessee Consolidated Retirement System (TCRS) PE program ($40BN fund assets; Treasury Department), updates on which have been reported by VNC since the PE program was authorized by state law, in 2009. Cambridge Associates (Boston) has occupied that coveted consulting role since August 2010. The gig pays about $1.5MM annually. The RFP says TCRS has been making about $600MM in asset commitments each year, but is likely to reduce that to $150MM-300MM per year, going forward, as it reaches its targets for commitments to buyouts, strategic lending and other asset types. A contract is currently set to be in place, by June.
'GOOD EXIT' is what you know you got when another company buys the company that bought your startup, and later makes warm comments about the technology your startup created. Eight months ago, Cognizant said it'd buy HealthIT player Trizetto, in a $2.7BN transaction. In 2012, Trizetto bought Nashville-based Healthcare Productivity Automation, founded by Tech entrepreneur Sal Novin, who's now with Trizetto. This past November, according to a transcript online, CEO Francisco D'Souza of Cognizant ($38.4BN market cap) pointed-out for analysts during a conference call that M&A target Trizetto was attractive partly because it "has some very interesting advanced automation software robotic kind of technology that they've applied in the healthcare space, which we think could be relevant across industries." D'Souza also said, in part, "We think that advanced autonomics and robotics software robotics are very important [and] will be very relevant to our business going forward across industries..." Earlier Sal Novin coverage.
JIM LACKEY, serial entrepreneur and Chairman/CEO of Complete Holdings, told a Williamson Chamber gathering at E-Spaces on May 1 that growing your business depends "like 98%" on your People, particularly the "A Players." So, he said, you have a choice to "hire hard and manage easy, or hire easy and manage hard." And, you have to realize that B Players know that's what they are, are usually miserable in a role calling for A Players, and should be "sent home" as soon as the reality of their contribution is clear. Your A Players are competitive, good communicators (they can speak AND listen), creative, confident and courageous. True A Players, said Lackey, know where they're going and what Success looks like, and they "aren't stopped by what they don't know." Lackey said that in studying the matter, he and Complete Holdings President David Jones agreed that "bad hires cost 6x-15x that person's salary," making a tough screening process worth the effort. It's not always easy to retain A Players, and that's fine, said Lackey, though he added that A Players sometimes leave jobs for the wrong reason, and could subsequently find that they're actually B Players in a different setting. In startups, CEO's should "overhire," bringing in individuals with more capabilities that they need immediately, but which will enable them to cope as a startup goes through its rapid metamorphosis. A CEO "should always be the dumbest person in the room" when the team convenes, said Lackey. Not recognizing that simple fact is one reason so few startups make it to the $10MM revenue mark, he said. Lackey listed scores of criteria for both people and hiring processes, and said he plans to take more speaking engagements on the topic.
MARC GUTHRIE, 53, the ComFrame founder and former CEO who was often active in Nashville Technology Council, despite being based in Birmingham, is now CEO at "pure startup" Wave Resource Strategies in that city, he confirmed for VNC. Focusing on markets including Education, Wave is a Cloud-linked IT/PC power-management solutions provider that helps optimize energy spend across fleets of personal computers, he said. Guthrie said he'll soon be joined in the company by its second payroll employee, a recruit from Nashville. Guthrie and co-owners sold Comframe in 2011 to Boston-based NWN Corp.
PASSING: DAVE CHAPMAN, the software entrepreneur who once frequently shuttled between New England and Nashville for his Northpoint consulting group, died May 1 at age 80, according to information provided VNC. With decades of hard-won experience among technology majors -- including many years as an IBM manufacturing executive -- Chapman also carried an MIT master's and a Syracuse EE degree. He was Massachusetts-born, upstate New York reared and had lived in Freedom, N.H., and Boston for decades. He worked several years to penetrate Nashville's Healthcare services sector with his passionate, tough-minded approach and tools designed to help C-levels identify gaps in knowledge, talent and other resources, and to overcome complacency regarding customers' needs, in particular. He was also expert in analyzing similar gaps in portfolio companies held by venture capital firms, and related matters. Chapman had remained fully active in Northpoint, developing business with such majors as IBM, Deloitte and others. Cleveland-based Rich Iler had been Chapman's COO the past nine years. VNC