Minnov8

Showcasing Minnesota Technology Innovation

Lief Larson, Former MN Serial Entrepreneur, Has Yet Another New Venture

By

Many of us here in Minnesota remember Lief Larson. He was known and respected widely in our startup community. He had a successful exit with an interactive kiosk company before going whole hog into a software startup. A few years ago, he moved to Seattle after handing over the CEO reins at that VC-backed software company, Workface Inc. I miss him, and I’m sure others do, too. Not only was he a ball of energy, a smart developer and product guy, but a really fun guy, too. And, as a founder, he was the best damn salesperson I’ve ever worked with in Minnesota. He began life in Seattle living on a boat with his wife in the trendy Fremont section. And he’s definitely loving life out there in the Pacific Northwest.

Once he moved, his entrepreneurial endeavors hardly stopped. Soon, he’d launched Engage.co, and not long after a sideline called Sportzy, a leisure sports and activity site. Always one to spot a new opportunity, Lief recently told me he and a colleague launched a new site called Planning to Retire.

“My buddy and I both have parents entering retirement and they keep asking us all these questions, so we decided to build a site to help them,” said Lief.  “We’re trying to capture 1,000 members in 30 days.”  So, friends, tell all your parents and relatives who are approaching that magical age about this great new site. It’s a really helpful resource for them!

Gettin’ old? Sign up now!

 

My Background With Lief
A little history: I was lucky enough to do some consulting work for Lief back in his Workface days — including traveling with him twice to big events in California. I really enjoyed the experience and found myself writing about him several times on this blog. Those posts go back more than five years, covering his journey with Workface (which he founded in 2006), his ties to Marissa Mayer (they grew up together in Wisconsin), and how he took on an educational effort for entrepreneurs all by himself here in Minneapolis called “SaaS Camp,” which I attended. Here are all those posts.

In one of them, I told the following story, which still makes me laugh today every time I think of it. Not only is Lief an amazing, hard-working entrepreneur, but the man knows how to have some fun!

Lief and I traveled to Palo Alto a couple years ago for a conference where Lief was pitching to the Silicon Valley VC community, along with a bunch of other hot startups, and sharing the stage with speakers like the founders of Salesforce and SuccessFactors. We stayed in a funky old, ’60s-vintage Travelodge motel — about as low-priced as we could find in Palo Alto. After we checked in to our respective rooms, we both went online to work. First thing I see is an email from Lief with a photo attached of this gorgeous, expansive hotel room, saying, “Wow, I hope your room is as nice as mine.” I never laughed so hard, because I could hardly turn around in my dinky little room, and I knew he couldn’t either… 🙂

I haven’t had an opportunity to get out to Seattle since Lief moved there, but you can bet I’ll be meeting up with him the next time I do. Go, Lief!

(NOTE: This post first appeared on GraemeThickinsOnTech yesterday.)

What’s the Future for MedTech Startups? Reasons to Be Worried (and a Ray of Hope)

By

advamed-logo-300wLiving and working here in Minnesota, as I do, you constantly hear about how wonderful our state’s medical technology industry is. After all, we’re the No. 1 Global Medtech Cluster, as I was reminded again here at the AdvaMed 2016 conference.  We all think we’re sitting on this huge industry that will just keep growing forever and bring bountiful riches to our state. Well, it turns out things are not all that rosy.

I learned today about a new report, “A Future at Risk: Economic Performance, Entrepreneurship, and Venture Capital in the U.S. Medical Technology Sector.”

futureatrisk-reportcoverHere’s the gist:

“The American medical technology industry has been suffering from a steady decline of entrepreneurship for more than two decades…”

What? Yes, it’s a fact: the numbers associated with this engine of innovation (and jobs) have been declining quite markedly.

We can relate to the medtech startup engine very well here in Minnesota, with our own giant Medtronic having been started by Earl Bakken in a garage in Northeast Minneapolis. (I worked for the company early in my career and got to be taken out for a welcome lunch by the man himself.)

Two charts from the report, shown here, will surprise many:startupdensity-chart-kauffman

 

 

newcoformations-chart
Here’s more from the report’s executive summary:

“The (medtech) industry is increasingly concentrated in a shrinking number of large players. All of those companies are scouring the globe for medtech innovation. With fewer startups in the system, the industry’s dominant companies recognize the long-term threat to innovation represented by fewer companies fueling the industry’s pipeline of innovation. All these factors represent a present and future threat to American leadership in the industry, to medical innovation and, ultimately, to patients.”

The key data points of this troubling picture? Here they are:

• The number of new medtech firms created each year has fallen by almost two-thirds, from 1,500 annually in the late ‘70s and early ‘80s, to around 600 in 2012.

• The industry is “graying.” More than 30% of medtech firms are at least a quarter century old and more than half are more than 16 years old. This age distribution is typical of a mature rather than a dynamic industry and is markedly older than other high-tech industries or even than businesses in the economy as a whole.

• Medtech’s share of total venture capital has fallen from 13% in 1992 to 4% in 2014.

• Medtech’s share of early-stage venture investment has fallen as well, from 10% in 1993 to 3% in 2014.

• During 2015, declining investor interest in medical devices led to a drop in new company formations, and the majority of Series A rounds were less than $5 million.

For reasons of brevity, I won’t get into the reasons for this decline. Read the report. But you can likely guess the major culprit. And you wouldn’t be incorrect to assume that money is also involved.

Funding for the activities and roundtables that led to the “Future at Risk” report was provided by AdvaMed through its Accel division. The authors of the report also thanked the following organizations that helped make the report possible: MassMedic, Medical Alley Association, Twin Cities Angels, Tech Coast Angels, and Edwards Lifesciences. Two Minnesota organizations there!

So What Can Be Done?
I said I’d mention a ray of hope. At Advamed today, I learned about one program that’s doing its share to stem the decline of medtech startups getting off the ground and becoming successful. I met and interviewed Paul Grand, the CEO of MedTech Innovator,medtechinnovator-logo an organization based in LA that’s been making quite an impact over the past few years to get medtech startups off the ground.

Here’s how it describes itself: “MedTech Innovator is the industry’s global competition and virtual accelerator. Our mission is to accelerate the development of transformative innovations that benefit patients and deliver improved value to the health care system.” It runs an annual competition that helps develop startups and gets them in front of the big industry players — at events like Advamed. It conducts its program with sponsorship assistance from Johnson & Johnson, RCT Ventures, Becton Dickinson, Enterprise Ireland, IDA Ireland, the U.S. Small Business Administration, and others. Note in the graphic some of MedTech Innovator’s stats to date:medtechinnovator-stats

I’m looking forward to their event on Wednesday at 7:30 am here at the AdvaMed conference, which is again hosting the “MedTech Innovator Competition Finals.” Twenty semi-finalists were selected from a field of nearly 500 early-stage companies to take part in their four-month virtual accelerator program. Four finalists were selected to compete in this live finals competition on stage at AdvaMed 2016 — yes, it’s at breakfast. You gotta get up early! Each of the attendees at the event — in the conference’s “big room” — get to cast their live vote to choose who will win. A total of $300,000 in prize money will be awarded.

The event is hosted by Paul Grand (CEO, MedTech Innovator). The MedTech Innovator judges this year were:
• Daniel Estes, Vice Chair, Mayo Clinic Ventures
• Jennifer Kozak, Vice President, New Business Development, Johnson & Johnson
• Albert Lauritano, Director, Strategic Technology Partnerships, BD
• Tamara St. Claire, Chief Innovation Officer, Xerox Healthcare

I’m looking forward to the audience vote, as the culmination of this year-long competition. Think of it as at the “American Idol” of startup competitions! I’ll definitely be tweeting the winner.

———

UPDATE: Here’s the tweet announcing the winner posted by the AdvaMed folks about 9:00 am October 19th, which I retweeted shortly thereafter. This lucky startup went home to Fort Collins, CO with a boatload of money!

———-

Today’s press announcement about the “Future at Risk” report is here.

————

Here’s some background on the organizations mentioned above:

About the AdvaMed Conference
AdvaMed 2016 is the leading medtech conference in North America, bringing more than 1,000 companies together in a uniquely multifaceted environment for business development, capital formation, innovative technology showcasing, world-class educational opportunities, and networking. This year’s event is the first to be held in Minneapolis.

About AdvaMed Accel
AdvaMed Accel is the division within AdvaMed dedicated to addressing the unique needs and challenges of smaller medical device and diagnostics manufacturers – the lifeblood of the medical technology industry. The only organization of its kind focusing specifically on the needs of the medtech industry’s emerging growth companies, AdvaMed Accel works to create a policy environment more conducive to capital formation and innovation. For more information, visit

About MedTech Innovator
The mission of MedTech Innovator is to accelerate the development of transformative innovations that benefit patients and deliver improved value to the health care system. MedTech Innovator 2016 features 20 semi-finalist companies selected from 430 applications that address one or more of the transformative themes identified in a 2016 survey of leading manufacturers and providers. The 2016 program includes three competitions: the first was April 13, 2016 at the Innovation in Medtech Summit in Dublin, Ireland; the second was June 24, 2016 at the Wilson Sonsini Annual Medical Device Conference in San Francisco; and it concludes with the finals at AdvaMed 2016 in Minneapolis on October 19, 2016.

StemoniX, MN Cup Winner, Gets TreeHouse Health Investment

By

stemonix-logoThe winner of the 2016 Minnesota Cup, the largest business plan competition in the U.S., has been named by healthcare-startup incubator TreeHouse Health in Minneapolis as its latest portfolio company. StemoniX is leading the development and manufacturing of human-induced pluripotent stem cells for pharmaceutical drug-discovery applications, such as biologically accurate, miniaturized organ-like microtissues.

“We are excited to announce the addition of StemoniX to the TreeHouse Health ecosystem,” said J.D. Blank, managing director, in a prepared statement. “Through their innovative work, they are advancing the field of drug discovery and ultimately helping patients get better treatment more quickly.”TreeHouse-FinalLogo

StemoniX’s biotechnology provides scientists with standardized, easy-to-use, cost-effective access to relevant human microtissue for toxicity and efficacy screening. Incorporated in Minnesota, the company is colocated in Minneapolis and San Diego, California.

TreeHouse Health defines itself as an “innovation center” designed to invest in emerging healthcare companies and help accelerate their growth. It says Stemonix is setting a new standard for stem cell technologies to meet the demands of drug discovery and personalized medicine.

mncup-logo-squareStemoniX earned the Grand Prize and title of “Best Breakthrough Business Idea of 2016” at the 12th annual MN Cup awards, held on September 22, 2016 at the University of Minnesota.

StemoniX says its efforts are revolutionizing stem cell-based research and drug screening and will lead to a new era of drug discovery and personalized medicine. “We’re grateful to become part of TreeHouse Health as a portfolio company,” said Ping Yeh, CEO. “We’re confident our relationship with TreeHouse Health will help us establish a strong presence in Minnesota, as well as generate new opportunities for Minnesota-based financing and collaborative partnerships with TreeHouse Health anchor tenants and other connections.”

 

Yeh continued: “We are thankful to the MN Cup organizers, sponsors, and community for their support and the

TreeHouse Health now has 13 portfolio companies.

TreeHouse Health now has 13 portfolio companies.

opportunities created by our participation in the competition this year, which includes our new relationship with TreeHouse Health.”

Along with providing investment, TreeHouse Health offers its portfolio companies access to its ecosystem consisting of leading healthcare organizations (its “anchor tenants”), professional service providers, and other emerging healthcare companies. To date, TreeHouse Health has invested in thirteen early-stage healthcare companies and has anchor tenant relationships with Hennepin County Medical Center (HCMC), Blue Cross and Blue Shield of Minnesota (BCBS), and Accenture.

Minnesota Cup Division Winners

By

mn-cup-winnersThe Minnesota Cup is thrilled to announce eight division winners who will compete for the grand prize title on September 22. The winners, one from each division, were pared down from an initial, record-breaking participant pool of 1,500. They are:

Each division winner has been awarded up to $30,000—and is now in consideration for the sought-after MN Cup grand prize, which comes with an additional $50,000 in seed capital. In its 12th year, the MN Cup is giving away a record amount of prize money: $405,000 total.

Go here for more information and to register for the final awards event.

TruScribe Kickstarts ‘Global Visual Language’

By

TruScribe-crowdsourcingThought you’d heard it all on Kickstarter? Well, how many times have you run into a project there that’s about launching a language? You read that right. Get your credit cards out, Minnesota startup lovers! Here’s your chance to say you were there back in ’16 when history was made.

But here’s the deal: you gotta tell a lot of your friends, because the folks at TruScribe have set a pretty hefty goal for this one: it’s $100k.  Of course, that’s befitting the ginormous implications here — I mean, how often do you get to impact the entire freaking global community, with that single audacious goal to allow everyone on the planet to communicate visually? This is big stuff, people!! What’s a lousy little 100 Grover Clevelands?

TruScribe, as you’ll recall, is a whiteboard video animation company that was cofounded in Minnesota. (We TruGlyph-logowrote about them here back in 2014.) A large part of its staff is in Madison WI, but Minneapolis became its headquarters a while back, with great new digs at International Market Square. It was named the 253rd fastest-growing company on the Inc. 5000 list in 2015, which was understandably touted far and wide. (As a point of reference, crazy-fast-growing LeadPages of Minneapolis was #220.) In February 2016, TruScribe announced the first part of its new initiative to transform into a full-fledged software business, with a new iOS app called TruGlyph. (You can download the app here.)

What’s coming next you can see in their new (and very first) Kickstarter project. Here’s an excerpt from that page on what it’s all about:

“We’re asking creatives – artists, word nerds, and everyday folk – to join our community and contribute to our efforts through our TruGlyph app. And we need your help to create the TruGlyph Marketplace that will reward those that contribute in the most meaningful ways.”

On communicating visually:

“While the internet and social platforms help us reach people anywhere on earth, we are worlds away from the technology helping us be understood across languages and cultures. People are visual observers and learners, but we’re often limited to text and audio when we want to communicate in meaningful ways. We believe that a Visual Language is the first step in allowing people to communicate visually.”

On the big goal of a global visual language:

“Visually representing even a single language is an incredible undertaking and even more so as we’re reaching across the world. Which is why we can’t do it alone, nor should we do it alone and why crowdsourcing is the only way we will accomplish it. Language isn’t defined by the dictionaries that print it, but by the people that use it.”

About the Glyph, the building block of this language:

“A Glyph is a simple image that animates as if drawn and is associated with words and context. The TruGlyph-FourPhoneScreenscommunity is already using our TruGlyph app to draw glyphs, tag them with words, and play games that pit glyph versus glyph asking the player to decide which has more meaning. When a glyph increases and meaning and rises up to become part of the Global Visual Language, it’s because of their efforts — which is why we need to reward them..(our) marketplace will be a system that allows creatives who contribute to the global visual language, in the most meaningful ways, to be rewarded and compensated for their efforts.”

And here’s more about TruScribe software:

“It’s an innovative platform designed to let you communicate via video using the TruGlyph global visual language. Send a video message to a friend; create a video to market your business; your ideas can be understood by anyone, anywhere. Backing the Kickstarter gives you a FREE subscription to the TruScribe software and the new frontier in worldwide communication and understanding.”

So, there you have it, crowdfunders — get your credit card out, back the project, and grab your reward!

——-

[Disclosure: TruScribe has been a client of mine.]

 

MN Tech Founders Tell 11-Year-Olds What It’s Like to Start a Business

By

Kidizen logoA pretty cool meetup happened over the weekend at CoCo Northeast. On Saturday afternoon, the cofounders of Kidizen, Mary Fallon and Dori Graf (who office there), got

Wade Gerten

Wade Gerten

together with another experienced tech startup founder,

Wade Gerten, to show some young girls what starting a company is all about. Wade and his wife, Lisa, brought along a group of five 11-year-olds, including their own daughter, all classmates at Poplar Bridge Elementary School in Bloomington.

I was delighted to be the one who introduced Wade to Mary and Dori, after learning last week from Wade that he was looking for a female-founded startup who would speak to the girls. Though I was traveling and couldn’t be there on Saturday, Wade was kind enough to provide some photos and comments on how the meetup went.

(Wade, as you may recall, was CEO/cofounder of 8th Bridge, formerly Alvenda, which was the Minnesota Cup grand prize winner in 2009. It was acquired in 2014. He’s now VP of Digital & Customer Experience at Infor.)

After I made the introduction and asked if the Kidizen cofounders would be willing to host the girls, Mary immediately agreed and said, “We’ll do our best to show them how rewarding entrepreneurship can be! It’s truly great to see that Minneapolis girls are being exposed to the tech scene.”

Mary Fallon (left) and Dori Graf talking to 11-year-olds about business,

Mary Fallon (left) and Dori Graf tell the girls what’s it’s like to run a business.

Following the meeting, she said: “The girls were awesome! There were some great questions and ideas from the group. We were thoroughly impressed. We’re also truly impressed that Wade and Lisa, as parents, are encouraging these girls to learn how to code. They are way ahead of the game!”

Mary continued: “When I was their age, I was part of a group called the ‘Future Problem Solvers of America’ and, thinking back, it made a big difference in my education and path in life because it taught me how to think bigger… Part of my ongoing dream would be to give back to our startup community via its youth and/or schools by helping shape young entrepreneurial thinking. So, our meetup on Saturday certainly scratched an itch for me. Wade and Lisa, if you ever start that brainstorming group you mentioned, I’d love to help!”

In a followup email, Wade said: “I really appreciated Mary and Dori offering to host my girlMary+Dori+girls coder gang of five 11-year-olds. Earlier in the day, we’d taken part in the Rebecca CoderDojo, a two-hour coding class just for girls. This was just a day I organized, not an official school thing. I was attempting to plant some seeds with the girls that not only is coding fun, but so could be starting their own company.”

He went on: “Based on the chatter in the car ride home, I think the girls were surprised by what ‘business’ means. My daughter commented, ‘I thought you said we were visiting a business. That wasn’t a business!’ She had some kind of image in her mind that business meant boring or corporate. They didn’t expect a slack line competition, a hammock chair, and the red tennis shoes! Thank you, Mary and Dori, for meeting our girls yesterday. You were gracious and inspiring. I suspect only a couple of hip momma storytellers like you could’ve made a business story so understandable and interesting to 11 year old girls!”

So, take a look: these may be the faces of some future Minnesota tech founders! Kudos to Wade, Mary, and Dori for making it happen.

App Developers, NativeX Has an Education for You

By

Graphic: VentureBeat

Graphic: VentureBeat

If you publish apps (and it’s hard to find a company these days that doesn’t), you’d better be up on the new science — and art — of App Store Optimization. Yes, say hello to another acronym: ASO. We all know about SEO — it’s such common practice, we do it like breathing. But when the whole world has gone mobile, when everyone and their mother are publishing apps, if you aren’t into ASO – well, you’re falling behind. It’s a major new focus for app developers and publishers, and one of our most successful Minnesota startups is ready to take you to school on it.

ASO is the direct result of a phenomenon VentureBeat calls “invisible app syndrome.” In a post today, it explains: “With over 1.5 million apps in each app store, it’s easy for apps to disappear and never be seen… App Store Optimization (ASO) can bring your app out of hiding, placing it squarely in front of the customers who need or want it, and keep them clicking through.”

St. Cloud-based NativeX is an experienced player in helping app publishers NativeX-logooptimize for the app stores. You know them well. We’ve certainly written about the company before. It lately describes itself as “the premiere ad technology choice of top-charting mobile games and apps.” It has an expert team of engineers, data scientists, account managers, and designers, and has been recognized as a leader in effective monetization and user acquisition.

NativeX has been an innovator as well in redefining native advertising for mobile games and apps. (Worth mentioning here is that this Minnesota-born startup has been profitable for 12 straight years. Yes, you read that correctly. We grow ‘em good here in the cold North – where the firm began life under the name Freeze.com.)

An Upcoming ASO Webinar: “Money for nothing, clicks for free”
VentureBeat is hosting a webinar on February 18th on App Store Optimization. It’s sponsored by none other than NativeX, who will be participating along with Aaron Kardell, founder of Minneapolis-based real-estate apps publisher HomeSpotter.

From the post about the event (where you can register): “Mobile app developers are fighting a fearsome battle every day. As mobile continues to be second nature for us, publishers are releasing countless new apps on a daily basis — almost 1,500 a day are added to Apple’s App store alone. However, only a few will gain the undivided attention of the public.”

ASO Best Practices
In addition to sponsoring the upcoming webinar, NativeX just released an ASO white paper, which is all about best practices to help publishers improve app store visibility. WhitePaperTitle-NativeX-ASOIt’s the first in a two-part series. Part 1 focuses on Search Ranking optimization. Part 2 will focus on improving Chart Ranking.

RyanWeber-NativeX

Ryan Weber, NativeX

“With the millions of apps already in the app stores,”  said Ryan Weber, NativeX cofounder and chief product officer, “many developers have experienced the crushing reality of publishing an app that never finds an audience because the audience never finds the app.”

VentureBeat says this about the new white paper: “It takes effort and insight to implement the kind of ASO that makes a measurable difference, but the experts at NativeX have broken that process down to four steps.”

Ryan Weber adds: “67% of app users say the last app they downloaded was found through typing their inquiry into the app store search, making search the dominant organic app discovery method. Improving search ranking within those stores has become one of the most critical ASO requirements for publishers.”

Weber said that NativeX published the white paper to answer the questions most relevant to app publishers about ASO and how to improve their app store visibility. Specifically, here are the questions it addresses:

  • What is ASO?
  • What motivates users to download an app?
  • How are users finding/ discovering apps?
  • What impact do paid installs have on organic installs?
  • What do you need to measure for effective search discovery?
  • How do you pick the right keywords?
  • What tools are available to help with keyword selection?
  • How does relevance, difficulty and popularity affect keyword prioritization?
  • What are On-Page and Off-Page influence factors and what improves search rank?
  • How do you optimize paid campaign delivery for the purpose of influencing Off-Page factors?
  • What can you do in your app to influence Ratings and Reviews to improve ranking and conversion rate?
  • What are best practices for optimizing your app store click-through & conversion rates?
  • What tools are available to help with AB Testing to determine best assets to use?

VentureBeat published an extensive report  a couple of months ago on App Store Optimization. In a post describing that report, it says, “App publishers who implement ASO can realistically expect a 20% lift in organic downloads, and can in some cases double or even triple their organic downloads. That’s huge, and reduces overall cost per acquisition of each mobile user.”

That report sells for $499. But you can get a pretty darn good education for free by reading NativeX’s two-part white paper series mentioned above.

Then you can not only be on your way to increasing your own downloads, but you’ll be ready to help your mother when she’s ready to publish her first app, right?

——-

[Note: This post first appeared on my personal blog, Graeme Thickins On Tech.]

Where Will You Be When the Tech Crash Hits Minnesota?

By

Photo: ShineYourLight (Sang Kim)

Photo: ShineYourLight (Sang Kim)

Trends don’t start here in the cold North. We all know that. They tend to come from the coasts. Not always, but mostly. Some trends never even get here at all, and we can be fine with that — or not even realize we missed another one. Then there’s a trend that turns into a… crash.

There’s one of those taking shape out there in the world of big tech that we should hope never gets here. We’re hearing the talk more and more. New signs pop up. I caught a story yesterday that uses the stock market term “correction” in the headline — how polite — then proceeds to cite so many reasons it could be called a crash. Or a bubble burst.

…  [Read More…]

Raising Money You Don’t Need: Minnesota Startup Trend?

By

I Dont Want Your Money

[UPDATE 9/28/15: At the bottom of this post, I include some great comments I got from a leading VC over the weekend.]

This thing about profitable startups raising money they don’t need is getting deafening around here. A few years ago, Code42 shocked us by taking their first VC money (a huge $52M round), which confused people because they knew they were doing fine without it. Then LeadPages raises a surprise A round in late 2013 that it soon was openly bragging it hadn’t touched — didn’t need it. Then, just months later, it takes yet more — another $27M. It’s growing crazy fast, so we wonder… do they not need that either?  How about SportNgin, raising something close to $40M over four rounds going back to 2011? With the continuous growth they’re experiencing, why do they need all that cash and can they even spend it?

Now we learn about another rapidly growing Minnesota startup, Field Nation, which began as a young college grad’s idea more than a decade ago and now claims a $100M revenue run-rate, grabbing a huge (for this town, FieldNation-logo-horizanyway) Series A round of $30M. Reading the recent news in the StarTribune and the MSP Business Journal, you had to be impressed. Another homegrown startup raises a huge initial round. Wow, yes, we say to ourselves, beaming with pride, the Minnesota startup community really is rockin’! But what’s going on here with this latest winner in the local VC stakes?

The one thing that struck me was that both the recent media stories about Field Nation said it was the company’s first outside money, when I knew it wasn’t. The first institutional (VC) money, yes, but this company was hardly undiscovered by smart investors. And it was growing just fine without using what little outside money it had previously taken in.

Field Who?
Just who is this company, you might ask? It’s true we don’t hear a whole lot about them. Well, they’re “the leading marketplace platform for contingent and on-demand workforce management” — as stated in their funding news release.  (Which contains so many “Tweet This” links within it, I had to laugh. Kudos to their PR dude, Chuck Grothaus.)

FieldNation-GetWorkDoneField Nation has been quietly toiling away for several years now building revenues like… well, apparently like mad if the aforementioned $100M run-rate it is any indication. Such a projection — and it is a projection — might make it seem more reasonable to understand why Susquehanna Growth Equity would inject $30M for only a minority position. Another perspective on the investment comes from a longtime advisor to the company, Ryan Weber, who told me “The market Field Nation is in is extremely hot, with well over mid-double digit growth rates expected for years to come.”

There’s no arguing the company has some impressive numbers, as stated in its funding news release: “During the past year, Field Nation has connected more than 1,000 organizations with its network of over 65,000 registered contractors.” Describing its growth rate, the company uses glowing terms: “Prior to securing this investment capital, Field Nation has been a self-funded business, growing profitably at more than 65% annually since its launch in 2008.”

There’s that insinuation again that it really hasn’t needed any outside investment.

MynulKahn-FieldNation

Mynul Kahn, CEO, Field Nation

I wanted some further background on the history of the company. So, I first went to Ryan Weber, the well-known cofounder of NativeX (formerly W3i), and, later, to Mynul Kahn himself, Field Nation’s founder and CEO.

The Viewpoint of an Early Advisor
Ryan Weber met Mynul while they were both working on their BS in Computer Science at St. Cloud State University. “He graduated in 2003, one year ahead of me,” said Ryan. “At the time, I didn’t speak to him about my business; we were simply classmates. This was before he had the idea that started Field Nation. Mynul had been living in the Twin Cities for a while and we didn’t keep in contact after graduation. However, in October 2008 he reached out to me to catch up. Soon after, in December 2008, I joined as an advisor to the company. Mynul had a false start with this business in the past, but I felt he had a lot going for him and was the type of person that wasn’t going to give up on this incredible idea.”

RyanWeber-NativeX

Ryan Weber
Advisor to Field Nation

How did Ryan participate? “I definitely did not have anything to do with the refinement of the business model. Rather, I provided feedback to Mynul on various organizational and business topics that had impacted my brother Rob and I in the company we had founded, as well as other startups we associated with. Mynul was already generating revenue when I got involved. He was very lean in getting the company started. After tracking the company a bit longer, Mynul and I agreed that I should approach Young Sohn (a board member at what was then W3i) about his potential involvement. Young had more business connections in Field Nation’s target markets, and was an occasional angel investor, a seasoned operator, and an incredibly strong leader. [Note: Young Sohn is now President and CSO of Samsung Electronics.] Ryan introduced Young to Field Nation in August 2009. “He was immediately interested in getting involved, and we worked out terms for a $200,000 seed investment, from Young Sohn and 32 Degrees, the angel fund I run with my brother Rob.”

How did Mynul fund the early days of Field Nation? “The company very early funded its own existence,” said Ryan. “It reminded me a lot of our company’s formation. Field Nation and W3i (now NativeX) were both bootstrapped to profitability and only raised a seed round to strengthen our savings, but, more importantly, to attract advisors — smart money.”

So, how was this $200K seed investment used? “He never actually spent the money we invested,” said Ryan. “I think the money helped Mynul feel more comfortable that he could spend the profits Field Nation was generating without worrying about taking on debt or having a bad month. He was also able to leverage Young, Rob, and I for any special projects and business advice.”

FieldNation-mission-600wI asked Ryan, in regard to the platform Field Nation created, what made him think they could succeed in a market dominated by the likes of Odesk and eLance. “Mynul’s focus was very different than the others. I personally had been a customer of eLance and other services like those. I found they were useful for software type service work. But Field Nation was focused on helping companies with service needs that required on-site field work. It made total sense for a contractor marketplace of technicians.”

What does Ryan now see now as the company’s critical growth challenges? “Their market is not well penetrated by any player right now,” he said. “Field Nation has its work cut out for it to convert potentials into customers and help shape the market. The biggest challenge I see is multiple growth opportunities to consider, including expanding markets and expanding products. Choosing the right focus and building the right team that can execute it will be the most critical.”

Another Perspective, from an Acquired Company’s CEO
Longtime local tech-industry player Mac Lewis was CEO of Field Solutions before its acquisition by Field Nation earlier in 2015. I asked Mac about his take on the funding announcement.

MacLewis-FieldSolutions

Mac Lewis, CEO, Field Solutions (acquired by Field Nation)

“This $30M financing is a significant one, from a reputable firm, which I believe is an evergreen fund,” he said. “That might minimize pressure for a liquidity event in 5 to 7 years. It will provide resources to expand investment in sales and software.”

Mac is not an employee of the combined company, though does have an advisory relationship. “Field Solutions was a complementary addition for Field Nation. Although we were in the same business, we did not see them competitively very often. From Field Solutions they got a customer base that was, for the most part, non-overlapping. We had focused more on enterprise clients. They also got a full-service delivery capability — in addition to more automated, SaaS ‘self-service’ capabilities, which were offered by both Field Solutions and Field Nation. They kept about two-thirds of Field Solutions employees.”

The Founder’s Story
This morning, I was finally able to run down Mynul Kahn (whom I originally met in 2011) and get him to briefly describe the story of his company. “The idea first came to me right after I left college. I founded a site called ‘Technician Marketplace’ then sold it in 2006. Soon after, in 2008, I started Field Nation with a much broader vision than just technicians.”

So, how many years following your founding were you in the ‘pre-revenue’ stage? “The company had revenue in its first year,” he said. “Since we were not funded by VC, it was important to generate revenue as early as possible. We created a minimal product in 2008 that was effective and customers loved it.”

But you must have had some money to start — how did you fund the early days of Field Nation? “From my paycheck,” he said. Yes, he had a day job, working for several years at an analytics firm. So, Mynul proves you can build a startup on the side while working a full-time job — but of course you can’t expect to do that with VC funding. First you put your own skin into the game. Both sweat equity and hard cash in this case.

What role did Ryan and Rob Weber play after their angel investment with Young Sohn? “As my first angel investors, they were extremely helpful,” Mynul said. “They worked as my sounding board and help connect me with a lot of people who ended working for my company.”

When did you first envision your platform strategy to serve freelancers in general (not just field technicians), and what made you think you could compete and succeed in a market dominated by the big established players? “The early success in field services broadened our ambition.” I guess so, if his next statement is any indication: “What Amazon is for retail, Google is for search, we want to be known for work – the work platform.” Can you say Think Big?

Who were your early critical hires? And how many are still with you? “The founding team is still with the company. One person built the technology team, one person built sales, one person built customer service.”

Finally, I asked Mynul. what are your goals for the immediate future, through 2016? “Further development of the platform. We’re adding lot of capabilities so the platform can handle any type of work, any type of worker classification, and eventually anywhere in the world. We’re putting a lot of effort in building the sales and marketing team.”

But how much of that $30 million will be invested in all that, and how soon? He’s not saying. But, with Field Nation generating revenues and profits as they are, will they even need to tap it?

Which Raises the Questions…

  • If revenue growth and profit trump everything, why do you need VC? (Truism: customer money is better than VC money.)
  • Why do VCs deploy large sums of money that really just then…sits there?
  • If founders aren’t asking for all this big money, is it flowing because VCs are pushing it on them?
  • Does a startup take such funds as a war chest for acquisitions?
  • Or all of the above?

Discuss amongst yourselves.

———–

UPDATE: When I was planning this post, I reached out to Seth Levine of Foundry Group (no stranger to Minnesota) for his take on the concept for this post. It turned out he was traveling and didn’t get a chance to respond till a couple of days ago. Here’s what he had to say…

“The reality is that the old adage is at play here – raise money when you can, not when you need to. Ultimately, it’s a sign of strength to put capital on the balance sheet. The key is to spend according to your business metrics, not according to your balance sheet. That’s where some companies perhaps get in trouble. As a practical matter, there are lots of reasons companies raise these growth rounds: they may need the money for marketing; they may want to look at M&A to grow faster; they may want to derisk the business and make sure that if things slow down in the economy they have plenty of cash as a buffer, etc. All very good reasons to shore up the balance sheet.”

[Note: This post first appeared at Graeme Thickins On Tech.]