About knockNOW!
A proposal to change the attitude and success of the local technology market

Calling a Crisis!

In June of 2000 Stephen Meade issued a challenge to some of his peers. The purpose was to point out what was missing in Chicago and what could be done to fix it. He wanted the City to "Call a Crisis" in the technology community and announce some initiatives to address the problem. The goal was to create a sense of urgency in galvanizing the city around the impending Crisis.

Unfortunately, in June of 2000, no one wanted to admit their was a problem, much less a crisis. What follows is the reason for creating the organization as well as the initial impetus behind it's formation.

The Creation

KnockNOW was originally created in August of 2000. This was a time when the dot-com bubble was bleeding, but had not quite burst. It was also a time when we noticed an impending crisis on the horizon. With much thought, we wrote the following outline for an organization that could change the fortunes of a city.

If the right people were brought together with a common purpose, we could accomplish some great things.

We wrote down this concept and formalized it BEFORE anyone else had recognized that there was a true crisis. We wanted to create this process as a barrier - to divert what we had already anticipated was an impending disaster.

Additionally, we believed then, as we do now, that this process would catapult Chicago to the forefront of the technology world. We knew that with our area's combined resources, mobilized and utilized for a common goal, we could position ourselves to lead the Country into the next Millennium.

Below were the thoughts and ideas as we had phrased them in the Summer of 2000. They are now, in the fall of 2001, beginning to bear fruit and to pay dividends to this community.

Why was knockNOW Created?

Problems:
- Lack of funding at the seed and start up stage
- Lack of structured support as companies grow

Reasons:
Shortage of:
Knowledge, Networks, Opportunities, Contacts, Customers, Credibility and Capital, Kismet, Notoriety, Obligation, and Winners;

Solution:
KnockNOW: The cross-section support network needed to propel business success.

In June of 2000 Stephen Meade issued the following challenge to some of his peers.

Mr. Meade asked them to give two or three internet/technology companies that have been successful in the Chicago area.

He qualified the question with these caveats: 1) companies who are leaders in their field; 2) have great management; 3) are fully funded; and 4) are executing on their vision. Unfortunately, after some discussion, they concluded that this was an extremely difficult undertaking to accomplish. Most of us may be hard pressed to name that many.

Why? There are a multitude of reasons, depending on whom you talk to. It has been my experience that if you talk to different groups you will get an astonishing amount of different answers. This is pointed out in a recent article written about the state of Chicago technology, where a so-called "power panel" were asked what they felt the problems with the business of technology in the Midwest were?

Here is a sampling of their answers:

- "We have the dots, but nobody is connecting them."
- "We have a jigsaw puzzle, but it is still in pieces."
- "There has been a shortage of great ideas emerging from here."
- "I think the dollars are here, but where are the good, exciting ideas that people want to implement, where the base of operation is here as opposed to somewhere else?"
- "I have seen a number of people get turned down by Midwest venture funds and go out to Northern California and get funding. Maybe it has to do with the investment psychology of the funds."
- "Chicago is missing high-risk, high-return capital."
- "The biggest problem here is finding deep management experienced in running tech companies."
- "We need more ideas with better plans and management teams that are not too thin."

These comments demand someone or some group to "connect" the dots; People who can help complete the puzzle, and assist in finding and developing great management teams for those good ideas that we know are out there.

If we can find these resources - all this will certainly help mitigate the risk of a high-risk start up that has high-return potential. But where does it all start? With money? With knowledge and intellectual capital? With networking and introductions?

We propose that it is a combination of these factors: a disconnect and disparity among the very groups who need to work together.

What's needed is a single focused group of individuals from various organizations and backgrounds who understand this disconnect and are willing and able to work to correct it.

The group will be brought together for the purpose of creating a support structure as well as a networked and nurturing environment for the creation of technology companies.

The goal of this group would be to: create successful technology companies by establishing an organization and to assist in funding start-ups, who understands the market places and the technology to exploit them, and who will work together by providing contacts, time, knowledge, and experience to ensure more successful ventures.

That group: KnockNOW

The role of KnockNOW is to create an organization and an environment that brings together the 5 groups necessary to create successful companies in this new environment. Each group, as they currently exist, function within their own universe with no or little connection to each other. The interaction between each group is limited at best, and unproductive at the worst. Each group has important and relevant knowledge, resources, experience, leverage, and exposure. However, each operates within their own microcosm of events, meetings, and even secret gatherings. Brought together in a united front, they would become a powerful force of funding, talent, and success in Chicago and the Midwest.

These 5 groups are as follows: What the group is/ what their input to the technology community is/ what meeting venue this group normally attends.

As a group we have an Obligation to increase the success, notoriety and exposure of the technology winners in Chicago, but disparate goals and objectives water down our efforts.

Why we don't have "winners" on the Silicon Prairie?

If we boil down the problem in the Midwest, it's fairly obvious that our lack of major successes stems from a critical shortage of seed and start up funding. This occurs mostly because those who can and would be finding or funding these startups don't have enough relevant knowledge, domain expertise, or confidence within the technology sector to make prudent investments. Why is this?

In order to better understand this phenomenon, let's examine at what is going on in other, more successful environments. Their process is designed to develop new ideas and bring them to successful conclusion. I call this process the:

"vision capital cycle"

1. An idea is born.
2. A company is created, and germinated with small money from friends, family and "angels".
3. This company begins with 1-3 people who build and create the company's driving "vision".
4. The Company grows and adds more people.
5. These people develop strategy, needs, more vision, direction, other ideas, implementation plans, and all sorts of issues related to not only for their own company, but also for other companies in their "space"; even other, more diverse ideas, and most importantly, ideas about their industry as a whole.
6. If this process has been successful, the company will ultimately get acquired or will IPO.
7. The result of these liquidating events is that you now have experienced management with high net worth, net worth that needs to be invested.
8. Many of these individuals look to give something back to the community that spawned them. They create "angel networks", venture funds, even new companies, or they just look for opportunities to help new startups.

This last stage, stage 8, is where both the East and the West coast happen to be. In those areas, there have been a large number of very successful companies, which have spawned a plethora of individuals who have money and a track record. They know how to raise money and they've executed on a strategy. They lived, breathed, ate (occasionally), slept (rarely), and drank (only highly caffenated drinks), the very essence of their company.

However, in order to be successful they also had to be able to:

- Find people who could understand their business.
- Find people who were willing to help.
- Gain experience both on their own and by hiring successful executives.
- Stay on top of the industry, the competition and the trends.
- Sell their idea to investors, customers, suppliers, etc.

All of this can be accomplished because they have the people, the structure, the understanding of what it takes to build successful tech companies - they have access to "Vision Capital".

Here in Chicago, we try compete with these other successful areas of the country - but without this process of the creation of successful entrepreneurs and without the understanding of what resources are truly needed to build a tech community. This is fostered mostly by the "disconnect" between all the resources we have and the lack of "vision capital".

This disconnect and a lack of vision capital fosters a tremendous chasm between funding sources, knowledgeable and qualified management and good solid ideas and applications.

The purpose of KnockNOW is be to bring together top leaders from each of these groups and create a society that replicates the best of Silicon Valley and Silicon Alley. The environment will encourage open dialogue, exchange of ideas, knowledge, experience, referrals, contacts and, where necessary, financial support.

Here are some interesting scenarios that could result:

- A local VC talks to the CIO of Motorola about what they are working on and why. The VC learns how it relates to where the technology will be in two years. He makes a connection to a startup whose business plan he just reviewed.
- A CEO of an Internet marketing company talks to the director of product development at Lucent and as a result they both get new insight on how to handle on-line consumer relations and marketing.
- An Internet CEO talks to the director of public relations at ATT about how to position his company for the most effective strategy. They are joined in the conversation by a local VC and angel investor. The discussion turns to market trends and competitive strategies. The angel decides to invest in a firm with a similar approach that he's been considering.
- The director of Andersen Consulting talks to a VC about the Fortune 500 companies they just provided consulting to and what their needs and desires are. The VC points out that here is a need for that very same venue in a startup he's just funded.
- An entrepreneur talking to a VC about what types of investments the VC is prone to fund, what industry they are focused on, what stage, what size, what they look for in companies. As a result, the entrepreneur revises his business plans, financials, projections, and valuations. He gets funding from a different VC, but one that was recommended by this VC.

The intrinsic benefit of exchanging this type of knowledge, contacts and dialogue is obvious. While we can't truly speed up the vision life cycle as it relates to what's happened in Silicon Valley, we can take steps to better educate and support our local groups. The result of that process should be the same cadre of knowledgeable and dedicated entrepreneurs and investors is a shorter amount of time.

The goal of KnockNOW would be to create this environment that fosters investment much further down the value chain than currently exists. It should be understood that with out a goodly number of startups seeded in Chicago, in a few short years, there will be no technology companies here at all.

By learning the backgrounds and needs of the different groups, the use of each other's time will be much more proficient. For example, why should an entrepreneur send a business plan built around Internet marketing to an VC group that only invests in Wireless? This happens now because the lack of knowledge garners a shotgun approach, or every man for himself. Knowledge vacuums breed xenophobia: the "I am not going to help anyone if it doesn't help me" mentality. This is what has been promulgated in Chicago.

If things are going to change, we in the community have to take the steps to change them. KnockNOW can do just that. It can create an environment that encourages networking, not one that talks about it, not one that labels you with a tag and sticks you in a room with 800 people. It needs to be a focused, interested, and professional group of people who want to make a difference in other's lives and the city of Chicago itself.

KnockNOW will give an entrepreneur access to top tier investors, executives, consultants, and others and in so doing, help accelerate their business development. To have the understanding of how true networking and referrals work would be even more beneficial.

Current and normal fare in Chicago is to have a VC say, "we are going to pass" followed by the sound of the door slamming. If KnockNOW is successful, that message will be more like: "this isn't for me, however, here are three other groups who fund this type of venture, call them and feel free to tell them I SAID TO GIVE THEM A CALL." Right now, an actual referral from a VC in Chicago is almost unheard of. In San Francisco, Boston, New York, it is commonplace.

We need people we are willing to take a stand, develop relationships, put their name on the line to support someone else. This can only be done by increasing the contact, knowledge and comfort level among the peers in this town.

How to create the connection.

KnockNOW will be a relaxed, intimate gathering where all funding components: VCs, entrepreneurs, successful executives, service sectors, government and the press can converse and exchange ideas and information.

Initial Membership: Develop initial membership. Invite 15-20 total people in the various different practices (Entrepreneurs, Executives, VCs and Angels, Service Sector Professionals, and Government) for the initial meeting. Attendees should be as equally balanced at meetings as possible. The initial objective would be to invite executive level decision makers from each group. Special care will be given to ensure the level of experience, the commitment of each participant and the adequate representation from each group.

- Venue: Is sponsored by a different company each month. The setting moves throughout the Chicago loop area. Venue is social, interactive, non-threatening, for information sharing and relationship building.
- Format: Cocktails and appetizers are provided. There are no speakers or presentations. It is networking only.
- Number of Participants: Attendance will average around 45-60 people. This will ensure the proper level of dialogue between members.
- Goal: To provide open dialogue, exchange of ideas and to increase the level of knowledge and comfort among each group.
- Rules of participation: Each member has to be willing to learn about the other group and provide resources (knowledge, experience, money, customers, contacts, referrals, etc.) as they see fit. To be willing to understand another members business needs and provide help when it is warranted.
- Utilize facilitated introductions: This is critical for the success of the knockNOW foundation. A facilitated introduction occurs when a member, who knows your business and what you do, makes a qualified introduction to another member.
- Help: For example, an introduction to a better funding source, a contact in a Fortune 500 company, agreement to utilize services, introductions to customers, and a referral to a potential executive looking to make a change. Any amount of support that would strengthen or benefit the other party must be considered.

The group would be encouraged and expected to help out other members within the group. In sales they have a saying; "He who knocks on the most doors wins". Well, this may be the case, however if we knock more intelligently we will all be more successful. Knocking on a door from a referral is much easier than knocking on your own. Often it is the difference between getting asked in for coffee and getting the door slammed in your face.

With better information, better referrals, better understanding of the businesses, dynamics, and operations of the participating organizations, I propose we will all be better off when "Opportunity Knocks".

So, if you are interested, please notify me and I will establish the location for the first event. I guarantee whether we have 3 people or 3 hundred, it will be an event that will: KNOCK your socks off!

All we have to do is knock the dust of our boots, knock a few people upside the head to knock some sense into them, knock around a few good ideas, and show the rest of the world that we aren't knocked down, quite the contrary:

We are going to KNOCK them out!