January 7, 1999
The May Report
by Ron May
firstname.lastname@example.org (I prefer that you use the email@example.com/tmr address
for subscribe and unsubscribe requests).
The May Report: 1/7/99: U-Access gets $17.5MM from maveron and bay; Calendar
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U-Access closes on $17.5MM in funding from maveron and bay.
This May Report scoop is a lesson for me. My first wake-up call came on the
morning of December 4, 1998, the day UBID went public. I had never heard of
them before that day.
I concluded that the lesson of UBID was to stop hob-nobbing and look in all
the nooks and crannies for the companies I don’t see regularly at events and
the firms I don’t know about.
Well, there is a problem with that. You start to ignore the companies and the
people you do know, the old-timers — in internet terms, of course. That
means you may miss what is happening right under your nose.
And right under my nose they were. Eric Linn, one of the founders of
U-Access, has known me since the fall of 1997. He and I sat at Clarke’s on
Lincoln for breakfast way back then and went over his first million dollars
That was eons ago, it turns out. Eons ago in terms of the amount of funding,
the size of the firm, and the business model. But not so long ago that the
relationship forged then was forgotten.
Eric called me almost a month ago to “update” me and I did not get back to
him. Eric, shame on me. I assumed that you were ambling along and, of course,
I already “knew” your story so I took it for granted.
A lesson to be learned. The story I “knew” has changed, and changed
When Eric and company started out, they were setting up a database marketing
firm based on the ability to deliver a non-intrusive phone tone to customers
they were identifying as likely buyers. The customers would be given one or
two “notices” a week through their phones and they would call in to a special
number to receive the offer, like flowers, pizza, or an airfare special.
At the time, U-Access was in the Evanston Research Park, and they moved last
summer to the building on LaSalle Street that had Planet Hollywood. Anyway,
during 1997 and 1998, U-Access raised their first million, then another
$1.8MM, which included money from the TDB ($250K), and Farley West Ventures
which is now going out of business. There was also money from some local
players, including Dakota, Dodi, Ravenswood, and Perfect World.
Not long after that Eric raised an additional $3MM, at least $1.5MM of which
came from KB Partners.
A grand total of about $5MM was raised before the current round.
Eric’s calls to me, the ones I was “too busy” to return, were of no
importance. Yes, of no importance, if you believe that seventeen and a half
million dollars is of no importance!!!
Eric called me again last night, telling me the whole story, and this time I
“got it.” He explained that they have been in stealth mode since the funding
in October so that they can build their infrastructure. The story has not
been reported anywhere else and no press releases have been issued. There is
a veiled reference to the story on the website if one is enterprising enough
to find it.
Eric wanted me to have the story first and I am honored that he would feel
that way, especially with all the attention I have paid to him lately. This
is my second wake-up call. UBID and now U-Access. I suppose the next one will
start with “U” too. It’s not just the UBIDs that we need to pay attention to,
its your old friends that may have something new and interesting.
By the way, not getting back to people in a timely manner is a problem and I
am trying to fix it. It started one week last June when I was not able to
return all my calls. That is when I knew I was trying to do too much. Just
watch. This will change.
So here it is:
U-Access closed in late October on a large round of venture capital, a total
of $17.5MM. This brings the total amount raised to about $24MM. The VCs in
this round are some major industry players. They include: maveron.com which
did the eBay, Motley Fool, and drugstore.com deals; Bay Partners, which has
done deals like Brocade, Digital Island, Exodus and Informatica; Venture
Strategy, which has invested in E-Style, Flooz, ShoppingList.com and
Sparks.com; and our own local KB Partners which has recently seen one of its
portfolio firms, ethnicgrocer.com, get follow-on funding from Kleiner Perkins
and Benchmark. October was quite a month for KB, getting follow-on money from
the likes of Kleiner, Benchmark, maveron and Bay.
The specific breakdown is as follows:
Bay Partners: $4MM
KB Partners: $1.5MM
Venture Strategy: $1.5MM
Staenberg Private Capital: $1.5MM
The remaining $1.5MM was in smaller amounts from other investors.
In this round are Brian Boorstein of Dakota Capital, and Jon Staenberg of
Staenberg Private Capital.
I mention Brian and Jon because they are part of the critcal path that lead
to the large venture players. Jon Staenberg was brought in in an earlier
round as a seed angel investor. He was introduced to U-Access by Brian
Boorstein of Dakota. Jon is a former Microsoft guy who lives in Seattle and
who does seed investing.
2. Developing the strategy:
The company did use that first $5MM to do the pilot study it intended to do
and in the process, its business strategy and model changed. The study was
conducted with 5,000 people here in Chicago, and U-Access listened to the
The users, many of whom are working mothers and families, want to be able to
use the phone because they are not able to go to a computer screen all the
time, but they also want that option. U-Access now has 30,000 users and that
number is likely to be 1,000,000 in the next three or four months.
Users listen to about 20 messages a month on average and they act on just
over half of those. The last part of this information is not published
anywhere to my knowledge.
3. Where they are now: the phone/web space:
The space they have entered is hot, hot, hot!! It is the phone/web space.
Have you ever heard of a firm called Qualcomm? Think about it. This could
turn out to be one of our local internet stars.
There is still some time to go before a person will see a computer screen on
his or her phone, so the voice delivery is still needed.
U-Access appears to be well positioned for the technology convergence trend.
If they had stayed “phone only,” they would have limited themselves.
The whole thing has blown wide open and that is because the consumers want
the wider range of choices. What U-Access was originally doing was not as
much driven by the consumer. Now, they have a mix of permission marketing,
providing consumers with both convenience and control. This is not e-mail
based at the moment, but that is coming in the next few months.
If a working mom is busy with her day, she can call 1-800-UAccess and say the
word “Pizza” and get a listing of the specials available. If she wants
something a bit more involved, she can go on the net.
Eighty percent of their users have a computer. U-Access originally projected
a slightly different demographic for their customers, but have found that the
customers are a higher socio-economic group than they originally projected.
I did ask Eric if they are competing with a firm like MyPoints, for example,
and he said that they were a likely partner.
Another entrant into the market, more on the technology side, is TellMe which
has also received funding recently.
4. What’s next?
U-Access plans to use the venture money to build its marketing efforts and
get those one million users. They have 55 people now, including about 25 in
technology and operations, 10 in category management, and 15 in sales and
Eric says they plan to hire 25 to 30 more people now.
They are planning to partner with credit card firms, and partners like Pizza
Hut are promoting them. They also plan to use some TV ads, and some TV
celebrities are being lined up. One of their investors is a Hollywood bigwig
whose name you will know. I am trying to find out who it is.
I asked Eric, “So, what will your new name be?” I told him that I know the
deal with these VC firms. The first thing they do is change your name and
brand you. The next thing they do is bring in a new CEO. Eric pointed out
that the new CEO part has not been proposed yet, but said that he is quite
willing to do anything needed to make this a successful business.
Eric’s response on the name was “no comment.”
Eric comes from an investment and consulting background. He will turn 30 this
year, and his wife, Melissa, grew up down the block from him, but they did
not start dating until two years after Eric was out of college. It’s a small
world. They are expecting their first child.
Here is a note he sent me last night. Most of this comes from items on their
site. Eric’s number is 312-602-6500 x. 535.
Subj: U-Access overview
Date: 1/6/2000 10:45:21 PM Central Standard Time
From: firstname.lastname@example.org (Eric Linn)
Reply-to: email@example.com (Eric Linn)
To: firstname.lastname@example.org/tmr, email@example.com
Dear Friends of U-Access:
Happy New Year! 1999 was quite a year for us… and 2000 is shaping up to be
even bigger and better. We completed a very successful Pilot in Chicago and
now have over 30,000 users in all 50 states and Canada, acquired mainly via
word-of-mouth. In addition, we recently closed a $17.5 million round of
funding, which will allow us to expand quickly and dramatically.
Our new investors include top West Coast venture funds Maveron, Bay Partners
and Venture Strategy (both Maveron and Bay Partners were named to the Red
Herring’s Top 25 List of Venture Funds in June 1999). Maveron
(www.maveron.com) has invested in leading consumer and Internet companies
including Drugstore.com, Ebay, Motley Fool, and People PC. Bay Partners
(www.baypartners.com) has invested in over 150 technology firms including
recent successes Brocade, Digital Island and Exodus. Venture Strategy
(www.vspartners.com) invests in companies with exceptional brand potential,
including E-Style, Flooz and ShoppingList. Existing investors, including
Chicago-based KB Partners (www.kbpartners.com), also participated in this
An innovator in the convergence of the phone and web, U-Access gives
consumers a better way to receive valuable marketing offers that save them
time and money, while providing marketers with a more effective and 100%
measurable way to deliver their offers. U-Access’ first mover advantage
allows over 50 national marketing partners including Blockbuster, GEICO
Insurance, Pizza Hut and Spiegel, to eliminate guesswork and sidestep the
clutter to deliver the right offer to the right consumer at the right time.
Several trade publications and research groups, including industry leader
Forrester Research, have lauded the company (www.uaccess.com/press.html).
Because U-Access is easy to use from any phone (including wireless phones),
results have been very strong and have yielded an excellent unit economics
model. Consumers simply call 1-800-UAccess (1-800-822-2377) and listen to
short messages that are tailored to their personalized profiles as well as
messages they select from categories such as “Steal of the Day.” Users
instantly respond to each message to hear more information, transfer to a
live operator or make an automated purchase via U-Access. Consumers use
U-Access frequently, listening to an average of almost 20 messages each per
month. Roughly 70% of users cite “saving time and money” as their main
motivation for frequent and regular use.
An official launch in early 2000 will introduce the “next generation” of the
program, highlighted by the phone / web integration and the ability for users
to navigate simply by using their voice. Several major partners, including
Pizza Hut, will help to scale up the program dramatically by promoting it to
their existing customers. Additionally, in the future, U-Access users will
conveniently use their voice to browse the web via the phone.
The U-Access team has grown to 55 employees, and we are looking to add 25-30
more immediately in the Marketing, Sales, Business Development, IT, Category
Management, Product Management and Finance areas. A partial list of open
positions can be found at www.uaccess.com/openings.html.
Interested candidates should email a resume to firstname.lastname@example.org
Learn more about U-Access at www.uaccess.com.
Sign up for U-Access by calling 1-800-UACCESS [1-800-822-2377].
By the way, in keeping with the spirit of the U-Access wake-up call, I
received this note an hour ago from a reader and I will get right on it.
“National Transportation Exchange (NTE) is really rocking with some HUGE
investments. You ought to look into this one – might be a bigger B2B play
than anything else in Chicago.”
At the beginning of 1999 the May Report was looking for a new home. Ron
May chose Forward.net not only because of our experience serving Chicago
businesses, but also because we support local communities like the May
Report. Forward.net currently hosts the May Report’s website, domain
names, internet access, e-mail, searchable archives and listserve.
Forward.net is an internet services provider strictly for business. We’re
full-service, supporting hosting and access technologies on our own
network, optimized for commercial purposes and delivered end-to-end with a
single-point-of-payment and professional management. Find out why diverse
organizations like the May Report, Streams, Hartmarx and the Lincoln Park
Zoo move Forward.
Will Cotter, Account Executive – email@example.com – http://www.forward.net
– 773-395-0023 x106
– DSL – T1 – DS3 – Remote Access – Website, Domain name, E-mail and
Internet Server Hosting –
The following is the rest of the calendar events from the last e-mail.
Date: Wed, 15 Dec 1999 19:47:01 EST
Subject: Fwd: Jan. 21st IIT “Building Businesses on the Web” Conference
Ron: Could you please alert your readers about the attached e-mail which I
sent to you yesterday? Thanks.
Wilder & Associates
creative catalog, retail and e-commerce strategies
1101 W. Armitage, Ste. 210
Chicago, IL 60614
Date: Tue, 14 Dec 1999 23:44:51 EST
Subject: Jan. 21st IIT “Building Businesses on the Web” Conference
Please let your readers know about a great conference coming up on Jan. 21st
at IIT featuring an impressive roster of speakers:
-Paul Cook, a key member of the team responsible for the management of
the Munder NetNet Fund (the largest Internet mutual fund);
-Andrew Parker, Ceo of Mercantec, the leading provider of open retail e-
-Bill Steinmetz, head of ABN-AMRO Investment Banking;
-Dan Foreman, head of ABN-AMRO Private Equity;
-Neil Stern, partner in McMillan|Doolittle, the retail and e-commerce
-Charline Poirier of Scient;
-Ward Parkinson, founder of Micron Computers;
-David Weinstein, Special Assistant to the Mayor;
-plus Richard Warner, Ronald Staudt, Jack Wing and Patrick Whitney
prominent members of the Kent Law School and the IIT Institute of Design
For more information on the conference program and speakers, please direct
your readers to www.kentlaw.edu/netbiz. It will be an information-packed
day which will be valuable to your subscribers.
I’ve been enjoying your newsletter. Thanks very much.
Wilder & Associates
creative strategies for catalog, retail and e-commerce
1101 W. Armitage, Ste. 210
Chicago, IL 60614
From: Stephanie Covall-Pinnix
Date: Wed, 5 Jan 2000 08:58:06 -0600
Cold Fusion Users Group
January 24, 2000
Location: Microtech – 230 W. Monroe, 27th floor, Chicago
Time: 6:00 PM
Cost: $no cost
Web Link: www.var.enteract.com
Contact Name: Stephanie Covall-Pinnix
Presenter: Richard Peete of the Follett Corporation Employee Self Service
implementation using Cold Fusion and SQL Server which allowed 5000+
employees located across the US to enroll in their benefits for the year
2000 across both the Internet and Intranet. This was the first time Open
Enrollment was done electronically — previously it was a tedious,
Business Development – Consulting Practice
407 So. Dearborn, 6th floor
Chicago, IL 60605
From: Stephanie Covall-Pinnix
Cc: Johnny Heintz
Subject: Windows 2000 workshop 1/26
Date: Wed, 5 Jan 2000 09:42:28 -0600
Windows 2000 readiness workshopJanuary 26th 8 a.m to 10 a.m. at the
Chicagoland Chamber of Commerce (One IBM Plaza) presented by EnterAct. Who
should Attend? Small to Medium business owners and/or tech support staff.
At this seminar you will learn:
* What is Windows 2000
* General Product Line
* Security Features
* Terminal Services
* Misc. Utilities
* Plug and Play Technology
* Integrated IIS
* Domain Structure in Windows 20000 (DNS)
* Active Directory
* General Planning Knowledge
* Hardware Requirements
* Interview Process
* Migration Techniques
* Active Directory – demo
* Management Consol – demo
* Exchange 2000
* Backup and Restore
* Application Push Technology – demo
* Volume mounting – Virtual Directory – demo
The cost is $10. RSVP to firstname.lastname@example.org
or 312-583-4811. This event is sponsored by Microsoft. Receive a free
Windows 2000 demo CD upon arrival at the seminar.
Business Development – Consulting Practice
407 So. Dearborn, 6th floor
Chicago, IL 60605
Digital Frontier Conference:
FOR IMMEDIATE RELEASE Please contact:
December 6, 1999 Andy Ford (847) 424-8629
Kelley McDonald (847) 424-9118
6th Annual Digital Frontier Conference
Kellogg Graduate School of Management
George Shaheen (President and CEO, Webvan),
Jay Walker (Vice Chairman, and Founder, Priceline.com) and
Joe Galli (President and COO, Amazon.com) to Appear as Featured Speakers
Evanston, Illinois – The Kellogg Graduate School of Management will host the
6th annual Digital Frontier Conference (DFC), on January 21-22, 2000, in
Andersen-Leverone Hall on the campus of Northwestern University.
The theme of this year’s DFC is “Leading the evolution of e-business.” The
DFC will bring together senior executives, technology visionaries,
successful entrepreneurs, venture capitalists, and MBA students from the
nation’s top business schools to forge and implement winning e-business
Kellogg is a leading educational institution participating in changing the
e-business landscape. DFC 2000 is prepared to help provide current and
future business leaders with the knowledge and tool sets necessary to
successfully revolutionize their organizations in the digital marketplace.
The longest running high-tech MBA conference in the country, DFC 2000 is a
hands-on, non-profit, educational event that will feature interactive
programs, panel discussions and keynote speeches by industry luminaries such
Pehong Chen, CEO, Broadvision
Joe Galli, President and COO, Amazon.com;
Laura Jennings, Vice President of Worldwide Strategic Planning, Microsoft;
Kevin Rollins, Vice Chairman, Dell Computer;
George Shaheen, President and CEO, Webvan, and former CEO of Andersen
Bernee Strom, President and COO, Infospace.com;
Jay Walker, Vice Chairman and Founder, Priceline.com.
DFC 2000 will also include the following panel discussions and innovative
Kellogg Entrepreneurs Forum ? An open forum, led by Kellogg entrepreneurs
who have been there and succeeded, discussing the trials, risks, and rewards
of working in startups. Forum led by the founders of Garden.com,
EthnicGrocer.com, Webwisher.com, and others.
Business Plan Workshopv2.0 ? partnership with Guy Kawasaki’s Garage.com,
an Internet-based new business venture firm, to review exciting business
plans written by Kellogg students.
Bricksorclicks.com On the first day of the conference, DFC 2000 will
officially launch a student-developed web-based Internet simulation game,
called “Bricksorclicks.com”. In Bricksorclicks.com, users will take on the
role of CEO at a traditional toy manufacturer that must confront the
challenges of going online. Bricksorclicks.com will be available to play on
the DFC web site several weeks prior to the conference. Attendees will be
able to play the simulation at computer terminals throughout the two days of
“The Digital Frontier Award for Business Innovation” will be presented to
recognize an exciting and pioneering startup company. Applicants will be
judged on concept originality, superiority of product or service, innovation
of business design, and effectiveness of marketing execution.
Postcards from the Bleeding Edge: Patterns and Themes Shaping E-Commerce: a
case-based class exclusively designed for speakers and corporate
attendees of the DFC and taught by Dr. Mohanbir Sawhney, one of five
academics selected to attend the World Economic Forum in Davos, Switzerland
and 1998 Kellogg Professor of the Year.
“TechFair” sponsors, speakers, and other high-tech players will showcase
their latest products.
Eleven different interactive panel discussions highlighting industry
transformations, the evolution of e-business, and more!
DFC 2000 will host over 70 distinguished speakers. For the most updated
schedule and conference information, please see the DFC web site at:
This year’s conference promises to feature a record number of participants,
including senior executives, technology-oriented entrepreneurs, and Kellogg
students and alumni. This year’s event will be broadcast to certain of
Kellogg’s sister schools around the world.
We welcome and encourage all press to attend. DFC 2000 will provide a new
press room allowing ample opportunity for press to interview keynote
speakers, panelists, and other attendees. For all questions and additional
information, please contact:
Andy Ford Kelley McDonald
Director, Public Relations, DFC 2000 Media Relations Coordinator, Kellogg
(847) 424-8629 (847) 424-9118
We look forward to seeing you at the conference.
Time & Place
January 21 (3pm-9pm) / January 22 (8am-6pm)
Kellogg Graduate School of Management
Northwestern University, Andersen-Leverone Hall
2001 Sheridan Road
General Information & Registration
Web site: www.digitalfrontier.org
Telephone: 1-847-467-5266 ext. 3