April 23, 2010

The May Report: 4/23/2010: Granite Hall Partners, a Chicago-based
fund-of-funds, defaulted on a $15 million commitment to TPG Capital in the
middle of last year; Some stats on mobile apps and users; “Can honour set-to a
leg? No. Or an arm? No. Or take away the grief of a wound? No. Honour hath no
skill in surgery, then?”; Where’s Waldo? What is David Weinstein up to?

Editor and publisher: ron@themayreport.com, ronaldmay@aol.com,
www.themayreport.com , 773-525-3944.

If you missed an article, go here:
www.tmronline.com/A55951/tmrarticles.nsf/vwFullNewsletter
_________________________________________

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________________________________
TABLE OF CONTENTS

The Scoop section:

— peHUB has learned that Granite Hall Partners, a Chicago-based fund-of-funds,
defaulted on a $15 million commitment to TPG Capital in the middle of last year
— Chicago Grand Challenges Summit was held Wed and
Thursday, 4/21 and 4/22/10
— Miscellaneous note
— Warren Bent: VoIP event April 27th at IIT
— Greg Pesavento’s resume and he still had the info. from the last time he
looked for a job 8 years ago
— Briefly noted, by Ron May

[Editor's note: Ron May here. Today, April 23rd, is the Bard's birthday.

Falstaff on honour in Henry IV Part I

Well, 'tis no matter; honour pricks me on. Yea, but how if honour prick me off
when I come on? How then? Can honour set-to a leg? No. Or an arm? No. Or take
away the grief of a wound? No. Honour hath no skill in surgery, then? No. What
is honour? A word. What is in that word "honour"? What is that "honour"? Air. A
trim reckoning! Who hath it? He that died o' Wednesday. Doth he feel it? No.
Doth he hear it? No. 'Tis insensible then? Yea, to the dead. But will it not
live with the living? No. Why? Detraction will not suffer it. Therefore I'll
none of it. Honour is a mere scutcheon. And so ends my catechism.
(V.i.129-139)

Who's the better Falstaff, Anthony Quayle or Orson Welles? Orson says in 1
minute what it takes Quayle 2:27 to say.

www.youtube.com/watch?v=e3SxxhSpLrY

www.youtube.com/watch?v=1mIok8ThT5c

Enough for today.]
_______________________________________
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Guys Night Out for the Kids
Benefitting the Chicago Children’s Advocacy Center
Friday, May 7, 2010 5pm-9pm
Carmichaels Chicago Steak House, 1052 W. Monroe

About Guys Night Out
Don’t miss the chance to hang with “the guys” on Friday, May 7 at Carmichael’s
for the 3rd Annual Guys Night Out for the Kids presented by US Cellular. The
event kicks-off with an outdoor Happy Hour in the courtyard followed by an
indoor barbeque, games, golf pros, hand-rolled cigars and celebrity athlete
appearances. There will be a live auction featuring unique items such as a VIP
package to a White Sox game including batting practice on the field or a suite
to a 2010 Bears game.

The evening is being hosted by Mully and Hanley from 670AM The Score, and all
proceeds benefit the Chicago Children’s Advocacy Center (CCAC) for abused
children. Founded by Mayor Daley, the CCAC has served over 19,000 abused
children and their families since opening its doors in August 2001.

Details
Date: Friday, May 7, 2010
Where: Carmichael’s Steak House, 1052 W. Monroe
Time: 5pm-6pm Outdoor Happy Hour in the Courtyard
6pm-9pm – Party inside!

Tickets In Advance: $100 5pm-9pm (includes Happy Hour); $75 6pm-9pm

To Purchase Tickets: www.guysnightoutforthekids.org

Current Sponsors:
U.S. Cellular, Cameron Venture Partners, CA, Continental Resources, Huen
Electric, Labor Management Cooperation Committee of Chicago/IBEW, Northern
Trust Corporation, ComEd, Illinois Medical District, Midwest Generation, Sidley
Austin LLP/Partners of Sidley Austin, Johnson & Krol, LLC, Loop Capital,
Bombardier, CDW, Brown-Forman, Goose Island Beer Company and Vienna Beef

For More Information: www.chicagocac.org; 312.492.3720 Melissa Siemasz
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____________________________________
The Scoop section:
________________________
peHUB has learned that Granite Hall Partners, a Chicago-based fund-of-funds,
defaulted on a $15 million commitment to TPG Capital in the middle of last year

www.pehub.com/69677/yes-virginia-there-were-lp-defaults-in-2009/

Yes Virginia, There Were LP Defaults in 2009
Posted on: April 21st, 2010

Granite Hall Partners TPG Capital

Remember all that talk about limited partner defaults, whereby private equity
firms would make capital calls that their illiquid investors couldn’t cover?
And then how it didn’t seem to happen?

Well, perhaps news of no LP defaults was exaggerated.

peHUB has learned that Granite Hall Partners, a Chicago-based fund-of-funds,
defaulted on a $15 million commitment to TPG Capital in the middle of last
year. The commitment was for TPG’s sixth mega-buyout fund, and was made just
before TPG plugged around $2 billion into Washington Mutual.

At the time, Granite Hall was seeking to raise around $150 million for its
third fund-of-funds. Its prior two vehicles had been capped at just over $60
million, with most of the money coming from high-net-worth individuals. The
third fund-of-fund instead was designed to entice institutional investors,
although the investment focus would remain on big buyout opportunities (Granite
Hall relationships include Blackstone Group, Carlyle Group, Madison Dearborn
Partners and THL Partners).

As the fundraise progressed, TPG was looking to close its sixth fund. Granite
Hall jumped in, even though it didn’t necessarily have the proper money in
hand. There is some conflicting info as to whether or not Granite Hall had at
least $15 million of hard circles, but suffice to say the capital wasn’t there
when it counted (perhaps due to one or more of its own investors defaulting – a
sort of secondary default).

Granite Hall did secure credit from a West Coast bank to continue making TPG
capital/fee calls, but it soon became clear that the third fund just wasn’t
going to happen (WaMu’s meltdown didn’t help). Granite Hall tried selling its
TPG interest in Q1 of last year, but got no takers at the proposed terms. By
mid-year, the commitment was in default.

Granite Hall declined to discuss the situation, but a source says that it
continues to manage its first two funds-of-funds, plus a real estate
fund-of-funds. It also hopes to return to market with a new vehicle at some
point, but it’s unclear what the focus would be.

If all of this sounds a bit familiar, you’re probably thinking of HRJ Capital -
which used a Silicon Valley Bank loan to front-load a buyout fund-of-funds
before it was raised. When LPs didn’t come through, HRJ began to implode.

Not exactly apples to apples – HRJ’s mess was of a far larger scale, and the
firm was later bought for scrap by Capital Dynamics. But the basic mistake of
investing prospective capital was the same. Moreover, both firms were founded
by ex-NFL pros (HRJ founders included ex-49ers Harris Barton and Ronnie Lott,
while Granite Hall’s managing directors are former defensive lineman Jim
Flanigan and ex-Washington Redskins exec John Wagner).

Different but the same. And something that many of us throught hadn’t really
happened…

Related Posts

* TPG Buying American Tire Distributors for $1.3 Billion
* TPG Nears Deal To Buy Nordenia from Oaktree
* WSJ: TPG Leads Race for Dow’s Styron
* Apollo, TPG Still Bidding for Styron
* KKR, Bain, TPG Vie for Morgan Stanley CICC stake
* TPG Not In Talks with Tompkins
* JAL Bankruptcy Proposed As Option to Banks
* Neiman Marcus Profits Fall, Sees Lasting Slowdown
* TPG, Sinopec Deny LyondellBasell Report
* Australian Tax Fight with TPG Worries Foreign Investors
________________________________________
Chicago Grand Challenges Summit was held Wed and
Thursday, 4/21 and 4/22/10

From: “Charles Stack, MPH” cstack@2ci.com
Sender: “Charles Stack, MPH” cstack@2ci.com
Subject: re: Chicago Grand Challenges Summit
Date: Thu, 22 Apr 2010 23:34:17 -0500
To: “ron@themayreport.com” ron@themayreport.com

Hi Ron! I had the pleasure of attending the Chicago Grand Challenges Summit
at the Fairmont Hotel, sponsored by IIT and others. This was held Wed and
Th, 4/21 and 4/22/10.

This was the event: www.iit.edu/grand_challenges/program/

We had a great turnout and some excellent speakers, headlined by Dr. John P.
Holdren, Pres. Obama’s top science advisor. Here’s the link to his
presentation slides regarding climate change:

www.whitehouse.gov/sites/default/files/microsites/ostp/jph-chicago-04
212010.pdf

Transportation Secretary Ray LaHood was the special guest on Thursday, so
the Obama administration was very well represented!

Amazing panelists included Chicago’s own news-caster Bill Kurtis, who
proudly told me he raises grass-fed cattle on his ranch in Kansas! Blair
Kamin of the Chicago Tribune was there, as well as John Rowe, CEO of
Excelon, Dr. John Anderson, President of IIT, Dr. Alan Schrieisheim, past
Director of Argonne and now President of Chicago Council on Science &
Technology, and Dr. Paul Brandt-Rauf, Dean of the UIC School of Public
Health. All speakers were excellent, the program (link above) names them all
and describes their topics.

Lord Oxburgh was not able to make it from the UK due to the Iceland volcano
troubles. He led the recent investigation into Climategate, so I was hoping
to hear his comments.

It was sobering to hear Mr. Charles Vest of the National Academy of
Engineering present the statistics on the state of engineering education in
the US, we are badly lagging behind Asia in this critical area. We are
being out-competed on the world stage & need to do better.

The NAE Grand Challenges site is well worth your readers’ time exploring, as
these touch upon many of the innovations we are trying to bring to market
out of Chicago startups, incubators and established companies.

Oh, by the way, the dinner was fabulous, and the drinks were great!

Best, Chuck

Charles R. Stack, MPH
Vice President
Constant Compliance Inc.
140 South Dearborn Street
Suite 411
Chicago, Illinois 60603 USA
Cell phone (630) 841-8706
Fax (312) 782-0936
Website: www.2Ci.com/
_____________________________________________
Miscellaneous note

From: “Mike Eisele” meisele500@sbcglobal.net
Subject: RE: The May Report: 4/22/2010: MIT-EF panelist Tony Kolton, just in
from central casting at The Sopranos, provides some welcome comic relief to an
otherwise dull discussion of Local Innovation Systems, aka clusters, in this
case the trading industry; Ever
Date: Thu, 22 Apr 2010 19:07:56 -0500
To: “‘The May Report’” ron@themayreport.com

I did not get a news letter on April 21, 2010. Could you resend it to me? Mike

Mike Eisele

Eisele Executive Search LLC

630-971-2376

www.eiseleexecutivesearch.com

Meisele500@sbcglobal.net
___________________________________________
Warren Bent: VoIP event April 27th at IIT

From: warrenbent@inchargesys.com
Subject: IIT VoIP Lab Student Colloquium
Date: Fri, 23 Apr 2010 09:34:47 -0700
To: “The Report” ron@themayreport.com

Ron

An upcoming event that your readers who are interested in VoIP may want to
attend is next week’s IIT VoIP Lab Student Colloquium on VoIP. There are
numerous student projects simultaneously underway in the VoIP Lab, each
typically sponsored by a commercial entity or industry association who provide
mentorship to the students. Twice a year, at the conclusion of both the Fall
and Spring semesters, VoIP Lab students provide presentations and
demonstrations of their semester projects. The ’10 Spring semester Student
Colloquium will be held next Tuesday evening beginning at 6:30 PM at IIT’s Rice
Campus in Wheaton. The following link provides additional information,
including free registration:

voip.itm.iit.edu/events.php#EVCSP4-ay910

Thanks much.

Warren

Warren Bent
Vice President – Sales & Marketing
InCharge Systems
630.474.9451 (office)
630.901.4826 (mobile)
warrenbent@inchargesys.com
_______________________________________________
Greg Pesavento’s resume and he still had the info. from the last time he looked
for a job 8 years ago

Subject: Greg Pesavento Resume per our Discussion This Morning
Date: 4/23/2010 10:54:46 A.M. Central Daylight Time
From: gpesavento1@comcast.net
To: ronaldmay@aol.com

GREGORY L. PESAVENTO
924 South Colfax Avenue
Elmhurst, IL 60126-4537
630 833-4047
630 336-4047 mobile

gpesavento1986@kellogg.northwestern.edu

Thirty-two years of consultative sales/marketing/management experience in
Information Technology with twelve years of Profit & Loss management.
Particular entrepreneurial strengths in initiating and building new Information
Technology businesses. Emphasis in developing strategic approaches for entry
into new markets. MBA in Strategy, Finance and Marketing, Kellogg School of
Management, Northwestern University.

PROFESSIONAL EXPERIENCE

DATA SYSTEMS INTERNATIONAL, INC., Elmhurst, Ill.
2002-2010
IBM reseller specialized in the Oracle applications environment.
Account Executive

· Sold $2 million annually of IBM Systems and related software and
services supporting the Oracle ERP Applications, eBusiness Suite and JD Edwards
. The IBM systems were the Power Systems running IBM i (AS/400), AIX (UNIX)
and System x (Windows/Linux Servers). Focused in the areas of Storage,
Disaster Recovery Software, Business Intelligence Software and Security
Software.

· Top new account sales leader in unit of eight Account Executives for
each of the last seven years.

INTERACT COMMERCE CORP., Elmhurst, Ill.
2000-2001
Regional Channel
Manager

· Sold $6 million annually of SalesLogix, the leading mid-market CRM
software offering, through a sales channel of 35 Business Partners in a
five-state Midwest area.

· Worked to develop Partners’ selling skills and strategies.

· Focused on emerging Customer Relationship Management technologies
including integration to: back-end accounting systems, Computer Telephony
(CTI), wireless PDA equipment, cellular phones and Web-based quoting and
ordering through a configuration engine integrated with Microsoft’s Commerce
Server offering.

ENTEX/INACOM, INC., Lombard,
Ill. 1998-2000
Largest PC reseller with annual revenues of $6 billion.
Senior Client Solutions
Executive

· Sold $2 million annually of eBusiness infrastructure services and PC
desktop outsourcing to Fortune 500 enterprises.

· Created Cisco Business Partner relationship for Midwest branch office’s
services practice – awarded Cisco sales certification.

· Initiated sales of Nokia (formerly Network Alchemy) VPN
fault-tolerant equipment and services for Midwest branch office’s eBusiness
infrastructure practice.

IBM GLOBAL SERVICES, Chicago,
Ill. 1995-1998
Notes Regional Manager

· Recruited to create Chicago Lotus Notes services practice for CGI
Systems a wholly-owned subsidiary of IBM – part of IBM Global Services – as a
section manager with profit and loss responsibility. During first year of
operation, growth from zero to $1.7 million in revenue with highest profits in
company for any Notes section.

· Focused Notes sales activities on cutting edge technologies:
eBusiness with Domino, Sales Force Automation (CRM) and Thin Client Supply
Chain Integration with Transaction Systems.

· Managed a staff of 12 Lotus Notes developers and one salesman.
Provided extensive sales mentoring.

AVANTI SYSTEMS, Oak Brook,
Ill. 1985-1995
Managing Director

· Founder, manager and owner of this software consulting firm.
Increased revenues from zero to $1.5 million annually in first four years.

· Sold and installed IBM midrange computers (AS/400s) and ERP
software (MAPICS) as an IBM Business Partner in the manufacturing, distribution
and supply chain areas – recognized by IBM as an “Outstanding
Business Partner”. Extensive APICS background.

· Managed a staff of up to nine systems analysts and mentored IBM
sales representatives in an overlay sales capacity.

· Increased sales/installations of FoxPro/Novell-based TradeBase
international export documentation software package from semi-annually to
monthly over a two-year time period – a 300% annual increase.

· Utilized world-class consulting methodologies as a subcontractor
to Arthur Andersen on a process improvements/systems selection project at the
Chicago Park District.

ZINK & KATICH, INC., Lansing,
Ill. 1984-1985
Director of Sales & Marketing

· Set up IBM’s new Business Partner program selling IBM midrange
computers (System/3Xs) and ERP software (MAPICS) in the manufacturing,
distribution and supply chain areas.

· Managed the world-wide direct marketing of the firm’s utility and
application software.

IBM CORP., Chicago and Oak Brook,
Ill. 1977-1984
Marketing
Representative

· Sold IBM midrange computers (System/3Xs) and ERP software (MAPICS)
in the manufacturing, distribution and supply chain areas.

· Four consecutive 100% Clubs (100% quota) attained 1980-1983.

EDUCATION

J.L. KELLOGG SCHOOL OF MANAGEMENT, NORTHWESTERN UNIVERSITY, Chicago, Ill.
1981-1986
· Awarded Master of Business Administration degree, June 1986,
through the school’s evening program while working full time. Concentrations
in Finance, Strategy and Marketing with additional course work in
Information Technology.

BENEDICTINE UNIVERSITY, Lisle,
Ill. 1973-1977
Bachelor of Arts degree, magna cum laude, May 1977.

· Majors in Economics, Accounting and Business Economics.

· Received the school’s highest honor, the Procopian of the Year
award, for
outstanding leadership, scholarship and service.

Greg Pesavento
gpesavento1986@kellogg.northwestern.edu
630 833-4047
630 336-4047 mobile
______________________________________________
Briefly noted, by Ron May

* Time today is very short since I am trying to get down to IIT for IPRO day.
I’ll spend two to three hours there. Meanwhile, Avery Cohen has left me high
and dry for today but his report on the MIT-EF meeting will be in by Sunday
night, he has promised me. Avery is a good father though. He drove his 12 year
old son down to Bloomington, Indiana for the bike race. Remember the movie
Breaking Away?

Michael Quintos presented some stats on mobile computing and apps at the TBIF
meeting Monday.

I typed most of them up this morning. I left out two slides that were not all
that informative.

++++++++++++++++++++++++++++++++
From: Michael Quintos michael@media-fuse.com
Subject: Fwd:
Date: Thu, 22 Apr 2010 16:02:43 -0700
To: Ron ron@themayreport.com

Ron,

If you didn’t jot down all the numbers on the mobile strategy here is a copy of
my presentation given. It’s more of a background on mobile.

Hope you are feeling better,

Michael

Sent from my iPad

Michael Quintos| President, Media-Fuse
Social Media Experts; Mobile APP Development, Facebook
media-fuse.com/
www.facebook.com/quintos
twitter.com/mquintos
++++++++++++++++++++++++++++++++++

Michael Quintos’ PowerPoint for TBIF

Mobile Ad Spend (in millions of dollars)

2008 $320
2009 $416
2010 $593
2011 $893
2012 $1,140
2013 $1,560

Includes Display, Search and messaging advertising
Source: eMarketer, September 2009

Smart Phones will dominate market
By Q3 2011, Smart Phones will outnumber feature phones
The chart shows the two curves intersecting, one rising, one falling at a
pretty steady rate.

US SmartPhone platform market share

November 2009 February 2010

RIM 41% 42%
Apple 26% 25%
Microsoft 19% 15%
Google 4% 9%
Palm 7% 5%

SmartPhone users =
Lucrative demographic

* Message more
* Game more
* Consume more media
* Access more internet (wireless and fixed)
* Engage more with advertising
* 40% of iPhone and Blackberry users make more than $100K a year
* 43% of ALL Smartphone users make $50K plus

What Apps are users downloading?

Games 24%
Themes 22%
Reference and books 12%
Utilities 9%
Entertainment 7%
Productivity 5%
Business 4%
Travel 4%
News 3%
Maps and navigation 3%
Sports and recreation 3%
Health and wellness 3%
Music and audio 3%
Finance 2%
IM and social networking 2%
Photo and video 2%
Shopping 1%
Weather <1%

Social Networking is Mobile

30.8% of smartphone users access social networking sites via their phone

In May 2009, 32 Mobile users accessed Social Networking or blogs from mobile
devices

Top 4 sites for mobile users: Facebook, MySpace, YouTube, Twitter

Consumers using mobile apps digest 10 times as many pages as they do online

Engagement rates using mobile apps are 15 times higher than company websites

* More on the MIT-EF meeting on 4/20/2010

I forgot to mention that Chuck Corush was at the MIT-EF meeting.

The moderation at the MIT-EF event could have been much better, and the panel
preps could have been much better. Consequently, what was really a pretty good
panel and a potentially great topic was undermined. They even said the word
“innovation” – more than once. But I feel that no attempt was made to connect
the dots of the ecosystem and delve deeply into some of the more interesting
insights to be gained by exploring why the CME came to be established in
Chicago or the role that the CME has played in foster innovation in other
industries around the country and the world. There is no question that the
emergence of Chicago as the nation’s largest modern livestock and grain
exchange played a pivotal role in the establishment of the CME, but so did the
growth of LaSalle Street as a national banking center, the rise of the region
as a major telecom and data center hub, and the advanced economic theories and
models, such as the classic Black-Scholes options pricing model, that were
developed at the University of Chicago. There was no attempt made to
investigate the differences between entrepreneurial, financial and industrial
innovation — all of which contributed to the rise of the CME as one of the
most important mercantile exchanges in the world. Nor was there really
discussion about how the rise of 7×24 online trading platforms around the
world, and newer entrants such as the Hong Kong Mercantile Exchange and
Intercontintental Exchange (ICE) were undercutting CME’s long-held leadership.

I will have more to say on this on Monday along with Avery’s write-up.

I alluded to some of the issues in the last report. Take Jeff Carter of Hyde
Park Angels or R. H. Bailin of HPA or our new buddy, Tony Kolton, who sold his
firm to Morningstar last year for more than $51MM, as examples. The trading
world is a great source of angel investors. After all, traders are risk
seeking, and that is in their DNA. They may be a bit impatient though.

I also want to talk about the “listening to customers” issue and bring in our
old buddy Clayton Christensen, the author of “The Innovator’s Dilemma.” As I
mentioned in the meeting, true innovation is not going to come from just asking
customers what they want because they tend to come back with the 15% solution
— better, faster, cheaper.

I recall a great talk by William McKnight Farrow III, CIO of the Chicago Board
of Trade in 2004 when open outcry trading was in its death knells.

And when you examine the statements by the panelists closely, they did
acknowledge that true innovation can often take a long time. The specific
dynamics of that were not really addressed.

* Finally, for today, what is up with David Weinstein? I have been hearing that
he is MIA from meetings. Does anyone know what he is really up to? Sources of
information will be kept confidential, of course.

* I have not forgotten my list of upcoming reports
Efoora
ITA board meeting and other ITA issues
Tandem Neutral and Peerless
Bergau, Slack, Chempetitive, Searle and Monsanto
That brokerage firm downtown
_________________________________________
END OF REPORT