The May Report: 10/03/2011: Rahm, Rahm, don’t let them suck you into this — Mr. Mayor, I don’t know if you remember me — I’m the fat guy from the 6th floor at 730 N. Franklin circa 1990-93, who used to chat with you sometimes — but Rahm, you are being played here in several ways and don’t let it happen (btw, whatever happened to that really cute brunette who worked for you? — what was her name, Colleen?), anyway, since those days 20 yrs ago, I’ve been a Kochlöffel: 1st, that World Business Chicago committee — as though we need yet another committee — with the same crowd as always, is a farce. There’s a firm here called MelonCard that is moving to California since they got funding from 500 Startups, but that committee will not do didly and other firms here like Attorney Fee and Spot Hero are out in the Valley right now seeking funding, so Rahm you need to zero in on that issue which is why our start-ups leave here; 2nd, that incubator proposed by the Pritzker, Moog, Henikoff, Willer gang is fine if they can do it on their own, but Rahm, don’t let them suck you into a TIF here which I suspect is what they’re planning– you know very well that TIFs are a cesspool and don’t do what they promise, but Rahm, all these guys are polishing up the handle of the big front door, polishing up that handle so carefullee that they’ll all be the Rulers of the Queen’s Navee! (a little HMS Pinafore this morning); Rahm, don’t go the way of showboating and grandstanding, we need real results, don’t end up as all hat, no cattle; btw, Shana Tova

Editor and publisher: Ron May, 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

Louis Brandeis: “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants.”
___________________________

TABLE OF CONTENTS

The Scoop section:

– Pritzker, Moog, Henikoff and Willer want a 50k sf incubator near an “L” stop — don’t be fooled, this is not a real estate deal competing with Tech Nexus and others, getting deal flow is the driver here
– MelonCard is moving to California
– Steve Hendershot: Chicago startup MelonCard.com heads west – with 500 Startups money
– Chicago Firm Timelines.com Sues Facebook Over Timeline
– Study shows that Groupons lower local merchants’ Yelp ratings
– Melissa Harris: World Business Chicago powered up; Mayor Rahm Emanuel adds to members, mission
– Fred Jones: How Many Investors is Too Many? A Guideline for Seed Rounds
– IL State Pension Plan To Bankrupt State Soon- Actions That Need To Be Taken To Prevent This
– Tarkus Murphy: Governor Andrew M. Cuomo $4.4 Billion Announcement – Albany heat warms up the Information Superglacier™ with 300 new jobs(?)

[Editor's note: May here. I have at least two more regular reports for you before Tuesday morning. Trying to get cleaned up here.

Here is what I have:
-- SMCC from August
-- MIT-EF from September, yes just last Monday
-- Clean Energy Networking event from last Monday too
-- Connected World
-- Bootstrappers' Breakfast

Everyone has a Groupon story these days. My podiatrist, Dr. Doug Diekevers, noted that the time it takes Groupon to pay the merchants is 60-90 days. I have done my best to confirm that. If Groupon does go under, where does that leave the merchants?

The chickens are coming home to roost for Len Bland. Since I ran that funny "addict" ad last week, two of Len's clients have approached me with their stories/concerns. I am not ready to disclose their names yet, but stay tuned.

I tried, but was unable, to watch this video of a Penn State professor who sees bankruptcy as a likely outcojme in the Groupon story:

www.washingtonpost.com/business/ketz-sees-a-high-probability-of-groupon-bankruptcy/2011/09/26/gIQADBGO0K_video.html

What is going on at Alterian? I have heard that there were layoffs.

Total Attorneys has changed its business model, I am being told. How so? Does anyone know?

Much more to come.]
_____________________________
The Scoop section:
_______________________
Pritzker, Moog, Henikoff and Willer want a 50k sf incubator near an “L” stop — don’t be fooled, this is not a real estate deal competing with Tech Nexus and others, getting deal flow is the driver here

Subject: Fwd: Private backers launching center for Chicago technology startups
Date: 9/29/2011 2:25:10 P.M. Central Daylight Time
From: anthonylawoffice@gmail.com
To: RONALDMAY@aol.com

———- Forwarded message ———-
From:
Date: Thu, Sep 29, 2011 at 1:17 PM
Subject: Private backers launching center for Chicago technology startups
To: anthonylawoffice@gmail.com

This story was sent to you by: Bill Anthony

——————–
Private backers launching center for Chicago technology startups
——————–

By Melissa Harris
Tribune staff reporter

September 29 2011, 9:17 AM CDT

Four leaders of Chicago’s technology community, including billionaire venture capitalist J.B. Pritzker, are spearheading an effort to launch a Chicago technology center for startups.

The complete article can be viewed at:

www.chicagotribune.com/business/breaking/chi-private-backers-launching-center-for-chicago-technology-startups-20110929,0,982450.story

Visit chicagotribune.com at www.chicagotribune.com

–
William D. Anthony, Attorney at Law
Anthony Law Office, 20 North Wacker Drive, Suite 2520
Chicago, Illinois 60606, Telephone (312) 332-6405, ext. 267, Cellular (630) 854-0009, Facsimile (312) 332-2657
+++++++++++++++++++++++++++

www.chicagotribune.com/business/breaking/chi-private-backers-launching-center-for-chicago-technology-startups-20110929,0,982450.story

Private backers launching center for Chicago technology startups

By Melissa Harris Tribune staff reporter

9:17 a.m. CDT, September 29, 2011
Four leaders of Chicago’s technology community, including billionaire venture capitalist J.B. Pritzker, are spearheading an effort to launch a Chicago technology center for startups.

They are searching for about 50,000 square feet of office space near public transit, according to Built in Chicago founder Matt Moog, who along with Pritzker, Troy Henikoff of Excelerate Labs and Kevin Willer of the Chicagoland Entrepreneurial Center are among those leading the effort. Moog said more than 100 people are involved in giving advice and input.

“It’s an idea whose time is overdue,” said Moog, who also is chief executive of startup Viewpoints Network.

Moog said the project would not be a traditional incubator, where startups are given free rent in exchange for the landlord receiving equity in the company. The yet to be named space would instead be run as a nonprofit. Rent would be charged by the desk or by the small suite; and organizers would not be given stakes in the company, Moog said. The goal is to have the center open by the end of the first quarter of 2012.

“It wasn’t always easy for people new to the community figure out where to go for capital, to hire people, and to get the general benefits that come from a close-knit community,” Moog said, adding that he hopes the technology center will become that hub.

Moog said organizers are keeping city and state officials informed about their plans, but, at this point, the project will be privately funded.

More information will be available later today.

mmharris@tribune.com
+++++++++++++++++++++++++++++++
Comments (2)
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RavensTech at 6:12 PM September 29, 2011

The Ravenswood Industrial Corridor should be at or near the top of the list. Many tech startups have come from here the past 10 years due to the cheap rent and close proximity to transit. I have more than a few locations to suggest as I live and work for a mature tech “startup” in this neighborhood.
CraigA.McCaw at 11:46 AM September 29, 2011

This is great. Chicago needed somewhere for startups to get moving without paying $1,000+ per month for an office and having to show financials to calculate security deposits. Hopefully there isn’t too large of a “catch”.
_________________________________
MelonCard is moving to California

tip on a startup

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sam@sincecollege.com to me

show details 10:23 PM (21 hours ago)

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date Wed, Sep 28, 2011 at 10:23 PM
subject tip on a startup
Important mainly because of the people in the conversation.

hide details 10:23 PM (21 hours ago)

Ron,

Wanted to give you a tip on a Chicago startup. MelonCard.com www.meloncard.com/ secured funding and is moving to California. Their website lets you opt out from websites selling your personal information. Don’t know how much you know about them.

Sam
_______________________________
Steve Hendershot: Chicago startup MelonCard.com heads west – with 500 Startups money

tinyurl.com/4538379

Chicago startup heads west – with 500 Startups money
Posted by Ann D. at 9/29/2011 8:39 AM CDT on Chicago Business

By Steve Hendershot

How’s this for a company on the fast track? Chicago tech entrepreneur Robert Leshner had an idea for a promising business on Aug. 4. Within a week, he had a working prototype. By the first week of September, he was talking to investors. He secured his first venture-capital investment round on Monday.

Mr. Leshner’s company, MelonCard, could be Chicago’s latest tech success story – except that the lead investor is Mountain View, Calif.-based tech-business incubator 500 Startups, and Mr. Leshner and co-founder Geoff Hayes are moving to Silicon Valley next week.

blog post photo

MelonCard enables consumers to remove their names and information from lists belonging to companies that sell personal data to marketers and background-check and people-search sites. The idea was a hit with Mr. Leshner’s friends, so on Sept. 3, he and Mr. Hayes crashed a dinner in Chicago that 500 Startup’s founder, Dave McClure, was attending. (Mr. McClure had announced his location on Twitter.)

Messrs. Leshner and Hayes made their pitch, and Mr. McClure agreed to lead a $500,000 seed-stage investment in MelonCard. And now Mr. Leshner is leaving Chicago after five years here for a shot at success in California.

“When the stars align, they align quickly,” said Mr. Leshner, 27.

He was already an admirer of Mr. McClure’s before the deal – that’s one reason he agreed quickly to Mr. McClure’s offer. In addition, Mr. Leshner thought MelonCard wouldn’t be able to put together a deal in Chicago nearly as fast: “Chicago moves slower. It takes seven meetings (to make a deal), and there’s more of an old-school focus. (Chicago investors) want to know if you’re already making money, but with (500 Startups) it’s all about the team and the idea and the product.”

MelonCard allows consumers to opt out of several data sites such as Radaris.com and Spoke.com for free, but charges $3 per month to remove their information from sites such as US Search and ZabaSearch. All those sites have opt-out policies, but they’re often cumbersome; MelonCard aims to make the process fast and easy.

500 Startups Principal Paul Singh saw MelonCard’s promise when he watched two people sign up for the paid version of the site during Mr. Leshner’s visit to Silicon Valley earlier this week. One of those new customers was Mr. Singh’s wife.

“We get hungry entrepreneurs all the time, folks that crash different events and are persistent. We always do our best to listen to them, but this was a little different-this was a no-brainer,” Mr. Singh says. He was drawn not only to MelonCard’s product, but to Mr. Leshner’s background in finance and willingness to leave a steady job behind to pursue tech entrepreneurship. “Early stage investing is more about the founders than business. And (Messrs. Leshner and Hayes) are the kind of people we want to back, because I can sense that whatever comes up, they’ll keep rolling.”

Companies incubated at 500 Startups only commit to four months in Silicon Valley, and Mr. Singh says most of the startups then return to their hometowns to build their businesses.

So will MelonCard return to Chicago? Maybe, says Mr. Leshner, but “we want to experience the Valley before making any decision.”
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Chicago Firm Timelines.com Sues Facebook Over Timeline

Chicago Firm Timelines.com Sues Facebook Over Timeline

www.nbcchicago.com/blogs/inc-well/facebook-timeline-trademark-suit-130895058.html

Chicago Firm Sues Facebook Over Timeline

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Chicago Firm Sues Facebook Over Timeline
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Facebook’s upcoming changes to profiles may have been hailed as the “greatest thing” the social networking company has ever done, but at least one Chicago-based startup begs to differ.

Timelines.com, with an office on West Berteau Avenue on the city’s north side, filed a trademark-infringement suit against Facebook on Thursday, alleging that Timeline — the name given to the next iteration of profiles — would confuse users into thinking the two companies are affiliated.

“Facebook has announced its intention to use and, indeed has already begun to re-direct Internet traffic, using Timelines’ federally registered “TIMELINES” trademark as the centerpiece of Facebook’s new product offering going forward, a move that, given the size and reach of Facebook, will essentially eliminate Timelines and leave the public with the confusing impression that plaintiff Timelines is somehow affiliated with Facebook,” the suit claims.

The suit also claims that Facebook hijacked Timeline.com‘s URL on the social networking site (facebook.com/timelines), but a check of that address on Friday appeared to go to the correct destination.

Facebook’s Timeline product, announced last week at the company’s F8 conference, aims to better chronicle a user’s life by preventing smaller, frequent posts from burying the larger, more important life events one might want to share and highlight. Conversely, Timelines.com describes itself on its site as a service “that enables people like you to collaboratively record, discover and share history.”

The Chicago company was granted registered trademarks for “Timelines” (U.S. Reg. No. 3,684,074), “Timelines.com” (U.S. Reg. No. 3,764,134), and “Timelines & design” (U.S. Reg. No. 3,784,720), TechCrunch.com noted.

Suit: Timelines v. Facebook (.pdf)
BY BJ Lutz // Friday, Sep 30, 2011 at 11:35 CDT | Print

Source: www.nbcchicago.com/blogs/inc-well/facebook-timeline-trademark-suit-130895058.html#ixzz1ZfrmhukS
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Study shows that Groupons lower local merchants’ Yelp ratings

Study shows that Groupons lower local merchants’ Yelp ratings

How Does Groupon Affect A Local Merchant’s Yelp Ratings?

www.businessinsider.com/how-does-groupon-affect-a-local-merchants-ratings-2011-9

How Does Groupon Affect A Local Merchant’s Yelp Ratings?
Pascal-Emmanuel Gobry | Sep. 12, 2011, 6:49 AM | 3,525 | 6

There’s a fascinating report out from John Byers and Georgia Zervas from Boston University and Michael Mitzenmacher from Harvard University.

One of the findings is that a daily deal is associated with lower average Yelp ratings.

groupon yelp ratings

Image: John W. Byers, Michael Mitzenmacher, Georgios Zervas

One big potential reason is simply that when merchants put out an offer they get swamped with new customers and quality deteriorates–even though the goal of a daily deal is to get new potential customers who will become loyal.

But another reason could just be adverse selection: a well known phenomenon with online reviews is that people who post reviews tend to have either a very positive or very negative view of what they’re posting. There are very few 3-star reviews on Amazon: mostly 1 star and 5 stars. It’s therefore highly possible that a minority of people with bad experiences are crowding out mostly good experiences.

In fact, another survey by LivingSocial found that most merchants were satisfied with their daily deal experience.

(Via Technology Review)

This post was published as part of BI Research, a new industry intelligence service from Business Insider. BI Research provides real-time research and analysis on the technology industry. The service is currently in beta and is free. To learn more and sign up, please click here.

Summary
Groupon is a deal-of-the-day website that is localized to major markets in the United States and Canada. Launched in November 2008, the first market for Groupon was Chicago, followed soon thereafter by Boston and New York City…
Summary
Yelp operates a social networking, user review, and local search web site. History Yelp was one of three projects, including Adzaar and Slide, to come out of the San Francisco incubator, MRL Ventures. The project arose out of..

Read more: www.businessinsider.com/how-does-groupon-affect-a-local-merchants-ratings-2011-9#ixzz1Zfsk5DVb
___________________________________
Melissa Harris: World Business Chicago powered up; Mayor Rahm Emanuel adds to members, mission

World Business Chicago powered up
Mayor Rahm Emanuel adds to members, mission

Melissa Harris’ Chicago Confidential

July 14, 2011
At least twice a week, Mayor Rahm Emanuel says, he calls Deputy Mayor Mark Angelson into his office to go over a list of companies that are thinking about creating jobs in Chicago.

Emanuel said a little over two dozen companies were on his list of targets as of Wednesday, when he announced that he was shaking up the city’s economic development arm, World Business Chicago, by adding a new roster of power players and extending the organization’s mission beyond luring and retaining corporate headquarters.

“The primary goal here is to create jobs for Chicagoans and to enhance economic development in Chicago writ large, and that’s going to happen mainly by (board members) lending us their ideas and their Rolodexes,” Angelson said.

The mayor named 31 new members to the organization’s board, including a vice chairman, Michael Sacks, who is chief executive of investment house Grosvenor Capital Management, a close friend of Emanuel’s and a top donor to his campaign. Sacks will join the Mayor’s Economic Council, which has been meeting weekly, to ensure cooperation between the mayor’s office and the nonprofit.

The organization’s board members will serve as roving ambassadors for the city and have been asked to talk up Chicago on domestic and foreign business trips. That model also was used in Chicago’s failed bid for the 2016 Summer Olympics.

“The mayor’s economic development program went on steroids today,” said Paul O’Connor, a former director of World Business Chicago now with architectural firm Skidmore, Owings & Merrill. O’Connor added that the appeal for the CEOs would be face time with the mayor and some insight into his thinking.

Emanuel argued that a board of about 50 members would not be unwieldy.

“The responsibility … is to create a focused agenda, which is why I have a list of how many companies we’re focusing on and making sure everybody is going through that list,” Emanuel said. “Also to give you an example, when I know a CEO or top management from a company that’s on (the World Business Chicago board) is traveling to India and China … (I can say) ‘Give us an hour of your time when you’re in New Delhi … Can you go visit this company that we’re trying to talk to right now?’”

As if to prove that his new board is wired in, the mayor said that even on the elevator ride up to the news conference, held on City Hall’s roof, Sacks had given him a tip about a health care executive considering moving jobs to Chicago.

But in addition to providing him with intelligence, Emanuel said he would call on board members to help pay for the organization’s operations, a necessity, given his campaign promise to cut World Business Chicago’s city subsidy. The city currently provides the organization with about 60 percent of its budget, or $1.4 million a year, said the organization’s president, Rita Athas.

Angelson, the former CEO of printing giant R.R. Donnelley & Sons, has said from his earliest days at City Hall that World Business Chicago needed to be expanded and its effectiveness improved. In an April interview with the Tribune, Angelson said more attention needed to be paid to helping startups and small businesses rather than making plays for headquarters. To date, World Business Chicago’s greatest achievement has been helping land the headquarters of aerospace and defense giant Boeing Co.

Sacks said there would be no “immediate” staff changes at World Business Chicago. Athas, a onetime deputy chief of staff to former Mayor Richard Daley, has been the organization’s president since 2007 but she was absent from Wednesday’s news conference. In an interview later that afternoon, she said she was looking forward to working with Sacks.

Emanuel “is intensifying some of the things we’ve already been doing,” she said. “He’s certainly intensifying the business input and activity level of business leaders themselves. They’re probably our best source for leads and contacts.”

Frank Beal, executive director of Metropolis Strategies, a policy think tank, said he couldn’t find much fault in Emanuel’s “very high-powered” board or broadened mission of growing existing businesses and helping new ones sprout. Most job growth occurs that way, he said, rather than from making plays for headquarters relocations.

But he called for more action.

World Business Chicago needs “to develop a business plan for economic growth, and they need to stick to it,” Beal said. “And they need to be honest about where we are and where we’re going. And they need a budget that is bigger than the current budget.”

More aggressive marketing, Beal said, won’t be enough.

Copyright © 2011, Chicago Tribune
ct-biz-0714-confidential-emanuel-20110714

World Business Chicago powered up

Among the attendees: Groupon CEO Andrew Mason and its chairman, Eric Lefkofsky; Judd Enterprises CEO David Weinberg; John Canning Jr., chairman of private equity firm Madison Dearborn Partners; Lou Simpson, the former chief investment officer at Geico who runs an investment advisory firm; McDonald’s Chairman Andrew McKenna Sr.; and Eric Schneider.

Schneider, 57, has attended the conference for business titans every year since 1996. Never heard of him? That’s probably because he plays the clarinet and saxophone in the band, which often featured Susan Buffett, the late wife of Warren Buffett, on vocals.

“Mayor Daley came last year, and I saw him walking into room, so we started playing ‘Chicago,’ the tune from the ’20s or ’30s,” Schneider said. “He went out, and when he came back in, I had the guys play ‘My Kind of Town (Chicago Is).’ He stopped, turned around and gave me a thumbs-up. He came over, and we chatted afterward.”

Mason spoke on a panel about managing fast-growing companies with two other people with Chicago connections: Twitter CEO Dick Costolo and Zynga CEO Mark Pincus.

Costolo launched three startups here, the most successful of which was FeedBurner, before joining Twitter and relocating to California. Pincus, who lives in San Francisco, was born and raised here. He left for college after graduating from the Francis W. Parker School in the mid-1980s and never returned. He is the son of Ted Pincus, a legendary figure in the public investor relations, who served as chairman of the Financial Relations Board for about 40 years.

Melissa Harris can be reached at mmharris@tribune.com or 312-222-4582. Twitter @ChiConfidential.

Here is a list of the new World Business Chicago board members:

Mayor Rahm Emanuel (chairman)

Michael Sacks, CEO, Grosvenor Capital Management LP (vice chairman)

Anthony Anderson, vice chair and Midwest managing partner, Ernst & Young LLP

Jeff Aronin, chairman and CEO, Paragon Pharmaceuticals Inc.

Norman Bobins, chairman, PrivateBank Inc.

Marshall Bouton, president, Chicago Council on Global Affairs

William Brodsky, chairman and CEO, Chicago Board Options Exchange

James Crown, president, Henry Crown and Co.

Donald Edwards, managing principal, Flexpoint Ford LLC

Michael Ferro Jr., chairman and CEO, Merrick Ventures LLC

James Glerum, chairman, Civic Consulting Alliance

Antonio Gracias, founder, CEO and chief investment officer, Valor Equity Partners

Mark Hoplamazian, president and CEO, Hyatt Hotels Corp.

Steve Koch, vice chairman, Credit Suisse

Eric Lefkofsky, co-founder and executive chairman, Groupon Inc.

Sam Mencoff, co-CEO, Madison Dearborn Partners

William Osborn, chairman of the board of trustees, Northwestern University

Hank Paulson, former secretary, U.S. Treasury Department

J.B. Pritzker, co-founder and managing partner, Pritzker Group

Bruce Rauner, principal, GTCR LLC

Jim Reynolds, co-founder, chairman and CEO, Loop Capital

Desiree Rogers, CEO, Johnson Publishing Co. Inc.

Pat Ryan, Jr., co-founder and CEO, Incisent Technologies

Muneer Satter, managing director, Goldman Sachs Group Inc.

Jeffery Smisek, president and CEO, United Continental Holdings Inc.

David Speer, chairman and CEO, Illinois Tool Works

David Storch, chairman and CEO, AAR Corp.

Charles Tribbett III, managing director, Russell Reynolds Associates

Byron Trott, founder and managing partner, BDT Capital Partners LLC

Glen Tullman, CEO, Allscripts

Gregory Wasson, president and CEO, Walgreen Co.

Thomas Wilson, chairman, president, and CEO, Allstate Corp.
________________________________
Fred Jones: How Many Investors is Too Many? A Guideline for Seed Rounds

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show details Sep 26 (3 days ago)

from Fred Jones fredjones64@yahoo.com
to ron@themayreport.com
date Mon, Sep 26, 2011 at 2:17 PM
subject Interesting Post
mailed-by yahoo.com
signed-by yahoo.com
Important mainly because of the people in the conversation.

hide details Sep 26 (3 days ago)

Ron,

Here is an interesting article on a nice local positive story.

www.builtinchicago.org/profiles/blogs/how-many-investors-is-too-many-a-guideline-for-seed-rounds

Fred
+++++++++++++++++++++++++++
How Many Investors is Too Many? A Guideline for Seed Rounds

* Posted by Ethan Austin on September 26, 2011 at 11:19am
* View Blog

A couple of weeks ago Mark Suster wrote an excellent blog post stating that a leaderless seed round with multiple angels and VCs is a bad idea … because no single investor will feel obligated to take responsibility and step up to the plate when the company needs help. In general, there is a lot of truth to this statement. With more investors on board, it is inevitiable that there will be less individual accountability and a smaller sense of responsibility for each investor.

However, seed rounds are here to stay and more and more VCs are jumping into the fray everyday. So if you’re about to raise capital, I don’t think the sole question should be how many VC investors is too many. Perhaps the more important question you should ask yourself is:

Am I getting married to the right investors?

Is your VC firm going to step up to the plate when you need them the most? At GiveForward we closed a “leaderless” seed round earlier this year with a mix of 12 VC, micro-VC, and angel investors. Coincidentally, shortly after Mark’s blog post came out, we actually had the opportunity to test out this theory.

Last week, we had a major crisis looming that had the potential to temporarily shut down functionality on the site. Instead of sending out our regular monthly investor newsletter, we wrote an email to our investors asking for immediate help. Within an hour, a handful of them jumped into action and went to bat for us calling up their CEO friends and cashing in favors to make sure we averted this potential crisis.

In particular, Matt McCall at New World Ventures stepped up to the plate a delivered for us big time. The reason this is notable is because GiveForward is by far the smallest investment in New World’s entire portfolio. From a purely economic standpoint, it doesn’t make sense for New World to devote time and energy to helping us on a regular basis – the opportunity cost of diverting time away from their larger investments in order to spend time with GiveForward is simply too big. Yet, Matt treats us with the same amount of respect as any of New World Venture’s big portfolio companies. To me, this speaks volumes about Matt’s character and the character of the firm.

Bottom line: I will defer to Mr. Suster on this subject as he has much more experience than I do and I think he’s correct that you don’t want five VCs coming into your seed round (allowing five VCs to invest in your seed round would lead to infighting about who leads the Series A if you’re successful). But I will say that if you seek out investors like Matt McCall who truly care about your company and support what you are doing, then it shouldn’t matter if you have a “leaderless” seed round with two or perhaps even three VCs backing you. When the time comes and you need them the most, the quality VCs are going to have your back.

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Chris Conn Comment by Chris Conn yesterday
Great post Ethan. I completely agree. I too have heard about your newsletters! Keep up the great work.

Jordan Linville Comment by Jordan Linville yesterday
Ethan - Great post and really timely for us. I've also heard that your monthly investor newsletters are setting the bar by which all other startup newsletters are measured. Seriously! I'm not sure if it's because it has great info or if you are just hilariously funny, but you are obviously doing something right
________________________________
IL State Pension Plan To Bankrupt State Soon- Actions That Need To Be Taken To Prevent This

Something That May Be Of Interest To Your Report Readers

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[Name withheld upon request] to me

show details Sep 27 (3 days ago)

from [Name withheld upon request] to ron@themayreport.com
date Tue, Sep 27, 2011 at 12:30 PM
subject Something That May Be Of Interest To Your Report Readers
mailed-by aol.com
Important mainly because of the people in the conversation.

hide details Sep 27 (3 days ago)

Per our conversation yesterday please do not use my name on this info that was emailed to WTTW by me.

IL State Pension Plan To Bankrupt State Soon- Actions That Need To Be Taken To Prevent This

The IL state pension debt currently is 1% as large as the entire national debt! However only residents of Illinois are responsible for this debt. The IL Pension debt is about $140B(about $12K per resident) when pension benefits are included. The US debt is about $14T.

Current state pensions increase their yearly payouts by as much as 3% for inflation each year. If benefits go up by the same amount the annual amount the $140B amount goes up is $4.2B! Where is the state going to get this? This does not even factor in that new retirees earn far more than those who die off that they replace.

As it now stands the revised IL employee pension plan (signed off in the past year) will allow the pension debt to keep rising at an explosive rate until most of the state employees are those starting this year and later..

The feeling of the IL governor and the legislature seems to be that it may be a waste of time to try to put all current state employees on a revised plan such as a 401K plan- because they feel the courts will reject such a change. Even with a 401K plan I wonder where the state could get the $$ for their contribution each year.
However without being able to change this IL is almost certain to have to declare some form of bankruptcy eventually- and perhaps much sooner than most people think. Many if not most of the other states may be forced into similar situations as well- although not nearly as soon.
These problems are so severe that what I am suggesting is that it needs to be addressed by the US President, Governors of most if not all states, and the US Supreme Court starting ASAP.
Perhaps the US President, Governors of the States, and members of the US Supreme Court should select people from each group to get together and make a study of this -and then follow up with suggestions after some defined period of time- nad soon. I do not see why a member or members of the Supreme Court cannot be a part of this process as long as they are not required to vote along with other members of the Supreme Court the way they may have voted in the study group suggested above.
What is needed is some way for states to possibly declare some form of soft bankruptcy to make changes that will save our state- as well as many others. Perhaps the bankruptcy of United Airlines, GM, and the elimination of company pension plans by IBM and other companies should be studied as well. If some form of bankruptcy were allowed it would probably need to cut back on pensions being received by current pensioners to avoid tax increases that could bankrupt the state since most businesses would leave the state.
When I was in business school working toward an MBA at the University of Chicago many years ago I took a law course where a big issue at the time was government wiretapping- and in other ways getting private information on private citizens, companies, etc. Virtually all of the students I knew said that this will never be allowed- and were very emphatic about this. My feeling at that time was if there were no changes were made to this rigid interpretation our country could be vulnerable to some disasters such as what occurred during 9/11- or even worse. However wiretapping and other means of getting information previously illegal in my days at the University of Chicago- were legal within limits at the time of 9/11.
Perhaps WTTW could address this as an item for discussion at some time. My guess is that much more than half of this deficit is created in the immediate Chicago area- so it could be said that it strongly a Chicago problem.
It would be interesting to see what may come out of this. The problem addressed here may be one of the very most important issues of all that needs to be addressed by our country. It is unfortunate that is being pushed aside as if it is a second rate issue- even by our governor..
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Tarkus Murphy: Governor Andrew M. Cuomo $4.4 Billion Announcement – Albany heat warms up the Information Superglacier™ with 300 new jobs(?)

Governor Andrew M. Cuomo $4.4 Billion Announcement – Albany heat warms up the Information Superglacier™ with 300 new jobs(?)

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Tarkus tarkus@ripco.com

show details 9:02 PM (23 hours ago)

from Tarkus tarkus@ripco.com
to Tarkus
date Wed, Sep 28, 2011 at 9:02 PM
subject Governor Andrew M. Cuomo $4.4 Billion Announcement – Albany heat warms up the Information Superglacier™ with 300 new jobs(?)
mailed-by ripco.com
Important mainly because of the people in the conversation.

Ron.

I was just beginning a meeting to bring an out of State commercial tenant prospect to the region (at the STC Center of Excellence) when my wife called to tell me that New York’s Governor, Andrew M. Cuomo had a major announcement (see, the release, below). We were just going in to a meeting to discuss both energy and data communications with Ontario County, Axcess Ontario, Cornell, a telecommunications design firm and a College of Nanoscale Engineering Smart Systems Technology Commercialization Center of Excellence (or just “STC”) representative.

I’m sure you are familiar with the fact that announced jobs don’t always result in created jobs. In fact, the former Infotonics (RIP) was supposed to create 5,000 jobs back under Governor Pataki. Changes in the economy in the early part of the decade actually led to that demise of that possibility. The tax exempt, Infotonics, foundered for year under two sets of management. Shocks to the locals were headlines proclaiming that things had been bad, but they thought they were nearing break even.

The third set of management was far more open to external commercial enterprises. Over the course of 2009, I brought several companies to the region. A Fiber to the Home (FTTH) provider, a fiber optic equipment company, a security company, a medical records company. The activity encouraged some other companies to investigate the entry into the region. Moser Baer matched the $5 M commitment of one of my clients and we were able to make several presentations together or in separate meetings with the State Economic Development people.

In April of 2010, Senator Schumer declared that (together with Axcess Ontario) technology led development would create an Erie Canal of the 21st Century. Nearly 200 years before Jessie Hawley (or Hercules in his essays) had written of the creation and development of the first Erie Canal. His writings were received as the “Effusions of a Maniac.”

In the end, Moser Baer had the “buzzer beater” play with commercial tenancy. It seems that the activities of the commercial entities vying for real estate had drawn the attention and, sometimes, ire of those from “Planet Albany.” I overheard more than one person complaining about having to drive four hours to a town that few had heard of (and fewer could pronounce on first try it’s CAN-AN-DAY-I-GUA).

As the commercial entities negotiated for entry to access of the first building on “Campus Drive” the Economic Development decided to take a look at the Mission of Infotonics and decided that if there was commercial interest, the property should also be not just a commercial center but a Center of Excellence in Smart System Technology Commercialization. Rather than just breaking even from the rent of commercial tenants, the NYSTAR center of Excellence was merged with the Albany Nanoscale facility.

The transition also meant that the former Infotonics became part of the State of New York University (SUNY) system. The supposed 5,000 jobs “to be created” never happened, but the 40 or so people at the Center suddenly became SUNY employees. Some of the previous management would admit that the facility would only hold about 250 people (something that is being tested with the new commercial tenants)

I’ve chronicled some of the commercial success as the participation of Moser Baer (up to $25 M from the original presentations and planning on a second building on campus), CareStream, ClearMomentum, and other companies in previous reports. The new position of the STC Center of Excellence as the commercialization arm of the Albany Nanoscale system, also means that when there are new programs with private companies in Albany (Intel, IBM, TSMC, Global Foundries and Samsung), there is a ripple effect in Western NY (the Information Superglacier™).

Over the next several weeks, I hope to be bringing news of planed groundbreakings at the STC Center of Excellence that may precede the opening of the next Moser Baer building or DoD Chip Foundry. I’m still hoping to attract a class IV data center here (we have Tier IVs in the region but not in the county). As well as new connections to top tier backbone providers, US UCAN and National Lambda Rail (ECC designed Southern Tier Network and Axcess Ontario are both named partners in the BTOP Infrastructure project, but we have heard little in the past few months – even as the network is build on I-90 (or thereabouts).

While not all of my commercial clients made it into the first building (Moser Baer was NOT a client – but we had joint and noncompetitive presentations about our intent for the commercial space), the resulting investment by the State may have displaced commercial opportunities in the first building, the success of the progress from November 2009 to today means that there will be dozens of acres of new commercial opportunities on the 57 acre campus. As many as five building plans are being vetted for more clean room facilities, more chip facilities, more clean energy opportunities and more.

I ended the day in a picturesque hilltop in the “drumlins” area of the Finger Lakes amongst the giant “big wind” generators as we listened to the muted whumps of the blades of these behemoths (not even as large as their oceanic cousins). I’ve seen them in the distance before and I’ve seen them from the valleys, but this was my first time in the presence of these giants. The odd and irregular landscape of the drumlins and the dozens of windmills along the hills makes for an otherworldly, experience. It is very easy to see why these systems (and so many of them) evoke strong reactions of either love or loathing.

I know things get quiet in the Winter, but there may be a few announcements before Thanksgiving. I might even have an item or two about the Cornell Technology Farm, by then.

Stay Tuned.

Tarkus

Governor Cuomo Announces $4.4 Billion Investment by International Technology Group Led by Intel and IBM to Develop Next Generation Computer Chip Technology in New York

Thousands of Jobs Will be Created or Retained in Albany, Canandaigua, Utica, East Fishkill, and Yorktown Heights; New York State Wins Investment Over Countries in Europe, Asia and the Middle East

Albany, NY (September 27, 2011)

Governor Andrew M. Cuomo today announced that New York State has entered into agreements providing for investments valued at a total of $4.4 billion over the next five years from five leading international companies to create the next generation of computer chip technology.

The five companies involved are Intel, IBM, GLOBALFOUNDRIES, TSMC and Samsung. New York State secured the investments in competition with countries in Europe, Asia and the Middle East.

The agreements mark an historic level of private investment in the nanotechnology sector in New York. Research and development facilities will be located in Albany, Canandaigua, Utica, East Fishkill and Yorktown Heights. In addition, Intel separately agreed to establish its 450mm East Coast Headquarters to support the overall project management in Albany.

“This unprecedented private investment in New York’s economy will create thousands of jobs and make the state the epicenter for the next generation of computer chip technology,” Governor Cuomo said. “IBM, which is celebrating 100 years in New York, Intel, which is making its most significant investment in New York, as well as TSMC, Global Foundries and Samsung now recognize that the state is on its way to becoming a premier location for jobs, which is why these companies are making this major investment. In the last nine months, my administration has worked to create a more confident environment for doing business in New York, and major deals like this one prove that the state is truly open for business.”

The investment in these two efforts will result in the creation and retention of approximately 6,900 jobs. That number includes 2,500 additional high-technology positions comprising of:

* 800 at CNSE Albany NanoTech Complex
* 950 at IBM – Yorktown Heights and IBM – East Fishkill
* 450 at SUNY Institute of Technology (SUNYIT) in Utica
* 300 at CNSE’s Smart System Technology & Commercialization Center in Canandaigua

In addition, approximately 1,500 construction jobs will be created in Albany and 400 in Utica. As a result of the investment 2,500 existing jobs in Albany, Canandaigua and East Fishkill will be retained.

No private company will receive any state funds as part of the agreement. To support the project, New York State will invest $400 million in the SUNY College for Nanoscale and Science Engineering (CNSE) in Albany, including $100 million for energy efficiency and low cost energy allowances. The state investment in CNSE will be made over a five year period. The state investment will be directed entirely to CNSE, and all tools and equipment acquired through the investment will be owned by CSNE.

Paul Otellini, Intel Corporation President and CEO said, “The Global 450 Consortium is a critical element to moving the semiconductor industry to next generation wafer size. This new technology will reduce the cost of production, increase productivity for manufacturers and reduce our environmental footprint on a per chip basis. The involvement of the College for Nanoscale and Science Engineering and the State of New York will enable the industry to meet its goals.”

Brian Krzanich, Senior Vice President and General Manager of Manufacturing and Supply Chain at Intel Corporation said, “This agreement puts New York on the forefront of the next generation of technological innovation. This is our first major investment in the State of New York and we commend Governor Cuomo for creating a business-friendly environment to foster growth and to make New York a nationwide leader.”

Dr. John E. Kelly III, Senior Vice President and Director of IBM Research, said, “This year is IBM’s centennial year and our company has been inventing, innovating and leading for 100 years – all of it with our headquarters right here in New York State. IBM continues to invest in New York because of the strong business climate and talent here, which is the result of Governor Cuomo’s leadership in Albany as well as the very close working relationship between the Governor, leaders in New York State government, our local colleges and universities and the business community.”

Ajit Manocha, CEO of GLOBALFOUNDRIES said, “The unique mix of industry and technology partners located in New York is a key component of our strategy of expanding our local operations, including the Fab 8 campus in Malta, N.Y., which will be the world’s most advanced semiconductor fab when it is completed in early 2013. Governor Cuomo and the State of New York are dedicated to creating a sense of confidence that encourages businesses to invest in advanced manufacturing technology and development to create jobs and secure New York’s role in driving the 21st century global economy.”

Dr. Mark Liu, TSMC Senior Vice President, Operations said, “This forward-looking initiative leverages New York State’s world-class technology infrastructure and workforce by pairing it with semiconductor leaders from private industry. Achieving 450mm manufacturing will be an important industry milestone that will lead to increased productivity and innovation. TSMC thanks Governor Cuomo for his dedication to New York’s future and looks forward to participating in this project.”

Oh-Hyun Kwon, Samsung Electronics Device Solution President said, “An increase in wafer size will significantly impact the semiconductor and electronics industries. Samsung Electronics will actively cooperate with global semiconductor companies to introduce the next generation 450mm wafer. The State of New York and Governor Cuomo’s decision to invest in future technology will enhance the productivity and health of the global IT industry while creating jobs and improving the lives of people across the globe.”

Senate Majority Leader Dean Skelos said, “Although we have more to do to ensure that every New Yorker who wants a job can find one, today’s announcement is further proof that New York is once again open for business. This multibillion dollar investment in New York’s economy will help us create and retain thousands of good jobs, and spur even more economic growth across the State. I applaud Governor Cuomo for his leadership and applaud New York’s economic development professionals for their outstanding work, and credit Intel and IBM for forging a partnership for the future. I am confident that we can build on this historic investment so businesses have the tools they need to succeed.”

Assembly Speaker Sheldon Silver said, “Working over the past year with Governor Cuomo to provide $400 million in funding to leverage this growing industry, today we are proud to announce that worldwide leaders in semiconductor manufacturing will be making a $4.4 billion investment in New York State. This kind of announcement is exactly what we in the New York State Assembly envisioned 15 years ago when we provided crucial funding that would lead to the College of Nanoscale Science and Engineering — the largest, most state-of-the-art, high-tech complex in the academic world. I commend Governor Cuomo for his strong leadership and for recognizing that even in difficult times there are investments that must be made to spur long-term economic growth and job creation. New York is indeed open for business.”

SUNY Chancellor Nancy L. Zimpher said, “I am extremely proud that SUNY is playing such a critical role as part of the extraordinary agreement reached today by Governor Cuomo. This partnership will draw on SUNY’s capacity to grow 21st century jobs and train a highly skilled, globally competitive workforce to fill those jobs. I want to commend Governor Cuomo for having the vision to include public higher education in the revitalization of New York’s economy.”

The investment in the state is made up of two projects. The first project, which will be led by IBM and its partners, will focus on making the next two generations of computer chips. These new chips will power advanced systems of all sizes, including, among other things computers and national security applications. This new commitment by IBM brings its total investment in chip technology in New York to more than $10 billion in the last decade.

The second project, which is a joint effort by Intel, IBM, TSMC, Global Foundries and Samsung, will focus on transforming existing 300mm technology into the new 450mm technology. The new technology will produce more than twice the number of chips processed on today’s 300 mm wafers thus lowering costs to deliver future generations of technology with greater value and lower environmental impact.

This investment will have other beneficial economic impacts in New York. The project will include a private “Made in NY” initiative to support the potential purchase of $400 million in certain tools and equipment from companies around New York State to create, attract, and retain manufacturers and suppliers across the state.

In addition, the companies will support a $15 million fund to increase the role of minority and women owned businesses. These technology developments may facilitate the possibility of building a 450mm plant in New York state. These plants are projected to cost in excess of $10 billion each.

Semiconductors are central to modern devices from computers and cell phones to automobiles and airplanes and the industry is the cornerstone of the “innovation economy.” Semiconductors are the nation’s largest export industry and generate billions of dollars in revenue. New York State’s investments in the semiconductor industry began in 1988 with the establishment of the advanced semiconductor program at SUNY Albany under the SUNY Graduate Research Initiative created by Governor Mario Cuomo and was cemented in 1993 with the establishment of the Center for Advanced Technology at SUNY Albany by Governor Mario Cuomo, which later became the basis for the College of Nanoscale Engineering.
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