VOL. 38, NO. 9
FEBRUARY 27 - MARCH 5, 2017
Source Lunch
Costly energy Investors are concerned about future of new power plants. Page 3
Page 23
ENTREPRENEURSHIP
Local startups weigh a westward move By CHUCK SODER csoder@crain.com @ChuckSoder
Two years ago, Kyle Stalzer asked himself a question that tech entrepreneurs have been asking themselves for decades: Should I move to Silicon Valley? The CEO of Tackk knew he was going to be spending a lot of time raising capital and building relationships there, given that it’s the undisputed tech capital of the world. He thought about just catching a plane every weekend. And Stalzer said he might’ve chosen that route, if he was running a more traditional tech company, selling software to other businesses. But Tackk doesn’t fit that mold: Like many social media and consumer app companies, its first priority was to get a huge number of people to use the company’s platform (which lets users create and share digital fliers and other simple web pages). And it’s much easier to find those types of businesses — and the investors interested in funding them — in Silicon Valley. So he answered the question with a “yes.” He and his family moved to the San Francisco Bay Area, but only for one year. Though Northeast Ohio has produced some successful tech companies in recent years — including a few that ended up getting acquired for hundreds of millions of dollars — it’s still pretty common for tech entrepreneurs to at least think about moving to Silicon Valley or another city with a larger tech community. But they don’t all answer the “should I move” question the same way. SEE MOVE, PAGE 13
The List
CLEVELAND BUSINESS
Largest private equity and VC firms Page 19
GOVERNMENT
Jackson stays away from center stage By JAY MILLER jmiller@crain.com @millerjh
On Feb. 14, Cleveland Mayor Frank Jackson went to a Greater Cleveland Regional Transit Authority board meeting to explain why he now favored closing Public Square to bus traffic after his Group Plan Commission’s $50 million makeover of the square. The redo, completed last summer, included pavement and a traffic light connecting West Superior Avenue with East Superior Avenue to accommodate bus traffic through it. Jackson decided to personally explain to the RTA board why he wanted to keep the agency’s buses out of Public Square. Most politicians would have issued a press release announcing his visit. That would have summoned TV cameras and put him and his position on the issue out front on the evening news.
Not Jackson. Instead, he went over and sat alone in the front row of the boardroom of RTA’s headquarters on West Sixth Street at Lakeside, waiting for the board to convene and move to the public comment portion of the agenda so he could explain his position. “I agreed to that, along with everyone else, because we had consultants that gave a rationale of why, if (Superior were closed), it would be an operational and financial difficulty for RTA,” Jackson said. “Even though it was my preference at that time to keep Superior closed to all traffic, I accepted that as the outcome.” He then spent 40 minutes discussing his position and answering questions from the board. When he was done, he left the building alone. His comments were reported by Crain’s Cleveland Business and cleveland. com. The presence of TV cameras, though, would have amplified his impact on the Public Square controversy. SEE JACKSON, PAGE 20
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SPORTS BUSINESS
Cavs’ Road Trippin’ podcast is taking off By KEVIN KLEPS kkleps@crain.com @KevinKleps
“Airball!” Channing Frye — who was seated in front of the Cleveland Cavaliers’ practice courts after a recent afternoon workout — couldn’t pass up a chance to make fun of a team employee about an errant shot, even if it meant doing so in the middle of an interview.
Entire contents © 2017 by Crain Communications Inc.
Frye’s teasing didn’t faze teammate and best friend Richard Jefferson, who continued to answer a question about the growing popularity of the duo’s Road Trippin’ podcast. The scene — aside from the fact that it was taking place in Independence, not in a hotel room or on the team’s private jet — was much like any of the podcast’s episodes, with Jefferson doing a lot of the talking and Frye interjecting comic relief at the most random moments. The podcast made national head-
lines prior to the NBA’s All-Star weekend, thanks to Kyrie Irving telling Jefferson, Frye and Fox Sports Ohio reporter Allie Clifton, the podcast’s host, that he believes the earth is flat. But the podcast was faring pretty well prior to the AllStar guard’s third appearance. Road Trippin’ cracked the top 100 of all U.S. podcasts four days after its Jan. 17 debut, and it has reached as high as No. 14 overall, according to iTunesCharts.net. As of Feb. 23, the first nine episodes had produced more than 400,000 downloads, and
the podcast had a 4.9 rating on iTunes’ five-star scale. The podcast’s appeal — with Irving, LeBron James, Kevin Love, Tristan Thompson and Kyle Korver already on the guest list — is obvious. But as unique as it is for a podcast to feature James, the world’s best player, talking freely about passing the “blueprint” to Irving while the Cavs’ luxury plane idles on a Dallas runway, the show’s behind-the-scenes arrangement is also distinct. SEE PODCAST, PAGE 22
Entrepreneur report Marketing the myriad microbrewers in Greater Cleveland. Page 12 Women Who Code opens a Cleveland chapter. Page 15 Five NEO startups to watch. Page 16
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Future of power plants is pricey concern By DAN SHINGLER dshingler@crain.com @DanShingler
Investors putting billions of dollars into natural gas-fired electric plants in Ohio say they’re concerned state legislators might make their investments virtually worthless by re-regulating the state’s electric industry. “They want to kick us out of Ohio,” contends Bill Siderewicz, president of Clean Energy Future, a Boston company that’s building four power plants in Lucas and Trumbull counties. What Siderewicz and some others in his industry fear is that Ohio legislators will, at the behest of utilities AEP and FirstEnergy Corp., return the state to a regulatory scheme under which regulated utilities are guaranteed a specified rate of return on their investments, while companies like his would have to compete with them at a distinct disadvantage. That means, effectively, that merchant-owned power plants like the ones Clean Energy Future is building would be forced out of the market, he contends. With 12 such plants being built or planned around the state — each one representing hundreds of millions of dollars of private investments that Siderewicz says would be diminished, if not wiped out. “We would not even be allowed to build a plant,” Siderewicz said, adding, “I can’t think of anything more offensive than that.” While it seems unlikely and probably would be unconstitutional for legislators to pass laws saying who could and who could not own a power plant, Siderewicz may have a point, said Todd Snitchler, former chairman of the Public Utilities Com-
The American Electric Power natural gas-fired electric plant in Dresden, Ohio, began its commercial operation in 2012. The total costs for the plant were about $366 million. (Getty Images)
mission of Ohio and now a lobbyist for power plant developers in Columbus. “That’s a very real fear on the part of the other generators,” Snitchler said, noting he, too, is hearing that utilities are seeking legislation that would re-regulate the state’s electric industry. Snitchler said that while a return to rate-of-return regulation might not make it illegal for companies other than regulated utilities to own power plants, it could make it unprofitable for them to do so, which would have
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the same net effect. Guaranteeing a rate of return for utility-owned power plants would enable those plants to offer their power for sale at prices below what the merchant plants could match, Snitchler said. That's because the utilities could go to state regulators and ask for a rider or means of getting ratepayers to make up for any lost profit margins. The merchant plants would have no such relief available, meaning they likely could not compete with the utilities, even though, contrary to what some believe, the merchant plants don’t have contracts in place to take away all their future power and will need to sell that power into what they believed would be a competitive market, Snitchler said. What’s more, he said no one other than existing utilities likely would plan any future plants in Ohio if the state re-regulates, because those investments would instead go to other states with a more level playing field. The utilities themselves have not yet said exactly what they want in
terms of legislative relief. FirstEnergy has previously said it would like to return to a regulated environment and, more recently, that it needs some regulatory relief for its two aging nuclear plants in Perry and near Toledo. The company has been struggling with the declining value of its coal and nuclear generation assets in the new era of natural gas-fired plants. It took a $6.2 billion loss for 2016, as it wrote down the value of its assets by $9.2 billion in the fourth quarter. FirstEnergy is working with legislators on aid for the nuclear fleet, said company spokesman Doug Colafella, while AEP is taking the lead on pushing for more general regulatory reform. FirstEnergy was stymied in some recent attempts to get ratepayers to subsidize its old coal and nuclear power plants, which are having difficulty competing against plants using new, low-cost shale gas. Even when the PUCO has attempted to help, much of the relief it’s granted was struck down by federal regulators
who said such subsidies stifled competition in the electricity markets. Colafella said FirstEnergy is hoping for some help, especially with its nuclear fleet, but downplayed rumors that merchant-owned power plants would be outlawed or forced to close. “It’s a little too early to say. We’re still anticipating legislation to be introduced,” Colafella said. “The rumor out there is that it will outlaw the private ownership of plants, but I’m not aware of any discussions with legislators that would do that or stop the construction of plants.” Colafella said FirstEnergy wants legislators to ensure that Ohio maintains a diverse mix of fuels for its power plants, including its nuclear plants. FirstEnergy also wants legislators to consider it as a whole — a provider of not just generation, but also power transmission and distribution, and to regulate it so that it can continue to profitably perform all three functions — though he concedes that might not be easy. “I think that’s the challenge,” Colafella said. “We expect through the regulatory process that all of the stakeholders will have a seat at the table and there will be a healthy discussion. We’d like to see clean natural gas come online, but at the same time have these nuclear plants serving the state for years to come.” Others who watch Ohio’s power industry and related laws and regulations predict that legislators will not do anything to prevent further investment in natural gas-fired power plants around the state. “I’m just not sure I can see a Republican legislature doing that, basically picking winners and losers,” said Matt Brakey, president of Brakey Energy, a consulting firm for large industrial power users. Bryce Custer, a commercial real estate broker who has sold sites to power plant developers in Carroll and Columbiana counties, said he “so far” has not heard clients express concern over potential legislation that would re-regulate their industry. Others, including Snitchler, say they’re not going to relax just yet. “They call it the Ohio Revised Code for a reason,” Snitchler said. “The rules can change and often do, and that’s the concern.”
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‘Building things’ has been NRS’ biggest money-maker By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty
Dale Andrassy II wasn’t setting out to start a manufacturing company when he founded what became NRS Industries about a year ago. The 28-year-old wanted to start a distribution company primarily for the infrastructure and construction industries that could quickly source hard-to-find products like post shores or specialty clamps for its customers. But then, he started getting requests for a particular kind of beam called an aluminum stringer, or joist, but he had trouble finding them to the specifications he wanted. Andrassy, who has a background in private equity but an education in both finance and civil engineering, decided to take matters into his own hands. In August, NRS began making and selling its own stringer beams; it now offers 10 versions, in addition to standard aluminum shapes like bars or tubes. Ultimately, the manufacturing side of the business made up about 75% of NRS’ sales last year, Andrassy said. Andrassy, who’s the president of NRS, declined to get specific on annual sales figures, but he said sales in 2016 were in the low, single-digit mil-
lions. He’s aiming for between $5 million and $10 million this year. In January alone, the company posted more than $500,000 in sales. He’s confident because of the strength he’s seeing in the construction industry in both commercial and residential. Interest rates are low, he said, and many of the projects are multi-year, which bodes well for the future. “There are projects everywhere,” he said. “Everyone’s building.” Andrassy has an office in co-working space LaunchHouse in Highland Heights, but the bulk of the business takes place in American Aluminum Extrusion Co.’s plant in Canton, where NRS rents equipment and about 50,000 square feet of space. NRS also uses a smaller warehouse in Stow that Andrassy rents for storage and inventory. The company has 15 full-time and part-time employees. Andrassy built the company the old-fashioned way: making cold calls and doing lots of networking, he said. Sometimes, he’ll even stop by a site in progress. He grew up in a family of construction workers and has always enjoyed the process. And he always knew he wanted to run his own business. “I like building things,” Andrassy said. “It’s just cool to see all the projects going up and driving by and knowing you have product there, and
you’re helping build that.” One of NRS’ customers is Universal Manufacturing Corp. in Zelienople, Pa. The company manufactures and rents scaffolding and shoring equipment, and NRS has helped fill in the gaps to complement what Universal provides, said Mike Bredl, Universal’s sales and marketing manager. Bredl said NRS offers competitive pricing and quick responses, and the company has been using them for about six to eight months. One of the ways NRS tries to stand out is by keeping the end user front of mind. One way it has done that is by bundling products together for particular parts of projects and doing engineering work to help save them money, Andrassy said. Andrassy also found that NRS was getting asked to supply a number of safety supplies, like gloves and hard hats, that its customers needed on the job, so in January he started another company, Ohio Safety Products LLC. While Andrassy is the sole owner of NRS, he has investors for Ohio Safety and is running it as a separate company. Ultimately, Andrassy’s vision would be to create a parent company with a number of diversified companies underneath it, all supplying different-yet-related infrastructure product lines, from plumbing to flooring to concrete.
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DDR Corp., the Beachwood-based shopping center company, is searching — patiently, its CEO says — for the exit when it comes to its 14 properties in Puerto Rico. What began as a $1.15 billion dive in 2005 into the island commonwealth’s property market will not be an easy departure. Part of the reason to shed what is often termed as Puerto Rico's largest commercial property portfolio also will make it tough to find buyers at strong prices: The debt woes of the territory’s overextended government and utilities may require austerity measures further damaging its economy, hampering consumer spending and fueling additional departures of more shoppers, in this case, to the United States. Tom August, the veteran real estate investment trust executive brought in to shepherd the company after its prior CEO was fired last year, said on a Feb. 14 conference call that DDR reviewed the Puerto Rican portfolio with lenders and mortgage bankers to see how tough the terms will be for loans that prospective bidders would need to get to close deals. In response to a question on the call, he acknowledged the possibility that DDR might need to provide some mezzanine lending to swing a deal. DDR owns a total of 319 shopping centers with a total of 76 million square feet of selling space across the country, according to a Securities and Exchange Commission filing
made last Tuesday, Feb. 21. The Puerto Rico portfolio, which features a combination of power centers and malls, has a total of almost 5 million square feet of selling space and represents almost 14% of DDR’s revenue after operating expenses. Although the centers have exotic names such as Plaza del Sol, which just added the island’s first Dave and Buster’s, they feature stores with familiar names in the United States, from Bed, Bath & Beyond and Best Buy to Walmart.
“In Puerto Rico, I think we’re anxious to do something, but we’re anxious to do something on a prudent basis.” — Tom August, DDR Corp. president and CEO
August’s caution is such that he is not saying DDR definitely will do a deal. He also noted the REIT needs to sell the properties in such a way that if it does not get a buyer for all the portfolio, that it's not left with only the lesser ones. August indicated DDR might combine the 14 properties into multiple packages to spread the risk. One prospective bidder was interested in all of the portfolio and several were interested in various parts of it, August said. “In Puerto Rico, I think we’re anxious to do something, but we’re anx-
ious to do something on a prudent basis,” August said, according to a Thomson Reuters transcript of the Feb. 14 conference call. He later added, according to the same transcript, “We are not counting on these sales to meet our leverage goals, but certainly would like to reduce our exposure to Puerto Rico. If the uncertainty on the island produces poor offers, then we are prepared to sit and wait until conditions stabilize and improve.” DDR, which has shed hundreds of properties for millions of dollars the last few years to clean up its balance sheet and clarify its story for Wall Street and investors, declined to comment on this story or about its sagging stock price. Although the shopping center space has suffered due to retailer sales woes and closings as well as worries about the impact of rising interest rates on commercial properties, DDR also hasn’t netted gains from its efforts. DDR’s stock closed last Wednesday, Feb. 22, at a 52week low of $14.43. That is down 28% from a one-year high of $19.91 on Aug. 1, 2016, a few days after August’s first conference call with investors. Wes Golladay, an analyst at the Solon office of RBC Capital Markets LLC who follows DDR, said in an interview that selling the Puerto Rican portfolio would eliminate a negative factor for the REIT, especially since its shopping center REIT peers don’t have to explain such a matter. “Puerto Rico is dragging down the whole portfolio,” Golladay said. “DDR’s peers have growth rates of 2% to 3%, while DDR’s is 1% to 2%, and half of that is due to Puerto Rico.”
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Schulman is sizing up natural gas market By DAN SHINGLER dshingler@crain.com @DanShingler
A. Schulman thinks it has found a way to corner part of the automotive market by developing crucial components for cars of the future. The Fairlawn-based plastics company is starting a major initiative, in partnership with New Jersey’s Absorbed Natural Gas Products (ANGP), to develop natural gas fueling systems that will be easier, safer and less stressful for consumers to use. It’s a move aimed squarely at the OEM market — Schulman and its partner are targeting customers like Ford, General Motors, Toyota and Honda — and not the small fuel-conversion companies that have dominated the U.S. natural gas vehicle industry to date. “We’re not even going to mess around with retrofitters and conversions. Our plan is to go with the OEM’s full on,” said Doug Gries, Schulman’s director of market development and engineered composites. While natural gas has been recognized in recent years as a cleaner-burning and cheaper alternative to gasoline or diesel fuel, often costing half as much or less than those competing fuels, vehicle manufacturers have so far balked at making cars and trucks that run on the stuff. Honda previously made a version of its Civic that ran on compressed natural gas (CNG) at its plant in East Liberty, Ohio, but it stopped production of that model in 2015. Some OEMs work with conversion companies to provide CNG pickup trucks, especially for fleet customers, but they don’t make vehicles designed from the ground up to run on natural gas. Gries said ANGP has a solution that can change how OEMs think about natural gas as a fuel, and Schulman has been working to be a big part of bringing that solution to market. “We engaged with ANGP back in April or May of last year,” Gries said. That happened only after ANGP looked broadly at the universe of potential partners and chose Schulman. “A. Schulman, as a leading material solutions company, was selected to be the material and molding solution provider for the development of the tank after a careful review of all our options. We are excited to add the company’s knowledge and expertise to our coalition to develop this technology for mass-market acceptance,” said Bob Bonelli, ANGP co-founder and CEO, in announcing the partnership on Feb. 20. Using new technology for which it has exclusive licenses, ANGP has developed a new type of fuel tank for natural gas vehicles. It requires the fuel to be contained at a pressure of about 900 psi, instead of the 3,500 psi or more that’s used in existing CNG tanks. “If you look at the tanks that are vehicles today, they’re high-pressure cylinders that you have to take to an industrial filling station … with some consumers, that scares them a little,” Gries said. More importantly, he added, “For an OEM to accept (a natural gas fueling system) and put it on their vehicle as an option, there needs to be a better way.” The tanks that are being developed by Schulman and ANGP use a special carbon “monolith” that essentially fills the inside of the tank. The material is extremely porous with a large number of nooks, crannies and surface areas that can absorb natural gas at relatively low pressures, but release it quickly when the pressure drops as an engine draws more fuel.
Ironically, the process of filling the tanks is a bit like the reverse of the fracking process that extracts natural gas from shale rock. That process has been responsible for low natural gas prices and the push for natural gas vehicles in recent years. By allowing the vehicles to use low-pressure tanks, it makes the use of the fuel safer, probably easier to market to consumers, and more suitable to home use, since the tanks could be refilled overnight with relatively simple equipment running from a home’s existing natural gas lines, Gries said. The new tanks also can be made in virtually any shape an OEM wants, so they can fit more easily into vehicle designs, including for bi-fuel vehicles that could run on both gasoline and natural gas, Gries said. They also can
provide good range — close to 200 miles, even using a relatively small and lightweight tank, he said. They’re safer than existing CNG or even gasoline tanks, which can blow up when punctured. Gries said that if a carbon monolith tank is punctured or even shot with a rifle, it still releases its gas slowly and produces only a small fire for a few minutes. Schulman’s role, initially, is to develop a membrane that is needed to wrap the carbon monolith that holds the natural gas. It already can do it, but it’s still working out how to best manufacture the membrane in larger volumes, Gries said. The technology that Schulman is bringing to the project largely comes from its 2013 acquisition of Chicago-based Citadel Plastics in 2013.
With a price of $800 million, it was Schulman’s largest acquisition ever, but it quickly soured and was blamed for large losses at Schulman, which is now suing Citadel’s former owners for fraud. The new initiative shows some value gained from that acquisition, even as the suit continues. “Don’t think I’m not aware of that,” Gries said with a chuckle. Schulman’s ultimate role, however, will be much larger. It will be the final manufacturer of the tanks themselves, with ANGP shipping carbon monolith components to Schulman, which will then wrap them in its membranes and build tanks around them so they can be mounted in vehicles. “The plan is for us to try to capture the whole value chain,” Gries said. But where it will do that is still up
in the air. “That’s to be determined — we still have a lot of development work to do,” Gries said. But the company believes the initiative will result in a major new product line for Schulman, and one that has a lot of value-added engineering that could help the company’s margins as well as its sales. Gries said he’s confident that natural gas will catch on as a popular vehicle fuel. Using is just makes too much sense, he contends. And, as an added bonus, Gries said Schulman also expects to develop still more technology related to natural gas, which it could use in other markets that it serves beyond the automotive realm. “We’re already looking at the industrial market for CNG,” Gries said.
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Late in 2016, the owners of Rising Star Coffee Roasters, a company that prides itself on developing relationships with coffee bean farmers around the globe, decided to pair with the BottleHouse Brewery and Mead Hall in Lakewood. BottleHouse would take care of brewpub visitors in the evening; customers wanting a morning cup of coffee would be able to satisfy their need with Rising Star. Opened in January, the Rising Star location is, in essence, a popup store. In reality, however, this new Rising Star spot is just the start of a growth spurt for the 7-year-old company. Other “unique collaborations� are currently brewing, including one on the East Bank of the Flats, said Rising Star co-owner and founder Kim Jenkins. Plans also are underway to open a Rising Star stall in the Orman Building Food Hall in the Van Aken District development in Shaker Heights. Also in January, Rising Star opened a storefront in the old Fairmont Creamery building, located on the border of Ohio City and Tremont. These new stores are in addition
Susan Condon Love is a freelance writer who was an editor and writer at The Plain Dealer, The Las Vegas Review-Journal, the Savannah (Ga.) Morning News and The Annapolis Capital.
to the Rising Star retail locations in Hingetown (part of Ohio City, at the “hinge� of the Gordon Square Arts Districts, the Market District and the Warehouse District), Little Italy and downtown in the Arcade. All of those plans mean that things are really roasting (OK, I’ll try to make that my last coffee or beer pun) for Rising Star. But you would never know that when meeting the relaxed Jenkins and fellow co-owner and general manager Robert Stockham in Rising Star’s corporate “offices� in the old Hildebrandt Meat factory in an industrial, turn-of-the-past-century neighborhood of Ohio City. Taking advantage of collaborations
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Service sector keys job growth
Rising Star Coffee Roasters co-owner and general manager Robert Stockham, left, and co-owner and founder Kim Jenkins. (Susan Condon Love)
with other businesses that might not be open during the day — think pubs and music venues — “is a partnership that makes sense,” said Stockham. “The cross-promotion alone is priceless.” He was sitting across from Jenkins in an open two-story room housing a large work table instead of work cubbies. They and coffee director Brandon Riggs (yes, that’s his title) work on laptops. Coffee mugs are everywhere — some full, some just waiting to be filled. Rising Star has a five-year lease with BottleHouse. The Fairmont Creamery lease is for just one year, as Jenkins and Stockham assess its potential. “We come in on a low-key basis,” said Stockham. “They (the co-businesses) make money on us — utilities and rent — and we have the opportunity to get our name and product out there.” BottleHouse owner Brian Benchek said, “We both have a similar philosophy regarding the approach we take to our craft. This fact creates opportunities to build upon each other’s customer base. Sharing a building will facilitate this cross-pollination of customers and products.” He added, “The real benefits will come as we begin working together on unique tasting nights and other synergistic events focusing on our products. We are already planning several new beers and meads, which will highlight the variety and quality of Rising Star’s beans. As the owner of the building, it is, of course, financially beneficial to have a tenant who will increase the value of the property and help drive business to the district.” The East Bank opportunity is similar to the one with BottleHouse. Rising Star is pairing with Magnolia. Magnolia is a unique club that appears to be a doughnut shop, but in reality is a bar and music venue — hidden like the old “speakeasy” clubs that operated during Prohibition. Jenkins and Stockham are predicting a mid-March debut. “We have wanted a strategic partner to operate our coffee shop since we opened,” said Magnolia owner Bobby Rutter. “We have had many offers, but until we met Rising Star, we weren’t satisfied anyone aligned with our standards and values.” He added, “We built an actual coffee and doughnut shop, so we are able to execute flawlessly. This
“We come in on a low-key basis. They (the co-businesses) make money on us — utilities and rent — and we have the opportunity to get our name and product out there.”
Employment in the Cleveland-Akron metropolitan area was up by 8,017 jobs in January, recovering from a decline in December, according to an estimate from the Ahola Crain’s Employment (ACE) Report. Seasonally adjusted, the region saw employment rise to 1,179,851 from 1,171,834 a month earlier, a 0.68% increase. Most of the growth, 6,900 jobs, was in the service sector, though the goods producing sector saw a rise of 1,196 jobs. In December, the region lost 1,879 jobs. The estimates also show a 0.35% increase over the number of people working a year earlier, an increase of 4,102 jobs. “January’s employment estimates exceeded both the three-month and six-month average,” said Jack Kleinhenz, the Cleveland Heights economist who created the ACE model. “The pace of job creation suggests that growth in regional economic activity appears to be at a modest pace early in 2017.” Kleinhenz attributed that optimism to key regional and national trends affecting the estimates. He said unemployment claims for the region decreased by 20% compared with the like month a year ago, and, nationally, construction and retail sales both show growth.
The ACE Report AHOLA. CRAIN’S. EMPLOYMENT Crain’s Cleveland Business has partnered with The Ahola Corp., a payroll and human capital management firm in Brecksville, and local economist Jack Kleinhenz to provide monthly data — and clarity — about a key factor in business decisionmaking: the size of Northeast Ohio’s workforce. Seasonally adjusted employment numbers, Northeast Ohio AUGUST: 1,171,406 SEPTEMBER: 1,170,029 OCTOBER: 1,173,327 NOVEMBER: 1,174,185 DECEMBER: 1,171,834 JANUARY: 1,179,851 1,155,000
1,165,000
1,170,000
1,175,000
late January that it would shrink a training program that new employees must complete to earn $10 an hour to three months from six months. Two years ago, the company increased its minimum wage to $9 an hour. More broadly, the Society for Human Resource Management reported at the end of January that wages are forecast to grow by an average of 3.2% year over year during the first quarter of 2017. Over 2016, the federal Bureau of Labor Standards reported, the average hourly wage grew by 2.9%. — Jay Miller
UPCOMING CUSTOM SUPPLEMENT
— Robert Stockham, Rising Star Coffee Roasters co-owner and general manager
will be a great addition to the Flats and will promote more day traffic.” Rising Star is also planning a venue for the Van Aken District. Jenkins and Stockham are in conversation with developers RMS Corp. to open in one of more than a dozen stalls in Orman Building Food Hall. The Van Aken project, with an opening date of June 2018, will include 80,000 square feet of new restaurants and retail, 60,000 square feet of office space, 102 apartments, a half-acre park and the Orman hall. RMS Corp. president Luke Palmisano describes the $97 million Van Aken project as “an anti-mall of sorts. Rising Star fits into that ethos so well, and they were always on our ‘best of local’ list. On a more selfish note, we are a Rising Star regulars and wanted a location closer to home.” Rising Star’s cash investment for the pop-up locations is low. The BottleHouse location, for example, already had updated kitchen equipment and a connected parking lot, a huge business benefit for Lakewood businesses. When asked how success will be measured monetarily at the new locations, Stockham paused before answering. “I don’t really know the threshold, but 150 transactions a day is good,” he said after a minute. “Under 100 a day and it’s probably not a good location. The amount of money is not as important as the number of transactions.”
1,160,000
Despite the occasional month-tomonth wobble, employment in the region has been rising steadily, if slowly. Since January 2013, the region’s seasonally adjusted employment has grown by 30,654 jobs, a 2.67% increase. During the same time period, the unemployment rate has dropped from 7.8% to 5.1%, according to the Ohio Department of Jobs and Family Services. That labor market tightening may be putting pressure on wages to rise. WalMart Stores Inc., for example, said in
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CRAIN’S CLEVELAND BUSINESS
Opinion From the Manufacturing Beat
It’s beyond time to start filling in the skills gap
Editorial
Shifty The shift is on again in Columbus, where Gov. John Kasich’s drive to reduce certain taxes is coming at the expense of local municipalities — and will hit Cleveland especially hard. This has been a common theme during Kasich’s tenure, and his latest two-year budget proposal offers more of the same. The state’s local government fund has lost hundreds of millions of dollars since 2010, due largely to changes in revenue-sharing and tax priorities, including the cutting of state income taxes and the elimination of the estate tax. The fund currently is distributed based on several factors, including population. Under Kasich’s new budget plan, 20% of the fund would be allocated in a new formula taking into account a municipal government’s ability to raise local revenue. The Columbus Dispatch noted that Kasich and his budget team “have argued that the current local-government funding formula drives too much money to larger cities, and does not take into account whether areas have the ability to fund their own services.” Budget director Tim Keen has said the current formula depends too heavily on property values, which benefits wealthier communities. But as Kent Scarrett, executive director of the Municipal League, tells The Dispatch, “The conversation centers around your ability to raise revenue locally, which is tax talk for raising your rates. The pressure is being placed on local taxpayers. We don’t think that’s the right solution to address the inequities and challenges the cut in the local government fund has had.” Kasich’s budget actually calls for a 3.5% increase in the local government fund, to $393.5 million by 2019. (For some perspective, though, the fund was nearly $700 million in 2011, before Kasich made cuts to help fill a budget hole.) But by changing the distribution formula to favor more rural communities, Cleveland would receive $2.1 million less in 2019 than the $25.3 million it is expected to receive this year. Other losers would be Cincinnati ($1.2 million), Dayton ($387,000), Columbus ($308,853) and Canton ($88,320).
In all, about one-third of Ohio’s villages and townships, and more than one-fifth of cities, would lose money in the second year of the budget under the new formula. There are some gainers, obviously, led by Parma, which would gain more than $445,000 by 2019, according to state estimates. We’re sure the residents and leaders of the western suburb would be quite pleased by that turn of events, but a formula that’s taking more than $2 million from Cleveland and giving nearly half-a-million dollars to Parma seems more than a little flawed. The local government fund is at 1.66% of the state general revenue fund; in 2011, it was 3.68%. Those cuts have real consequences for big cities, which either have to trim services, including vital safety services, or raise taxes further. Talk about government picking winners and losers. The local government fund problem is a microcosm of mismanaged state budget priorities. Kasich wants to cut the number of income tax brackets in Ohio to five from nine, and give most Ohioans a small tax cut. At the same time, he would increase the state’s sales tax rate to 6.25% from 5.75%, and would expand it to apply to services including cable TV subscriptions, landscape and interior design fees, and travel packages. This is a gambit that members of the Republican-led state Legislature, hesitant to raise taxes on any businesses, have rejected before, and they should be skeptical again. Sales tax increases to cover further decreases in the personal income tax might work for well-off Ohioans, but they come at the expense of people at the lower and middle levels of the income spectrum. The Kasich budget is currently being heard in the House, which certainly will make changes before passing it along to the Senate. Those changes should start with a re-examining of the commitment to local governments that redresses some of the damage done to big-city budgets over the last several years.
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The president has made it clear that he wants to bring manufacturing jobs back to the United States. Let’s set aside, for a moment, whether he can actually do that. While automation has made it so companies can make far more products with far fewer people, presumably there are still jobs currently being done in other countries that could instead be done in the U.S. At face value, that sounds like a great idea for the country. The problem? Manufacturing already is facing a shortage of skilled workers, and it’s expected to get worse. The Manufacturing Institute and Deloitte in 2015 released a report on the industry’s so-called “skills gap.” At that time, the expectation was that about 3.4 million manufacturing jobs would become availRachel Abbey able between 2015 and 2025 and that about McCafferty 2 million of them would go unfilled. And that was accounting for retirements and some economic growth, not an influx of new jobs due to political policy. The skills gap or worker shortage is not a problem that’s new to manufacturers. Nor is it one that can be solved quickly. But there could be ways President Donald Trump and his administration could help. For example, I spoke with William H. Gary Sr., executive vice president for the workforce community and economic development division at Cuyahoga Community College. The conversation can’t just be about bringing more manufacturing jobs into the country, Gary said. It also has to be about building up the training infrastructure for those jobs. At the community college level, that could look like more money for Pell Grants or apprenticeship training funding, he said. But beyond training, even, manufacturers have to get students interested in the industry. And as Northeast Ohio in particular becomes more economically diverse, there’s more competition for skilled labor, Gary said. Many companies already have been working to change the perception of manufacturing careers — offering everything from internships to plant tours — but the problem persists. Dan T. Moore, CEO of the Dan T. Moore Co., is an advocate for skills-based training for young adults, and his company has tried to get such a program off the ground at Ginn Academy in Cleveland. He thinks part of the reason there are unfilled jobs in manufacturing is because the country has turned its back on vocational training. Moore said he’d like to see mechanically focused, hands-on skills being taught starting in elementary school and, ideally, he’d like to see the federal government pay for schools to convert classrooms for that purpose, especially in big cities. Ultimately, getting more money from the Trump administration could be a challenge, if reports about the drastic cuts expected for the budget come to fruition. But the president has indicated an interest in hearing from industry. Trump has launched a “Manufacturing Jobs Initiative” made up of business leaders across the country, including Timken Co. president and CEO Rich Kyle, whom he wants to advise him on job growth. Details on the initiative’s role are few at this point, but hopefully, some of those executives are able to share the struggles companies have faced trying to get and keep talented employees. And hopefully Trump and his team will also take the time to listen to the small and medium-sized manufacturers who have to compete with the big players when it comes to finding qualified workers. The skills gap has been a problem facing manufacturers for years. If the country wants to see “Made in America” more often, the public will finally have to face it, too.
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Help us
Personal View
New data shows economic impact of immigrants By JOE CIMPERMAN
New American Economy, an immigration reform advocacy organization, last week launched “Map the Impact” — a campaign to highlight the vital economic contributions of immigrants in communities across the country. Global Cleveland has joined this time of action to help promote the new research on the contributions of immigrants in the Cleveland metro area and highlight the critical need for immigration reform. The Cleveland metro area is home to more than 113,352 foreign-born residents who are positively contributing to our workforce and economy. In our congressional district alone, residents contributed more than $1.2 billion to state and federal taxes in 2014, and held $3.2 billion in spending power. And we have 7,405 immigrant entrepreneurs creating jobs and wealth, bringing their talent to communities that need it most. One only needs to look to some of the Buckeye State’s most important industries to see the vital role immigrants play. Consider our computer systems design industry, which added $7.8 billion to the state GDP in 2013, where roughly one in seven workers are born abroad Or consider our health care industry, where more than one in every four physicians in the state graduated from a foreign medical school, a likely sign that they were born in another country Immigrants are helping to fill labor shortages in a variety of industries, and at the same time are laying
down roots, building homes, sending their kids to school, and contributing positively to all of our communities. U.S. employers often rely on immigrants and international students to attract and retain the workers they need. In 2014, there were roughly 18 jobs available for every one unemployed STEM (science, technology, engineering, and math) worker, while Northeast Ohio colleges and universities are graduating thousands of STEM international students. The demand is outpacing the supply of H1B visas, commonly used to hire these college graduates. Ohio businesses will continue to be held back from reaching their growth potential if we do not address the need for more international talent in our local economy, not less. For every H1B worker, there are roughly 2.6 jobs created in support of that role. We need to be making it easier, not harder, for immigrants to come to Ohio and positively contribute to our economy and workforce. The system in place does not address the current reality in our state or our country. That is why leaders from across Ohio and around the country are joining NAE and calling on Congress to act. Together, we will create a chorus of voices calling on all of us in our own homes, businesses and town halls to take action to enact common-sense immigration reform. We are a nation founded by immigrants, and immigrants will only help our country continue to grow. Cimperman is president of Global Cleveland, an economic development nonprofit that aims to attract and welcome people from across the world to Cleveland.
Web Talk Re: FirstEnergy's financial woes There is obviously something wrong with management here. You have a monopoly, and demand for power is a constant. A failure of cash flow management is doubtful. Accounting tricks (smoke and mirrors) create the loss. This is a financial engineered crisis. I am not buying it. File the bankruptcy! I call your bluff. The monopoly will be acquired in full by a stalking horse bidder probably composed of the same management of the same old company. To this the stockholders and bond holders should object, and the PUCO and the SEC, and the Attorneys General, federal and state, should prosecute and jail management; disgorging them of their golden parachutes! Drain the swamp here too in the fraudulent business community. — 216265 Whatever happened to doing what is in the consumer's best interest? Charging their customers higher rates over some long-term period to pay for these aging plants just doesn't add up. Simply put, their aging generation plants are noncompetitive in the open market, and now they want a bailout. What kind of precedent would this set for other businesses who fall on tough times? Think they'll get bailed out with a subsidy? NOPE! You have your monopoly and guaranteed profit. Stop trying to get your customers to pay more for your mistakes, FirstEnergy. — Eric
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Crafting beer and an identity Market Garden Brewery, founded in 2011 in Ohio City, is known for its labels and taps depicting Cleveland’s “Guardians of Traffic” on the Hope Memorial Bridge. (David Kordalski)
Quality remains king, but local brewers find other ways to rise above By JEREMY NOBILE jnobile@crain.com @JeremyNobile
In terms of the modern craft beer scene, the days when Great Lakes Brewing Co. was founded in the late 1980s were the veritable dark ages. Back then, the term “craft beer” wasn’t even part of the lexicon. To consumers, Great Lakes was simply a local beer producer, and one that garnered much less attention and market share than mega-brewers like Anheuser-Busch, whose ubiquitous Budweiser ads featuring buxom, big-hair swimsuit models frolicking on sandy beaches would become synonymous with ’80s pop culture. For Cleveland’s oldest brewery, the hyper-local movement feeding today’s surging demand for craft
brews simply wasn’t there in those days. Gaining a foothold in the beer market meant getting people to try something different from the familiar commercial golden lagers that were flooding shelves, taps and ad space. Times have changed a lot since then. And while every brewer will devoutly report that quality must remain key in having a beer resonate with consumers — as it goes with most products — marketing still plays a significant role in crafting a brand’s identity and getting a share of an increasingly crowded craft beer market. As Northeast Ohio is flooded with a surge of brewing startups, that marketing is proving more important than ever. “There’s a need for a strong brand that can connect with its audience,” said Ciara Ahern, an account executive at Cleveland marketing agency The Adcom Group. “When you think of Great Lakes in 1988, when there were only a few brewers, and now, when there are more than 4,000, it’s just harder to stand out.” Ads for Great Lakes Brewing Co. in the 1990s were designed to educate consumers about their products as the term “craft beer” wasn’t even part of the industry’s lexicon. (Contributed photo)
Marketing evolves When Budweiser was still targeting the male beer drinker with leggy, half-naked women, Great Lakes’ pushed ads that featured short lessons on their beers. Education was considered paramount in getting consumers to try something different at the time. Some ads in the latter part of the 1990s explained what Dortmunder Gold, Eliot Ness and Burning River tasted like and the ingredients used in them. One for Holy Moses, a Belgian-style wit, explained what a wit was. It means “white,” by the way, and is derived from the cloudy, light appearance that comes from wheat grains used in the style. Today’s typical craft beer enthusiast probably knows that, or at least Googled the answer at some point. But to most U.S. beer drinkers 25 years ago, “wit” was foreign and unfamiliar, and consumers were more likely than not to buy a brand they were comfortable with — or that subconsciously gave them an impression they could seem more interesting to supermodels while guzzling beer. SEE BEER, PAGE 18
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ENTREPRENEURSHIP
MOVE CONTINUED FROM PAGE 1 To give you a better sense of how they answer that question, Crain’s talked to five entrepreneurs who have been tempted to move West (or, in one case, East). One stayed in Cleveland but regularly travels back and forth. Two moved and came back, but for different reasons. And two others set up shop in other states.
RageOn Why did the RageOn’s CEO, Mike Krilivsky, move to Silicon Valley? His company, which still has 10 employees in Cleveland, started off as an online marketplace for outlandish clothing, but now it’s also marketing an app for designing T-shirts. He said he had trouble raising capital to finance that app from local sources, but in 2015 he got a call from a friend in the Bay Area. That friend suggested he check out the Alchemist Accelerator, one of many bootcamp-style programs. He moved to join that accelerator. But then RageOn got into another Silicon Valley accelerator called StartX. By moving to Silicon Valley, Krilivsky not only got easy access to the many accelerators in the region, he also said he was able to close deals faster and at better valuations than he would have in the Midwest. He noted that Cleveland does have its advantages, including a lack of traffic, an abundance of parking, cheap real estate and lower salaries. But, he encourag-
es entrepreneurs here to take advantage of the Bay Area, even if they never move or only stay for a little while. “Come out here, meet the people who can connect the dots and then decide what your next move is,” he said. That’s what Dave Neundorfer did, but in the end he made a very different choice.
LineStream His industrial software company, LineStream, raised $5 million from a Silicon Valley venture capital firm, U.S. Venture Partners, in 2011. At the time, the firm asked if he was interested in moving. He said “no.” By 2011, he’d already had some success recruiting talent to Cleveland, so he wasn’t worried about that issue. And for him, Cleveland’s lower costs were especially important. Given the long sales cycles in his industry, he wanted that $5 million to stretch. “That could last us two years (in Silicon Valley) or we could double that,” he said. Though venture firms are sometimes known to pressure startups to move to be near their investors, U.S. Venture Partners didn’t do that. It helped that LineStream’s first investor was Cleveland-based Early Stage Partners. That “gave the guys from U.S. Venture Partners a significant amount of comfort,” he said. Though LineStream started by raising local capital, he encourages entrepreneurs to find investors that invest in companies like theirs, no matter where those investors might be. “It’s never been easier to connect with investors that are not in our
backyard,” he said. Lindsay Preston, however, had a hard time executing that fundraising strategy, so she took a different route.
FlipSnap Preston moved to Silicon Valley in the summer of 2015 so that her company, FlipSnap, could join the Plug and Play accelerator there. After the threemonth program ended, the company immediately joined the Plug and Play Media accelerator in Los Angeles. Today, she’s living in Chagrin Falls, but if it was entirely up to her, Preston probably would’ve stayed on the West Coast. She said investors out there were more supportive of her original, consumer-focused vision for FlipSnap. The company created an app that works like a mobile green screen: Its lets users insert themselves into videos and then share them through social media. She came home, however, so that her daughter could be near her ex-husband and other family members in Northeast Ohio. FlipSnap still has five employees in California, plus one in Denver, but Preston said raising money on the West Coast has been hard since she moved because investors want her to be closer. So she changed her strategy. To become more appealing to investors within driving distance, Preston started thinking more like a B-to-B entrepreneur: FlipSnap lately has been focusing more on developing back-end technology to give advertisers more detail regarding how their content is shared. The company could end up white labeling that
technology for companies that in some cases aren’t interested in the mobile app. “It’s not what I pictured, but I’m having a lot of fun,” she said.
Remesh Remesh has office in two cities: Cleveland and New York. The market research software company joined New York’s Barclays Accelerator, which focuses on financial technology companies, in 2015, and it has maintained a presence in the city. The company’s cofounders, CEO Andrew Konya and chief technology officer Aaron Slodov, are based in New York and Cleveland, respectively. The accelerator helped them figure out how to monetize their software, which is designed to take comments from lots of people and distill them into a message the represents the entire group. It also exposed them to high-powered people in New York and also pushed them to make connections in other states, Slodov said. Both cofounders say Remesh and other companies with ties to other regions can help connect local entrepreneurs to investors, mentors, customers and business partners in those markets. Local connections can also be valuable: Though the company had a hard time raising money in Northeast Ohio, it did get accepted into the Flashstarts accelerator in 2014. That program provided Remesh with crucial support.
Tackk Unlike those who left, Stalzer
didn’t leave specifically to join an accelerator, even though Tackk eventually did get into the StartX accelerator in 2015. At that point, two of his colleagues joined him in Silicon Valley. Moving helped him raise capital and make valuable connections. For instance, he ended up having a coffee meeting with an entrepreneur from Vidme, which led the two companies to integrate their products to make it easier for users to share Vidme videos via Tackk. That provided a traffic boost, though Stalzer noted that the integration has since been turned off because the videos sometimes were too controversial for the many students who use Tackk in the classroom. Though he gained a lot during his year in Silicon Valley, he still believes it’s possible to build a great social media company from Northeast Ohio. Location doesn’t matter when he’s working on most of the big challenges facing the company, like how to get users to keep coming back. He encourages entrepreneurs to search far and wide for partners. However, some of Tackk’s most important connections were made locally: Four of the company’s first employees (Stalzer, cofounders Eric Bockmuller and Dan Klammer, and its first CEO, Christopher Celeste) met because they all worked for Findaway World, a Solon company in the digital book industry. Celeste’s investment firm ended up investing in Tackk, as did another local investor, Morris Wheeler. They’ve helped the company meet investors in other states. “The best source for intros are people who’ve already invested in your company,” Stalzer said
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LaunchHouse, The Dealership settle into By BETH THOMAS HERTZ clbfreelancer@crain.com
For LaunchHouse, moving from Shaker Heights to Highland Heights last June occurred under less-thanideal circumstances, but CEO Todd Goldstein now calls it the best decision the organization ever made. The coworking space for area entrepreneurs decided to relocate when the city of Shaker Heights gave control of its facility, a former car dealership, to the Shaker Heights Development Corp. on June 30. Goldstein owned the LaunchHouse name and took it, along with about 50% of its members, to an 8,000-square-foot location in the Alpha Park office park. “Over 20 members of our community stepped up on a hot summer day to help us move to Highland Heights. We really hit the ground running,” he said. “People who were already engaged, truly active members, who really understand this is about relationships — not space — came with us without hesitation,” added Marybeth Stucker, LaunchHouse director of operations and membership. About 20% of members chose to remain, some of whom needed garage space that was not available at Alpha Park. The remaining 30% of members quit coworking entirely for one reason or another, she said. LaunchHouse currently has more than 40 active members representing a variety of industries, and Goldstein said the culture that has been created in the new space is stronger than at any time since the organization was founded in 2008. He attributed this to the strength of the bonds between the members.
LaunchHouse’s Bootstrap Bash is an annual party celebrating Northeast Ohio entrepreneurs. (Contributed photo)
Stucker said the new space accommodates better relationships than at the Shaker Heights location. “Everyone sits a little bit closer together," she said. "It is more comfortable. People are talking while they have coffee. At our old space, everyone was kind of all over this huge building." Most members pay $125 a month for a “flex membership,” which offers access to open desk space and a conference room, as well as Wi-Fi, printers, a projector and a shared kitchen with coffee. Private office space is available for $500 a month. A “community membership” for $15 per month allows people to use the space a few times a month and attend all of LaunchHouse’s events, which include many networking opportunities. LaunchHouse also offers more than 50 free programs a year for the entrepreneur or small
business community that are open to anyone. All rental options are on a monthto-month basis. “We understand that entrepreneurs’ needs change and don’t want to lock them into anything,” Goldstein said. Stucker said LaunchHouse has room for more members, especially since the adjacent suite is vacant. “If we need more space, we can just open up that door,” she said. “The sky is the limit right now,” Goldstein added. The easy access to Interstate 271 has helped with growth, they said, including drawing interest from Lake and Geauga counties, which Stucker called untapped markets for coworking spaces. Jeffrey Bargiel is one of the members who pitched in to help with the move in June. He is CEO of EntoBio — a company developing imitation
termite spit to help naturally accelerate decomposition of stumps and unwanted wood. Although Bargiel works with several consultants, he’s the company’s only employee and chose to work at LaunchHouse starting in January 2016 for the opportunity to interact with others. “I got sick of talking to my dog,” he said with a laugh. He also appreciates the way members bounce ideas off of each other. “After I started working at LaunchHouse, everything went faster and smoother with fewer mistakes and less of an on-my-own learning curve,” Bargiel said. For example, they recently helped him brainstorm a name for a new product, writing ideas on a white board over lunch time.
Bargiel also said the new location has a quieter, more polished feel than the previous site. Moving there was a bit of a homecoming for him, since he worked in another building in Alpha Park several years ago.
The Dealership Meanwhile, LaunchHouse’s former location on Lee Road continues to operate as an entrepreneurial hub under the name The Dealership. Nick Fedor, executive director of the Shaker Heights Development Corp. (SHDC), which was given the lease by the city, said The Dealership is building momentum in its mission to serve entrepreneurs and small business owners in Shaker Heights and beyond. About 75% of
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their new digs
Most LaunchHouse members pay $125 for a flex membership, which includes access to open desk and conference space. (Contributed photo)
Here’s a peek inside the new LaunchHouse space in Highland Heights. (One RED Door Photography)
the private offices are occupied, and there are 16 coworking members, a number he says has increased in recent months. “It continues to be a hub of activity and a resource for people in the community and a building block for our broader redevelopment goals for the Chagrin-Lee commercial corridor,” he said. He said the facility has changed significantly since LaunchHouse left. The building has been rebranded and painted, and new furniture and other amenities have been brought in. “The look and feel is updated and refreshed,” he said. Fedor said SHDC’s goal for The Dealership is to see businesses outgrow the space and decide to stay in Shaker Heights, but said that since it’s only been six months since the change in management, it’s premature to say if that is happening. SHDC announced in November it was partnering with The Economic & Community Development Institute (ECDI) to manage the day-to-day operations of the coworking and events part of the facility. Carrie Rosenfelt, executive director of ECDI, describes the partnership between ECDI and SHDC as “a good fit.” For ECDI, it represents a second location. Its main operation at 2800 Euclid Ave. has a small coworking and training space, but the organization wanted more room for those services. “Our goal is to move our clients from the idea stage to a business, whether it be their own office or a brick-and-mortar storefront and The Dealership is a nice midpoint for someone who has graduated from our coworking space,” she said.
Women Who Code launches chapter in Northeast Ohio By TIMOTHY MAGAW tmagaw@crain.com @timmagaw
Nicole McGuire’s love affair with technology started when received Commodore 64 on Christmas in 1983. Almost 34 years later, that interest in technology hasn’t wavered. In fact, she’s built a career out of it and hopes to help other women do the same. Today, she’s the executive director of the recently launched Cleveland chapter of Women Who Code, an international organization devoted to empowering women in the technology sector. Since Women Who Code’s founding, it has grown to include 80,000 members, with networks located in 60 cities and 20 countries. The Cleveland network — Ohio’s second, alongside Cincinnati — already boasts more than 150 members. “There is a great deal of energy in Cleveland now and that is spilling over into the tech sector,” said McGuire, who also is a technical architect for Bluewolf, an IBM company. “Bringing a nationally recognized organization like Women Who Code to Cleveland will create an immediate network of resources for women.” The stats about women in tech are pretty sobering, underscoring the need for such an organization in Cleveland. For one, among women in the technology field, 56% leave by the middle of their careers, an attri-
tion rate double of their male counterparts, according to the National Center for Women & Information Technology. “It’s been a really male-domiMcGuire nated field, and women are easily outnumbered,” McGuire said. “This is a way to try to bridge that gap. Computers and computer science were always seen as something for men and boys in particular. An organization like Women Who Code can encourage women, help them network and offer role models. Basically, we’re saying even though you’re outnumbered, you can do this and be part of that community.” She added, “Back in college, I was the only woman in some of my classes. I had determination.” In a statement, Women Who Code Global Leadership Director Joey Rosenberg said, “Women Who Code is important because we support underrepresented groups in tech, empowering them to achieve success. That increases diversity in the industry, which is good for individuals, businesses, communities, and the economy at large. I believe that this new Network, under the steady guidance of Nicole, has a chance to have an incredible impact on the city of Cleveland.”
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Five startups to watch LeBron James’ iconic pronouncement that in Northeast Ohio “nothing is given, everything is earnedâ€? has become an almost-clichĂŠ call to arms for Northeast Ohioans. Still, it perhaps describes best the ethic instilled in many of our regions’ brightest entrepreneurs. Here are five of the region’s young companies worth watching. They all had an idea, and acted on it. Know an entrepreneur or a company with a story worth telling? Let Sections Editor Timothy Magaw know at tmagaw@crain.com.
Clockwise, from top left: Kate Volzer, John Knific, Kris Ciccarello
Patel, top, and Scott
EntoBio
Wisr
amaZEN U
Drive My Way
Markers
Highland Heights Founder: Jeff Bargiel Description: It turns out artificial termite spit could be big business. “In April 2015, I was mowing my lawn, hit a tree stump and got the idea to decompose it by mimicking termites digestive enzymes,� Bargiel said. Bargiel spent most of his career in early-stage business development for algae and bio-derived products and came to Cleveland in 2007. He’s working on a non-toxic formula to decompose tree stumps and control invasive shrubs such as glossy buckthorn and bush honeysuckle — two major ecological threats in Northeast Ohio. EntoBio recently was awarded development funds from the National Science Foundation and the Great Lakes Innovation and Development Enterprise at Lorain County Community College. His inspiration for launching his own business? “I wanted out of the dark lab and into the business side,� he said.
Rocky River Founders: Kate Volzer (CEO), John Knific (President, COO), Kris Ciccarello (CTO) Description: Connecting alumni with current students isn’t necessarily a novel idea for colleges and universities, but actually doing so can be a bit tricky. Wisr’s online tool helps facilitate that relationship by matching alumni mentors with current students. Volzer, a former higher ed administrator, said the platform allows students and alumni to explore more than 100 industries, grow their network and get advice from seasoned professionals. She said Wisr’s built-in communications tools allow data-driven campuses to scale alumni engagement, while gaining new insights on improved student career outcomes. Wisr’s seed round was led by North Coast Angel Fund. The company’s hometown clients are Case Western Reserve University and Oberlin College.
Solon Founders: Sonya Bapna Patel and Joie Scott Description: It’s no secret yoga can help scatter-brained business professionals chill out, but it turns out kids can benefit too. While running a local nonprofit called ZENworks Yoga, its yogis discovered schools with which they worked wanted quick and easy ways to incorporate yoga into their lessons. The teachers didn’t always have time or space for traditional yoga classes, so the team created a tool that allows teachers to quickly and effortlessly incorporate yoga and mindfulness exercises into their daily routine. The result? amaZEN U, a web-based platform of easy-to-follow exercises that teaches self-awareness and self-management. The activities can all be done at the students’ desks without any additional equipment. “It’s like having your own personal zen-maker in the classroom,� Patel said.
Chagrin Falls Founder: Beth Potratz Description: The United States has a big rig problem. There’s a growing shortage of CDL truck drivers — an industry that already sees high turnover. What’s more, a million-plus job truck driver openings are expected in the coming years. To fill that gap, Drive My Way boasts an online, personalized recruiting technology that matches CDL truck drivers with available jobs based on their qualifications and personal preferences. The value play? With Drive My Way, employers can expedite the hiring process and lower recruiting costs. The company was founded by Potratz, a long-time human resources executive who has worked with organizations such as Helene Curtis, Rockwell Automation and Unilever. The company is a partner with the Flashstarts business accelerator and is quickly becoming one of the trusted resources in the CDL space.
Cleveland Founder: Reginald Cash Description: It’s estimated that as much as $9 trillion of market capitalization is foregone by companies because of ineffective investor relations, and a Cleveland startup is trying to solve that problem. Cash, a graduate of Columbia University and previous head of investor relations for both UBS and Deutsche Bank in the Americas, found the greatest constraining factor to more effective investor relations was the time it took to search, gather and collaborate to find information. The Markers platform manages the entire life cycle of information from internal collaboration to the dissemination to investors. Cash, who grew up in Cleveland, said Markers helps companies comply with regulatory requirements and win shareholders.
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ENTREPRENEURSHIP SCORE is Looking for Volunteer Mentors
Adviser: Laura Sheridan
A cheat sheet for hiring your next marketing professional Hiring for your marketing team is hard. It’s easier to assess the quality of a candidate for an accounting, sales or IT position. Engineers have to be great at math; marketers give you a bunch of words. That’s why Zappos CEO Tony Hsieh offers new hires $3,000 to leave the company. After the company’s intense four-week training program and a week on the job, Zappos makes what it calls “the offer,� $3,000 to leave the company. Hsieh knows that if a new hire is willing to leave for $3,000, then they don’t have the drive needed to make Zappos great. Follow these 10 tips and you’ll successfully cut through the fluff. Tip #1: Define the job before starting the recruiting process.
Start with a job analysis. What business objectives is marketing supporting? What does this individual need to do to accomplish those objectives? What experience and skills are necessary to get it done? What outcomes are expected? What personality types thrive in your culture?
Laura Sheridan is president of Viva La Brand, a brand and marketing strategy and ad agency search firm.
tomer educational piece? Ask candidates to conduct research and write the content. Tip #3: Find a social media expert.
Familiarity with social media is not enough. You need someone who is adept at using social media to generate leads, which ultimately lead to new business. How do you assess a candidate’s social media prowess? Type his or her name into Google to start. Does it dominate the front page with social media profiles, his or her own website, or news? Can that individual share specific examples of using social media to drive response, not just “likes?�
Tip #2: Test candidates.
Tip #4: Find an opportunistic marketer.
Marketers need to be excellent writers and researchers. However, no job interview questions can differentiate the great researchers and writers from the bad. The answer? Create a sample task similar to the type of research or writing project you need. Have weak copy on your home page? Need better subject lines for email campaigns? Need content for a cus-
Memorable marketing moments aren’t always planned. Remember the Oreo tweet during the 2013 Super Bowl? The power went out in the Superdome and Oreo seized on the opportunity and tweeted, “you can still dunk in the dark.� Great marketers are always on the lookout for customer insights, creative marketing plays, and trends. What experience does the can-
didate have that demonstrates an ability to quickly seize an opportunity? Tip #5: Pick a customer lover.
You need someone with a passion for your customers. Ask for stories and examples that demonstrate how he or she has delighted customers. Tip #6: Identify a candidate who can distinguish pain from feature.
Great marketers are problem solvers. They don’t “sell� but rather they help customers understand how they can help solve their problems. How does the candidate define selling? If you hear a bunch of product features, then move on.
Have You Experienced a Successful Career and are now Ready to Give Back? SCORE a National Volunteer Organization, dedicatd to helping people start their own businesses, is now recruiting new Volunteers. ÇĄ Ď? ÇĄ mentoring and presents free business related seminars in Cleveland and the surrounding communities. To become a volunteer, check us out at score.org or contact the Ď? 216-522-4194Ǥ Ď? ÇĄ Lake, Huron, Geauga and Lorain Counties.
Tip #7: Attract a metric lover.
A smart marketer includes metrics in every project plan. How can you tell if a candidate appreciates the importance of measuring marketing activities? Ask the candidate to describe a process he or she used to develop a strategy for a new marketing initiative. If it includes metrics, that candidate earns another interview. Tip #8: Find a candidate who gets the importance of testing.
You need a marketing professional who considers every marketing initiative to be a test. This mindset dovetails with establishing metrics and voilà , you’ve got data to make better decisions. How will you know if a candidate gets the importance of testing? Ask for examples of tests that SEE ADVISER, PAGE 18
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Steve McKeown, creative director at Cleveland advertising agency Brokaw Inc., has worked with Great Lakes on marketing for the last 20 years or so. He said it’s the approach to marketing that’s really evolved through the years. The need hasn’t changed. “But as people became more accustomed to that category growing and learning about different products and brands, Great Lakes was in a different position,” McKeown said. That’s because they were already well-established when craft beer started gaining real traction as its own segment of the market in recent years. According to the Brewers Association, U.S. craft breweries numbered a record 4,656 in July 2016 with some 2,200 more in planning stages. That’s 417 more from the like point a year prior. Meanwhile, in Ohio, craft beer production surpassed 1.385 million barrels in 2015. That's 40% more craft beer brewed than in 2012, said Mary MacDonald, executive director of the Ohio Craft Brewers Association. At that time, the entire state had 52 breweries. When Great Lakes formed in 1988, they were the lone steed in a onehorse town. Their only competitors were the mega-breweries that still overwhelmingly dominate the U.S. beer market, even though they’re slowly losing share to craft beer. That place in the market was enough to feed the business for a while. And then more brewers started popping up. Even though it wasn’t an en masse surge like what’s happening today, more players meant more competition. And the pitches reflected that. “Over time, it became less about education and helping people appreciate quality, craft beer,” McKeown said, “and more about reminding them of where this all started.” Happen to remember a “Best Friend of Dortmunder Gold” campaign from a few years back? That was Great Lakes reminding consumers of their place in the craft market they helped pioneer. “We were reminding people that their first foray into craft beer was probably their best friend Dort,” McKeown said. “And then we redeveloped brands, and re-did packaging. It’s to make them contemporary and relevant and remind people they’re here in a fresh way without changing history.”
Quality is still key When it comes to the hyper-local movement and consumer’s appetite for local, artisanal fare, which is credited with driving craft beer’s surging popularity, capturing local elements of a city in a brand isn’t just an option, it’s really a best practice. While there’s no shortage of Cleveland breweries taking on a locally inspired name nowadays, the market-
“We were reminding people that their first foray into craft beer was probably their best friend Dort. And then we redeveloped brands, and re-did packaging. It’s to make them contemporary and relevant and remind people they’re here in a fresh way without changing history.” — Steve McKeown, creative director at Brokaw Inc.
ing piece is balanced by the need for a superior product. Nonetheless, the more a local brewer can connect with its local clientele, the more likely it is to exceeded in a crowded market. “To this day, we are still marketing the neighborhood every bit as much as what we are doing,” said Sam McNulty, owner of Market Garden Brewery, a brand founded in Ohio City in 2011 known for its labels and taps depicting Cleveland’s “Guardians of Traffic” on the Hope Memorial Bridge. “It’s all about telling the story.” That story is about the revitalization of West 25th Street and Ohio City, where others, like Platform Brewing Co., have set up shop in recent years. Platform owner Paul Benner has said the moniker is a reference to the brewery’s secondary goal of being a platform to facilitate brewery education in the city. In Market Garden’s case, the brewery’s flagship beers took names like Progress Pilsner and Prosperity Wheat. Both were inspired by the Cleveland city flag, which includes the words progress and prosperity under a shield design. For McNulty, they’re references to development of the once depressed neighborhood. “We wanted to craft that identity right out of the gate,” he said, acknowledging the actual marketing budget in the brewery’s early days was next to nothing.
A Cleveland identity, and one that intrinsically captured the idea of revitalization that has been part of the Cleveland narrative for years now, gave local consumers something to appreciate. But investments were always made in beer and quality ingredients, he emphasized. “While we of course want branding and packaging to look great, it’s a distant concern to the quality and consistency of our beers,” McNulty said. “You could have the most interesting, super cool branding and marketing and PR buzz out there. But if the product you’re selling doesn’t always taste good, you might get that first beer sold, but not the second.”
Cleveland pride The significance of that certainly isn’t lost on veteran Great Lakes brewer Luke Purcell, who will soon open Collision Bend Brewing Co. on the East Bank of the Flats alongside Cleveland restaurateur Zach Bruell. The brewery should be open in midApril, he said. The name references a narrow section of the adjacent river where ships were once known to either ram into the bridge or each other. But it’s also considered a reference to “quality colliding,” he said, referencing quality on the brewing front coupled with Bruell’s expertise and renown in the restaurant scene. “As the industry grows, marketing certainly is more and more important,” Purcell said. “Of course, the brewing side of me knows it starts with quality. That’s the backbone of it all.” But even in an industry known for collegiality, particularly as brewers tend to move between local operations, usually cutting their teeth as a brew assistant at one shop and graduating to brewmaster at another years later, Purcell said there is still a push to craft an identity that resonates with people. “Brewers are all friendly with each other and we all help each other on the brewing front,” he said. “But there certainly is more competition, and you want to sell your product wherever you may be. If the plane is even and the quality is there, marketing will be part of everybody’s business. You have to get the word out and set yourself apart in some way.” “It’s hard to be unique in craft beer right now,” he added. “Sometimes, all you have to do is get people to try it.” For Northeast Ohio overall, where there are more and more neighborhood taprooms popping up, that Cleveland connection is something that will continue to resonate with locals and, it’s hoped, translate into wider appeal in other markets as operations grow. “There’s a lot of civic pride right now, probably more than ever,” Purcell said. “We’ve always had a Cleveland mentality. But now we have a different image and in a more positive light. Why not run with that?”
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ADVISER CONTINUED FROM PAGE 17 candidate has conducted. What was the situation? What was the candidate’s task? What action did that person take? And, what were the results? (Yes, using behavioral-based interviewing is a must.) Tip #9: Hire a direct response marketer.
It’s not enough to simply generate awareness. Sure, marketing initiatives must positively build the brand, but they also have to drive results. If a candidate shares a case study with rationale such as, “it was successful because it helped build our brand,” then it’s time to move to the next candidate. Tip #10: Pick a candidate that understands that marketing and sales are one.
The marketing department as it
existed 10 years ago is dead. A marketer’s job is to support sales to achieve the company’s goals. That means no functional silos. Ask candidates how they define the role of marketing. What’s the right answer? It’s about generating leads and sales. Hiring is hard. That’s why luminary CEOs like Steve Jobs profess that hiring the best staff is an executive’s most important job. Use this cheat sheet and hire the best to propel your brand in 2017.
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THE LIST
Private Equity and Venture Capital Firms FIRM NAME Align Capital Partners, Beachwood (216) 505-6463/www.aligncp.com
MINIMUM INVESTMENT (THOUSANDS)
PREFERRED PROJECT INVESTMENT (THOUSANDS)
CAPITAL UNDER MANAGEMENT GEOGRAPHICAL (MILLIONS) PREFERENCES
Alliance Source Testing
Steve Dyke, Chris Jones managing partners
NA
Midwest
Low- and mid-tech manufacturing, distribution
2
1
Vanner Inc., Conneaut Leather, Omega Sea
Darrell W. Austin managing partner
$20,000
NA
United States
Manufacturing, business services, distribution
0
5
Alco, AWP, OrthoLite, Selmet
Chip Chaikin, John Kirby, John LeMay, Sean Ward partners
$2,000
$2,000-7,000
$60.0
Ohio, eastern half of U.S.
Services (business/health care), distribution, manufacturing
0
1
American Heritage, VSI Global, Speedgrip Chuck
Kevin T. Coyne founder, CEO
$25
$250
NA
National
Software (analytics, SaaS, B2B, finance)
1
11
Scout, Astronomer, Keen, Lob
Morris Wheeler, president of management firm
$10,000
$30,000
$224.5
Ohio, western Pennsylvania
Real estate (commercial, health care, education)
3
0
Flats East Bank, Westin Hotel, Crocker Park
Stephen Strnisha CEO
$30
$30-50
$0.6
Northeast Ohio, Ohio
Big data, Internet of Things, sensors, civic tech
0 (1)
0 (1)
None (1)
Jennifer Thomas chief strategy officer
Edgewater Capital Partners, Independence (216) 292-3838/www.edgewatercapital.com
$1,000
$6,000
$125.0
United States
Specialty chemicals, pharmaceuticals, materials
0
3
Particle Dynamics, Tri-Tec Seal, Far Chemical
Christopher Childres Ryan Meany managing partners
Edison Partners, Cleveland (216) 658-3965/www.edisonpartners.com
$5,000
$5,000-12,000
$1,000.0
East Coast, Midwest
Software (health IT, finance, marketing)
0
12
Vox Mobile
Chris Sugden managing partner
Evolution Capital Partners LLC, Beachwood (216) 593-0402/www.evolutioncp.com
$3,000
$4,000-8,000
$90.0
United States, Canada
Small businesses; software, training
0
8
Monolith Software, Cascade Healthcare
Brendan D. Anderson Jeffrey D. Kadlic managing partners
$250
$250-Evergreen, Focus funds; $500-NEXT Fund
$40.0 (2)
Evergreen Fund, NE Ohio; Focus, Next funds, Ohio
Information technology, health care tech
15
2
Complion, Revenue Conduit, BioMendics, StreamLink
Raymond T. Leach CEO
$1,000
$2,000-10,000
$100.0
United States and Canada
Manufacturing, business services, distribution
0
1
SmartSource, Form Tech
Thomas N. Littman CEO
$50
$250-1,000
NA
U.S.; preference for Ohio presence
Health care IT, orthopedics, 3D Printing
2
0
Did not disclose
Randy Theken, founder Jeffrey Lietzke, president
$2,500
$5,000-9,000
$115.0
United States
Income-producing real estate (multifamily focus)
0
9
Various real estate properties
David St. Pierre managing director
$15,000
$20,000-35,000
$500.0
North America
Industrial, business services, consumer products, health care
0
4
Happy Floors, Home Helpers, Glynlyon, RANDYS
Frank Linsalata, chairman; Stephen Perry, Eric Bacon, presidents
Cleveland International Fund, Cleveland (216) 245-0606/clevelandinternationalfund.com DigitalC Fund, Cleveland (216) 923-2230/www.digitalc.org/digtialcfund
JumpStart Inc., Cleveland (216) 363-3400/www.jumpstartinc.org Kirtland Capital Partners, Beachwood (216) 593-0100/www.kirtlandcapital.com LaunchDen Capital Fund, Akron (330) 733-7600 x633/None Legacy Capital Partners, Lyndhurst (216) 381-2303/www.LCP1.com Linsalata Capital Partners, Mayfield Heights (440) 684-1400/www.linsalatacapital.com
$1,000-4,000
$10,000
TOP EXECUTIVE TITLE
1
Clarion Direct Investment LLC, Beachwood (216) 910-1702/none
$500
OUT OF AREA PORTFOLIO COMPANIES
0
Canal Holdings LLC, Twinsburg (330) 425-1225/www.canalcapital.com
$325.0
N.E. OHIO
B2B manufacturing, distribution, services
Blue Point Capital Partners, Cleveland (216) 535-4700/www.bluepointcapital.com
$20,000
INDUSTRY PREFERENCES
United States and Canada
Austin Capital Partners, Cleveland (216) 574-2284/www.austincapitalpartners.com
$5,000
# 2016 DEALS
THE LIST
Private Equity and Venture Capital Firms The M&A Attorneys of
DEAL MAKERS. NOT DEAL BREAKERS.
SMART SOLUTIONS FOR MERGER AND ACQUISITION DEALS OF ALL SIZES. # 2016 DEALS
FIRM NAME The Litchfield Fund, Lyndhurst (216) 780-3752/www.litchfieldfund.com
MINIMUM INVESTMENT (THOUSANDS)
PREFERRED PROJECT INVESTMENT (THOUSANDS)
CAPITAL UNDER MANAGEMENT GEOGRAPHICAL (MILLIONS) PREFERENCES
$0
$25-150
NA
$4,000
$5,000-8,000
$10,000
Mutual Capital Partners, Westlake (216) 577-4408/www.mutualcapitalpartners.com
INDUSTRY PREFERENCES
216.781.1212 | walterhav.com
N.E. OHIO
OUT OF AREA PORTFOLIO COMPANIES
TOP EXECUTIVE TITLE
None
Natural/organic food and health segment
0
4
B'More Organic, Harvest Soul, SuperEats, Genius
Thomas Malengo partner, chief business officer
$125.0
North America
Manufacturers selling to OEMs; distribution
1
0
Torsion Group, RMB Products, Performance Plastics
Mark E. Mansour senior managing partner
up to $50,000
NA
North America
High-value manufacturing, industrial services
0
0
United Pipe & Steel, dlhBowles, Polytek, Trachte
Karen L. Tuleta partner
$1,000
$3,000-10,000
$80.0
Midwest
Technology, health care
0
1
Cleveland HeartLab, 7signal, Vox Mobile, enosiX
Bill Trainor, Wayne Wallace, general partners
North Coast Angel Fund, Mayfield Heights (800) 975-5846/www.northcoastangelfund.com
$250
$500-2,000
$20.0
Ohio
Life sciences, IT, instruments, controls
4
4
OnShift, Ahalogy, StreamLink, Navistone
Clay Rankin, Todd Federman, managing directors
North Coast Venture Fund, Mayfield Heights (216) 262-0478/northcoastventurefund.com
$250
$500
$15.0
Ohio
Software, life sciences
4
2
OnShift, StreamLink, Neuros Medical
Todd P. Federman managing director
Peppertree Capital Management, Chagrin Falls (440) 528-0333/www.peppertreecapital.com
$2,000
$15,000
$750.0
None
Telecommunications infrastructure
1
3
Branch Towers, Continental Towers, Omega Wireless
F. Howard Mandel, president; Ryan Lepene, managing director
PNC Erieview Capital, Cleveland (216) 222-2491/www.pncerieview.com
$5,000
$5,000-40,000
$1,000.0
United States
None
0
8
Listing on website
Edward Pentecost managing director, president
$15,000
$25,000-50,000
$540.0
United States and Canada
Tech-enabled services, software, health care
0
3
Hyperwallet, SkillSurvey, Payspan
William Mulligan, Phillip Molner II, managing partners
Resilience Capital Partners, Cleveland (216) 292-0200/www.resiliencecapital.com
$5,000
$15,000
$625.0
Eastern half of U.S. and Canada
Special situations, divestitures, industrial, aerospace, flow control
2
6
Aero Communications, Flight Options/Flex Jet, Hallmark Lighting
Bassem Mansour, Steven Rosen, co-CEOs
The Riverside Co., Cleveland (216) 344-1040/www.riversidecompany.com
$1,000
$1,000-400,000
$5,700.0
North America, Europe, Asia
Generalists; health care, education/training, software
1
35
ARCOS, Be Green Packaging, Paradigm Tax Group
Stewart A. Kohl, Bela Szigethy, co-CEOs
Rockwood Equity Partners LLC, Beachwood (216) 342-1790/www.rockwoodequity.com
$2,000
$3,000-10,000
$150.0
North America
Aerospace, defense, health equipment, process control
0
1
BJG Electronics, Altimate Medical, AMACS
Brett R. Keith managing partner
Signet LLC, Akron (330) 762-9102/www.signetllc.com
$2,500
$5,000-50,000
$375.0
Midwest, Southeast, global
Commercial real estate, tech, manufacturing
2
4
Signet Accel, Artesian Capital Partners, eTERA Consulting
Anthony S. Manna chairman
$50
$100-500
NA
NE Ohio, Midwest, East Coast
Tech (SaaS, media, elder care, sales/marketing)
1
0
Futuri, Ads in Motion, GenomOncology, Groupmatics
Lee Zapis, president Rich Bongorno, CFO
MCM Capital Partners, Beachwood (216) 514-1840/www.mcmcapital.com Morgenthaler Private Equity, Cleveland (216) 416-7500/www.mpepartners.com
Primus Capital Partners, Cleveland (440) 684-7300/www.primuscapital.com
Zapis Capital Group LLC, Westlake (440) 871-1300/www.zapiscapital.com
RESEARCHED BY CHUCK SODER The print version of this list excludes firms based outside of Northeast Ohio and firms that aren't currently making new investments. The online version includes 39 firms and is available for purchase at CrainsCleveland.com. Information is supplied by the companies. (1) DigitalC Fund was launched in October 2016. (2) $10 million for the Evergreen Fund, $10 million for the Focus Fund, $20 million for the NEXT Fund.
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ACCOUNTING
Jaime Hart
Jim Paulitzky
Sarah K Lynch
John T. King, CPA
Business Development Manager
Account Manager
Vice President
Director
Rudolph Libbe Group
Rudolph Libbe Group
Meaden & Moore
King Barrett, LLP
Meaden & Moore is pleased to announce the election of Sarah K. Lynch to Vice President. Ms. Lynch is based in Cleveland and is a member of the Firm’s Assurance Services Group. With over 15 years of experience, her background includes working with a diversified client base of manufacturing, distribution, service, and private equity companies, as well as employee benefit plans. Her approach to serving clients has been instrumental in the success of our Company.
John joined King Barrett, LLP in 2016. His key responsibilities at the firm include transaction and accounting services, real estate management, profitability consulting, and tax preparation/planning. Prior to joining, John was a Senior Associate in the Wealth & Asset Management - Assurance group at Ernst & Young, LLP in Chicago, IL. John is a Certified Public Accountant who received a Bachelor of Science degree in Accountancy from Miami University of Ohio in 2013.
Hart has over 20 years of experience working with general contracting, architecture and engineering firms, and specialty contractors. She holds a bachelor’s degree in organizational communications from Ohio University and is a member of the Cleveland Engineering Society, Women in Manufacturing northeast Ohio chapter, the Association for Iron and Steel Technology and Women Leaders of Economic Development.
JACKSON CONTINUED FROM PAGE 1 You wouldn’t think that someone running for a fourth mayoral term of a city like Cleveland would be shy about taking center stage. Maybe it’s even surprising that person would survive to make a run at a fourth term. But that’s Frank Jackson, who’s had center stage available to him since 2005. A supporter said Jackson does himself a disservice by not doing a better job of expressing his positions and using the bully pulpit to broadcast his successes or take his opponents to task. Another recalled being surprised more than once to see Jackson sitting unobtrusively in the back row at a another public figure’s funeral. Tracey Nichols, until recently the city’s economic development director, believes Jackson and his administration’s outreach into city neighborhoods deserve credit for keeping the city calm after the 2014 slaying of young Tamir Rice by police, when other cities exploded in violence in similar situations. Still another observer, though, wishes the mayor would be “a person who speaks to people’s aspirations.” But Jackson probably couldn’t deliver a State of the City address with the kind of soaring rhetoric that would take. Observers concede he’s not an eloquent speaker, not someone who will reach within himself to help an audience understand what makes him tick. For several of his State of the City presentations, Jackson didn’t even prepare a speech. Instead, he answered questions from a television reporter before taking questions from the City Club of Cleveland audiences that packed Public Auditorium. But even then, said a longtime observer with a background in African-American organizations, “With Frank, you have to listen so closely; the essence is there.” Part of Jackson’s reticence may come from the fact that he never really aspired to be mayor. He was satisfied being president of Cleveland City Council.
Paulitzky is a member of Pipefitters Local Union #120 and has over 25 years of experience in mechanical contracting, strategic and healthcare accounts. He attended the West Side Institute of Technology and is a member of the Mechanical Contractors’ Association and the Mechanical Service Contractors Association.
He was not propelled by a vision for some variation of a shining city on a hill, or rather a lakefront. He ran, he said at the time of his 2005 challenge to incumbent Jane Campbell, because Campbell lied to him about several issues and he brought to the office the soul of a councilman, which he had been for 16 years. And city council members believe they win elections by making sure the trash is picked up, empty lots are regularly mowed and the potholes are filled. Sitting before council on the morning of Feb. 20, Jackson impassively talked about a city budget that can loosen its belt a little since the $601.3 million budget has an additional $83.5 million, a result of an income tax increase approved by voters last November. He could have led off reminding council members about the successful Republican National Convention of the past year, or about plans — buried in his budget narrative — for about 2 million square feet of lakefront development. Or about plans to spend $34 million from a 2015 bond issue on recreation centers and other neighborhood developments. Only later, deep into the question-and-answer part of the presentation would he comment on how his administration is looking to replace the 41-year-old police headquarters. Those are significant plans that would give council and residents an idea of where the mayor was taking the city. Instead, he led off talking with obvious pride about how his administration was able to balance the budget he was presenting to council without dipping into reserves. Keeping the city’s financial head above water after the Great Recession and cuts in state support to cities wins Jackson support in the business community, but it’s little-noticed by voters in the neighborhoods. With that, he was ready to talk about the future. But again, not about anything big picture. “We have an opportunity now to invest in services, either enhancing services or bringing back services that we previously cut out,” he told council. “Street sweeping, leaf pickup, just
PROFESSIONAL SERVICES
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Jeremy Damstra Business Development Manager GEM Energy Jeremy Damstra has been named business development manager with GEM Energy’s Service Group based in the Cleveland area. Damstra holds a bachelor’s degree in engineering from Ferris State University’s HVAC engineering program. He joined GEM Energy in 2010 as an applications engineer. GEM Energy of the Rudolph Libbe Group, provides comprehensive services and technologies to improve customer business performance and reduce facility operation costs. The company is located in Independence.
basic city services.” It took a loud attack from councilman Jeff Johnson — who has announced his intention to challenge Jackson for the mayor’s job — to prod the mayor to recall with an eloquence he rarely musters on his own initiative to help council understand his passion for Cleveland. Johnson was berating Jackson over how the administration has neglected the social and health concerns surrounding lead paint in homes and violence among youth as Jackson focused the city’s resources on downtown at the expense of these neighborhood problems, including in Johnson’s Ward 10. After a heated exchange between Johnson, shouting protests of “disrespect,” and council
Ryan joined the firm with over a decade experience working for the United States Navy JAG Corps and a civil litigation boutique law firm. Utilizing years of experience prosecuting and defending criminal matters, Ryan heads up the firm’s criminal defense practice. He also has expertise in the defense of service members facing administrative and criminal disciplinary proceedings, having served as senior trial counsel, senior defense counsel, and Special Assistant U.S. Attorney in the military.
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president Kevin Kelley, gaveling Johnson out of order, Jackson responded quietly. “There is no amount of money that can fully address lead problems in urban centers,” he said, describing how the city was working with other agencies on the issue. As for the drug addiction that is a factor in youth violence, Jackson recalled, “When I was a city prosecutor, people were coming in, parents and grandparents, where the child has emptied their bank accounts, the child has stolen all of their appliances and jewelry and everything and now, since they have nothing left to give them, they beat them up,” he recalled. “Anything that will cause you to beat up your mother, the rest of us don’t stand a chance.”
BUSINESS 27, 2017 μ PAGE 17 C R A I N ’ S C L E V E L A N D B UCRAIN'S S I N E S SCLEVELAND | FEBRUA RY 2 7 - MμAFEBRUARY R C H 5 , 2 017 | PA G E 21
AKRON
KSU Stark’s enrollment efforts paying off By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty
When Kent State University at Stark passed a significant enrollment milestone in the fall, counting more than 5,000 students on campus, dean Denise A. Seachrist wanted everyone to take part in the celebration. So, she had a local company make cookies for each and every person at Kent State Stark and helped personally deliver them. This seemingly small gesture is indicative of Seachrist’s leadership style. She came to the Stark campus in July 2014 as interim dean, and the university officially named her dean and chief administrative officer in February 2016. But she had begun making changes from the start to create a more-inclusive campus. It’s important to note that the 5,015 students Kent State Stark commemorated is a different number than the state’s official enrollment figures. Kent State Stark’s tally includes every student who took a class on its campus, said Mary Southards, assistant dean for enrollment management. The state’s headcount enrollment only includes students who took the
majority of their classes on Kent State Stark’s campus, which offers four-year degrees and some master’s programs, as well as serving as a gateway to the Kent campus. So a student who Seachrist took online classes based on another campus, or who spent most of their time on another campus, would not count toward the state’s total. Regardless, Kent State Stark appears to be performing better than other regional campuses across the state. From 2010 to 2015, regional campuses across Ohio lost 7% of their headcount enrollment, according to state data. Kent State Stark lost 2% of its enrollment during that time frame. However, Kent State Stark saw an uptick in the final year of the span when headcount enrollment grew by 2%, from 4,685 in 2014 to 4,761 in 2015. Regional campuses overall lost 1% of enrollment in that time. The final headcount enrollment numbers for fall 2016 aren’t available yet. And Kent State Stark’s doing pretty well compared with the university’s
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LEGAL NOTICES LEGAL NOTICE Notre Dame College Invites Third-party Comments in Reaffirmation of Accreditation. Notre Dame College is seeking comments from the public in preparation for a periodic evaluation by its regional accreditor, the Higher Learning Commission (HLC). The College, which has been accredited since 1931, will host an HLC peer review site visit team April 10-11, 2017. The team will review Notre Dame’s ongoing ability to meet the HLC criteria for accreditation. The public is invited to submit comments that must address substantive matters related to the quality of the institution or its academic programs. All information must be received by March 10, 2017. In addition, Notre Dame’s five criterion committees continue to meet, collect and review data in support of the College attaining standards for accreditation. This information will contribute to the accreditation Assurance Review document. In the HLC’s new model for continued accreditation, called Pathways, Notre Dame is participating in the Open Pathway component, which consists of a Quality Initiative Project as well as an Assurance Review. The College’s Quality Initiative Project is focusing on persistence and completion. Comments from the public regarding reaffirmation of accreditation must be in writing and sent via U.S. mail to the following address or entered online at the HLC webpage included below:
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districts would say, ‘Well, we don’t know what the colleges want. Why aren’t the colleges helping us?’ she said. “And I think we finally are at the point where we realize, these are all our kids.” It’s clear teamwork is important to Seachrist. Stark State College president Para Jones noted the strong relationship the schools have. The two leaders speak regularly, looking for opportunities to collaborate, such as through articulation agreements. Nathan Ritchey, who oversees the regional campuses as vice president for Kent State System Integration, praised both Seachrist’s team and her relationship with the community. “She really gets the people part of her job,” Ritchey said. Seachrist clearly wants Kent State Stark to be a place where everyone feels comfortable. Since she started, the campus created spaces for breastfeeding mothers and veterans. And it’s creating a safe space for its lesbian, gay, bisexual, transgender and questioning community. Kent State Stark also has become more international, an interesting feat for a campus without housing. It started with coordinated efforts to send local students overseas for study abroad opportunities and ex-
six other regional campuses. Between 2010 and 2015, enrollment fell by about 10% at those schools overall, according to the state data, with most of the individual campuses seeing enrollment drops in that time. The one that defied the trend, Kent State Geauga, saw gains through 2014 (with a small dip in 2012), but then enrollment fell by 7% from 2014 to 2015. Seachrist said she has been intentional about efforts to both enroll and retain students. On a practical level, that means ensuring classes are available when students need them and emailing students who were in good standing but who hadn’t re-enrolled. Seachrist also has been working more closely with school districts in the area through programs such as College Credit Plus. “For far too long, the institutes of higher ed just let the high schools do the best that they could (in preparing students),” Seachrist said, saying the schools’ successes often are tied to levies and the classes and services districts can afford to offer students. Students sometimes would enter the university not as prepared as they could be, she said, and higher ed institutions would wonder why districts didn’t do a better job. “And then I think that the school
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panded to finding other ways to give students a more global education, such as bringing in speakers or offering foods from foreign cultures. Then a faculty member suggested bringing students studying English at Shenzhen Polytechnic in China to the Stark campus. “I said, ‘Wouldn’t that be great,’ without really thinking that we were a nonresidential campus,” Seachrist said. But the university figured out a way to make it work, partnering with a nearby Best Western to house the first 11 students in fall 2015. In fall 2016, that number increased to 27 students, from both Shenzhen Polytechnic and Beijing Wuzi University. Kent State Stark partnered with Staybridge Suites that semester so students could have access to their own kitchens. The university is in talks with other institutes for future semesters, Seachrist said, and there are very early considerations being given to someday offering housing. Seachrist thinks all of these measures have contributed to the increased enrollment. Part of it is being accessible. She said she thinks the university “forgot to nurture the relationship” with the community in recent years, but now it’s actively sharing what it’s doing with the public.
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AKRON
Building boom now bringing empty rooms By STAN BULLARD sbullard@crain.com @CrainRltywriter
About 1,000 hotel rooms, more than half in the Akron area, went into eastern Ohio along the I-77 corridor as the short-lived oil and gas boom added spark to the resurgence of hotel development in the region. But many of those rooms checked in just as the fracking boom was checking out. As the gusher of field hands, engineers, supervisors and vendors ebbed, hotel occupancy and rates fell as the room supply increased. Sean Leatherman, senior vice president for corporate development at family-owned American Hospitality Group based in Wadsworth, called the situation “a case study for how developers in the hotel industry get it wrong.” “When gas and natural gas prices climbed eight years ago and fracking began, we had a gradual build-up of business in Ohio and Pennsylvania,” he said. “There was a lot of demand in areas that did not have it previously. It suddenly became a place to develop hotels. We count 16 new hotels from South Canton to Fairlawn, when the market probably needed six or eight. Then we had the drop in demand, not just in the oil and gas business, but from the hundreds of other businesses that tie into them.” Statistics from Hendersonville, Tenn.-based STR Global tell the tale. In the Akron area, STR reports occupancy fell to 54% in 2016, compared to 57% in 2015. Revenue per available room fell 4% in 2016 to
PODCAST CONTINUED FROM PAGE 1 The podcast, a Cavs source said, is owned by Jefferson and Frye, whose friendship predates Jefferson recruiting Frye to the University of Arizona before the former left the Wildcats for the 2001 NBA draft. It also includes the help of Fox Sports Ohio (Clifton, the network’s
$49.70 from $51.68 the prior year. Despite the headwinds, however, average daily rates remained a bright spot, climbing 2.3% to $92.22 in 2016 from $90.17 in 2015. In Canton, STR reports occupancy was flat at about 54% the last two years following a drop from 61% occupancy in 2014. Meantime, revenue per available room dropped by less than 1% to $50.43 a room in 2016 from $50.51 in 2015. Average daily rates climbed to $92.72 last year from $92.35 in 2015. Canton-area revenue per available room particularly shows the sector’s rise and decline, for STR reports it was at a high of $58.48 a room in 2012, a 16% increase from $50.61 the prior year. That’s the kind of spike that beckons hotel developers the same way an oil find calls oil drillers. Daniel DeHoff, president of North Canton-based DeHoff Development Co., said his firm’s DeHoff’s Hilton Garden Inn in Green feels the impact of the decline in business from the additional hotel rooms more than the slowdown in drilling for new wells. “We benefit from visitors generated by businesses located in southern Summit County and even more so by those in northern Stark County,” DeHoff said of the hotel at 5251 Landmark Blvd. “It’s a cyclical market, so now it’s a down market. Our Hilton opened in 2007. We had a long run of nice demand and nice rates. We’re still getting those, but boy have things changed.” Likewise, Leatherman said his firm’s properties in Wadsworth felt little impact from the slowing of the fracking business. Its new Holiday Inn Cavs reporter since 2012, is the show’s point guard, so to speak) and the Cavs. Rafael Hernandez Brito (better known as Rafa “El Alcalde”), the play-by-play voice of the team’s Spanish radio broadcasts, produces and edits the podcast, and the Cavs promote it, supply some of the equipment and even designed the Road Trippin’ logo. “When you have the support of the people around you that are like, ‘Hey, if you guys want to do this, we will
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Express in Montville Township in Medina County near I-71 is even exceeding expectations. The firm’s Cambria Hotel and Suites Akron-Canton Airport, 1787 Thorn Drive in Green, feels the loss of the oil and gas business more than its other locations, but still benefits from travel created by area businesses and residents. “Demand is still growing,” Leath-
erman said. “It’s just going to take some time for the new supply to be absorbed. The good thing is that additional hotel development has stopped.” Gregg M. Mervis, president and CEO of the Akron/Summit Convention & Visitors Bureau, noted the 2016 downturn followed three years of increases in occupancy and rates
in Summit County. “We were fortunate,” Mervis said. “It could only continue as it did for so long. There were some segments in the market that did not come to fruition, which creates some of this adjustment. It’s a shame that oil and shale did not pan out to be what everyone hoped.” Although the shale rush created an anomalous factor in Ohio, it also reflects the build-and-bust cycle of the lodging business, which is normal for the industry. Although there are more rooms to divide the revenue, overall hotel expenditures in the region continue to grow, STR reports. Mervis said he thinks 2017 will be better than last year, although he described the expected growth as marginal. DeHoff said he has been surprised by the volume of business that motor coach tours produce. He also hopes the Hall of Fame Village at the Pro Football Hall of Fame will help occupancy, even though that plan includes its own hotel. “In Stark County, we’re hopeful that the Hall of Fame Village will produce a pickup in business," he said. “There are skeptics and real believers. You don’t know what imprint a $600 million project will have. If it does 50% of what they say it’s going to do, it will mean additional business.” For his part, Leatherman said it boils down to needing to remain focused in a competitive environment. “The name of the game is to do a super job on service and produce a good project,” he said. “It’s just going to take a while for the business to come back.”
help you,’ I think that means the most,” said Jefferson, a 36-year-old in his 16th NBA season.
2016 Finals, he would be playing for the team’s Development League affiliate in Canton. “You’d already be in New York,” Jefferson replied, referring to the oft-mentioned Love-for-Carmelo Anthony trade scenario. The exchange made everyone, including Love, laugh, and showed how captivating the podcast could be — with star players openly joking about a topic that has the potential to distract a locker room. “The best thing, the best statement, is somebody sits down and they’re like, ‘So what are we talking about?’ ” Jefferson said. “We’re like, ‘What do you want to talk about?’ That’s really the podcast. We might have things we want to discuss or we know people are interested in, whether it’s LeBron’s shoes or whatever it is, but for the most part, it’s just off the cuff.” That’s when Frye is at his best. The podcast doesn’t have a sponsor, but the 11-year NBA veteran often calls out companies (usually those in the fast-food industry) during the podcast, urging them to send him some gifts. “I just want free stuff, to be honest,” Frye said. All of the joking, according to those close to the team, isn’t just for show. Jefferson and Frye help to keep the Cavs loose, and it’s evident on the podcast, which has included discussion’s about Thompson’s relationship with Khloe Kardashian, Irving being a “superhero” to James’ sons and hotel aliases the players use on the road. (Irving even revealed his current one, which he said he was then going to change: Kanye West.) “I think it’s a chance for people, if
you’re gong to work, you’re chilling at work or you’re just cleaning up the house, you listen to it and you laugh with us,” Frye said. “It’s like they are with us, because I would talk to anybody how I talk on the podcast — but probably with more cuss words.” Jefferson says that because the players trust Clifton and don’t just view her as a member of the media, they’re more relaxed than they would be if they were appearing on a regular show. “So when you say you’re going to sit down with the three of us, they know it’s just going to be a jokearound session,” Jefferson said. Jefferson isn’t sure where the podcast will go from here, but he’s confident it will be beneficial as he gets closer to the end of his playing career. Clifton, who was selected for her current role with Fox Sports Ohio two years after her basketball career at the University of Toledo concluded, is thankful that the podcast gives her a chance to “navigate and understand” the role of a host. “I think my professional side, this could help me in the future,” she said. Frye, the show’s wild card, just hopes for “coupons to Taco Bell, Rally’s, Five Guys — anything bad for me.” Summing up their motivations, Jefferson said, “So Channing gets free (stuff ), Allie gets to show people she can be a host and I get to help put out stuff that NBA fans enjoy.” To which Frye yelled, “Boom!” Not long after, the trio had to board a plane to Minnesota. Another road trip awaited. Another chance for a teammate to show a different side of himself, and for Frye to make an out-of-the-blue call for food.
Just add wine Jefferson, who has purchased some of the equipment for the podcast, is the show’s leader. Already a regular on the team’s Fox Sports Ohio broadcasts, the forward is looking ahead to what he thinks could be a career in broadcasting. “It’s funny because I talk too much, Channing says off-the-wall stuff and Allie is the person that says, ‘OK, that’s funny. Back to Game 4.’ She keeps us on point,” Jefferson said. The most difficult part of the podcast, Jefferson and Clifton said, is getting Frye — whom Jefferson calls “the wobbly leg of the tripod” — to commit an hour-plus of his time. “If you only knew what it took to get Channing to sit down for the plane episode,” Clifton said. “Basically,” Jefferson added, “it’s easier to get our teammates on than it is to get our host on.” Frye — a 33-year-old who was a huge acquisition by the Cavs at the 2016 trade deadline — had a quick reply to his friend’s barb. “I’m not really a host. I’m just more of a sidepiece,” he said. The power forward said he sometimes needs “that internal motivation” to record an episode. “But usually,” Frye said, “if you just give me a glass of wine, I’ll be good.” During one of the more amusing moments of the podcast’s first month, Love — a frequent subject of trade rumors — joked that if the Cavs hadn’t rallied from a 3-1 deficit to defeat the Golden State Warriors in the
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CRAIN’S CLEVELAND BUSINESS
Source Lunch
Bruce Hennes
Founder, Hennes Communications Bruce Hennes has been helping businesses and institutions shape their image for more than 30 years in public relations. But it took the 9/11 catastrophe in 2001 for him to focus on his true calling — crisis management. ¶ Hennes, a Canton native, is the founder and president of Hennes Communications, a firm that specializes in helping executives and managers work through the unforeseeable calamities that threaten organizations and the public — from natural disasters to workplace violence to corporate malfeasance. ¶ Long a homebased business, Hennes moved the firm to the 32nd floor of the Terminal Tower in 2012, in part to house a staff that now numbers six full-time professionals. ¶ The work has taken him and the firm from Cleveland to Kuala Lumpur, Malaysia. — Jay Miller ¶
Five things Favorite movie Director Steven Spielberg’s 1987 epic coming-of-age, loss-of-innocence war film, “Empire of the Sun”
Current book “Hillbilly Elegy,” by J.D. Vance, a memoir about growing up poor in Middletown in southern Ohio. Hennes said he wants to understand the whole country, not just half.
Favorite building in Cleveland Terminal Tower, where the new owner, K&D Group Inc., has reopened the observation deck.
Favorite musical group The Count Basie Orchestra, which Hennes has listened to at Nighttown restaurant. There, he said listening to the orchestra “is like sitting in front of a roaring freight train.”
Favorite magazines The New Yorker and the American Journal of Threat Assessment & Management. The first, he said, is for the soul; the second is not.
Lunch spot Nighttown 12383 Cedar Road Cleveland Heights
The meal Smoked salmon burger and sweet potato fries; Bloom’s burger with mashed potatoes; Diet Coke, water.
The vibe Long an East Side hangout, the name is the same as the Dublin red-light district in James Joyce’s “Ulysses.”
The bill $36.19 with tip
How’s business? Business is terrific. We have had double-digit growth for at least five years. As long as people screw up, we’ve got a business model. About 80% of our revenue comes from immediate crisis response work. The other 20% comes from companies or organizations that recognize they could have a problem and call us beforehand to put together a crisis management plan and perhaps media training. We seem to be attracting bigger and bigger clients that have bigger and bigger problems. You’ve posted a commentary by your colleague, Thom Fladung, about the preponderance of news stories getting posted on the internet in pieces as reporters work on them, not just once a day, as in a newspaper or on a television news broadcast. It’s what’s called “iterative journalism.” How has that changed how you counsel clients about dealing with media? The time is gone when reporters would wait all day for a call back. Nowadays, reporters call our clients and say or imply, “You’ve got 10 minutes to call us back. If you don’t, we’re going to put the story on the web anyhow.” The posted story may be incomplete or even possibly include errors. Reporters are usually amenable to making changes, but smartphone news consumers don’t go back to read updated stories — and the original story may have numerous iterations throughout the day, underscoring the importance of getting the client’s side of the story in that first news cycle and correcting errors immediately. What are the biggest mistakes companies make when they face a crisis? Sticking their head in the sand hoping it will blow over, sometimes putting them days past when a response should have occurred. Or just as bad, they fail to realize that they’ve got to have something to say to their various stakeholders immediately. The Hennes mantra used to be, “Tell the truth, tell it all and tell it first.” Now we’ve added, “Tell it fast.” Because of the speed of social media today and the fact we have a 24-second news cycle, there is no time for consensus, to track your lawyer down deciding what you’re response is going to be.
How embracing are CEOs or other executives of your advice in a crisis? Most embrace it quickly. The same is true of the lawyers that call us. Sometimes they come in thinking we’re going to spin it. But spinning is lying. We’ve had clients who wanted us to spin, to lie for them. Those clients get fired. Sometimes there are clients who say, “I get it. I get it, we’ll tell the truth, we’ll tell it all, but we’re not going to tell it fast.” Our attitude is, as long as what you’re asking us to do is legal, moral and ethical, we’ll do it. In those cases, we get them ready so that if it does come out, we’re ready in the first news cycle. Are business executives ready to handle that? Another thing we tell them is the skill set that got you into the C-suite is not necessarily the skill set that you need to manage your way out of an acute crisis situation. They’ve got financial talent, sales talent. They’ve got leadership skills ... and they’ve got collaborative skills. That’s not necessarily the skill set you need to manage your way out of a sudden crisis. There’s a phrase in our business, “You’re not usually punished for what happened, you get punished for what you did after it happened.” Which means making the right decision to do the right thing very quickly. It’s not B.S. It’s pretty simple. An example? We had a situation with a large nonprofit. A reporter had requested some information from a state agency in Columbus. So the nonprofit got a call from a friend at the agency who said, “There’s a reporter coming after you.” We told them, “Run toward the reporter.” We told the reporter, “We’re going to answer all your questions. But, by the way, there is also a similar story at this agency, at that agency.” We forced the reporter into reporting a broader story. By doing so, we minimized the damage. There was still damage to the client, but the damage had a larger context. I just call that good media relations. And this work is fulfilling? Yes. If my mother knew we were being paid to tell people to tell the truth, she would be very pleased.
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Today’s Tip: Sometimes your story is more effective when it’s told by someone else.
Anyone can toot their own horn, but there is a big difference between saying you’re great and someone else saying you’re great. Content takes on a new meaning when it comes from an outside source. And, when something is presented in a way that is not overly promotional, readers are more likely to consume it.
Amy Ann Stoessel Managing editor, custom and special projects Crain’s Cleveland Business astoessel@crain.com
How Crain’s can work for you: CRAIN CONTENT STUDIO - CLEVELAND Crain Content Studio – Cleveland, the content marketing division of Crain’s Cleveland Business, can create a customized, magazinesized piece – just for your organization. We’ll handle the writing, editing, design and distribution – all done in partnership with you and your goals. For an example of this type of work, check out the Junior Achievement anniversary piece packaged with this week’s issue of Crain’s Cleveland Business. Interested in doing a similar project? Contact Nicole Mastrangelo at 216-771-5158 or nmastrangelo@crain.com.
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