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Yearly Archives: 2018
Regular readers know that we’ve often covered the limits of decision models, the importance of chemistry, and what makes a team work well together. And that we’re baseball fans (especially of our Rays).
A recent review of “Astroball” in The Wall Street Journal. covers that same ground with the terrific story of the 2017 World Series champs. Astros GM Jeff Luhnow figured out how to get scouting and analytics to work together and combine that with team building to go from last place to World Series champs in 3 short years.
It was no easy task, “(B)ut it was done, and the team made a series of sound, even brilliant, choices as it drafted, traded and signed players.”
This roster-creation, all by itself, did not bring home the championship. Building an exceptional team is one thing, but making it work as a team is another. “Fault lines” exist in all complex organizations—including baseball teams. If these lines can be bridged or eradicated, a team is likely to win more ball games. To use another bit of old-fashioned terminology, a team needs chemistry.
Carlos Beltrán, the veteran outfielder signed by the Astros after the 2016 season, immediately took on the role of chief chemist. Among other things, he created a postgame ceremony that awarded prizes for excellence in the field and instituted a postgame “court” for those who failed to attend: The fine was $500. Mr. Beltrán also had a singular ability to study opposing pitchers and determine their “tells”—gestures and small changes in behavior that signaled whether or not the next pitch would be, for example, a breaking ball or a fast ball. Finally, Mr. Beltrán had a strong desire to close the gap between the English and Spanish speakers.
His biggest ally in this quest was Alex Bregman, who professed to speak perfect Spanish. In fact, it was far from perfect, but Mr. Bregman worked hard to communicate with his Spanish-speaking teammates, including going out of his way to befriend first baseman Yuli Gurriel, who joined the team in 2016 after coming to the United States from Cuba and who spoke no English at all. Mr. Gurriel was exactly the sort of player who can become isolated and resentful in many American clubhouses. But Mr. Bregman refused to let that happen. As Mr. Reiter explains, “The two yammered at each other in Spanglish all day long.”
Add to all this the signing of pitcher Justin Verlander, acquired during the 2017 season, and a dash of good luck, and there’s no reason why any of us should have been surprised that the Astros won their World Series right on schedule. Mr. Reiter’s superb narrative of how the team got there provides powerful insights into how organizations—not just baseball clubs—work best.
We have previously suggested that in baseball there’s just a slight correlation between more analytics and more success. It remains tough to eliminate the usefulness of having more money than other clubs, and with technology and best practices so widely disseminated and articulated (in baseball, at least) the early Moneyball advantages may have been arbitraged away. So excellent teamwork or a hot stretch of cluster luck can make the difference.
The fan inside us is fascinated by new thinking on the topic, and the prospect of advantages to be gained in the short term, but over the long term our conclusion remains the same: big data may help make accurate predictions or guide knotty optimization choices or help avoid common biases, but it doesn’t control events. Models are useful in predicting things we cannot control, but for those in the midst of the game – players or entrepreneurs – the results have to be achieved, not just predicted.
Source: Florida High Tech Magazine
Home to more than 383,000 millionaire households and 34 people on Forbes’ list of the 400 richest people in America, Florida has ample funding available. While success stories from across The Corridor exhibit how startups like Orlando’s Fattmerchant, Tampa’s Morphogenesis and Gainesville’s Captozyme have tapped into such wealth, the reality is most entrepreneurs struggle in an increasingly competitive environment.
Fundraising has accelerated rapidly in recent years. While funds grow in dollar amounts, the number of funds has remained relatively the same. This dynamic causes investors to write fewer, larger checks, making it more difficult for smaller companies seeking less capital to benefit unless they boast a disruptive or scalable idea. Indeed, MoneyTree’s Q1 report this year ranked Florida among the top five states for largest deals by dollar amount, with $511 million in financing distributed amongst just 20 contracts.
“On one hand, The Corridor region is a much more credible geographic area to invest in than it was 15 years ago and investors from all over the country now consider investing here,” said Randy Scott, partner at Gainesville’s HealthQuest Capital and advisory board member for the Florida Institute for the Commercialization of Public Research. “On the other hand, the businesses starting here tend to be the ones raising smaller amounts of capital, which will make it tougher to raise capital in this era of bigger deals.”
Randy has been an executive, board member, entrepreneur and investor in health care and medical technology companies for more than 30 years. He recommends smaller companies in The Corridor seek funding from “less traditional sources like angel groups or family offices,” which offer assets from wealthy individuals or families with longer investment horizons.
Tampa’s Ballast Point Ventures, the most active venture investor in Florida over the past 10 years, is not an angel group or family office, yet it does assist companies in earlier stages generating around $3 million in revenue. According to Principal Sean Barkman, who works largely with software-as-a-service companies, this segment of the entrepreneurial ecosystem is underserved by larger funds.
“We are pleased that five of our first 10 investments in Ballast Point Ventures III (a $164-million fund raised in early 2015) are based in Florida and three of those companies are based in Central Florida,” said Sean.
Similarly, IDEA Fund Partners is one of the most active seed and early-stage venture investors throughout the Southeast with stakes in three Florida companies, including one in The Corridor. With offices in North Carolina and Orlando, its managers review over 1,000 business plans a year, but typically make only one investment a month. This scenario is not uncommon among firms, said Founding Partner Richard Fox.
All three investors would agree success stems from investing not only in funds, but also in entrepreneurs. For Florida and The Corridor to advance the entrepreneurial ecosystem, assisting early-stage companies in the competitive environment is key. As Randy explained, venture capital money “chases talent more than technology.”
“We need to turn Florida into a destination for high potential and already successful entrepreneurs to move to. Then, everything will take care of itself in time.”
Several groups across the region, such as NEXUS and Seed Tampa Bay, are aware of the challenges facing early-stage companies and are working to help company founders more easily access funds. Before entrepreneurs utter one word of their business pitch, however, much preparation is required. Investors are more likely to work with founders who possess strong business acumen, leadership capability, industry awareness and a realistic company valuation. They must also be adaptable.
“In all the companies we invested in that were successful, every one of them had to pivot because of outside influences, surprise competitors and deeper opportunities in adjacent areas,” explained Richard. “It’s not all about the brilliant idea; it’s whether the company has thought through every scenario.”
It’s not unusual, added Sean, for investment firms and entrepreneurs to build relationships long before any capital is raised.
“The most rewarding part of our job is developing relationships with entrepreneurs and working alongside them to help grow their businesses,” he said. “The entrepreneurial spirit is truly unique, and we are thrilled to be part of the growing ecosystem here.”
In the world of venture capital, progress begets progress. As early investments in some of The Corridor’s leading technology entrepreneurs are coming to fruition, the region faces immense potential. Crucial to growth is reinvestment by successful entrepreneurs. We need them to serve as angel investors and advisors for the next wave of pioneers. This cycle proves efficacy, enticing even more investors and entrepreneurs to The Corridor, where a favorable business tax climate, modern infrastructure, talented workforce and lifestyle amenities provide refuge from the rising costs and bloated markets of other high tech hubs.
Dick Brandewie, co-founder of Ballast Point Ventures in Tampa, remembered for ‘intellectual curiosity’ and love of people
Source: Tampa Bay Business Journal
By: Ashley Gurbal Kritzer
Brandewie, who co-founded the firm in 2001, died July 14 at the age of 63 after a long illness, according to an obituary published Friday.
Full Article: Tampa Bay Business Journal
Source: Prepaid Technologies
BIRMINGHAM, Ala., July 10, 2018 /PRNewswire/ — Prepaid Technologies, a leading provider of payment and rewards solutions announced multiple leadership changes today. Long-time prepaid industry executive Steve Fussell was hired as president and former president Stephen Faust has been promoted to CEO. Company founder and CEO Thomas Mcculley will now serve as executive chairman.
“Steve Fussell is an industry leader whose extensive operations and technology experience is essential at a time when we’re investing in and experiencing immense growth,” said Thomas Mcculley. “As Steve concentrates on enhancing our technology offerings to support our entire product suite, Stephen Faust will accelerate his focus on growth, business development and key account management.”
“We’ve driven steady 20-30 percent year-over-year growth for the past five years, pacing well above industry growth estimates of 3-12 percent,” added Faust. “Steve’s expertise will bolster our ability to sustain this growth through the delivery of innovative business payments and reward products.”
Fussell is known for creating best-in-class operations and process solutions. His experience includes management of transaction processing, operations, credit, and prepaid in both startups and large public companies. He has held executive positions at UniRush, FSV Payment Systems, Netspend and Macy’s, among others. Most recently, Fussell consulted investment groups in the evaluation of financial service and technology companies.
“Prepaid is driving more innovation than any other payment platform today and will continue to be the rails for growth in virtual, contactless and peer-to-peer payments among others,” said Fussell. “As a provider of some of the most diverse payment and reward solutions across payroll, expense management and incentives, Prepaid Technologies is uniquely positioned to capitalize on market opportunities and I’m excited to lead the team as we support this growth.”
Since third quarter of 2017, the Prepaid Technologies team has also made several key hires in Birmingham as well as the addition of national payments leaders including Brian Thornsberry, who joined in November 2017 as senior vice president of business development and marketing.
About Prepaid Technologies
A pioneer in financial technology, Prepaid Technologies has been providing innovative electronic payment solutions including payroll, expense, gift, reward and incentive card products to employers, financial institutions, and government agencies for more than 20 years. Learn more at www.in-prepaid.com.
Source: ABC Action News WFTS Tampa Bay
By: Sean O’Reilly
TAMPA, Fla. — It just became easier to jog down Bayshore Boulevard or do yoga in Curtis Hixon Park while listening to up-and-coming Tampa musicians.
Symphonic Distribution and the Tampa Downtown Partnership worked together to create six new public playlists music on Spotify. Each playlist on the music streaming service offers a different experience for people living, working and playing in Tampa’s downtown neighbor.
“After moving our operations to the downtown area, we quickly realized that there is a great opportunity to connect this vibrant and dynamic area with the music that is being created in it,” said Janette Berrios, Director of Marketing for Symphonic Distribution.
The playlists features music from up-and-coming Tampa musicians, local favorites, indie music from around the globe and people performing in the monthly downtown music series, Rock the Park.
“We hope that listeners discover and experience the diversity, culture and incredible talent that our Tampa Bay area has to offer,” said Berrios.
Rock the Park is among the six playlists created by Symphonic. The others include Study Sessions, Tampa Riverwalk Run, Yoga in the Park, Zumba in the Park, and Pre-Game Party which is a tribute to Tampa Bay Lightning fans.
To view all the playlists, visit Tampa Downtown Partnership’s profile on Spotify at downtowntampamusic.com.
The latest addition to The Library in St. Pete is Thinking in Bets – Making Smarter Decisions When You Don’t Have All the Facts, authored by Annie Duke, the professional poker player who began her career when, at age 26, she quit the cognitive-psychology doctoral program at the University of Pennsylvania. The Wall Street Journal review of her book calls it “the dissertation she never got around to finishing.”
Ms. Duke writes that “our brains weren’t built for rationality” and “they aren’t changing anytime soon” so decision-makers have to “figure out how to work within the limitations of the brains we already have.”
As with many of our irrationalities, how we form beliefs was shaped by the evolutionary push toward efficiency rather than accuracy. Abstract belief formation (that is, beliefs outside our direct experience, conveyed through language) is likely among the few things that are uniquely human, making it relatively new in the scope of evolutionary time. (p.51)
Among her recommendations are organized skepticism and truth-seeking accountability groups, as well as assorted forms of “mental time travel”: backcasting, premortems, Ulysses contracts, and moving regret in front of a decision.
The WSJ review nicely summarizes Ms. Duke’s thesis:
Ms. Duke suggests recasting our judgment calls as bets. “We don’t win bets by being in love with our own ideas,” she writes. “We win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world.” Thinking about choices this way brings with it a profound attitudinal shift, from binary right-wrong thinking to a “probabilistic” approach, in which we choose “among all the shades of grey.” This reframing has a clarifying effect. “The more we recognize that we are betting on our beliefs (with our happiness, attention, health, money, time, or some other limited resource),” Ms. Duke writes, “the more we are likely to temper our statements, getting closer to the truth as we acknowledge the risk inherent in what we believe.”
Moreover, when we state our judgments circumspectly in the form of a bet, we are more inclined to revise them with the arrival of new information. “When confronted with new evidence, it is a very different narrative to say, ‘I was 58% [certain] but now I’m 46%,’ ” writes Ms. Duke. “That doesn’t feel nearly as bad as ‘I thought I was right but now I’m wrong.’ . . . This shifts us away from treating information that disagrees with us as a threat.”
She also argues that the role of skill and luck in sports and business makes it difficult to just “work backward” from outcomes to the decisions we made.
Think about this like we are an outfielder catching a fly ball with runners on base. Fielders have to make in-the-moment game decisions about where to throw the ball: hit the cutoff man, throw behind a base runner, throw out an advancing base runner. Where the outfielder throws after fielding the ball is a bet.
We make similar bets about where to “throw” an outcome: into the “skill bucket” (in our control) or the “luck bucket” (outside our control). This initial fielding of outcomes, if done well, allows us to focus on experiences that have something to teach us (skill) and ignore those that don’t (luck). Get this right and, with experience, we get closer to whatever “-ER” we are striving for: better, smarter, healthier, happier, wealthier, etc.
It is hard to get this right. Absent omniscience, it is difficult to tell why anything happened the way it did. The bet on whether to field outcomes in the luck or skill bucket is difficult to execute because of ambiguity. …
Outcomes don’t tell us what’s our fault and what isn’t, what we should take credit for and what we shouldn’t. Unlike in chess, we can’t simply work backward from the quality of the outcome to determine the quality of our beliefs or decisions. This makes learning from outcomes a pretty haphazard process. (p.86)
ORLANDO, Fla., June 19, 2018 /PRNewswire/ — PowerDMS, a leading provider of cloud-based policy management software, today announced that David DiGiacomo has joined the company as chief executive officer. In this role, DiGiacomo will be responsible for leading the day-to-day operations as well as executing the company’s growth strategy.
For over 15 years, DiGiacomo served as the CEO and president of OnSolve (formerly ECN), a global provider of cloud-based critical communication solutions for government, enterprise, and SMB clients. Under DiGiacomo’s leadership, OnSolve grew from two full-time employees to what it is today, the industry’s largest provider of emergency and mass notification services with $100+ million in annual revenue.
“I am excited to welcome Dave as our new CEO,” said PowerDMS founder, board member, and former CEO, Josh Brown. “He has the experience we were looking for, along with a vast understanding of our customer base. His track record of scaling a company of our size to our next growth horizon makes him ideally suited to lead the company through this stage of its incredible journey.”
Founded in 2001, PowerDMS offers a compliance and content management solution that helps organizations reduce risk and liability. The company provides software tools to organize and manage an organization’s critical documents and industry accreditation standards, as well as allow for training and testing of employees. PowerDMS serves customers in public safety, government, and healthcare and has achieved significant organic growth in these markets.
“I’m honored to lead the team at PowerDMS,” said DiGiacomo. “The company has a long history of success and an unmatched reputation for customer satisfaction. My goal is to drive strategy that accelerates business growth and technology innovation without compromising the world-class service PowerDMS provides its clients.”
Michael Ramich, partner of Frontier Capital, the growth equity firm that invested in PowerDMS last year, said that adding a seasoned leader from the public safety and government software-as-a-service space is key to the company’s strategy and future growth. “Dave has the right combination of industry experience and expertise to advance PowerDMS in this next phase of growth.”
PowerDMS, headquartered in Orlando, Florida, is a cloud-based policy management software company. The application provides practical tools to organize and manage crucial documents and industry standards, train, and test employees, and uphold proof of compliance, thereby helping organizations reduce risk and liability. PowerDMS simplifies document management through powerful collaboration, process, and automation.
About Frontier Capital
Frontier Capital is a Charlotte-based growth equity firm focused exclusively on software and technology-enabled business services companies. Founded in 1999, Frontier partners with management teams that can benefit from capital to accelerate growth, fund acquisitions or generate shareholder liquidity. The firm makes minority and majority equity investments in high-growth companies. For more information, please visit www.frontiercapital.com, or follow Frontier on LinkedIn or @TheFrontierTeam on Twitter.
This interesting article in Health Ambition provides an excellent summary of the potentially serious risk factors of sleep apnea, which they estimate affects 26% of adults – 80% of which goes undiagnosed.
The corresponding reduction in sleep quality can lead to common symptoms in the short term such as fatigue and irritability, but over the long term the consequences could include increased risk of many serious conditions such as diabetes, high cholesterol, heart disease and stroke.
If you’d like to learn if you might be part of the undiagnosed population, our portfolio company SleepMed offers a free online preliminary sleep risk test that is quick and easy. They also offer home- and lab- based sleep diagnostics services as well as outcomes-based sleep disorder treatments and support.
Check out the article at Health Ambition. One of the many fascinating things we’ve learned since our investment in SleepMed is how critical a good 7 hours/night of sleep is to a whole range of health outcomes.
“Cryptocurrency Billionaire” Tom Draper is trying, once again, to split California; and as of this morning, his “Cal3” initiaitve has officially earned a spot on the November 6 ballot.
This time he’s proposing 3 states; last time he pitched the idea it was 6. What we said then:
These pages have often extolled the virtues of doing business in the Southeast and Texas, the best climate for entrepreneurs and where we have focused our investment efforts for over twenty years. Along the way we may have poked gentle fun at our friends in California whenever the state’s business environment fared poorly in surveys or did something like retroactively tax entrepreneurs.
So we can try to imagine the frustration engendered when a large and diverse geographic area strains under distant and schlerotic governing institutions… Hard to see how this becomes a political reality though.
With the mood of the electorate today, anything might be possible. But whatever one thinks of the notion, he has his work cut out for him. A May 8 article in Bloomberg points out that CA’s differences run deep, making it difficult to structure the break-up in a fashion that would be politically palatable across-the-board.
In related news…
The Orange County Register writes that California lacks a job-friendly economic policy. The letter Gov. Jerry Brown wrote to Amazon CEO Jeff Bezos, pleading the case for “HQ2” to be located in his state, promised a long and complicated list of incentives, breaks and assistance.
“It reads like a confession of everything California is doing to kill businesses” and “(would be) a useful list for the next governor, and for anyone who wonders why there’s no gold rush of businesses moving to California.”
Last month CEO Magazine produced its annual ranking of the best states in which to do business, and, as with previous surveys, our region does very well.
The best place to do business in the United States is Texas, followed by No. 2 Florida and, in a tie, No. 3 North Carolina and South Carolina, according to Chief Executive’s 2018 “Best and Worst States for Business.” CEOs ranked Indiana No. 5, rounding out the top five states.
Seem familiar? That’s because those are the exact same positions each of these states has occupied in each of the last four years in our annual poll of CEOs about business climates.
The entire ranking includes TN & GA in the Top 10, at #6 & #7 respectively. Those at the top tend not to change much because they have a consistent philosophy about how to approach the business climate, and they don’t see significant leadership changes. There’s a similar dynamic at the bottom of the list as well:
Meanwhile, the high-tax, high-cost environments created by the bottom states also tend to be self-reinforcing. Mostly, those places are kept afloat economically by legacy advantages such as strong education and healthcare systems, as well as by the fact that in-demand, digitally skilled millennials enjoy living in their cities.
But states like Massachusetts risk eroding even those advantages as the cost of living skyrockets in big cities and traffic and other annoyances mount. … The situations of bottom feeders could get worse before they get better, in part because of a particular effect of federal tax reform on high-tax states—like the basement dwellers. “The exit numbers of companies and owners are going to be higher,” McGuire says, “because people won’t be able to deduct as much in property and income taxes. They’re being taxed into oblivion.” Also, the coasts are losing some of their perceived edge in talent and lifestyle amid sharply higher costs of living—and facing steadily increasing digital capabilities in the heartland.
“It’s getting to the point now where if you’re a digital marketing specialist, you can move to Nashville or Omaha and have three or four opportunities,” says David Hall, vice president for investments at Revolution LLC, a Washington, D.C.-based seed fund. “Before it was so scattered. You’re seeing the density of the tech and startup ecosystem build on itself and create great network effects within a region.”
This is the most recent item in a long run of stories describing a geographic analog to the process of creative destruction. Those states who spray “startupicide” on the economy – suffocating regulations, inflated business taxes and fees, lawsuit-friendly legal environments, and political classes uninterested in business concerns, if not downright hostile to them – lose economic clout as people and capital migrate to other states with more favorable environments in which to work and live.
This migration of economic clout within the US has been more subtle than the California Gold Rush or Irish Potato Famine but is just as significant. Some states are chasing away their earners, workers, and entrepreneurs; this is their tax base.
The growth corridors of the high-tech South would have a mercantile-like advantage but for the fact that employers can (and do!) simply move in order to thrive under our growth-oriented tax policies, lower public sector debt burdens, stronger job creation, excellent climate for entrepreneurs, and a superior overall business climate. (The actual climate happens to be conducive to a great quality of life as well.)