Irv Cohen, Innovative Investor & Social Venture Partner
Irv Cohen shares C-suite wall street tales and his vision for supporting start-ups
On this episode of SPx, we sit down with innovative investor and former Wall Street executive, Irv Cohen. As St. Petersburg Group Insight Board Member and through other platforms like Social Venture Partners and Seed Funders, Cohen is trying to change the way Tampa Bay supports start-ups. He believes that new companies need active investors who lend their acumen on a regular basis. Enjoy this lively discussion about needed change and how SPG could be a catalyst.
- Cohen came to St. Petersburg with 25 years of experience on Wall Street. In that time he worked with Lehman Brothers, ABN AMRO, and most recently JPMorgan Chase.
- JPMorgan Chase did a human capital analysis and found that they were too concentrated in New York. Cohen helped to move 2,200 jobs to the Tampa Bay Area, half from New York, and half locally sourced. That location has now grown to 5,000.
- Cohen is a strong believer in the cluster theory of economics, so he helped launch the Florida Financial Cluster Initiative, which was "a state-wide event, and we brought together all of the financial firms around the areas, primarily Tampa Bay. And we helped sell the area to bring other financial services firms down here."
- The cluster theory applies to areas we call districts, "Because the cluster theory of economics is what makes any area work. You go back to New York, that's what makes the advertising industry work up there, the fashion industry and Wall Street. And Wall Street is the best example of it, because all these Wall Street mega-firms of world cluster are more than a few miles of each other. There's a reason for that."
- Cohen was integral in getting the first Apple II to the trading floors of Wall Street - and the creation of the derivative market.
- Cohen described working on Wall Street as being "in a bubble" where innovation is a constant driving force. "Wall Street exemplifies it the best, because obviously it has access to capital and access to the minds. It's always looking for what is coming down, what's the next innovative thing?"
- While Cohen was part of a large corporate relocation, he believes that companies that start and grow here are the key to our economic success. "If you try and do the big relocations, those are long shots. But if you grow your own, that's the way for an area to mature and the excitement stays, and the environment is one that we're all happy and proud to live in."
- Cohen is a big believer in St. Pete entrepreneurial community. He founded Florida Funders and helped found Florida Seed Funders to help the entrepreneurial community thrive here. He believes the Tampa Bay Area can match up with any region in the world.
- TECGarage and Wave are doing great things in the entrepreneurial community, but Cohen is proposing a more involved project: "What I'm discussing is going beyond the initial funding, but staying with the companies and being basically active investor, active management and working with them as they go through the process. A lot of times we have found you give the company x a hundred thousand dollars, and they're back six months later... That is not a successful entity, or a successful process."
- Start-ups are not the only ones with these needs. Non-profits also face the same obstacles and needs for business acumen, which could be solved with Cohen's proposition. "If we deal with our social challenges, as well as our business challenges in a unified basis like that, we can tackle anything."
- Innovation talk, live: "If you could put a group together that had the skillset, sort of what Carlyle already has built into their model, they have the skillset available, so if you need IP attorney you've got one, right? And if you need whatever. And in Wave, and in Tech Forum they do some of that themselves too, but an interesting model would be a for profit version of that... where you have some financial incentive, and you can get the role players in and they can make their living doing this, and then maybe the group, instead of corporate profit you have equity as your corporate profit."
- Cohen rejects the notion that St. Pete does not have the resources to be an entrepreneurial hub, "Resources are here! It's keeping them here. We've got some great Colleges, Universities here. People want to live in the Tampa Bay area, this is one of the nicest places in the world to live. We've got to make sure that jobs meet the supply."
- Former SPx podcasts guests, Reuben Pressman and the Presence team, as well as St. Pete Chamber CEO Chris Steinocher received special shoutouts from Cohen for their contribution to the business community.
- Cohen shed special light on Dr. Kevin Moore's work on the entrepreneurial program at the University of Tampa.
"We all want to live in a community that is growing and innovating, and it's all about being able to keep our best and brightest right here in the St. Pete... [N]ot only is that the future, but that's the blood and the engine that's gonna drive further growth."
St. Pete is changing rapidly. We hear this all of the time. The city is rising, literally and figuratively, as high rise condos pierce the sky and the tangible vibrations of the city’s bustling business community intensify. Business is good. But good is relative. According to a recent released by the Kauffman Index, Tampa Bay is having no problem starting. In fact, we rank 18th among 39 of the largest metropolitan areas in the country for Start-up Activity. Where we lack is helping those start-ups grow to become larger small businesses with high-paying jobs.
What does this mean?
We have funding and awesome ideas. But our start-ups’ abilities to scale-up and grow into a small business or a larger company a few years on is less than phenomenal. Tampa Bay dropped from 24 in 2016 to 26 in 2017 for entrepreneurship growth. Our middle-to-back-of-pack ranking is telling of our ability to compete in a highly competitive global business environment. It is also telling of an important need in our entrepreneurial community – for an accelerator that goes beyond seed funding. On this episode of SPx, Joe Hamilton and Irv Cohen, both members of the St. Petersburg Group Insight Board, drop some knowledge on innovating our start-up environment. They discuss the need for fractured business acumen to “plug in” where businesses are lacking and teach start-ups how to survive and thrive in an increasingly competitive world.
"I believe in being a very active investor and being involved with the entrepreneurs. We have a bunch of people down here who can mentor and coach and do things of that nature. We just have it dispersed. And if we could bring it together, whether it's under one roof or under one management... I don't know all the answers to that, but just that it's done in a real true partnership, I think we could grow and go a long way."
Table of Contents
(0:00 – 0:40) Introduction
(0:40 – 8:23) Background Experience
(8:23 – 12:38) Innovation
(12:38 – 15:32) Lehman Shutdown and Goldman Sachs
(15:32 – 18:38) How Can St. Pete and Tampa Bay Area Succeed?
(18:38 – 23:28) Acumen and Incentives
(23:28 – 27:53) A Services Support Company Model
(27:53 – 30:49) Social Venture Partners
(30:49 – 34:19) Creating a Solution
(34:19 – 39:04) Successful Startups
(39:04 – 40:44) A Business-Friendly Environment
(40:44 – 41:45) Shout-out
(41:45 – 42:36) Conclusion
Joe: Hey, this is Joe Hamilton and we’re here on SPX and today we’ve got a very esteemed guest, Irv Cohen. Good to see you, sir. Thanks for coming in.
Irv: Hi, Joe. My pleasure!
Joe: And normally we don’t do the standard profile thing, and tell us about yourself and about your background. But yours is so good, that I wanna do that just for a minute. So you’ve got some pretty big hitters in your– was it thirty-some years up in the Wall Street?
Irv: Twenty-five on Wall Street.
Irv: Yeah. Don’t age me.
Joe: So what were some of those…?
Irv: Yeah, you make your own luck, and I’ve been fortunate in my career. I grew up on the finance side and got an advanced degree both in accounting and finance out of NYU, and went straight to working with at that time the Big A. And it gave me a fabulous experience with Price Waterhouse, and dealing with management at a senior level. It also taught me that I wanted to work on Wall Street. I was always very interested in the markets. To me it was very important to be relevant, and that’s something that I continue to be, where you pick up the Wall Street Journal and everything that happens in the world affects my business. So I joined Lehman Brothers back in the early ’80s, when it was a growing firm, it was only three billion in total assets. And eventually it became hundred billion dollars before it unfortunately went out of business. However, I’ve joined the firm right when it was in its growth curve. One of the things about Wall Street, and I’ll explain with my other firms that I’ve worked with, is when you’re there, you don’t even realize what a fortunate bubble that you’re in. Because we had the leading technology, I’m working with the best people out of the best business schools. At Lehman Brothers I brought in the first Apple II into the firm basically to automate the accounting department. And once that came into the firm and the traders saw what was happening, it went right down on the trading floor and the derivative market created out of that, because you could break down cash flows into all sorts of things. Which you could only do with the big computers then, which was the Holy Grail, and the IT departments didn’t let anybody even get near them. So I worked with Lehman Brothers for about eight, nine years and grew with the firm. I was Chief Financial Officer, I was Chief Operating Officer, I was a Chief Compliance Officer, signing all of the focus reports and things of that nature. But I was stuck– I was very good operationally, and I was also very good strategically, so I was the tactician and the strategic guy and I really know how to run big operations and I’ve done that throughout my career. But I’ve also been the person who’s been with new products and new businesses, and had to evaluate them and bring them into the firm. And I’ve done that every step of my career. So Lehman went on for about eight years, and I’ve got recruited over to Barclay’s Banking. This was the late ’80s, when the foreign banks wanted to get into the U.S. investment market, and basically me and three other people were given 100 million dollars of equity capital, and said, ‘Build us an investment bank.’ That was probably the greatest and most rewarding challenge that I’ve had. Literally, all the way from designing the letterhead, all the way through hiring the entire staff and building the system and the marketing and everything like that. In a year and a half, we became a primary deal on U.S. Government Security, it’s the fastest that’s ever happened, which is very important for the fixed income market, there’s only 20 odd in the world. And basically, creating a business from scratch, again, is something that I love to do and I’m very passionate about. So I was able to help create that business and at the same time manage and run the entire infrastructure for the place. I actually did it too well, because I got asked to move over to the bank side and I became the Chief Operating Officer at Barclay’s Banking in the U.S., they were going through some growing pains and some challenges in their organization, and I did that for a few years. And then I got subsequently– and I did a lot of work both in the United States and in London. I was probably traveling back and forth as a minimum once a month through the whole process. But the Dutch bank ABN AMRO came calling for the exact same need and requirement. The difference was they had a big bank in Chicago, so I was able to work on integrating the Chicago bank with the Dutch bank, also one of the largest banks in the world, and building a business for them in the U.S. and connecting into Amsterdam. And then I got recruited to my final Wall Street job, which was at JPMorgan Chase, which basically– they were actually looking for someone specifically with, obviously, the background experience I have, but basically the merging of investment banks and commercial banks. This is a trend that has continued, people can argue whether it’s been good or bad, and those discussions will go on forever, their bringing together and splitting apart and the cycle goes around and round. But basically, I joined the organization to build their overnight… their short-term securities and banking and move it together. We basically do whole sale banking for every major bank around the world, and the overnight PNL, and lending and creation of products around that to grow the business. Along with that came the great challenge of the relocation, and that’s how I came down to Tampa Bay. Before 9/11, JPMorgan Chase had done an analysis of their human capital, and basically to no surprise they found they had too large a concentration in the New York area. So basically, a study was taken and I was part of this whole process. And it came down to Houston, Atlanta or Tampa to move a major division, this was called the treasuring security services division. So the final decision was made to move it to Tampa Bay. It was a process that involved moving 2,200 jobs to the Tampa Bay area. Now, half of them came from New York, the other half we went into the marketplace and hired people down in the Tampa Bay area. It was a great experience, you can imagine, I was dealing with native New Yorkers who never had left New York before, but once they came down to Tampa Bay, their eyes…
Joe: Oh, if that’s fair to Tampa or not, it’s like the hoards are invading, I don’t know.
Irv: Well, the way we used to say it, these are the people shopping at Publix, creating jobs and leaving and creating more jobs. So that’s very important for any community. And basically… So, we built the location in Northern Tampa, it was three buildings, 450,000 square feet. It’s since grown and there’s over 5,000 at this location now. So that is great for any community to be able to bring the higher paying jobs down to the area. I had too challenges when I did that. One was personal and one was my staff. Now, I asked my staff to move down there, and that’s taking a pretty large risk. Even though the Yankees train here and they’ve got the beautiful beaches and everything like that, when you work on Wall Street and the whole cluster initiative, when I worked at Lehman Brothers and I got an argument with my boss, I could go across the street and– Goldman Sachs was across the street. You don’t have that down here in Tampa Bay. We’ve got a few financial firms that they were operating on an island, and I felt responsible to my staff and said, whenever I feel that way I gotta do something about it. I launched the Financial Florida Cluster Initiative, which became a state-wide event, and we brought together all of the financial firms around the areas, primarily Tampa Bay. And we helped sell the area to bring other financial services firms down here. The whole cluster theory, with friendly competition grows the whole market. So our biggest success was recruiting DTCC, which is a large clearing organization down to the area. But it was spreading the word that the Tampa Bay area is open for financial services.
Joe: And how did you do that? Or what was the most effective way? I’m sure you tried several things, but…
Irv: The most effective way was getting people together and having the discussions about it, and selling the entire community – the benefits of the community. But the hardest thing, like any of these projects or challenges, is getting everyone together, working together and understanding that there’s common interest here, and the common interest helps the entire good. So it wasn’t easy, but it succeeded. Because the cluster theory of economics is what makes any area work. You go back to New York, that’s what makes the advertising industry work up there, the fashion industry and Wall Street. And Wall Street is the best example of it, because all these Wall Street mega-firms of world cluster are more than a few miles of each other. There’s a reason for that.
Joe: Sure, once, then– Yeah, it’s done all over the world. You go to the market in Morocco, and all the pots and pan dealers are in one spot, and all the shoe dealers are in one spot, and that works. I guess over here we would call those districts as much as clusters too. It’s just terminology.
Irv: Exactly. Exact the same thing.
Joe: So, a couple of interesting things that… The Lehman Brothers thing, you said you brought the Apple II into for the accounting department, somebody wound it up you said from the fixed income trade…
Irv: From the trading floor.
Joe: …and then they adopted it down there and the rest is history, essentially?
Irv: The rest is history.
Irv: Literally, they had to depend upon these large models running into the large mainframes, if you remember. This was the early ’80s. Once they got their hands on a laptop, and of course it was a very primitive laptop at that time, and they took control of the process, they put the young analysts on it immediately and able to split up, it gets a little complicated if you’re not part of the… They basically split up – like a mortgage back security, they were able to break it up into its cash components and break it down and sell all these like-securities around it. And the whole derivative market is basically what that’s about, it’s really redistributing cash flows and risk. And the ability to do that, it’s very hard to give that to a programmer to do at that time. Much easier for the guy who understands the market to be the guy actually doing it. Obviously, that resource was never available for that.
Joe: Yeah. So what’s the mindset there? Is this something that’s still happening today, or was there a definite period of renaissance where you were doing everything paper and pen, even trading, and now as these tools came along, all of the sudden unlocked opportunities?
Irv: As I said, I was feeling like in a bubble. Wall Street exemplifies it the best, because obviously it has access to capital and access to the minds. It’s always looking for what is coming down, what’s the next innovative thing? The big thing going on right now is the whole breaking up of the cash payment system and how do we distribute that? Bitcoins, and things of that nature, how accessible are they? Should they go to the market? The whole concern now is obviously cyber-security and how do we go outside and find the best and the brightest out there to be able to deal with it? That’s a constant search that never stops for the firms that succeed. They never sit on their laurels. And the reason they’ve stayed on business and continued to grow and some of them have telephone book numbers of revenue is because they understand and learned how to do that.
Joe: So it’s fair to say that a decent chunk of the whole industry is as much innovation as it is acumen?
Irv: Definitely. And being open to innovation. I ran the new product committee for a couple of years, and I also did that at both Barclays and JPMorgan. I also filled into my portfolio, I’m doing– buying businesses who were taking us longer to build ourselves, and it’s quicker to fill it in. Because it’s literally a market race against some very high-powered competitors, and you wanna make sure that you’re always not necessarily at bleeding edge, but at cutting edge, so that you’re able to offer to your client… but it’s both to your client and to your own business. Risk management is such a major thing on these big firms. Who’s got the best risk management system and how well does it manage and how well does it test it and stress test it? The ones that didn’t do it well fell into some pretty big issues. Issue two about moving down here was personal. At that time I had two young daughters and moving down here, they were– I wasn’t the most popular person in my family, but they agreed to come. And I felt a responsibility in a strange way of wanting to work very hard at the financial, economic, and entrepreneurial platforms of the Tampa Bay area, so that if they had decided at some point that they wanted to go back to New York they would obviously go with my blessing, but I don’t want them to go because they couldn’t find good jobs down here. And that was important then, it’s equally important right now. We all wanna live in a community that is growing and innovating, and it’s all about being able to keep our best and brightest right here in the St. Pete market and area. Because not only is that the future, but that’s the blood and the engine that’s gonna drive further growth. When you try and do these big relocations, and I was part of one– I was into corporate, and that’s the problem. But if you try and do the big relocations, those are long shots. But if you grow your own, that’s the way to grow, and for an area to mature and the excitement stays, and the environment is one that we’re all happy and proud to live in.
Joe: Yeah. And obviously we do a lot of work with the EDC, and that is definitely their philosophy. There’s not a big expectation of drawing down, yeah. And partly because we don’t have the space and we don’t have the transportation infrastructure and what not. So we’re growing and looking to those 100 person companies and things like that as well. So, before we get out of the Wall Street days, do you ever see a couple of positions on from Lehman, when they went to shut down, how was that for you? Obviously, you probably still had colleagues there and that was a big part of your formative…
Irv: Not only did I see cause. Last year at a conference I ran into the former CEO, who I worked directly for for a few years, his name is Dick Fowler. The years I was at Lehman, and I helped create their risk management system back in the ’80s, it was probably the best– and I’m not saying just because I did it, but risk management was number one. They knew what every dollar was, they knew what the risk was, they knew what their positions was. I used to have to go to Dick every morning and go over the positions and if he wasn’t happy you’d be out on the… If you didn’t answer him immediately wherever you stood, you were in deep trouble. I just think that two things happened– and I feel really bad, because when you’re at Lehman, a lot of your personal net worth is tied up in the firm. So some former colleagues got hurt. But it was really the growth of the market. And ultimately, I’m in the camp that thinks Lehman should have never gone under, obviously I have emotional ties to it. But there was a lot of politics going on right then, and Lehman and Goldman Sachs were always arch enemies, and if you remember when it went under the treasurer secretary was a former Goldman Sachs guy. So that, to this day that’s what Dick Fowler says. He thought he had an agreement, and obviously we see what happened.
Joe: Well, yeah. And Goldman… you have obviously mixed feelings about them, they’re pretty entrenched in today’s administration as well.
Joe: Yeah. People call them the World’s Bank. You have any insights that… when you’re up against them and as you’ve seen them exist through the different down trends we have had, how are they doing that? And what are your thoughts on them?
Irv: Well, having never worked there and just as a competitor I think they have a very monolithic strong culture, and they don’t suffer fools, and their– our current… I guess he’s now treasury advisor, Gary Cone, was the CFO of Goldman Sachs, and basically they were known to have the best risk management system on the street. And that they had literally newer, every single position was, and everything… When I was describing that Lehman was back when the world was a little simpler in the ’80s, only if you get walking the trading floor with the Chief Operating Officer at that time, Chris Peter of Lehman, and he’s saying, ‘Who in the world understands all the risk that sits on this floor?’ And that was 20-30 years ago, before the mass derivatives and things of that nature, and we see what the final result of that was. But Goldman escaped that, because Goldman basically had their hands on top of… the risk measurement that they employed was able to capture all of that.
Joe: So then getting out early, and obviously they probably took opposite positions and what not on what they saw was higher risk, was there a chance that they have any sort of obligation to share that information? Knowing… I don’t think it’s a secret. If they knew the risk, they obviously had to know the consequences as well.
Irv: That will be litigated forever.
Joe: Yeah. It’s interesting. So, living in that world of high performers, it sets your expectations. And you’ve been down here now for a number of years, and then we’ve had some good conversations about that. Where do we need to move here, in St. Pete and Tampa Bay, knowing that there’s all the pieces that drive the success in our entrepreneurial community and our startup community, and then tracking corporate families? What do we need to do?
Irv: Well, let me just step back a second. The last couple of years I’ve been working… I was a founder of Florida Funders, and I’ve also recently helped found Florida Seed Funders, because I’m a very big believer in the entrepreneurial community and helping that along. And I’ve seen it, I’ve seen it from both sides, as an employer. I have basically reviewed hundreds, if not thousands of business plans over the last couple of years and I’ve invested in a bunch of them. I think we can match up with any region in the world. I think we’re a young, growing area in this regard and I think that we have to challenge ourselves to come together as a cohesive community and whatever the expression is, leaving all the stuff back at the office, and basically sit down and put the pieces together in a uniform basis, so get away from the cliches for a second. Basically invest in our next generation, invest in our community, invest in entrepreneurs and not count on… you know, the Florida Funders of the world, we can do so much. But basically send a message out to the rest of the world that St. Pete is open for good ideas, good innovation and we’ll help you along with channels of funding in your early days. Because once you get past that first leap, you know right away whether you’re gonna make it or not. It’s not that simple, but you cut down the odds. Investing is all about risk management and odds mitigation, about early stage investing. And early stage entrepreneurs, it’s the same thing. I believe in being a very active investor and being involved with the entrepreneurs. And we have a bunch of people down here who can mentor and coach and do things of that nature. We just have it dispersed. And if we could bring it together, whether it’s under one roof or under one management… I don’t know all the answers to that, but just that it’s done in a real true partnership, I think we could grow and go a long way.
Joe: And I think some of the things, like Tampa Bay Tech Forum, and the Wave have tried to be that, the entity in TecGarage here. Unfortunately, I think the how is the challenge, and everybody has got through their fiefdoms and the realms that they control, and nobody wants to say, ‘Okay, I’ll give that to you to become a bigger entity.’ Because, again, a lot of this is– strangely enough, there’s not money involved. It actually ends up being people who are doing this for things other than the money. Some of it we have talked about earlier, at the level that things are happening, the acumen that’s needed to do this correctly isn’t there, especially tied to their potential financial return. Therefore you get people like you who believe it should be done and do it, versus do it specifically for a financial incentive. And so what happens is people then derive different kinds of incentive, which are more based on influence and being the king of the startups in this area, or the entity here. And then when one personality jumps into it like that, then it makes it even less likely that they’re gonna work together. And so where do we find the acumen that we can have that objective drive? That’s what I feel like we’ve lacked here in the entities that we’ve built.
Irv: Well, I think… At the end of the day it all goes back to funding. And if we could do a joint funding project which basically shares the funding and shares the risk, it can then be under one umbrella. A lot of the entities that you’ve just mentioned, be it Wave or TecGarage or a bunch of others around, they’re great at what they do, but they’re feeders. What I’m discussing is going beyond the initial funding, but staying with the companies and being basically active investor, active management and working with them as they go through the process. A lot of times we have found you give the company x hundred thousand dollars, and they’re back six months later, ‘I’ve burned rates down but it’s still high, and I need the money…’ That is not a successful entity, or a successful process. And the other thing, we have a huge non-profit world, and I hate that word, we call it ‘social enterprise’, who have the exact same needs and requirements as the startup community. And a lot of times people don’t understand that, and that they have a passionate founder or executive director who needs the business acumen to really drive it forward for sustainability, and to keep themselves going, and that the whole social enterprise don’t be dependent on grants and this and that, and capacity building– the same core group can basically help manage and train these entities. And I think that would help put St. Pete on the map, if we have an organization that can do those things together, who will stand out as a community, and not so much, that– which is important, because that will drive other people here, but will also be building a greater community here. If we deal both our social challenges, as well as our business challenges in a unified basis like that, we can tackle anything. We talked about this Just Grow initiative, that’s one of our applicants for our Social Venture Partner fast pitch. Imagine putting our best brain on this social problem. How great is that?
Joe: But the thing– it still comes back to the same issue, is that the reason why… it’s a great… because it’s out of context, it’s Just Grown, Just Learn, it’s a startup based out of UT that has an aquarium with a plant agriculture element to it, at the top of it.
Irv: That’s a stem initiative.
Joe: A stem initiative, yeah. It’s a really cool product, we were talking about it at off air earlier. So, is there a place where people can see that? They have a website or anything like that?
Irv: I’m sure they do, but I don’t have it.
Joe: Just Learn, Just Grow, UT– that’s a cool program, that will all be in the show notes page at some point. But there again, I think what happens is people act in a way of– are meant to stick with folks, they do have lawyers and accountants available to people wherever they are in that stage. And you’re coming back to more of the traditional VC model where they put their money in and then they help build the company, right? And they’ve got the ecosystem in place, but– and it’s kind of the same problem, is that the people who have the money either are gonna pay someone with the acumen, which they often do at VCs, or they are gonna do it themselves out of altruism, which is what you do. But the incentive is not there.
Irv: Well, let’s go back to what you were just discussing. I worked for a few years in the VC and private equity world, and after I left JPMorgan and flunked retirement (laughs). And I work for some of the top– I work for Carlyle Group, it’s one of the largest private equity firms. And I was on a couple of their investments. And this is the same thing that happens with Y Combinator, so even on the VC startup world out West. If you get into that group, you basically are guaranteed a certain level of success because the portfolio work buys and sells with each other, does things together. That’s what I’m leading to with this overarching group that makes sure– we all do it informally.
Irv: You’ll recommend someone, I’ll do an introduction…
Irv: But if we’ve got a place and an organization that’s doing this 24 by seven, imagine where we could get to. Just on a local basis.
Joe: And it’s like district building, right? New York has a built-in advantage, because they have Wall Street. And so you’re trying to build it from scratch here. Carlyle Group has a built-in advantage because everybody wants Carlyle Group so they get to pick from the very best, and they have the very best working for them already. And so it’s an ideal for sure, but even people here, the best people here are not probably gonna stay here to get their funding either, they’re gonna go if they need, Carlyle Group, Acumen. So it’s where do you play in that level of what money is available here and what acumen is available here versus what companies are available here too.
Irv: Well, we don’t have to play at the… We’re not sure.
Joe: To be able to play at that time.
Irv: The mid-market is a fine place to play. And in the 21st… 22nd century, location is not nearly the same degree of importance as it was before. We used to say a VC, if it wasn’t in driving distance you don’t want to invest, and I had that experience a few times. But as we grow and as we build the infrastructure, they have no problem delegating it.
Irv: And we can keep those people here as long as it looks like we’ve got a system and a process in place that works.
Joe: Obviously, here we could talk about Social Venture Partners, which is an organization that you’re very involved with right now. Do you see anybody in Tampa Bay that could be what fits this vision that you have? Or is SVP the best fit that you see right now and that’s why you chose to be involved with them?
Irv: Well, SVP, just by the name, Social Venture Partners, is really taking techniques and the best practices of the venture capital world and applying it to these social problems in the non-profit world. I basically see the two arms all turn together, the for profit and the not for profit world. The things that… the angel groups and the Florida Funders of the World on one side and the SVP on the other side– those companies that come to them have the same needs and requirements, plus or minus less than 10% differences at the end of the day. To be successful it takes every one of the requirements for them. One of the things that we have not done is building critical mass back to what you were just saying, when you have all these one-off you haven’t built critical mass. I went on a benchmarking trip two years ago to Nashville. Nashville has a national entrepreneurial center just a couple of blocks out of their main music district, and they say that’s the front door to their community. And right in the same place is not only the startups and the entrepreneurs, but also the venture firms and then the universities, their top school has an office right there. It’s like bring everything together, figure it out, and then it goes back out into the world where it belongs. But everyone knows that this is where you have to go for the best and the brightest in that local community. We have a few places around here that think they’re that, but in all due respect, they haven’t reached that level yet.
Joe: Right. So even concerning SVP and what they’re doing, that’s something that you still see as something that needs to be built. There’s specifically having the support in that work for the entrepreneurs that can stick with them as they grow. Sounds like with that sort of venture it’s gonna be a quality over quantity thing, simply because for the acumen to plug in and have the time to invest, it can’t be that many of them.
Irv: The Tampa Bay chapter is only completing its third year right now. SVP as an organization has been around for 14 years, came out of Seattle, there’s 40 chapters in the United States right now. And basically with the same experience of entrepreneurs and philanthropists who wanna be active give-backs, not just writing a cheque. And it’s the same thing that I see in the investors in the for profit. If we can marshal those resources together we can leverage on an exponential basis what’s being accomplished, the return to the entrepreneur or to the social enterprise, and the potential return, because it becomes a numbers game at that point.
Irv: How many are you feeding, how many are you investing in increases your odds of scoring a success.
Joe: And when you say bringing them together, at that point what you’re really talking about is the mentoring aspect of it. It’s growing them, giving them plugging in skills they need…
Irv: And it’s both person to person, it’s creating… and I know a lot of people in this area have tried to, it’s creating the software, or it’s the system or the platform around that. And I know there’s a bunch of efforts under way right now in different areas of the community trying to do that, but it’s becoming systematic about it, and the knowing go-to place.
Irv: And then it’s all about execution, and then it’s all about management, and it’s all about being on top of your game and treating it like it’s being passionate about.
Irv: The group that’s doing this has to be passionate about it, has to believe in it, care about it and then great things happen.
Irv: That’s why it isn’t anything that…
Joe: Well, and that could measure back full circle to the problem, because to do that you need the right people to support… Going back to Just Grow, great product but maybe not business people, so they need business people. And you can try to teach the founders, or you can just be there to support them. But if you’re there to support them that’s a long-term investment in your time, which then means the next one that comes along you probably don’t have that time for them unless they’re amazing, because all of the sudden then you can’t do what you normally do, or can do it at your retirement, or whatever. And it’s just not that many people that are in that boat, right?
Irv: I respect what you’re saying, but you train the trainers, who train other people.
Joe: Sure. Teach them to fish instead of giving them a fish.
Irv: Exactly. We actually are kicking off a pitch competition for SVP in two weeks, the Accelerator, which will culminate in the pitch. And basically, we’re training the trainers the first week and a half. We have our first training session on Monday. These are experienced people in their sectors, but we’re basically explaining and teaching them how they should approach this and how they deal with the company, the personalities, the issues… It’s all of it– it’s the soft stuff, it blows the hard stuff.
Joe: Sure. Definitely. It’s almost all the soft stuff. The ideas are the easy part, right?
Joe: And I think that’s the model, and we have talked briefly– or not briefly, we’ve had a pretty long conversation about potentially a services company that could act as the support. Because then one way to get through it instead of trying to organize investors and trying to consolidate these different entities that support entrepreneurs is if you could put a group together that had the skillset, sort of what Carlyle already has built into their model, they have the skillset available, so if you need IP attorney you’ve got one, right? And if you need whatever. And in Wave, and in Tech Forum they do some of that themselves too, but an interesting model would be a for profit version of that, which is available for some mix of… and where you have some financial incentive, and you can get the role players in and they can make their living doing this, and then maybe the group, instead of corporate profit you have equity as your corporate profit or something like that. But then the people who are out there spending the money and investing can say, ‘We wanna plug you into this group of services that will help fill in all the gaps that you’re missing as business people or whatever.’
Irv: And by doing that you increase the likelihood of success.
Irv: And you’ve saved a tremendous amount of time for these companies to go down ten blind paths and then… I can’t tell you the number of startups or early stage companies that go and try and develop their own software or go to India and try to deal with those type of issues themselves, which is just…
Joe: Or get their cousins do their marketing, and think that, ‘I have a website up, that’s all I need, life is good.’ Yeah.
Irv: We come in and they flush a lot of money down the toilet, because you have them start again on a more professional basis.
Joe: And the biggest stuff also is the stuff that isn’t necessarily laid into the accounting, marketing, is pricing is a big one I see a lot, where… We have a company that I’ve been talking to, they have a product that they’re trying to sell for– that’s based on financial data, that’s putting out financial data and their monthly raise like $150 or $200 and their next biggest competitor is $3,000, right? So without thinking that through, it’s do you want financial data that cheap? And if your next basic competitor is 3,000, what’s the difference between 200 a month and 750 a month? You’re still… There’s a massive gulf between you and the next person up. And that can make the difference between a, hurting their position in the market because they’ve underpriced themselves, and then leaving all that profit on the table. And that’s one of those things, people think ‘I’ve got a product and I’ve got a website, and I’ve got accounting.’ And that’s where that stuff between the stuff comes in and really…
Irv: And the last that’s very important… The pricing, and equally important is the entire customer acquisition side of it. We get a lot of early stage startup companies that are looking from one end, they wanna, ‘What do you need?’ ‘Well, we’re gonna do marketing, give us a couple hundred thousand dollars or something like that.’ That’s not how it works!
Irv: They have to understand it’s business development, and they have to be the ones that are initially doing it and being out there and meeting and getting testing… the product, and doing all those sorts of things. There is an extreme lack of understanding around that, in both the social enterprise world and the for profit world. And we could really help bridge that, and it’s both time and money will be greatly enhanced if we do that.
Joe: So, would you consider the days that you’re spending now, obviously you’re working on CFunders, which is a little bit… it’s for the funders, but a little bit earlier.
Joe: And then you’ve got SVP. Are you actively trying to build the solution that we’re talking about here in addition to that? And how does that look to you as you said right now?
Irv: Actually, I am. What was announced recently was that Orlando is starting the Social Enterprise Accelerator and wants to be the leader in Florida around that, and a lot of that it’s what I just talked about. That’s a joint effort between Rollins College and their community found– the Orlando or whatever county it is, community foundation, as well as some influential business people in the community. That’s basically a for profit and a not for profit, working to a six-month accelerator with awards at the end of it. And really putting a mark down for social enterprise, as well as what I call a more traditional accelerator type of effort, and going all in on it. And I really still– I believed this a couple of years ago, and that’s why I started down this path. I’ve been on a lot of boards and I’ve written checks to a lot of non-profits, but I was only affecting one at a time. Social Venture Partners gave me the chance to leverage that, and I think that that’s the answer. The more that you can touch and feel and bring together, as I said, you’re contributing to your community. I’m all about invest in your community, be proud of where you live… And we have a lot of social issues, even though we’re growing greatly in the community. Along with that come a lot of challenges, and you can’t rely on government for the answers, you can’t rely on Washington for the answers. A lot of these innovative answers are sitting right out there, and especially with our millennial generation, which is full of bright ideas, and they’re not encumbered by the past. And the solution for a lot of our problems are right in front of us. We just gotta open the door to it and give them the ability to get out there and to talk to the right people, and to meet the right people, and enhance and have those conversations and have those dialogues. And who knows where it goes to? It’s always the serendipity at their water cooler, it’s always where is it gonna go? I’ve dealt a lot in my– I still do, but a lot of… In my New York travels you go up Broadway and the early accelerators were all on the lofts upstairs right off Broadway. You walk up there and the buzz in the place was absolutely incredible. That’s kind of what we’ve got to work on right here, right now. We gotta bring that energy together, but we all have to take a responsibility for it. It’s those of us like myself. You’ve been successful business people and this is where your family is gonna live. You’d better invest in that and be part of the solution and the growth. Help and make this a great community. And the reason the social aspect is so important… SVP has been involved with Ready for Life, which helps kids aging how to foster care. If we don’t help those people, they become the homeless on their street. They don’t choose to be homeless, they choose it because life got them in the wrong place. But if I’m an employer I don’t wanna work in a community that there’s homeless, it’s not good for the community. So why don’t we all get together and fix the problem, and fix the social problem, along with what we’re doing on the for profit entrepreneurial side as well? We can do it. The problem is some of these larger non-profits, are not innovative, just like the lodge or for profits, the whole… You gotta reinvent yourself. A lot of them are fat, dum and lazy just because the money comes in all the time. But the new ideas and the new solutions, they all get air to breathe. Especially with the– we all know what technology can do for any organization today. And let’s let those organizations breathe, and those innovators breathe. It can help the community a tremendous amount.
Joe: Yeah, I agree. So it would be interesting to hear… You’re out and about a ton, what are some of the startups that you’re seeing there doing it right? I think immediately when you were talking about that, I was thinking, ‘Man, a huge win coming out of Tampa Bay would be a great catalyst for some of that,’ right? Just that attention. And that’s a good way. And then the way information is received, now that you were talking about building a cluster, building the perception of a cluster. We’re obviously trying to do that with the different districts here in St. Pete and that’s gonna need some more resources behind it. Have you seen anybody that has a chance of being a win in your travels in the last couple of months?
Irv: Well, we’ve got a number of investments on the Florida Funders Flag that has a chance to be wins. We’ve got one right here with, I guess it’s Presence right now.
Joe: Presence, yeah.
Irv: We’ve got one in Tampa, I believe that’s actually from Clearwater. With the whole Tampa Bay area. Pik My Kid, which is the one where basically they help families pick up their kids from school. Believe it or not, that’s expanding like crazy, because he’s been able to sell to large school districts, and that’s… We have another one called Homee, which we recently financed their early round, which is basically Uber for trade services. So you need an air conditioning plumbing, etcetera. Guaranteed one hour of turnaround, had a fixed price and that seems to be taking off. Some of the smaller ones, we’ve got a couple of IT service companies, we’ve got… Yeah, I’ve got a family business that I’ve funded that’s called CaseGlide, that’s doing… it’s IT technology for the property casualty insurance company and they’re very busy right now with what could potentially happen with this pending hurricane. So there are definitely good things happening here, and a lot of people are working very hard to do a lot of the things that I’ve been talking about. I know there’s been a lot of talk about branding an area and doing things of that nature. I really think we can brand our community as one of these, whether it’s social entrepreneurship, social enterprise, become… And in doing that, we put our money where our mouth is, but we also then get some recognition for what we’re doing, and that will help the growth of this community. And it will help drive other people wanting to be where the action is, that’s always the case. And if we do the right things around everything else I talked about, we can keep those people here and those companies here.
Joe: Yeah, and I think that… I want to say that I think the Saint Petersburg Group… And that’s why out of our conversations I was excited that you’ve jumped in and joined us. I’m hoping that we can fill that role, and we’re not certainly tied specifically to startups, we’re working with… because even HSN could have used a little digital transformation too, right? Even at the highest levels, the need is there, but the organization is what’s lacking, right? And…
Irv: Yeah, I want to… I’m glad you reminded me, I want to, but even big organizations have their own incubators, startups. When I was at JP Morgan, we had major areas devoted to basically early stage startups, it’s just the advantage you have was the capital was there, but they still had to go through… So big organizations, they’re doing the exact same things right now, and they will gain also by connecting the way I’ve just talked about.
Irv: HSN’s learning… One of the big issues, and I kind of laugh a little… We don’t have the resources here, we don’t have the… resources are here! It’s keeping them here. We’ve got some great Colleges, Universities here. People want to live in the Tampa Bay area, this is one of the nicest places in the world to live. We’ve got to make sure that jobs meet the supply, and things that I’ve been talking about. I’ve researched this, I’ve looked at every project that’s been done around the country, I’ve looked at social venture funds that have sprung up in Silicon Valley, and Chicago, and New York. This is the trend, and I hope we can get ahead of the trend and be the leaders in our reach and then the country for doing this.
Joe: Sure. I think the rarity factor and why these incubators inside large corporations work is because the senior skillset is a phone call away, right? And I think for St. Pete and Tampa Bay, and I’ll speak specifically for St. Pete because I know better, right now I feel like the next year all called factional acumen is important for us. I think people like you who have this experience, who have this knowledge, there’s only one of you. And as you said, you can teach the teacher, teach them to fish versus give them a fish. But I think for our best and for certain opportunities, just plugging people in, but having the group be able to support it and get the little pieces of senior level knowledge and experience, and then doing that for as many as possible, I think is… that’s to me what the rarity factor is, right? We have the ideas, so we have the spark plugs, we have the people that have the energy to do it, and I think we have the money. There’s a misnomer here that the money is not here, and Reuben from Presence was on a couple of podcasts ago, and he was like, ‘If you’ve got the right idea, the money is here, right?’ And so if you look for all the things you need for success, those plug in skills, that little bit of, ‘Hey, your pricing is not exactly right,’ or, ‘Hey, Facebook ads are not a marketing plan,’ right? That can really flip the switch between success and not is what the rarity factor is, and that’s what I was hoping to solve with SPG.
Irv: And being a business friendly environment is so key. One of the things that’s really impressed me since I’ve moved full time to St. Pete over the last couple of months, and my whole family has, is the welcoming to business and having a Chamber that is so business friendly. You can’t put a price on that, you really can’t. And the things that are happening here, and the ability to get things done is priceless. And I think that’s step one, but as you just said, you gotta leverage that and you gotta take that up the chain, up the value chain.
Joe: And we can’t go past talking about the Chamber without giving some props to Chris, because as I told you earlier, he’s really activated and he’s been interested in the community, and he’s got a strong gravitational pull and he burns the candle at both ends, and he’s a special guy.
Irv: I know Chris, I was just to be on the board of Tampa Bay, when it was Tampa Bay Partnership years ago. And he was a star then, and who St. Pete did tremendous getting him as the head of the Chamber. And I think I’ve watched his career all the way through and he’s done fabulous things. He’s the most business friendly Chamber President I’ve ever seen.
Joe: When he came on an earlier podcast, the first thing we talked about was the St. Pete Clearwater airboat, which is this match box essentially that flew 12 feet across the water. And there was the birth of the commercial airline industry, and they got passed by and passed by, and they made it to the St. Pete Chamber. And mayor’s like, ‘I’ll buy the first ticket,’ and the Chamber invested in them, and technically we birthed the commercial airline industry at this time…
Irv: That’s good stuff.
Joe: …by risking, yeah, the mayor risking his life to fly that thing across the bay. But his point was that we’ve always been open and ready to receive and act on opportunity. And business friendliness is in the very early DNA of the community, so…
Irv: Well, you can definitely see it.
Joe: So, towards the end of conversations we do, and I think we kind of just did that with talking about the startups, but who’s someone that in your travels, you’ve seen that is doing great work? Can be one of the startups and can be Steinocher, because we’ve just talked about him. But that you think needs, deserves a little more eyeballs for a little more appreciation, or just some awareness to what they’re doing.
Irv: It’s generally a discussion. There’s a professor out of University of Tampa, Dr. Kevin Moore, actually lives over in Tierra Verde. He has been an entrepreneur, which that is the biggest… He and I had breakfast this morning, we were just talking about teaching versus doing, how important that is for an entrepreneur. And last couple of years he’s run their entrepreneurial program, and I think he represents the type of individual that we need to leverage and be part of the success of the area. He moved down here and he’s here to stay now a couple of years ago and comes out of Kentucky somewhere. And he’s very happy here, and I think he’s one that definitely deserves mention.
Joe: Great. Then we’ll reach out to him and see if he’ll come sit down with us. I appreciate it. I’ve enjoyed our conversations we’ve had over the last couple of months and…
Irv: The same here.
Joe: …you’re a unbelievable asset for the area, so I look forward to working with you and watching you, and all that good stuff going forward.
Irv: Fabulous. It’s great what you’re doing for the community here, Joe.
Joe: Thanks. Alright.
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About the host
Joe Hamilton is publisher of the St. Pete Catalyst, co-founder of The St. Petersburg Group, a partner at SeedFunders, fund director at the Catalyst Fund and host of St. Pete X.