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Matchstick Ventures ignites tech-startup economy

Confluence Capital, the groundbreaking MSP venture capital (VC) fund, is now Matchstick Ventures. The rebrand comes amid a flurry of other changes announced early last month, notably the addition of several high-profile investors and advisors.
New investors, according to Minneapolis-St. Paul Business Journal, include Seth Levine, managing director at Boulder-based Foundry Group, a venture capital fund; Lisa Crump, co-founder of Eden Prairie-based digifab giant Stratasys; Scott Burns, CEO of St. Paul-based GovDelivery, a software communication platform that serves government organizations; and Darren Cotter, founder of St. Paul-based online rewards company InboxDollars. Advisors include Levine and Joy Lindsay, principal at Minneapolis-based StarTec Investments.
But why “Matchstick”?
“The ‘Matchstick’ name rings truer to the entrepreneurs and startups that we exist to serve,” says founder and managing director Ryan Broshar, who also founded beta.mn and Twin Cities Startup Week. “Our goal is to act as a catalyst — not just for the companies we invest in, but for MSP’s startup economy as a whole.”
To date, Matchstick/Confluence has invested in 14 early-stage companies. Though most are headquartered in the MSP area, there are a few outliers: Denver, Seattle, Chicago, St. Louis, and Lincoln, Nebraska. Far from diluting Matchstick’s local potency, Broshar sees these wayward investments as central to the fund’s mission: “evangelizing” MSP’s emerging tech ecosystem.
“We talk up the region every time we interact with out-of-market clients and prospects,” says Broshar, adding that his company gets at least one inquiry from outside entrepreneurs or VC funds who’ve heard about Matchstick and are excited about what’s happening in MSP. “Interest in the Twin Cities is definitely gaining momentum.”
“The writing is on the wall for MSP’s startup scene and capital ecosystem,” he adds.
Broshar should know what an up-and-coming tech hub looks like. He lived in the Denver-Boulder area in the late 2000s and early 2010s, when the Front Range’s tech economy was blowing up. Broshar threw himself into the local scene, parlaying a pending MBA at UC-Boulder into a gig as a consulting firm principal. He networked with and advised ambitious Front Range entrepreneurs for a few years, then turned his focus to finding and investing in early-stage companies through partnerships with the Foundry Group and other local VCs.
When he moved back to MSP in fall 2012, Broshar found the same entrepreneurial energy he’d grown accustomed to in Denver-Boulder. But with few notable VC firms and a relatively conservative commercial financing ecosystem that eschewed risk, many local startups had to look elsewhere for capital.
“We’re blessed with a lot of gritty entrepreneurs who just go to work and get stuff done, rather than talking about what they have yet to do,” says Broshar. “But even the most talented and ambitious entrepreneurs can’t survive without capital,” along with the mentoring and peer support services provided by organizations and initiatives like Broshar’s beta.mn and Twin Cities Startup Week.
“The goal was, and still is, to put MSP on the map,” he says.

Cologix turns MSP into Internet hub for Netflix and MICE

Cologix, one of the country’s most prolific data center operators, recently unveiled a new state-of-the-art facility in Downtown East’s 511 Building, the company’s MSP headquarters. According to a company press release, the 28,000-square-foot hub has space for more than 250 server cabinets and upward of 70 network connections, making it the most connected piece of real estate between Chicago and Seattle — the Internet capital of The North.
“People think of the Internet as this ethereal cloud,” says Graham Williams, chief operating officer, Cologix. “But in reality, that cloud is very solid. The world is crisscrossed with untold miles of fiber optic cables and dotted with servers, routers and switches. That physical infrastructure — the Internet’s plumbing — intersects at data hubs like [the 511 Building].”
The heart of Cologix’s new facility is the Meet Me Room, the hub where the networks actually intersect. Clients who rent space in the facility can pick and choose which networks to use. The setup is akin to a co-working space: Tenants pay to be there and provide their own equipment, but they get access to most of the service providers operating in MSP.
They also enjoy lower latency (faster connection speeds), which is particularly important in the video streaming business. “We enable companies like Netflix to get closer to their end users,” explains Mike Hemphill, general manager of Cologix’s Minneapolis facility. “They’re pushing copies of the shows and movies people want to watch to their servers here in Minneapolis, rather than calling everything up from California and traversing thousands of miles of fiber to get here.”
Increased competition for clients in the Meet Me Room reduces’ service providers’ pricing power by as much as 20 to 40 percent, says Williams. But it’s a worthwhile tradeoff. The alternative is an expensive, piecemeal approach wherein providers lay fiber all the way to clients’ offices, wherever they might be located. Depending on the fiber’s final cost per mile, directly connecting to clients could end up being less cost-effective than using a facility like the 511 Building.
Cologix’s new data center also houses the Midwest Internet Cooperative Exchange (MICE), a nonprofit, donation-supported network exchange used by smaller Internet service providers and telecoms as well as data-hungry content providers like Netflix. MICE was devised in 2010 to improve MSP-area bandwidth and connection speeds, and to level the playing field for smaller operators. FWR Communications, Cologix’s predecessor in the 511 Building, donated a modest square footage to house MICE’s first servers; with more than 50 participants at last count, MICE is now a major Cologix tenant.
“It’s an exciting time to be in this business,” muses Hemphill, whose telecommunications career has spanned nearly a half-century. “I’ve had more fun in the last decade than at any time previously.”

Visual has ambitious vision for social VR in MSP

Visual, a Northeast Minneapolis startup run by co-founders Chuck Olsen and Taylor Carik, has an ambitious vision for “social VR,” a blend of social media, virtual reality and everyday experience. The company’s current app, an interactive social dashboard that hovers in an immersive, computer-generated 3D environment, will soon be available on two virtual reality headsets: Samsung’s Gear VR, an affordable consumer model, and Oculus’s DK2, a higher-end device ideal for gaming.
Visual’s app grew out of Futurekave, a far-reaching “virtual world platform” developed by Olsen and Carik. To help build it, the pair tapped Dual Reality Games, a group of talented app designers with members in MSP and Oregon. Users sync their social media profiles with the app, manipulating photos, posts, tweets and profile information using a keyboard or touchpad. Visual only works with Instagram at the moment, but other social networks are in the works.
Social VR’s time has come, explains Olsen. “Facebook is hiring 1,200 employees right now,” he says, “many of whom will be working on building a VR presence for the company.”
“But Facebook [and other tech companies like Apple] aren’t VR natives, like we are,” he adds. “That puts them at a disadvantage.”
As a small, lean startup, Visual is more nimble than Facebook et al. And as possibly the first independent social VR company anywhere in the country, Visual is uniquely positioned to take advantage of what Olsen and Carik believe will be a fundamental change in the public’s relationship with mobile computing and connectivity.
In the short term, VR is about to get a lot more accessible. Samsung is planning a big consumer push later this year for its $200 Gear VR headset, a goggled apparatus that syncs up with the Note 4 smartphone’s screen to immerse wearers in a 360-degree VR. Thus far, the Note 4 is the only piece of hardware that works with Gear VR, though (according to Olsen) that’s not as big of an obstacle as it seems.
“[Gear VR] is going to be under Christmas trees this year,” predicts Olsen. “If you’ve got a free phone upgrade, it’s not a huge commitment to get a Note 4 and then buy the headset.” And Samsung may tweak the Gear VR interface to work with other mobile devices, he adds.
Visual’s social VR app is also compatible with the DK2, a similar headset device from Oculus, the company responsible for many of the recent advances in VR interfacing.
In both cases, the headset experience is incredibly lifelike, with realistic sound, HD-quality video and just-barely-perceptible lag when the user moves his or her head. The big drawback, explains Olsen, is that VR is not yet interactive: You can move your head to look at different parts of the virtual environment, but you can’t reach out and manipulate your surroundings.
Visual’s social VR system could solve, or at least mitigate, the interactivity problem. Olsen and Carik imagine headset-wearing concert-goers using Virtual’s app to post real-time images and video with friends who aren’t at the event, or meet and engage with other social VR users who are present. While users wouldn’t actually be able to manipulate the performers or anything else about the environment, they’d be able to process and share it socially.
Olsen, Carik and the Dual Reality Games crew aren’t placing all their eggs in the headset basket, of course. Longer-term, they’re interested in the concept of augmented reality: a virtual, Internet-connected field of vision overlay, like a much more advanced version of Google Glass. They see Visual as a “hardware agnostic” app that can handle the social element of augmented reality, which some technology experts believe is the future of mobile Internet — the post-smartphone world.
“Imagine having your social dashboard in the corner of your living room, waiting for you to engage with it,” says Olsen. “That could really be powerful.”

Retrace offers cure for healthcare costs

Rising costs and inconvenient delivery modes beset healthcare consumers. Thompson Aderinkomi, a trained economist with an MBA from the University of Minnesota’s Carlson School of Business, has a novel solution.
His new startup, Retrace Health, offers at-home, on-demand consultations and care from licensed doctors and nurse practitioners, either by videoconference or in-person visit.
Retrace has grown rapidly since its late 2013 launch, when the company had a roster of about 40 patients, mostly Aderinkomi’s friends and family members. The company began accepting corporate clients in June 2014: Aderinkomi now counts at least seven client companies, ranging in size from a few hundred to a few thousand employees, whose employees can tap Retrace’s services. Between individual and corporate clients, Retrace now brokers “double-digit weekly consultation counts,” says Aderinkomi.
According to Aderinkomi, convenience — the fact that patients don’t have to drive to a clinic or hospital and sit in a waiting room for hours on end — is a huge factor in Retrace’s success. “We’ve found that once people try Retrace and realize how seamless the process can be, they use us more than they’d use a regular doctor or care provider,” says Aderinkomi.
Retrace’s doctors and NPs keep longer hours than a typical health clinic. Video consults are available 6 a.m. to 10 p.m. on Mondays, and 6 a.m. to 6 p.m. Tuesday through Friday. In-person consults occur from 10 a.m. to 3 p.m. Monday through Friday.
For simple issues, users can schedule a three-minute video consultation and be on their way. For more complex problems, a 30- or 60-minute home visit may be necessary. Retrace’s care providers can schedule same-day appointments with as little as 60 minutes’ notice, though off-hours requests need to wait until the following business day.
Retrace users also value the company’s untimed appointments. Whereas a traditional clinic might schedule 15 or 20 daily appointments per doctor or NP, Retrace’s care providers don’t have such heavy workloads. A lighter workload allows care providers to linger longer with each patient, answering questions and addressing issues that might normally get pushed aside due to time constraints.
Financially, Retrace isn’t out of reach for most patients. Individual patients who want to pay through their insurance provider (Retrace works with most providers) don’t have to pay anything to use the service, aside from premiums and co-pays set by their providers.
Individual patients who don’t want to tap their insurance providers can choose from three packages: Basic, Premium and Unlimited. Basic, which doesn’t come with an annual fee, requires users to pay a la carte for labs, visits and other services. (For instance, an in-home X-ray costs $150). Premium and Unlimited come with respective annual fees of $99 and $599; costs for visits and services are reduced or waived altogether. (Corporate prices are customized based on the client’s employee count and other factors.)
Retrace’s simple pricing scheme is a breath of fresh air in a healthcare sector that famous for confusing statements and wildly variable prices. “We’re huge believers in price transparency and simplicity,” says Aderinkomi. “Customers have a right to know upfront how much they’re paying for their care.”
And not everyone is bound by Retrace’s standard prices. The company’s “original 40” patients got a sweetheart deal in exchange for their faith in the company: An all-inclusive lifetime membership for a one-time fee of $300. That deal, unfortunately, is off the table, replaced by a limited-time promotion that waives all visit and lab fees for 12 months with the payment of an annual membership fee.

Walkway Workstation adds tech amenities to treadmill desks

Kari Severson, a Minneapolis-based inventor and entrepreneur, has a fun, healthy, ultra-connected solution for sedentary office workers: the Walkway Workstation, a “treadmill desk designed with the purposeful user in mind.” On March 2, Severson and her team of contract designers and developers celebrated Walkway’s official launch at Startup Venture Loft (SVL), a North Loop coworking space and startup incubator.
SVL will permanently feature at least one Walkway desk, a high-visibility win for Severson’s health-and-productivity startup.
“We’re thrilled to have the support of Startup Venture Loft’s tenants and management,” says Severson, a self-professed fitness enthusiast who juggles a full-time job at United Health Group with her entrepreneurial duties at Walkway. “It’s gratifying to see people embracing the Walkway concept so enthusiastically.”
Walkway Workstation also recently announced a partnership with MSP International Airport. Severson’s team will deliver two Walkways to Concourse C, near gate C21, and one to Concourse F, near gate F3. More could follow in other locations this year or next.
The airport partnership is apt. Severson first came up with the idea for Walkway during a hectic, travel-heavy period in her life. Because her boyfriend was enrolled in graduate school at the University of California Los Angeles, and Severson had a full-time job in MSP and was pursuing master’s program Duke University in North Carolina, she was constantly crisscrossing the country.
“With all the travel and a generally unpredictable schedule, I found myself really inactive,” she says. She came up with a concept that improved upon existing treadmill desks, which didn’t feature the amenities or built-in controls that would eventually adorn the Walkway.
Each Walkway is a self-contained unit equipped with a sturdy treadmill, ample desk space, device charging ports and a free Internet hotspot. The treadmill’s speed is capped at two miles per hour, a relatively leisurely pace that facilitates multitasking and doesn’t tire out users too quickly. The setup is ideal for individual offices, common areas in open-plan workplaces, waiting rooms and institutional public spaces, says Severson.
“The goal is to make everyday lifestyle resources available to busy people,” she says, “and to seamlessly facilitate healthy choices in a convenient setting.”
Severson offers several different Walkway configurations, each ideal for a particular end-user. A light-duty treadmill base is ideal for home offices and small workplaces; a moderate-duty base works better in medium-sized, collaborative workplaces; and a heavy-duty treadmill supports near-constant use at large corporate offices, and airports and other public spaces. Each version comes with the user’s choice of a manually or electronically adjustable desk.
Though individual buyers and small offices can purchase Walkways at market price, Severson’s team seeks sponsorships to subsidize the cost of units in heavily trafficked public spaces. In effect, each public Walkway is an interactive billboard; sponsors pay for customized user interfaces and prominent, outward-facing logo displays visible to anyone who walks by.
And a lot of people can walk by: According to Walkway’s website, about 26,000 people per day walk by the company’s two MSP airport sites.
Severson is looking at other revenue-generation ideas, too, including a “freemium” model that offers free access for an initial period, and then imposes a per-minute or per-hour rate for continued use. She’s also mulling partnerships with content providers to deliver premium music and video to users willing to pay a fee for the service.
Severson is also keen on the concept of “Walkway pods,” which would feature two, three or more Walkways facing one another — good for “walking meetings” and other collaborative activities, she says.

Design firm Little evolves into holistic brand agency

Little, one of Minneapolis’s oldest and best-known design and branding firms, has emerged stronger and more focused from a recession that left some local peers reeling and put others out of business altogether. Since the beginning of 2014, the company has signed a dozen new clients — including high-profile organizations like US Bank and the Minnesota Timberwolves. Collectively, the new accounts will add about $2 million to the company’s top line — a hefty boost for a firm with revenues of about $10 million last year.
Little is also refreshing its leadership ranks. Monica Little, the firm’s founder and principal, stepped aside last year. Into her shoes stepped competent leaders like president/chief creative officer Joe Cecere, vice president of finance and administration Kirk Grandstrand, and director of marketing and business development Traci Elder. Cecere is a Little veteran, but Grandstrand and Elder are outsiders to Little and the agency world writ large: Little hired both away from Best Buy.
The leadership change, says Cecere, brought a rare opportunity to reassess Little’s priorities and refine the company’s approach in a competitive, rapidly changing industry that’s sensitive to economic disruption. Little has historically focused on high-quality, brand-focused design; in the 1980s, the company cut its chops producing colorful annual reports for MSP-based corporate behemoths like Hudson-Dayton (later Target) and Polaris. But the past decade’s economic turmoil and technological changes drove home the need for a broader, bottom-up approach to branding.
“At our core, we still believe in the power of design,” says Cecere, “but we’re a much more holistic brand agency now than even five years ago.”
Brand strategy and effective communications, both internal and external, are now critical components of Little’s work. “We want our clients to know what they stand for,” says Cecere, “and to be able to effectively communicate that to employees and customers.”
Cecere cites the Minnesota Timberwolves as a prime example. Little is currently helping the Wolves through an “inside out rebranding,” asking employees at every level of the organization for insight into its identity and purpose. The eventual goal: a recognizable, unified brand that produces a compelling, consistent fan experience “that feels right from the moment [fans] enter the arena to the moment they leave,” says Cecere. “As an organization’s most important brand stewards, employees are integral to a positive customer experience.”
A broad-based, recession-related drop in marketing budgets and promotional spending complicated Little’s “reset,” though the company survived the downturn relatively unscathed.
“Companies typically cut ad spending after they’ve reduced costs elsewhere,” says Cecere, “but we were fortunate not to lose any clients during the recession, just individual projects.”
In some ways, the recent economic downturn was a boon for Little, despite the temporary hit to revenues. Lean times tend to disrupt “comfortable” sectors; well-run companies and organizations typically respond by refocusing and rebranding. For instance, Carleton College and the University of St. Thomas Law School, both recent additions to Little’s portfolio, are trying to remain competitive and relevant in an increasingly cluttered higher-education market.
“[These schools are] competing against larger institutions with inherent structural advantages,” says Cecere. “For organizations in such a position, the importance of effective branding and communication is clear.” Especially in a world where disruption is the new norm, and companies large and small struggle to stand out from the crowd.

App sparks new twist on old-fashioned matchmaking

SparkStarter, a matchmaking and dating app developed by MSP entrepreneur Tony Kramer, promises a better, less awkward way for singles to meet, mingle and (maybe) fall in love.
Launched nationally in mid-February, SparkStarter already has nearly 2 million unique user profiles. The business also has about a dozen collaborators working part- or full-time. The app is available for download at the Google Play store and the iTunes App Store.
Kramer has an aggressive plan to drive user growth over the coming months, relying on a combination of organic growth and collaborations with nonprofit organizations.
“We’re developing win-win partnerships to grow our user base in return for supporting worthy causes,” says Kramer. “We love giving back to charities and the community in general, as we see SparkStarter as a thriving community of its own.”
Kramer is also laser-focused on the user experience, a weak point for some other dating apps. “We’re continuously adding features to engage users,” he says, describing how customer feedback led his team to add a social feed that strengthens the connections between Sparkstarter users.
SparkStarter syncs with Facebook for a twist on the now-familiar dating app archetype. As a single user, you browse your friends and friends-of-friends lists to find other eligible singles who catch your eye. When you find someone appealing, you can “vote up” to create a “Spark” — a potential match — and get formally introduced by a mutual friend.
Since both individuals know the matchmaker, these matches involve an element of trust and familiarity that may be missing from chance encounters or dates brokered by a computerized dating app. And since the matchmaker knows the individuals well, he or she is likely to be a great judge of their mutual compatibility.
Once the introduction has been made, other SparkStarter users in your Facebook network can upvote or downvote the Spark; upvotes increase your compatibility score relative to your match partner, while downvotes decrease compatibility. A built-in messaging system lets you communicate with your Spark partner. If things go well, you and your partner can mutually decide to meet offline as well.
Unlike most other dating apps, SparkStarter has a distinctly social element, welcoming — even relying on — input from other users (who may not even be single) to determine the compatibility of each match. Each upvote is a literal vote of confidence that the two individuals go well together — and that the match will ultimately succeed.
Kramer’s confidence in the SparkStarter model comes, in part, from personal experience. Five years ago, while trawling Facebook, a good friend of Kramer’s found an old female acquaintance who seemed to be compatible with Kramer. He introduced the two online, and a real-world relationship soon blossomed.
“Within 3 years after that first date, we were married,” Kramer recalls. “It was simple, easy” and not at all awkward, he adds. After speaking with friends and colleagues, Kramer realized that his experience wasn’t unique: Lasting relationships often form when a matchmaker introduces two mutual friends to one another, whether online or in person. But when he met his future wife, Astyn, Kramer wasn’t aware of any apps or websites that facilitated person-to-person matchmaking.
“While online dating and apps had become more popular, there still wasn't a digital concept that involved a common way for people meet, through a mutual friend,” says Kramer. “That's when the idea for SparkStarter was born.”

Humdinger grows by catering to other startups

Humdinger and Sons, a young ad agency in Minneapolis’ Mill District, may have found the formula for startup success in a competitive industry dominated by entrenched behemoths: seek out, and partner with, other ambitious startups.
With a full-time staff of six and a trusted supporting cast of freelance scriptwriters, developers and designers, Humdinger has built and scaled a business around memorable, well-produced promotional videos.
Thanks to a rapidly rising profile and impressive client retention rate, Humdinger is growing faster than at any point in its two-year history. At least two new hires, including for business development, are imminent.
“We’re taking the expertise we’ve developed over the years in the ad business and reinventing a business model that really hasn’t changed in 40 years,” says Nicolas Will, who co-founded the company along with fellow Minneapolis native Andrew Berg. “Our clients are immensely receptive — we haven’t lost a single one since we’ve been in business.”
Will and Berg tie Humdinger’s retention figures to the company’s unique niche and approach. Unlike traditional agencies, which typically compete for high-profile clients like Target and Wells Fargo, Humdinger seeks out ambitious but often cash-strapped startups — in MSP, coastal innovation centers and even international markets — that simultaneously need funding and exposure. In many cases, Humdinger clients can’t even afford an in-house marketing employee.
“For a lot of our clients, we’re basically operating as an external marketing department,” says Berg. “Once they see what we can do [after the first project], they totally trust us to handle their promotional needs.”
Humdinger’s startup culture appeals to entrepreneurs and innovators, too. Startup owners are used to devising and implementing solutions quickly, without filtering decisions through multiple layers of red tape or aligning directives with corporate protocols. For people used to results, says Will, working with a traditional agency can be a frustrating experience. With Humdinger, there are few if any barriers between agency and client.
And for Will, Berg and the rest of the Humdinger team, working with smaller firms ensures that creative work doesn’t get diluted or shelved by an in-house marketing department or hands-on C-suite employees, as sometimes happens with larger corporate clients.
There’s an additional benefit to Humdinger’s niche: a relative lack of competition. Will and Berg struggle to identify their closest competitors, largely because established agencies — even small ones — tend to pass on unproven startups that may still be scrounging for funding.
While Will estimates that 80 percent of Humdinger’s business is paid upfront, the company will often exchange its services for a percentage of a client’s Kickstarter funding, or even (though less frequently) for an equity stake. Some of Humdinger’s most promising clients” have accepted Humdinger’s services in exchange for equity or a “Kickstarter kickback.”
Accepting equity or a percentage of a crowdfunding round — which isn’t guaranteed to succeed — “is a bit of a risk,” says Berg. But for truly promising startups, it’s an acceptable risk.
Will and Berg weren’t always risk-takers. Both cut their chops at big coastal ad agencies with high-profile clients — Will was part of a team that designed LeBron James’ first website, after the NBA superstar signed a massive deal with Nike. But in the early 2010s, Will and Berg returned to their native MSP, ostensibly to settle down. The pair first crossed paths at Olson, where they worked for a few months on the company’s Tivo account.
Though Will and Berg enjoyed working at Olson, they soon grew frustrated by the sheer volume of inquiries they and their colleagues received from smaller companies and startups without the six- or seven-figure budgets necessary to support a full-scale campaign with a major agency — the types of companies that would later become Humdinger’s bread and butter. So Will and Berg conceived the “Humdinger model.”
Current Humdinger Job Listings in Minneapolis
  1. Business Development Manager
  2. PR Specialist

Great Lakes Clothing Company grows "life at the lake" brand

A successful Kickstarter that netted Great Lakes Clothing Company more than $20,000 will allow the custom clothing company to move into a new collaborative work space on March 1. The company will share space near the North Minneapolis riverfront with several other Minnesota companies—including Marked Leather, Mill City Fineries, and the U.S.-made artisanal clothing and product distributor William Rogue & Co.
“We’re committed to the idea of native businesses sticking together, sharing resources and space,” says cofounder Spencer Barrett, hinting at the prospect of future apparel and branding partnerships with Great Lakes’ co-tenants. The move will roughly quadruple Great Lakes’ floor space, from 600 to about 2,400 square feet,
For now, cofounders Barrett and David Burke plan to use the expanded space to grow their inventory and make way for new hires to manage inventory, sales and the company’s expanding online presence.
Great Lakes has already shipped its branded T-shirts, crew sweaters, polos and accessories — including koozies — to 47 states, building buzz largely through word of mouth, a no-frills video marketing campaign orchestrated by Barrett, and a “brand ambassador” program that recruits college students to sport its clothing on campuses across the Midwest.
Customer service doesn’t hurt either. The co-founders include a handwritten thank-you note with every online order and send a follow-up email about a week after each customer’s order arrives.
According to the co-founders, Great Lakes’ brand centers around “life at the lake,” a laid-back, nostalgic vibe that’s instantly recognizable to anyone who has spent a warm day near a body of water in Minnesota. The brand’s mascot is an understated loon, a Northern archetype that needs no introduction.
“We found a huge gap in the apparel market,” explains Burke. “No one in Minnesota, or anywhere in the Midwest for that matter, was taking advantage of our unique Northern lifestyle and fusing those ideals into a brand. We strive to create fun, useful and well-made products inspired by life at the lake.”
“We were inspired by shared memories of time spent around the water” in the Twin Cities and up north, adds Barrett. “It’s a common experience shared not just by people in Minneapolis-St. Paul and Minnesota, but by anyone who lives near fresh water.”
Another Great Lakes differentiator: Unlike many of their competitors, including similarly sized startups, Burke and Barrett are committed to a totally American-made supply chain. The pair will oversee all design work at their new Minneapolis studio, even as the company grows.
Great Lakes currently relies on a North Carolina manufacturer to supply the bulk of their unfinished shirts — “that’s where most of the American textile industry operates these days,” explains Barrett — with partners in the Twin Cities handling embroidering, printing and other final touches.
Though the online sales model is working well for now, Burke and Barrett are hoping to diversify in the months ahead. A last-minute decision to put on a popup store during the holiday season paid off big time, “blowing past our already pretty ambitious projections for November,” says Burke.
The co-founders are already exploring additional popup opportunities at outdoor events — including a “winter golf” tournament on Lake Minnetonka in mid-February — and, possibly, local brewery taprooms.
But “the dream,” says Burke, “is a flagship store that gets right to the core of the Great Lakes brand,” with an expansive retail area up front and a fulfillment center in the back.
“The popup experience has really reinforced the importance of personal connections for us,” says Burke, noting that in-store conversion rates are about five times higher than online. “We want to be as friendly and hospitable to the customer as we can.”

Tangletown/Wise Acre's farm-to-table growth

The calendar still says winter, but Tangletown Gardens is ramping up hiring, and investing in initiatives to make the popular South Minneapolis business “even better at what we grow, what we produce, and what we create for our customers and the communities we serve,” says co-founder and principal Scott Endres.
That doesn’t mean, however, that Endres and co-owner Dean Engelmann will tear up a playbook that has worked for more than a decade.
“The growth of our business has always been organic,” Endres says. “We make sure things as are as good as they can be before taking the next step. Right now, we feel there is room to grow and refine all aspects of our business without having to take on new ventures.”
Tangletown Gardens’ current ventures keep Endres, Engelmann and their staffers plenty busy. The flagship garden center at 54th & Nicollet supports a flourishing garden design and consulting business that counts some of the Twin Cities’ most notable companies, nonprofits, government organizations and individuals as clients. Off the top of his head, Endres lists the Museum of Russian Art, the Minneapolis Park Board, the Minnesota Landscape Arboretum and the U of M’s Horticulture Department as “garden partners.”
Endres and Engelmann met while enrolled in the University of Minnesota’s horticulture program. They worked in the landscape design business before setting out as partners and founding Tangletown. Careful product selection and innovative cultivation strategies play a role in their success, along with their backgrounds. According to Endres, Tangletown has “thousands of...perennial, annual and vegetable varieties,” along with “the most diverse group of unusual and hard-to-find woody plants in the Upper Midwest.”
In addition to the garden center, Endres and Engelmann run Wise Acre Eatery, a bastion of the Twin Cities’ farm-to-fork movement, and a 100-acre farm in Plato, which supplies Wise Acre and a flourishing CSA. According to Wise Acre’s website, “80 to 90 percent of what we serve is grown sustainably” on the Plato farm.
Since opening in 2012, Wise Acre has been joined by a host of farm-centric restaurants across town. But it remains unique. “Unlike the owners of any other restaurant we know of, we are the folks sowing the seeds, nurturing plants, and tending the animals in the morning, then delivering the harvest to our restaurant’s kitchen in the afternoon,” says Endres.
Endres and Engelmann grow produce year-round in state-of-the-art greenhouses to maintain their locally grown supply. The owners also keep Scottish Highland cattle, two heritage pork breeds and free-range poultry on the farm — a self-contained food ecosystem that relies on “biology, not toxic chemicals,” says Endres.
“Healthy soil creates healthy food and gardens, which ultimately create healthy people,” adds Engelmann.
This philosophy reflects Endres’ and Engelmann’s upbringing. Though horticulturalists by training, both grew up on small working farms in the family for generations. “Our fathers, grandfathers, and great-grandfathers knew the way they treated their land would shape its future,” says Endres. “We farm today in much the same way as the farms we grew up on.”
Current Tangletown Job Listings in Minneapolis
  1. Garden Designer
  2. Container Designer
  3. Gardener
  4. Seasonal Garden Center Associate
  5. Seasonal Landscape Team Member


MNvest and MN-SBIR to reduce funding barriers for startups

Two new initiatives, MNvest and MN-SBIR (Small Business Innovation Research), are aiming to give Minneapolis-St. Paul startups and entrepreneurs a competitive leg up. Both initiatives lessen or remove existing barriers to funding for early-stage companies.
MNvest is a legislative proposal that could pave the way for “equity crowdfunding,” which would remove some red tape from existing securities law and allow young companies to raise up to $5 million from members of the public in any 12-month period.
Currently, Minnesota startups can raise funds in three ways, none of them ideal. First, they can register with state and federal securities regulators, a costly and stringent process that’s unrealistic for capital-starved entrepreneurs. Second, they can limit advertised investment offerings to accredited investors — roughly the state’s wealthiest one percent.
Third and most common: They can make a private, unadvertised offering, sometimes known as a “friends and family round,” but can’t solicit on the Internet or through other public means. In all cases, startups must either shoulder unreasonable costs or remain unable to accept investments from most members of the public.
MNvest’s value proposition appeals to lawmakers and constituents alike, says Winthrop & Weinstine attorney and MNvest proponent Ryan Schildkraut. “The question is simple: Why should only the wealthiest people be able to use the Internet to invest in businesses with compelling ideas?”
MN-SBIR is a conduit to the federal SBIR program, which offers access to more than $2 billion in business grants from nearly a dozen federal agencies. Individual grants range from less than $150,000 for Phase I (early stage) companies to as much as $4 million for Phase III (established, generally medium-sized) companies.
MN-SBIR provides technical support, proposal writing assistance, cost analyses, commercialization planning and other services for startups and small-to-medium-sized businesses seeking grant money. The Minnesota program also offers regular workshops, including a February 24 proposal-writing workshop and a March 26 overview workshop, for participants and interested parties.
MN-SBIR is “often the only source of capital available” to startups and small companies perceived as high-risk by traditional lenders, including venture capitalists, says MN-SBIR director Pat Dillon.
The program also pumps federal dollars into Minnesota’s economy. “We send so much of our [tax] money to Washington,” says Dillon. “This is one way for us to get some of it back.”
But both MN-SBIR and MNvest face challenges.
As a legislative proposal, MNvest is currently working its way through committees at the Capitol. Though the bill has bipartisan support and “has not run into major opposition from any group,” the legislative process offers no guarantees, says Zachary Robins, Schildkraut’s Winthrop colleague and fellow MNvest proponent. House and Senate versions of the bill still need to be reconciled into a single draft, a process that can take time. A full vote could happen anytime between now and late spring, with the governor’s signature required for MNvest to become law.
“We’re cautiously optimistic about MNvest’s prospects,” says Robins.
MN-SBIR faces a different set of obstacles. The state government recently restarted the program after a decade-long hiatus. MN-SBIR remains under-resourced due to its newness and funding realities, with Dillon and a small team of consultants sharing responsibilities.
“I’m a hard worker, but I’m not Superwoman,” Dillon laughs.
The continued economic vitality of Minneapolis-St. Paul, and Minnesota more broadly, could hinge on the success of MNvest and MN-SBIR. Both find the state in the unfamiliar position of playing catch-up with others, including some of its closest neighbors.
MNvest, for instance, is similar to bills already passed in Wisconsin, Indiana and other midwestern states. Last year, Schildkraut found out about Craftfund, a Milwaukee-based brewery crowdfunding platform that takes advantage of the Wisconsin law.
“I assumed we had something similar on the books in Minnesota,” he recalls. When subsequent research failed to turn up anything similar, he and Robins set MNvest in motion.
“We’re just young and energetic enough to try to get a law passed,” says Schildkraut.
Meanwhile, MN-SBIR aims to dramatically increase Minnesota’s share of the federal SBIR pie. Local companies account for just $30 million of the $2.3 billion total, a disproportionately small share relative to population. California and Massachusetts alone account for nearly 50 percent of the available amount.
“We could do a whole lot better given our size and existing entrepreneurial energy,” says Dillon.

College of Design students craft tap handles for micro-breweries

A novel partnership between several local craft breweries and the students in a College of Design class at the University of Minnesota produced innovative tap-handle designs, and laid the groundwork for future collaborations between creative students and the Twin Cities’ booming beer industry. Sarah Sheber, a fabric developer at Target, taught the Product Form and Model Making class. Her intention was to give students a window into the workings of the small, creative businesses reshaping the Twin Cities’ economy.
“I pursued smaller [breweries] purposefully,” she says. “I wanted students to have a chance to learn as much about [the breweries’] brands as they could, to see as much of the business as possible and understand the different roles that go into producing local brews. With a large company [like Target], individuals own a small piece of the process. With small companies, each member of the team needs to be flexible, to know the business and the brand, and be able to wear a lot of hats.” 
Fair State Brewing Cooperative in Northeast Minneapolis participated in the project. So did Mighty Axe Hops, which produces high-quality, locally grown hops for brewers in Minneapolis, St. Paul and elsewhere; and Excelsior Brewing, a suburban taproom and brewery.
Students produced multiple tap-handle designs for each business, some attempting improvements on existing designs and others completely reimagining the brands’ ethos. Breweries had the option to purchase finalized tap handles, which otherwise remain student property.
The collaboration had two overarching goals. First, Sheber wanted to students to experience the creative freedom and creative expression that inform commercial design projects. “The idea was to act like a client, providing support and feedback as students worked through each design,” says Matt Hauck, Fair State’s director of operations.
Not every design was practical. One student incorporated powerful rare earth magnets into a prototype, recalls Fair State CEO Evan Sallee, making it impossible to detach and move. “There was a lot of trial and error,” says Sallee, “but it was great to be engaged with talented students who are passionate about design.”
Some designs eventually solved problems of which Hauck and Sallee weren’t even aware. “The students we worked with put a lot of thought into the ergonomics of their final designs, something we’d never even considered,” says Sallee.
Sheber and her students unveiled the final tap-handle designs during a December 16 happy hour fueled, naturally, by free beer from Fair State and Excelsior. Sheber is already planning to bring back the collaboration for next year’s class, possibly with new brewery partners.
“We’ve had interest from brewers of all scales,” says Sheber, some of whom urgently need updated branding.
At Fair State, Sallee and Hauck may take a pass on using any of last semester’s designs. But they’re open to future collaborations that keep their branding fresh and distinctive.
The local craft beer community is largely chummy and supportive of new entrants, says Sallee. “But positioning among other breweries’ tap handles at bars is still important,” he notes. “You want your design to stand out in the right way.”

Tiny Diner is top Small Business Revolution story

Kim Bartmann’s Tiny Diner has just been honored as the country’s top “Small Business Revolution” story by Deluxe, a business services company based in the Twin Cities’ northern suburbs. The South Minneapolis restaurant was the first stop on Deluxe’s nationwide Small Business Revolution tour, which will profile 100 U.S. companies during the coming months in honor of Deluxe’s 100th anniversary.
Small Business Revolution was initiated in response to what Deluxe sees as the country’s increasingly impersonal, digitized economy; a place where conducting anonymous online transactions is often easier than seeking out independent, brick-and-mortar businesses owned by our friends and neighbors.
“We’re less likely to know who we’re buying from,” according to Deluxe’s Small Business Revolution website. “We’re exchanging data instead of sharing experiences. In too many places, the magic and the meaning [of doing business] have begun to fade.”
According to Deluxe, Small Business Revolution taps “award-winning independent filmmakers and photographers to honor” businesses that “create something more personal, more local, more meaningful for all of us.”
Bartmann’s participation required a couple of phone interviews and a “fairly long day of shooting,” Bartmann says—not a bad deal for national exposure.
“I was thrilled to be approached,” she says. Bartmann owns Tiny Diner and seven other restaurants across the Twin Cities. “I’m interested in taking part in anything that promotes small business here.” She found her way onto Deluxe’s radar, she says, because she’s a prominent booster for the Twin Cities Metro Independent Business Alliance, a key small business organization.
Deluxe immediately bought into “the pretty powerful little project we have here,” says Bartmann. Tiny Diner is “engaging sustainable food production in a real way,” she says, “thinking through how we can close the loop in the traditionally wasteful restaurant industry.”
As a diner that offers food at a moderate price point and caters to a regular, neighborhood-centric crowd, says Bartmann, Tiny Diner has an even greater responsibility to be sustainable than high-end “destination” restaurants.
Case in point: Tiny Diner’s patio-top solar setup is “the largest visible solar array” in the Twin Cities, she said, as all larger arrays are on high roofs or hidden behind greenery. Despite the array’s size, Bartmann offset about 90 percent of its cost through various state and federal rebates.
Bartmann is justifiably proud of Tiny Diner’s food, too. “Our challenge is to think about how we can make typical diner food, like hash browns, better,” she says. “You can go and eat at a lot of restaurants, but you’re not always being fed.”
After Tiny Diner, the Small Business Revolution tour hit The Shed Fitness and Bogart’s Donuts, both also in Minneapolis. The tour heads south to Kansas next, though Deluxe is still accepting nominations for businesses to be featured in the tour’s later stages, regardless of location.

SVL helping to transform MSP into national tech hub

Startup Venture Loft (SVL) tripled its physical footprint with a move into an 8,500 square foot space in the North Loop’s McKesson Building last September. The new digs were the final piece of a year-long rebranding and restructuring process that transformed SVL from Healthcare.mn, a healthcare-focused business accelerator, into a coworking hub and incubator for “investable startup companies with high growth potential,” says owner and executive director Peter Kane.
“Expanding to an 8,500 square foot space grabs people’s attention and lets them know we’re serious,” says Kane, who wants to “make the Twin Cities the best place in the country to launch a startup.”
Thirty early stage companies mostly in the healthcare and technology sectors now rent space at SVL, up from just five in November 2013. Healthcare.mn remains an SVL tenant.
Turning the Twin Cities into a tech hub requires a self-contained ecosystem of entrepreneurs and talented knowledge workers, plus venture capital funds, angel investors and service providers such as intellectual property lawyers and marketing specialists, who support and promote entrepreneurial efforts.
Kane cites Chicago—a city not known for its technology industry until recently—as a model for the Twin Cities. 1871 is the beating heart of Chicago’s tech startup scene, with tenants ranging from idea-stage one-person companies to established VC funds that funnel capital into proven technology concepts. Decision-makers from big technology and healthcare firms, including Google, either rent space in or routinely visit 1871, providing startups with access to larger, more lucrative markets and creating buyout opportunities—known as “exit strategies” in startup parlance.
SVL also aims to bridge a generational and cultural gap that hinders local startups’ growth. Many Twin Cities entrepreneurs, especially in tech and healthcare, are Millennials with different values and business strategies than the older, more experienced executives and investors they typically pitch ideas to. Kane’s two previous startups both failed in part, he says, because established company executives didn’t take him seriously.
“Our culture is somewhat risk averse, which isn’t necessarily a bad thing,” says Kane. “But [decision makers] want to know that you’ve been vetted, and that’s a tough sell when you’re a 20-something entrepreneur and everyone across the table from you is a baby boomer Pharm.D.”
“The response is often ‘who are you’ and ‘why should I trust that you know what you’re doing,’” he adds. “There isn’t the sort of informal vetting network that exists in more established tech centers like Silicon Valley and New York.” Kane wants SVL to be a core node in that network. With the support of a competent, technology-driven community, entrepreneurs associated with SVL would have a de facto stamp of approval from investors and corporate decision makers.
Bringing entrepreneurs and business leaders together also requires a mature digital media sector that trumpets the Twin Cities’ startup scene as worth of national and international attention—and investment.
“We’re not always great at telling our story [in the Twin Cities],” says Kane. “We need a beacon—the media—that churns out stories with national appeal and raises the local startup scene’s profile to where it needs to be.”

SPS Commerce positioning retail supply-chain software for global presence

SPS Commerce, a retail supply-chain software company that occupies six floors in downtown Minneapolis’ Accenture Tower, has added about 200 employees since 2012. “And the rate of hiring is not slowing down,” says Peter Zaballos, VP of marketing and product. SPS Commerce has more than 800 employees as of this month. The company just added a new floor to its downtown headquarters, with an option for additional space in the building.
“We’re positioning to become a world-class, global supply-chain business” in the tech space, he adds. “That’s making us a magnet for talent in the Twin Cities region and around the world.”
Most of SPS’ employees work at its Minneapolis headquarters. The firm also has a big presence in New Jersey, as well as international operations centers in Beijing, Hong Kong, Mumbai, Sydney, Melbourne, London and Kiev. Each office will grow “organically” even as SPS adds employees in Minneapolis, says Zaballos.
SPS Commerce’s ambition got big boost last month, winning MHTA’s prestigious Tekne Award for best software platform in the “established company” category. SPS was one of 12 Tekne winners this year, out of more than 100 entrants. According to an SPS release, the company won plaudits for “embracing innovation and the changes that today’s retailers are facing, while giving global organizations access to an established online trading community.”
“The Tekne win really communicates to the local and national tech communities that SPS is on the forefront of the ongoing reinvention of retail,” says Zaballos. “We’re on the move.”
SPS Commerce is also raising its profile in the booming Twin Cities tech community. The company’s CEO and CTO earned Minneapolis/St. Paul Business Journal’s prestigious Titans of Technology Award in September. And the company routinely hosts events for programmers and business professionals at its offices.
“We enjoy sharing our success with other members of the local technology community,” says Zaballos. “It’s a great opportunity.”
Zaballos and other SPS executives are thrilled with the Twin Cities tech community’s progress. Zaballos came to SPS less than three years ago, after extended stints in major coastal tech hubs: Silicon Valley, Boston, Seattle. He’d never set foot in the Twin Cities. But he was “stunned by the breadth, vibrancy and depth” of the industry.
“The quality of the people here is amazing,” he says. Local professionals are also “aware of the game they’re playing”—a game, Zaballos argues, largely controlled by elites in the Bay Area and New York. “To compete on a global basis, you need to play in that league,” which the Twin Cities does very well, he says. Finding competent, talented workers is easy here.
SPS Commerce helps retail clients manage and expand digital sales channels, providing analytics, inventory management and seamless interfacing with suppliers and other software platforms.
“Things that seem easy to do when you’re shopping online are actually super complicated for retailers,” says Zaballos. A dramatic increase in mobile device use complicates matters further. “Mobile shoppers are especially high maintenance,” he says.
More than 55,000 retailers and suppliers now use SPS’ solutions. But most local residents have still never heard of SPS Commerce, despite current revenues of nearly $130 million.
When Zaballos took his current job, the company had no marketing department to speak of. “Our sales team was and is really good at getting suppliers into our network,” he says. “We got to around $100 million in revenues and tens of thousands of users before anyone [outside the retail industry] had heard of us.”
SPS kept its low profile despite an IPO back in 2010. It’s listed on the NASDAQ, under the ticker symbol SPSC. “Being public is a big advantage for us,” says Zaballos. “Prospective clients and employees can look at our annual reports and financial disclosures and know that we’re a fundamentally sound, growing business.”
One item of note in SPS’ public filings: The company currently has $170 million in cash on hand, an impressive sum for a firm of its size. That cash pile will support SPS’ aggressive hiring and expansion drives—and possibly spur more exciting investments in the future.
And the company is finally investing in publicity for itself. “We’re thrilled to be telling our story,” says Zaballos. “We want talented Twin Cities professionals who share our values to see a future with us.”
Current SPS Commerce Job Listings in Minneapolis
  1. Account Executive
  2. Business Analyst
  3. Marketing Acquisition Manager
  4. Software Engineer
  5. Supply Chain Strategist
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