Inaugural Spin66 dishes entrepreneurial tips (Matt E. Miller) - Springfield Business Journal

From startup to selling to failures, the Springfield Innovation Summit covers all the bases

Brian Brown, Contributing Writer

Monday, May 12, 2014 9:29 AM

Springfield urologist Dr. Howard Follis says he didn't build his electronic medical records software firm, Intuitive Medical Software LLC, with the intention of selling. Follis is now developing a mobile EMR system for health care professionals.

Keela Davis: The Springfield area lacks venues for innovative business collaboration.
Matt E. Miller: Testing ideas through social media can help avoid failures.

The three things that might keep entrepreneurs awake the most at night: starting the next venture, selling the business or managing the failures.

The Springfield Innovation Summit, aka Spin66, covered all three and other topics during the May 5 half-day event at The eFactory downtown business incubator. Nearly 200 professionals attended the summit, organized by Mercy Research and Development, The eFactory and Create Springfield to mobilize and connect area business experts with entrepreneurs at various stages of business.

“We realized the Springfield area was limited in forums that would allow this type of group to come together and begin talking, learning and trying new things. That’s what today’s event is about,” said Mercy R&D Director Keela Davis as she welcomed attendees. “Whether it was ideas that were started on napkins at Springfield restaurants or perhaps on counters at Brown Derbys, entrepreneurialism is something this city is primed to do.”

Step 1: Startup
What is your risk tolerance?

Jeff Schrag, owner of Springfield brewery startup Mother’s Brewing Co. and veteran legal publication The Daily Events, said determining one’s tolerance to risk is a good place to start.

For Schrag, his risk factor emerged in the late 1990s, when he became nervous legal publications might be fading with the rise of the Internet. He started looking for his next business venture.

“The Mother’s idea was based on the notion that I was just young enough to gamble everything I have one more time,” Schrag said during a breakout session titled, “There is no boilerplate.”

While Schrag said Daily Events is still going strong filling its niche, his strategizing coupled with his tough skin ultimately advanced the brewery idea.  

He said the best advice for young entrepreneurs is to be flexible about where and how profits are generated.

Schrag said he recently read a story about a couple selling emu oil that demonstrates the value of flexibility. In the ’90s, they bought emus to breed before the bottom fell out of the fledgling industry. The demand for emus and their eggs fell off, but Schrag said their ability to adapt saved them.

“I’m always telling people, ‘You may think that your profit is going to be over here, and if you are lucky, you’ll be right.’ Most people aren’t that lucky. Most people go through trial and error, and in the end, the customer decides,” Schrag said.

He also said it can be good to tiptoe into a business. A Kansas City-area printer Schrag knows uses a wide press – a piece of specialty equipment most printers don’t have. The company, Lew Printing, bought a wide press and owner Larry Wittmeyer began his business out of his home by letting area print shops know that he could handle specialty jobs for them. The owner started slow but eventually grew his business and was able to leave his other job. Schrag said entrepreneurialism is all about finding and filling a need in the market.

He also said networking is important. Schrag recommended new business owners join trade associations to learn industry best practices. In the craft beer market, Schrag has leaned on the experience of industry veterans with Boulevard Brewing Co., Schlafly Beer and New Belgium Brewing Co. to help guide production-related decisions.

Step 2: Failure management
Developer Matt E. Miller – who is embarking on a multimillion-dollar student housing project dubbed The Q Place – knows a thing or two about failing and starting over.

“It’s OK to fail. It’s part of the process to success,” said Miller, who operates Miller Commerce LLC, which has had a hand in developing $100 million in projects, including Deep Elm, The Jefferson and The Monroe.

Last year, Miller and Pat O’Reilly went their separate ways after developing properties together for nearly a decade under Miller-O’Reilly Co. Inc. Miller stopped short of calling the split a business failure, because the company still exists and manages property. They now each develop separately: Miller through Miller Commerce LLC and O’Reilly via O’Reilly Development Co. LLC.

While leading the workshop titled, “Failing is a chance for a new start,” Miller noted business authors estimate for every success, an entrepreneur experiences nearly four failures. Because failures are inevitable and teach valuable lessons, he recommended “failing responsibly.”

“There are casualties involved,” he said.

For Miller, failing responsibly means taking appropriate risks and testing ideas upfront through social media, for example. “It is so easy to test your ideas out there now. There is a value in knowing what doesn’t work,” he said, noting persistence is a business virtue, but being stubborn can have its drawbacks and lead to bigger failures.

The most common failure, he said, is missing out on opportunities to turn good ideas into reality. He said many people don’t succeed because they lack the passion necessary to see a venture through. Also, he cautioned being unprepared for challenges can be a stumbling block.

Ultimately, Miller said it is important for entrepreneurs to be willing to learn from their mistakes. “The best lessons are learned at the scene of the crash,” he said.

Step 3: Exit strategies
Springfield urologist Dr. Howard Follis is well-versed in making the tough decision to sell a startup.

In 2011, Follis sold his 7-year-old electronic medical records software firm to Delaware-based Endo Pharmaceuticals (Nasdaq: ENDP) for an undisclosed amount. He said selling something he was so personally invested in was not easy.

“We actually were in acquisition mode ourselves. We weren’t really looking to be acquired,” Follis said during the “Staying in it and getting out of it” session.

After launching Intuitive Medical Software LLC in 2004, Follis grew the company through marketing, setting up a professional management team and implementing solid accounting practices. The legwork in the formative years paved the way for a sale.

He said Endo Pharmaceuticals in 2010 began talks with Follis.

“They wanted to buy us, and honestly we were neutral about it. In retrospect, that was a good frame of mind to be in, because we didn’t need to sell,” Follis said of the 35-person firm.

He said the first offer was low, based on comparable sales in the industry, so Follis declined and went back to work. Weeks later, Endo officials increased their offer, and after a roughly six-month negotiation period that included a financial review of the company, the transaction closed.

Follis, who still works as a urologist two days a week, said he’s been bitten by the entrepreneurial bug and now is developing a mobile EMR system for health care professionals.

Follis said older EMR software often isn’t compatible with newer tablet technology, so he’s forging ahead with development even though his return on investment is unclear.

Rick Thomas, co-organizer of the 1 Million Cups business-networking event in Springfield and a panelist in the Spin66 session on failure, said the nature of development is uncertain. What separates entrepreneurs from others is they are willing to blaze new trails.

“Development is exactly that – you don’t know where you are going. You’re developing,” Thomas said. “All entrepreneurs are willing to fail. That’s what keeps them in the game.”

Editor Eric Olson contributed to this story.