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CONTENTS FEBRUARY 2016
Trending
40 Banking | Banking on a Durable Economy Local lenders have an optimistic outlook for 2016. By Burl Gilyard
45 Technology | Data-Driven, Digitally Delivered Marketing automation helps businesses get closer to their customers. By Gene Rebeck
49 Insurance | Insurance for Startups Small businesses have many of the same insurance needs as large companies. Resources exist to help entrepreneurs understand the varieties. By Nancy Crotti Dee Thibodeau, p. 39 Departments Features 6 Starters 22 Northern Exposure | Populating Cook County Gas station strategy County leaders want to entice more young people and entrepreneurs Who will support the MOA’s expansion? to the area, but there’s at least one big challenge: Where will they live? Fridge magnet revival By Gene Rebeck 11 A & E 24 Who is Ned Abdul? Springsteen and the E Street Band come to the X with The River Tour; And why is he so busy? Learn about this bold player in the intensely enjoy Eastern spirituality and Western spectacle with Shen Yun. competitive arena of commercial real estate. By Burl Gilyard 12 Concierge | The Play’s the Thing Treat your out-of-town clients to a local theater performance. 30 Escape Route By Melinda Nelson Airport clubs are a hot growth business, and MSP travelers are getting a taste of the competition. 13 Plugged In By Adam Platt Spend the day in a series of interactive sessions with some of Minnesota’s top innovators at the MNovation Seminar Series. 34 TCB Women’s Leadership Awards By Kate LeRette Meet five accomplished women who serve as role models in how they lead their companies and how they serve their communities. 15 Beyond These Pages By Suzy Frisch and Fran Howard Celebrating 2015 Person of the Year Omar Ishrak, CEO and chairman of Medtronic; check us out on YouTube: tcbmagvideos.
TWIN CITIES BUSINESS, Vol. 23, No. 6. © 2016 MSP Communications. The opinions of columnists are their own. Unsolicited manuscripts or artwork will not be returned unless accompanied by a self-addressed, stamped envelope. Telephone 612-339- 7571. Fax 612-339-5806. E-mail: [email protected]. TWIN CITIES BUSINESS (ISSN 1072-673X) is published monthly by MSP Communications, 220 S. Sixth St., Suite 500, Minneapolis, MN 55402-4507. Subscriptions available for $24.95 per year; foreign subscriptions, $169.00 per year; back issues, $10.00. To subscribe or change address, visit tcbmag.com/subscriptions.aspx. For back issue requests, contact [email protected] or 612-339-7571. Periodicals postage paid at St. Paul, MN, and at additional mailing offices. POSTMASTER: Send all UAA to CFS. (see DMM707.4.12.5); NON-POSTAL AND MILITARY FACILITIES: send address corrections to TWIN CITIES BUSINESS, Subscription Processing, P.O. Box 5846, Harlan, IA 51593.
2 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Commentary
5 Editor’s Note Time to end sugar subsidies?
14 Personal Brand By Roshini Rajkumar Little things matter in how the world perceives you. 16 Economic Indicators GIVING Economic pessimism persists at the outset of 2016.
20 Performing Philanthropy By Sarah Lutman What are the ripple effects from Mark Zuckerberg and Priscilla Chan’s charitable giving? 21 Explanation of Benefits Y U By David Burda MORE Employers should back up their wellness push with weight-management benefits. TARGETED 54 Marketing Mash-Up By Glenn Karwoski Big data is marketing’s next holy grail. SAVINGS 55 Corner Office By Mark W. Sheffert AIM TO SAVE WITH REBATES Why should anyone want to follow your leadership? Natural gas equipment rebates help you save with 56 Open Letter better efficiency and an improved bottom line. By Vance Opperman Rebate savings include: In politics as in business, it’s mostly about who shows up. Let your voice be heard at precinct caucuses on March 1, and you can make a difference. • Boiler systems and boiler system components • Boiler tune-ups • Steam trap repair/replacement • Unit and condensing unit heaters Special Advertising Section • Forced-air furnaces Milestones • Infrared heaters 16 Minnesota companies mark a milestone celebration of their business success. • Linkageless controls • Energy recovery wheels and plates • Condensing water heaters MARCH • Foodservice equipment Insights from Minnesota’s fastest-growing companies. Not sure where to start? Have a Natural Gas Energy Analysis completed on your facility.
Correction: Visit CenterPointEnergy.com/EnergySavings In January’s issue of TCB, Emergent Networks, Edina, should have been included among or call our Business Customer Hotline at the finalists for the 2015 Small Business Success Stories. Founded in 1985, Emergent Networks has continuously kept abreast with the accelerating pace of change in business 612-321-4939 (877-809-3803) for complete details. IT. The company’s broad range of products and services includes IT strategy and support, unified communications, mobile app management and software development. Having experienced its biggest year-over-year growth rates in the past few years, Emergent Networks has recently opened offices in Mankato and Rochester. tcbmag Archives Tax incentives could make Minnesota more attractive to Hollywood. The real reason Punch Pizza raised wages. ©2016 CenterPoint Energy 150715 Ten stories of small business success throughout the state.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 3 vice 29th Year Twin Cities Business Magazine Staff of Ser Editor in Chief Publisher Dale Kurschner Shelly Elmore Sure Stop Floor Safety [email protected] [email protected] “your fast and dependable solution to any slippery floors and steps” Executive Editor Adam [email protected]
call 763 571-1769 Trending Editor Liz Fedor [email protected] We do building entrances employee and Senior Writer Burl Gilyard [email protected] customers, pool decks, locker rooms, Online & E-Newsletter Editor Andre Eggert [email protected] lavatories and restaurant floors! Online & E-Newsletter Writer Sam Schaust [email protected] Northern Minnesota Correspondent Gene Rebeck [email protected] www.surestop.com Copy Editors Judy Arginteanu [email protected] Sherri Hildebrandt [email protected] INDUSTRY EXPERTS Editorial Intern Kate [email protected] Design Director Chris Winn [email protected]
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4 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Beets Can Be Beat The sugar industry needs to wean itself from federal support before Congress does.
story in the Dec. 27 Star Tribune reported how up for a vote, Minnesota Sens. Amy Klobuchar and Al sugar beet farming—a big deal in parts of western Franken abstained; the sugar beet industry generates a few A Minnesota and eastern North Dakota—could be billion dollars in economic activity and employs, directly and hurt by consumer groups looking to eliminate genetically indirectly, an estimated 30,000 people in Minnesota. They are EDITOR’S LETTER modified ingredients from food. among those who say we must continue subsidizing sugar to by Dale Kurschner It turns out all sugar beets nowadays have been ensure jobs in rural areas. engineered to be able to withstand Roundup—the one But they, like just about everyone else who matters in commercially available herbicide that really kills vegetation Washington, also receive campaign contributions from Crystal (even buckthorn). I guess the science says we shouldn’t worry Sugar. In 2014, the company donated more than $1.3 million about eating sugar that even Roundup can’t kill, but it makes to 221 members of Congress (many receiving the maximum at least this sugar consumer wonder. allowed) and spent $1.4 million on lobbying in 2013, according It also made the Hershey Co. wonder (with a nudge from to a recent report from the Manhattan Institute for Policy consumer groups)—enough so that it switched to cane sugar Research. beginning late last year, because it is not genetically modi- Looking at the bigger picture, the approximately fied (GM). With annual sales of more 9,500 sugar farms in the United States make up less than than $7 billion and 80 brands of candy, 1 percent of the 2.2 million farms that exist nationwide, Hershey’s had been a major customer for yet they account for 33 percent of the crop industries’ total sugar beet farmers. campaign contributions and 40 percent of crop industries’ American Crystal Sugar felt that total lobbying expenditures, according to the 2014 Heritage decision. The Moorhead-based farmer- Foundation report, U.S. Trade Policy Gouges American Sugar owned cooperative produces approxi- Consumers. mately 34 percent of the nation’s sugar In the end, the Agriculture Act of 2014 provided another processed from sugar beets—about 15 five years of sugar-industry protection, at our expense. percent of the nation’s total refined sugar Including confectioners, cereal makers and other businesses production. that use sugar in their products, Americans are paying more Reaction from Crystal Sugar regard- for sugar than they need to—to the tune of $1.4 billion a year, ing Hershey’s move was sort of an “Oh, according to the Heritage Foundation. That’s the equivalent well”—since non-GM beet seeds are of more than $310,000 per sugar farm in the United States. no longer available. But as consumer The federal government supports the sugar industry in groups continue to persuade companies to avoid GM various ways. The USDA makes loans to sugar farmers and produce, it might behoove the coop, as well as the rest of the allows them to repay in sugar if prices fall below so many sugar beet industry, to start producing at least some non- cents per pound. It then sells that sugar at a steeply discounted GM sugar as an option. rate. In 2014, this cost taxpayers $53.3 million. Including Granted, the sugar industry (55 percent of which is loans that could not be repaid, it cost us all $172 million. The from beets, the rest from sugar cane) is so well protected by government also enforces tariffs and quotas on imported Congress that it acts as though it is impervious to any outside sugar, limiting our access to cheaper sugar. factors. But changing times are coming. More companies Juxtapose, for a moment, the sugar industry’s generous will likely follow Hershey’s lead (General Mills already has level of support with what the iron mining industry and started to, with some of its cereal products). There’s the rising paper industries receive: nearly nothing. Minnesota produces tide of health reports for us all to cut back on sugar. And 75 percent of our nation’s iron ore, and the paper industry most significantly, there is a growing number of associations, generates $2.9 billion of annual economic activity here. Both trade groups, corporations and leaders looking to phase out of these industries directly employ, or employed, more people the incredibly lucrative federal price-support policy that has in Minnesota than sugar. Yet sugar’s sweet deal continues artificially sustained the sugar industry for far too long. unabated for another three years, while iron ore and paper This subject recently came up among Republican producers fight for their lives. presidential candidates: Ted Cruz says he wants to do away Sugar policy skirts the healthy balance that needs to be with government support for the sugar industry, echoing maintained when it comes to tariffs, duties and other tools some other conservatives. Former Florida Gov. Jeb Bush also designed to help protect U.S. producers from unfair foreign says he would support phasing it out, even though doing so competition. And government-funded job protection efforts would affect the significant sugar cane industry in Florida. should never be long-term, which is exactly what sugar policy Rand Paul, Marco Rubio and Carly Fiorina also have said they has evolved into. would support such a move. And momentum for reform Supporters say the policy is still needed to counter the is building on other fronts, due in part to the Coalition for actions of other countries that unfairly subsidize and then Sugar Reform, an alliance of candy companies, food industry dump low-cost sugar on world markets. After hearing this associations, consumer groups, business groups and taxpayer claim for nearly 40 years now, we can no longer refer to the watchdog organizations. rest of the world as being unfair on this matter. It’s time the It was only two years ago that Congress seriously U.S. sugar industry learns how to compete without federal considered phasing out the sugar program. When it came support. tcbmag
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 5 ELLIE MOONEN
Square Deal my homedudes kept making fun of me, I just started spelling it like that and it’s been my thing ever since,” Taylor says. The second part is derived A quirky doughnut shop employs from the name he had given the pop-ups, Donutz. eccentricity for the win. In addition to an unconventional name, Sssdude-Nutz keeps unconventional hours. The shop opens at 7:30 a.m. during the week, 9 n “Where are all the good doughnuts?” was one of the first questions a.m. on weekends, and is open until all the doughnuts sell. On Friday and Bradley Taylor asked after arriving in Minneapolis in 2011 from the West Saturday, S-N re-opens at 9 p.m. for late night revelers. Coast. “I was used to doughnut shops on every corner back in Cali, so I Taylor markets by handing out free doughnuts and doing catering Perham-based Barrel was surprised at the lack of doughnut shops here.” for the U. “If you have a good product and it’s consistent, word spreads o’ Fun sold to Ohio snack But rather than tolerating mediocre doughnuts, he began pretty quickly,” Taylor says. producer Shearer’s experimenting with a friend’s recipe and making his own. Not long after, The small shop has two part-time student employees and two bakers. Foods, for $125 million. he started getting requests from friends of friends. “I was spending more He sells about 120 square doughnuts a day at $2-$3 a piece, and he says Minnesota operations will time making doughnuts than going to class,” Taylor recalls. the business is modestly profitable. continue. Although skipping class doesn’t typically pay off, it did for Taylor. This Taylor credits Alec Duncan of nearby Potter’s Pasties for some of his past September, he and fiancée Ashley Peterson—both recent University success. In exchange for volunteer hours at Potter’s, Duncan allows of Minnesota grads—opened Sssdude-Nutz in Dinkytown after multiple Taylor to use his kitchen, and offers business guidance and mentoring. pop-up experiments near campus. Taylor is now fundraising to open his own commercial kitchen. OK, you’re wondering about the name. The first part came from Oh, and then there’s Sssdude-Nutz’s SoCal area code. Taylor uses his Taylor’s inability to clearly pronounce “dude” in high school because he personal phone for business. He kept the old number as a reminder of had retainers on his teeth. “It came out slurred, as “sssdude,” and after where he’s from. –Kate LeRette
6 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 How to Spend a Surplus
What does the 2016 legislative session portend for Minnesota businesses? n The 89th Minnesota Legislature kicks off its election-year session in early March with a lot left on its plate from 2015. Lawmakers still need to produce a comprehensive transportation bill, compliance with federal ID laws loom ever larger and MNsure hobbled along for yet another year. Fortunately, the state’s budget surplus grew to nearly $2 billion. RJ KERN What business-relevant priorities are on key deciders’ wish lists? Gruff Business Rep. Kurt Daudt (R-Crown), Speaker of the House $ R&D: Create tax credits to encourage innovation for startups and entrepreneurs. Goat dispatch chews its own path. $ Higher ed: Introduce a student loan credit to keep Minnesotans in the state and encourage other students to move here. n $ Health care: Seek a waiver for small businesses to receive federal tax credits without As the labor market tightens, some business owners lament going through MNsure. that they can’t find enough skilled workers to fill jobs. This is not $ Infrastructure: Craft a long-term transportation bill using surplus dollars, bonding and redirecting a problem for Jake Langeslag, co-owner of Faribault-based Goat sales taxes from rental cars, vehicle leases and auto parts. Increased funding for rural broadband rollout. Dispatch, which he and his wife, Amanda, started three years ago. The bulk of his staff of 85 devour plants such as buckthorn for Rep. Paul Thissen (DFL-Minneapolis), House Minority Leader: customers. $ R&D: Use budget surplus to fund innovations in biosciences, water resources and medical “I call it invasive and undesirable plants,” says Langeslag. technology via a public-private partnership. “They eat thorns, all kinds of stuff.” $ Infrastructure: Pass a comprehensive transportation package that does not rely primarily Training is not an issue for Langeslag, and human resource on borrowing or redirecting funds that affect education or health care. concerns rarely bubble up. That’s because his workers are goats. $ Workforce training: Invest in higher education to give future workers the skills employers Langeslag considers his business territory to be the are seeking. geographic triangle connecting the Twin Cities, Rochester and $ Red tape: Make it easier for small business to interact with the state. Mankato. He declines to disclose revenue for Goat Dispatch, but says that he’s encouraged by the growth he’s seeing from Sen. David Hann (R-Eden Prairie), Senate Minority Leader customers looking to rent a herd to clean up land. $ Taxes: Use surplus dollars to cut personal and business taxes to spur job growth. Fees range from $500 to $1,200 per acre, depending on site $ Education: Improve student outcomes / achievement gap with more choice for families. conditions. It can take anywhere from a couple of days to a couple $ Infrastructure: Pass a bill that improves roads and bridges without raising the gas tax. of weeks for a hooved crew to fully consume unwanted vegetation. Langeslag has a border collie to help corral the crews, but also tries to identify goats that have a good aptitude for the work at hand. Sen. Tom Bakk (DFL-Cook), Senate Majority Leader, speaking for DFL Caucus “We try to $ Taxes: Property tax relief for businesses and other property owners. There will certainly have workable be a conversation about cabins this session. goats that we trust,” $ Transportation: Our caucus will have a hard time passing any transportation bill that says Langeslag. “There are doesn’t include transit. There is still support for a gas tax and a sense of urgency to address our certain ones that don’t cut it; crumbling infrastructure. they all have a report card.” $ Infrastructure: There is a good deal of interest in maintaining existing resources, manyof which are —Burl Gilyard in desperate need of repairs.
Minnesota Chamber of Commerce $ Taxes: Reduce statewide general property tax (and remove automatic adjustments), increase research and development credits and change the state’s estate tax to conform to federal thresholds. $ Workplace: Prevent cities, counties and townships from enacting local minimum wage and benefit ordinances. Remove minimum wage inflation indexing that begins in 2018. Essar Steel Minnesota agreed to $ Infrastructure: Invest in roads, bridges and transit through existing transportation-related revenues from repay a $66 million loan to the state of the state’s general fund. Link new transit funding to efficiency and reforms. Minnesota for Essar’s stillborn taconite $ Compliance: Modify Minnesota Human Rights Act/Americans with Disabilities Act to prevent businesses from production facility on the Iron Range after being sued for violations without prior notice and allow at least 90 days to remedy the situation. —Andre Eggert Essar failed to meet the terms of the loan.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 7 CRAIG BARES
COMPETITIVE EDGE A Tale of Two Gas Stations
Independence fuels profitability.
U.S. n With oil prices constantly in flux, it’s a balancing act for gas stations to stay in the black. When the Minnesota 127,588 price of oil drops, stations start price-matching in an effort to ditch the gas they paid more for, while 2,800 gas stations with replacing it with fuel purchased at the new lower price. gas stations convenience stores Station owner Richard Bohnen says his average profit per gallon is 10 to 15 cents, 20 65% compared with an average 30 percent markup on his convenience store goods. “Can you just Minnoco stations pay at pump sell gasoline and make it? No,” he says. “You have to have alternate profit centers,” such as car 35% washes, auto repair and microwave burritos. pay inside Bohnen is in the unique position of owning two gas stations directly across the street from 69% each other at 60th and Penn in south Minneapolis. The original is a Minnoco, which his family of gas buyers do not operated under the Mobil brand from 1976 until 2013; the second is Crosstown BP, a station he purchase an in-store item purchased in 2007. The BP was appealing because it has a car wash and larger convenience- store. In the aftermath of the Bohnen’s biggest expenditures are credit card processing fees, which often surpass labor Gulf of Mexico oil spill in 2010, Bohnen experienced costs. Back when gas was $4 a gallon, he spent $200,000 in credit card fees for the year. a drop in sales at his BP About half the nation’s gas stations operate under Big Oil brand names, but that number has station, while at the Mobil been dropping as oil companies have sold off stations to focus on drilling station he owned across Bohnen Fuel Empire and production. Nearly all stations still operating under a Big Oil name the street sales surged. 60th and Penn, Minneapolis Minnoco Crosstown BP like BP, Shell or ExxonMobil are operated by independent franchisees. “I’m tied to what happens nationally and what the oil Fuel dispensers 8 6 For franchisees, all money collected at the pump is sent directly company does, too.” Employees 6 6 to the oil company to be credited against future gas purchases. “Let’s car wash, Alternate profit centers auto repair say you have a big car wash month,” says Bohnen. “They hang onto an convenience store excess of money and apply it to a gas load that you may or may not have ordered yet. In the meantime, you’re trying to order and pay for your groceries that are in the store, and BP will be sitting on your cash flow.” (Crosstown BP is under contract to the oil company through 2021.) This model prompted a group of Minnesota station owners to buck Big Oil and start their own brand, Minnoco, in 2012. Bohnen was Minnoco’s founding president. The benefits include lower credit card processing fees, direct access to monies collected from fuel transactions, lower prices on wholesale gas and a bigger say in company-branded marketing efforts. “We’re able to buy [wholesale] gas just the same as SuperAmerica and Holiday,” says Bohnen. “When you’re branded as a Mobil they feel that there is a value to having their name up there, so therefore you pay more for their gas.” —Megan Wiley
8 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Who Will Sustain MOA’s Expansion?
The mall is placing more and more of its bets on out-of-region visitors.
n Just as Americans are increasing from foreign countries or U.S. regions beyond “Upscale retailing in the Twin Cities has 20 percent or more, and Canadians pay 14 to online retail purchases, Mall of America is the mall’s Twin Cities-area core. not fared particularly well,” says David 15 percent. expanding. So who is the future customer Now, more than 40 percent of the MOA’s Brennan, who teaches retail and marketing at And tourists spend considerably more at base at MOA? Twin Cities-area shoppers shoppers are visitors, and Killian notes that the University of St. Thomas. He references MOA than the locals do; U.S. visitors spend remain the foundation, but a bigger portion the addition of two hotels at the mall will make the closures of Saks and Neiman Marcus in about 1.5 times more than locals do. Foreign of the dollars spent at the mall is expected to it even easier for tourists to visit. Radisson Blu downtown Minneapolis, plus Bloomingdale’s visitors spend 2.5 times more than local come from distant shores. opened in March 2013, and the JW Marriott at MOA, but also emphasizes that the shoppers, Killian says. While neighboring “International visitors hold very strong followed in November. mall is unique because it has 520 stores, Canada supplies the greatest number of potential for the Mall of America for revenue “About 50 hotels are located within 10 entertainment offerings and draws from an foreign shoppers, the United Kingdom comes growth,” says Doug Killian, MOA’s senior minutes of the mall and Minneapolis-St. Paul international customer base. in second. “The Brits love to shop; they like director of international communications. International Airport,” he notes. Both Killian and Brennan say that a lack of holidays and family entertainment,” says Killian. When the mall made its debut in 1992, Killian The other notable change is that during sales tax on clothing is a huge benefit for the Japanese and German tourists also are big says 65 to 70 percent of shoppers came from 2016 the mall plans to add a greater quotient mall. In European countries, Brennan says, MOA shoppers, and he lists China, Mexico and a 150-mile radius. The remaining third came of high-end retailers to its expansion. shoppers pay a value-added tax on clothes of France among growth markets. —Liz Fedor
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FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 9 In 1993, Dave Kapell was a University of Minnesota graduate with a passion for songwriting limited only by a relentless case of writer’s block. One night, while borrowing a method from David Bowie known as the cut-up technique, Kapell affixed random words to magnets, eventually transferred those to a refrigerator and was stunned to find his friends and roommates spellbound by his creation. Months later, he premiered Magnetic Poetry at a weekend craft show at Calhoun Square and was approached by a buyer from the Walker Art Center’s gift shop. With her help, a business grew, ascending from $30,000 in sales to a peak of $7.5 million by 1997. CVS completed its So whatever happened to that magnet business? buyout of Target Today, Minneapolis-based Magnetic Poetry is still piecing it together, generating roughly $2 Corp’s in-store million in sales, anchored by more than 100 different themed kits such as “Urban Lumberjack” and pharmacy business. Fridge “Bacon.” Kapell says the themed kits were introduced as a half-price model to serve buyers looking for a lower price point than the $20 cost of the Original Magnetic Poetry kit. The themed kits make up Magnet Revival Wells Fargo roughly 70 percent of sales, or about 115,000 kits each year. The remaining 30 percent share covers sales of sold off its crop about 30,000 units of the original kit and its fan-inspired spinoff, the Poet. How Magnetic Poetry beat back insurance business Kapell says the company recently “reeled in the horrible Amazon situation” that was diminishing the value a rogue Amazon-based challenge for $1 billion to of its product. For years, mysterious bulk wholesale buyers had been turning around Magnetic Poetry kits to its business. Zurich American for nearly half their retail price; as a result, Kapell saw his once robust sales to the retail market slipping. Insurance. Several “We wound up hiring a company to do the detective work,” he says, adding that Magnetic Poetry is solely in days later, Cargill control of its Amazon business now. “It has helped immensely, and our retailers are much happier with us,” announced similar says Kapell. “Even Amazon sales are up.” plans. Its buyer In its 22-year history, Kapell says his invention has inspired songs from Tom Petty, the Rolling Stones is Indiana-based and Madonna. In fact, “every lyric in Madonna’s song ‘Candy Perfume Girl’ is in The Poet kit,” Kapell claims, Silveus Inc. though he’s never received any confirmation from the artist. “I actually hired a mathematician to figure out the odds. In the end, chances were 1 in 4.2 trillion that she used Magnetic Poetry.” —Sam Schaust
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10 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 A&E By Tad Simons
From the editors of State of the Art: Discovering American Art Now | Curators from the Crystal Bridges Museum of American Art in Arkansas traveled to 48 states and visited almost a thousand artists’ studios to identify the best unknown or little-known artists in America. The result is an enormous, wide-ranging show that takes the pulse of contemporary American art in a unique and fascinating way, and features work in all kinds of media: painting, photography, video, installation, sculpture and more. Twin Cities artists who made the cut are Chris Larson and Andy DuCett. Bruce Springsteen Feb. 18-May 29, Minneapolis Institute of Art, and E Street Band: 612-870-3000, new.artsmia.org The River Tour | His 1980 double album, The River, took Bruce Springsteen to the top of the charts for the first time. Gypsy | Theater Latté Da has been stringing Thirty-six years later, Springsteen together one hit after another, including last year’s and company are revisiting that fantastically wicked staging of Stephen Sondheim’s iconic era by presenting the Sweeney Todd. For his next Broadway Re-Imagined entire River album in concert. For some, that project with Hennepin Theatre Trust, director Peter news alone is reason enough to melt some Rothstein takes on another Sondheim vehicle (he plastic. But if you need more excuses, the Shen Yun: Open the Gates to a Lost Civilization | Shen Yun is the Cirque du Soleil wrote the lyrics, anyway; Jule Styne wrote the concert comes on the heels of Bruce’s latest of Chinese dance, but with better stagecraft, more compelling music and a much more score). Gypsy is the raucous, iconic 1959 musical release, The River Collection, a four-CD/ sophisticated artistic aesthetic. Drawing from ancient Chinese dance and storytelling based loosely on the life of stripper Gypsy Rose three-DVD box set of E Street excess. techniques, the company creates an eye-popping fusion of Eastern spirituality and Lee—a show that ranks as one of the greatest Feb. 29, Xcel Energy Center, St. Paul, Western spectacle. This year’s show is an all-new production that revisits a mythical time American musicals. 651-726-8240, xcelenergycenter.com when gods walked the Earth and everything in the universe was in perfect harmony. Feb. 13-Mar. 13, Pantages Theatre, Mpls., Feb. 19-21, Orpheum, Mpls., 612-339-7007, hennepintheatretrust.org 612-339-7007, hennepintheatretrust.org
Smart Women. Sophisticated Advisors. Fredrikson & Byron — Counsel for Women
Counsel for Women, Fredrikson & Byron’s women attorney‑led initiative, is a group of experienced legal advisors focused on helping women business owners succeed. We are proud to support the Twin Cities Business Women’s Leadership Awards.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 11 CONCIERGE Star treatment for VIP clients and guests. By Melinda Nelson
The Play’s the Thing Treat your out-of-town clients to a performance at a local theater.
Two Gentlemen Gypsy | Pantages Theatre of Verona | Jungle Theater n Clients with a soft spot for musical theater n Clients who love Shakespeare will be will love Gypsy, often lauded as the greatest amused by this contemporary valentine to the American musical. Re-envisioned by Peter bard. This inventive production features an all- Rothstein, artistic director of Theatre Latté Da, female cast of local stars including Christina the show features local star Michelle Barber Clark as Proteus, Mo Perry as Valentine, and as the mother of all stage moms and Cat Shá Cage as Antonio and Thurio. Brindisi (her real-life 26-year-old daughter) Feb. 12-March 27, 2951 Lyndale Ave., Mpls., as striptease artist Gypsy Rose Lee. 612-822-7063, jungletheater.com. Feb. 13-March 13, Pantages Theatre, Before the show, enjoy a bottle of red wine 710 Hennepin Ave., Mpls., and a plate of house-made charcuterie, 612-339-7007, hennepintheatretrust.org. artisan cheeses, freshly baked bread and Kick off the evening in burlesque style rosemary-spiced nuts at Lucia’s Wine Bar. at Relevé Champagne Bar in the Loews 1432 W. 31st St., Mpls., Minneapolis hotel with a bottle of Moët & 612-825-1572, lucias.com Chandon and oysters on the half-shell with Loews Hotel mignonette. Richard III | Theatre in the Round 601 First Ave. N., Mpls., 612-677-1100, n Should your clients happen to be both loewshotels.com Anglophiles and theatrophiles, book tickets to Shakespeare’s Richard III at the legendary The Wedding Singer Theatre in the Round, where every seat is | Old Log Theatre within 30 feet of center stage. n For an only-in-Minnesota experience, Feb. 12-March 6, Theatre in the Round, take your clients to Lake Minnetonka, where 245 Cedar Ave., Mpls., 612-333-3010, the storied Old Log Theatre is Minnesota’s theatreintheround.org. oldest professional stage. Take your seats Wedding Singer SHAKESPEARE ISTOCK HULTONARCHIVE ISTOCK SHAKESPEARE Begin the evening with an early dinner at and enjoy artistic director Kent Knutson’s Brit’s Pub. Over a savory repast of Fuller’s highly entertaining production of The Wedding London Pride and bangers and mash, regale Singer, the 1998 Adam Sandler-Drew your clients with the story of how King Barrymore rom-com. Richard’s grave was discovered four years 5185 Meadville St., Excelsior, ago beneath the streets of Leicester, England. 952-474-5951, oldlog.com. 1110 Nicollet Mall, Mpls., After a quick winter stroll around the 612-332-3908, britspub.com picturesque 11-acre grounds, warm up in the bar at Cast & Cru. Order a round of signature The Critic and The Real Inspector Old Log Fashioneds (made with bourbon, Hound | Guthrie Theater spiced cherry bitters, and maple syrup), a n Clients who prefer comedy to tragedy trio of Reuben, Cubano, and Thai salmon will appreciate the clever pairing of these sliders, and a cone of French fries. two one-act plays that poke fun at pompous 5185 Meadville St., Greenwood, playwrights and bombastic critics. 952-767-9700, castandcru.com Feb. 23–March 27, Guthrie Theater, 818 S. Second St., Mpls., 612-377-2224, guthrietheater.org. Arrive well before show time to relax and enjoy a jovial happy hour at Sea Change on the main floor of the Jean Nouvel-designed building. Order a round of Corpse Reviver #2—a bracing 1930s gin-and-absinthe concoction—a shrimp cocktail and the chile- spiced langoustines. 806 S. Second St., Mpls., Sea Change Restaurant & Bar Minneapolis 612-225-6499, seachangempls.com TIM DAVIS COURTESY SHEA, INC.
12 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 PLUGGED IN The best opportunities for networking. By Kate LeRette February
TINA FLOERSCH Feb. 27
Feb. 6
JODY RUSSELL PHOTOGRAPHY Feb. 9
Feb. 6 Feb. 25 Arc Gala MNovation Mingle with more than 500 community Spend the day in a series of interactive leaders and volunteers for a cocktail sessions with some of Minnesota’s top reception, dinner, auctions and a rocking innovators. MNovation Seminar Series, performance by Sonny Knight & the Lakers hosted by Brave New Workshop, is designed in support of the Arc Greater Twin Cities. to help professionals spark creative thinking This year’s theme, Clearing a Path to through five key behaviors. Throughout Healthier Lives, seeks to promote healthy the day you’ll hear from Kristy Lynn Allen, lifestyles among people with intellectual and founder of the Beez Kneez; Dale Nitschke, developmental disabilities. Cathy Wurzer, former president of Target.com; Jesse MPR’s Morning Edition host, will be the Roesler, Emmy award-winning filmmaker; evening’s MC. and other local leaders.
JENNY PHILLIPS Feb. 5 5:30 p.m., $175, Marriott City 9 a.m., $300, Brave New Workshop, Center, Minneapolis, 952-920-0855, Minneapolis, 612- 332-6620, arcgreatertwincities.org/gala2016 eventbrite.com/e/mnovation-tickets Feb. 4 Feb. 5 EAT: Entrepreneurs at the Table Pay It Forward Casino Night Feb. 9 Feb. 27 Join 2015 MN Cup finalists RED Food and Bring your lucky charm and enjoy an evening TeamWomenMN WaveMaker Wishes & More Winter Ball Simpls, as well as past finalists such as of casino games, prize drawings, silent and Awards Calling all superheroes to the Wishes & More Burning Brothers Brewing and TrueDough live auctions, and dinner and cocktails. KARE Help TeamWomenMN celebrate outstanding superhero-themed winter ball: “A Gathering for EAT: Growing the Food Innovation 11’s Tim McNiff and Rena Sarigianopoulos will female leaders at the first WaveMaker Award of Superheroes.” Enjoy a night of dancing, Network in MN. More than 30 local food, host the Pay It Forward Fund’s 11th annual ceremony. Honoring women across five auction bidding and special programming that agriculture and beverage companies will casino night. Proceeds from the evening will categories, the evening will shine a light on showcases wishes coming true for children showcase, sell and provide samples of their help cancer patients pay everyday expenses. women who have had a profound impact on with life-threatening conditions. Although it’s products. In addition to enjoying local food, 5:30 p.m., tickets start at $85, Medina their profession and community. VIP tickets a black-tie event, superhero costumes are attendees can network with past MN Cup Ballroom, Medina include a social hour with a complimentary encouraged. contenders, as well as future candidates. 952-442-2191, ext. 6369#, cocktail, appetizers and a chance to network 5:30 p.m., tickets start at $200, Marriott 5:30 p.m., free with registration, payitforwardfund.net/2016-casino-night with the finalists. City Center, Minneapolis, Chow Girls in the Solar Arts Building, 5 p.m., tickets start at $35, Minneapolis 763-502-1500, wishesandmore.org Minneapolis, 612-625-0027, Event Centers, 952-525-2236, carlsonschool.umn.edu/events teamwomenmn.org
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 13 Love Your Brand Little things matter in how the world perceives you.
Coke. Pepsi. Tiffany. Bentley. Las Vegas. Brand identity means green for business and matters much for longevity. One thing most successful brands have in common is consistent delivery of brand promise. At its best, this consistency translates into pure gratitude from customers.
PERSONAL BRAND by Roshini Rajkumar Learn from the big guys The same holds true for personal brand. Growing your own brand visibility means you are your own brand ambassador. A person acutely aware of this connection is TitleSmart CEO Cindy Koebele. She often shares these words with her staff and customers: “The little things make the big difference.” Staying true to brand promise stems from her Those little things personal dedication to never overlook Sometimes little things that communication opportunities. Her busi- make a big difference are as ness team makes it a mission to deliver simple as returning a phone on TitleSmart’s brand promise in all call or email in a timely interactions with customers. fashion. I am amazed at how many business professionals overlook this simple brand- builder. When you stay current with seemingly mundane emails and grow your own brand promise of efficient and timely communication, you will be pleased with the dividends you reap at those times you have a need. However, if your contacts cannot count on a reply to simple business communications, why would they help you or buy from you on the important asks? Make it authentic I’ve heard recently about recruiters unable to connect with millennials be- cause they do not have voicemail greetings on their phones. This is a turnoff for For TitleSmart, an authentic members of other generations who might actually be trying to hire you. commitment to making the customer experience just right means warm chocolate chip cookies and mini gifts or trinkets at closings. Koebele says each closer customizes the setting and even the choice of room to fit the customer at hand. Think about how your business or per- sonal brand would gain from finding authentic ways to show appreciation for your customers Gratitude matters and colleagues. When I’ve talked about “inten- Remember to say “Thank you.” I’ve heard tion” in the past, I’ve always said the intention the difference between two finalists often is about you. But the ultimate performance comes down to one sending a personal- of how you connect your intention with your ized note that specifically covered aspects customer has everything to do with them and of their time together. In this world of their needs. texts, emails and instant messaging, don’t you still smile when you receive a hand- written note in the mail? Taking time to make that small gesture could really go a long way for you and your brand. tcbmag
Roshini Rajkumar is a personal brand strategist and presence engineer. She is host of News and Views with Roshini Rajkumar on WCCO Radio and author of Communicate That! For additional communica- tion tips, visit CommunicateThatBook.com. Interface with Roshini at [email protected]
14 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 tcb.mag Congratulations BEYOND THESE PAGES Susan!
FOR YOUR DAILY DOSE OF MINNESOTA BUSINESS NEWS
FACEBOOK Susan Park Rani Rick Gobell facebook.com/twincitiesbusiness President President Rani Engineering Drake Bank TCB’s Person of the Year More than 300 people attended TCB’s exclusive reception honoring 2015 Person of the TWITTER Year Omar Ishrak, chairman and CEO of Medtronic, at Windows on Minnesota on Dec. @TCBmag 16. Guests included nearly half of TCB’s 100 People to Know in 2016. The December edition’s coverage of Ishrak and the TCB 100 is available online at TCBmag.com.
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10-13 TCB Social Media 2.indd 1 8/28/13 10:32:17 AM Life Style The best places to take your VIP guests, most significant networking opportunities in the month ahead, how to boost your personal brand Minnesota-style, and more. Thinking about Go online to: tcbmag.com/Life-Style your business is Events Join us for a reception Thursday evening, Feb. 18 , as we celebrate our annual a big part of ours. selection of fiveWomen’s Leadership Awards winners (who are profiled beginning on page 34) at the Golden Valley Country Club. To register, go online to: tcbmag.com/WLA15 PUT OUR TAILORED INSIGHTS TO E-newsletters WORK FOR YOU. Catch the latest business news—and explore what it means—every Tuesday To make confident decisions about the and Thursday inBriefcase. And our monthly Minnesota Small Business future, middle market leaders need a e-newsletter,Headway , provides features, tips and insights for small different kind of advisor. One who businesses across the state. starts by understanding where you To sign up, go online to: tcbmag.com/E-Newsletters want to go and then brings the ideas and insights of an experienced global On the Air team to help get you there. Tune in to 830 WCCO-AM every Monday at 10:35 a.m. to hear TCB’s take Experience the power of being understood. on the week’s top business and economic news and trends; and KARE 11 Experience RSM. every Thursday at 11 a.m., for perspective on the state’s most significant business developments. rsm us.com Go online to: kare11.tv/1HnarkK
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2-16 TCB RSM.indd 1 FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 15 1/6/16 3:21 PM INTELLIGENCE REPORT Quarterly Economic Indicators
Economic Pessimism Persists Minnesota’s business leaders plan to scale back growth yet again this quarter.
eading into 2016, business leaders throughout Minnesota are the H least optimistic they have been in more than three and a half years when asked about the state’s overall business climate, according to TCB’s Quarterly Economic Indicator survey completed by 463 respondents in late December. When polled about their outlook and plans for the current quarter, 19 percent of business leaders say they expect business conditions in Minnesota will worsen in the next few months, more than double the percentage (8 percent) who thought this way one year ago. Only 20 percent say they expect conditions will improve; this is the lowest level of optimism since the survey began in 2011. Some 28 percent say they expect MINNESOTA QUARTERS 2014-15 / BUSINESS PLANNING national/international business condi- ECONOMIC OUTLOOK INDEX tions will worsen by the end of the QUARTERS 2014-16 Productivity Revenues Employment Levels Op. Profit Margin quarter—similar to three months ago, but 52 51 49 52 51 50 51 51 80 up 74 percent from one year ago at this 75 time (when 16 percent expected things to worsen). Conversely, the percentage of 2 3 4 1 2 3 4 1 70 those who believe conditions will improve 14 15 16 65 60 has dropped 17 percent from the fourth Percentage of respondents anticipating quarter of 2015, and by 51 percent from increases (Business Planning, above left) or 55 one year ago. improvements (Business Conditions, below 50 At press time, issues affecting business- right) in these areas during the first quarter of 45 2016. Charts provide a diffusion index view: leader sentiment included: all responses for “increase” or “improve,” plus 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 n Growing economic uncertainty, fed one-half of responses for “maintain” or “stay the 2015 2015 2015 2015 2016 2016 2016 2016 in part by terrorism and the current same.” Above 50 is positive; below is negative. 2014 2014 2014 2014
QUARTERS 2014-15 / BUSINESS CONDITIONS
Finding Business Conditions Business Conditions Obtaining Financing ABOUT THE SURVEY Minnesota Global Qualified Labor 80 ince mid-2011, Twin Cities Business has sent more 75 S than 11,000 business leaders throughout the state the same set of questions every quarter, asking them 70 about plans and expectations for the next three months. 65 This issue’s survey, conducted at the end of December, 60 provides insight about the first quarter of 2016 ending 50 March 31. 45 40 35 30 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2015 2016 2015 2015 2015 2016 2016 2016 2014 2014 2014 2014
16 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 expected to grow less during the first quarter than they have during recent IT’S HERE! periods. The percentage of respondents who say they plan to increase spend- ACG INVITES YOU TO REGISTER FOR ing on capital expenditures this quarter (34 percent) is down by 10 THE FOURTH ANNUAL BOLD AWARDS! percent from last quarter, and down by 24 percent from a year ago at GET YOUR BOLD ON! this time. Meanwhile, the percent of Tuesday February 23, 2016 5:30 PM Cocktails respondents who plan to cut capital Metropolitan Ballroom 6:00 PM Event Begins expenditures this quarter (12 percent) 5418 Wayzata Boulevard, 7:00 PM Program Commences is up 37 percent from those who planned to cut back three months ago, Minneapolis, MN 55416 8:30 PM Event Concludes and 28 percent from the first quarter of 2015. Program highlights will include 15 BOLD Finalists, fiveBOLD Winners The percentage of respondents in the categories of early stage, small, medium and large corporations who plan to increase R&D spending and non-profit. this quarter (22 percent) is down 5 percent from last quarter and down One BOLD-est of the BOLD Awardee who will be determined political environment in Min- 24 percent from one year ago. And the nesota and nationally. percentage of survey takers who say through a live vote by our guest audience. n The impact of a strong U.S. dol- they plan to cut spending in this area Daring and BOLD, these awards are a big deal. Celebrate BOLD lar on imports and exports. (9 percent) has increased by 20 per- with us! See the daring strategies to grow Minnesota and meet the n Recent reports indicating the cent and 27 percent from last quarter economy may have cooled dur- and last year at this time, respectively. leaders and teams that make Minnesota flourish. ing the fourth quarter of 2015. Respondents anticipating produc- To register and for more information visit: www.acg.org/minnesota n The slowing of high-growth tion increases in the months ahead economies such as China’s. (42 percent) are fewer by 13 percent As a result of these and other from last quarter and 12 percent from BE BOLD! REGISTER TODAY! factors, survey takers indicated they a year ago, while those looking for plan to reduce hiring this quarter; 34 production levels to drop (6 percent) percent still plan to hire more people, doubled from last quarter and grew by but this is down 26 percent from one 15 percent from a year ago. year ago at this time (when 46 percent While 62 percent of respondents planned to increase hiring). Nearly 9 one year ago anticipated revenue percent plan to reduce employment, growth in the months ahead, only 50 up from 7 percent in the first quarter percent think this way heading into of 2015. 2016. About 44 percent of survey At the same time, finding qualified takers expect to maintain revenues PLATINUM SPONSORS labor in Minnesota continues to be of at current levels, up from 31 percent the highest concern amongst survey when heading into 2015. takers, as 53 percent now say they ex- On a brighter note, employee pro- Business First, Online Second. pect it to become even more difficult ductivity and operating profit margins in the months ahead. This is the high- are expected to remain steady. RECEPTION PHOTO MEMORY BOLDTINI TECHNOLOGY SPONSOR SPONSOR SPONSOR est percentage ever recorded on this Survey findings are used to SPONSOR topic over the survey’s 18 consecutive- compile TCB’s Minnesota Economic quarter lifespan. Outlook Index, which comes in at Unlike last quarter—when hiring 50.9 this quarter, close to the trailing appeared to be the only area where 18-quarter average here. An index Minnesota business leaders planned For questions contact Nicki Vincent, to tap the brakes—capital expen- [email protected] or 612-590-1041 ditures, research and development, production outputs and revenues are
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FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 17 above 50 indicates healthy business growth, below signals slowing busi- ness growth. This indicator would have been higher if not for the high level of “it’s getting harder” responses to finding talented labor, and rising concerns about global and state eco- nomic issues. One survey question asks “What do you anticipate as your biggest Percent of 463 Minnesota businesses, business challenge in the next three by industry, anticipating increases in these areas during 2016’s first quarter. months?” Finding good employ- Join us as we honor women who are trailblazers ees topped the list among the 371 within their respective fields, accomplished and highly Full-time employee count written responses. One response respected by their employers, employees and colleagues (top 10) that encapsulated current challenges IT Services/Software/ was: “Gaining quality, well-educated for their professional acumen and achievements. 59 Telecom new employees and keeping up with Banking/Finance 50 demand for good people (lots of ap- Architecture/ Honorees: 40 plicants are marginally employable).” Engineering Other responses that hit upon com- Marketing/Adveritsing/ 40 KATE KELLY Comm mon concerns included: Health Care Delivery & n “Increasing our output with a President and CEO, Minnesota Bank & Trust 38 Services shortage of skilled labor.” Manufacturing 38 n “Government regulation, health Other 34 care, slow economy, aging JILL LLOYD employee population.” President, Lloyd Security, Inc. Retail 26 Entertainment/ n “Optimizing employee produc- 24 Hospitality tivity to avoid having to hire Construction 23 additional staff that we may KIM NELSON not be able to sustain in 12-24 CFO, SPS Commerce Capital outlays/ months.” infrastructure investments n “Maintaining the momentum Architecture/Engineering 47 the construction industry has SUSAN PARK RANI Real Estate 43 presented to us over the past 24 President, Rani Engineering Entertainment/Hospitality 41 months. Our industry is due for a correction.” IT Services/Software/ 39 Telecom n “Declining economic forecasts DEE THIBODEAU Banking/Finance 38 and guidance. Concern over forward economy.” Wholesale Trade 33 CEO and Co-Founder, Charter Solutions n “The strength of the US dollar Manufacturing 32 is starting to have an effect on Other 32 sales for our clients. This will THURSDAY, FEBRUARY 18 Retail 32 make our clientele more cau- Health Care Delivery & tious about capital investment.” 31 Golden Valley Golf and Country Club Services n “The effect that continued ter- 7001 Golden Valley Road, Golden Valley, MN 55427 rorism and cyber attacks have on the purchasing of goods and R&D spending services.” IT Services/Software/ 5:00 pm | Registration 34 TCB’s survey also gives respon- Telecom 6:00 pm | Program dents a chance to mention issues not Manufacturing 31 on the survey. Among them: 7:00 pm | Event Concludes Construction 25 n “In an election year there is a Real Estate 23 wait and see where the economy Marketing/Adveritsing/ 23 will be going . . . . I suspect our Ticket Information: $50.00 per ticket Comm business will remain the same or Banking/Finance 21 decrease a bit.” Register Today // tcbmag.com/WLA16 Architecture/Engineering 20 n “The overall economy appears Health Care Delivery & 20 Services to be weakening locally, based on the overall decrease in our SPONSORED BY: Other 19 Wholesale Trade 15 body shop business. People defer such repairs when they have some concerns regarding the economy as most body shop repairs are discretionary.”
18 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Percent of 463 Capital outlays/ respondents, Full-time infrastructure R&D spending by county, employee count that anticipate investments increases in these Washington 43 Scott 38 Anoka 32 areas during the Carver 40 Dakota 36 Carver 30 first quarter of Hennepin 39 Hennepin 35 Dakota 28 2016. Scott 38 Ramsey 34 Scott 25 Anoka 32 Other 33 Hennepin 22 Dakota 28 Washington 29 Washington 21 Ramsey 28 Anoka 27 Ramsey 20 Other 25 Carver 20 Other 14 Wells Fargo presents
Gov. Mark Dayton’s st Approval Rating 1 Tuesday METHODOLOGY 32.8% (down from DINE, NETWORK, AND LEARN WITH RENOWNED win Cities Business conducts its 37.5% last quarter) BUSINESS AND COMMUNITY LEADERS. quarterly survey to provide a look T The governor’s at business planning and sentiment approval rating is among leaders across all Minnesota down 13 percent industries. An email link to an online FEBRUARY 2 • 2016 from last quarter survey was sent to 12,179 Minnesota and 3 percent from one business leaders in mid-December, year ago at this time. and reminder emails were sent over The percentage of those the following two weeks to those who who disapprove of him had not yet completed the survey. The increased 9 percent from Minnesota Chamber of Commerce last quarter, to 51 percent provided some email addresses used today. Compared with a in this outreach. As of December 30, year ago at this time, 4 463 leaders responded, resulting in BEN FOWKE percent more disapprove. a 3.8 percent net response rate. Of Chairman, President & CEO Meanwhile, 16 percent those who responded, 90 percent Xcel Energy remain unsure. represented privately held businesses. 11:30 a.m. – 1:00 p.m. McNamara Alumni Center, University of Minnesota
n “I believe that the internal pres- both nationally and in the state For more information and to register visit: sure to grow will erode the high is in turmoil and as busi- carlsonschool.umn.edu/firsttuesday levels of customer satisfaction nesses we are whistling past the that had been our focus, ulti- graveyard hoping that nothing mately resulting in a business critical happens.” The 1st Tuesday Speaker Series convenes Twin Cities’ professionals slowdown due to results com- n “Growing the business today is ing up short of expectations. like building a bigger campfire to address hot topics in business, management, and leadership. A Everyone has been pressed to with WET wood!” Carlson School tradition since 1992, the monthly event is one of the the limit for too long.” Another question asked was wheth- largest gatherings of corporate and community leaders in the area. n “Up markets can’t last forever er those businesses that plan to expand and some of the signs are be- will do so in Minnesota. This quarter, Presented by ginning to show a slowdown.” 57 percent indicated they would, down n “Our profit margin is good, from 59 percent three months ago; primarily due to unfilled staff 24 percent said they won’t, up from positions—not the way we’d 22 percent three months ago; and 19 like to grow margin.” percent answered “unknown,” which is n “The current political climate unchanged. tcbmag
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 19 Game Changer—or Not? What are the ripple effects from Mark Zuckerberg and Priscilla Chan’s charitable giving?
hen Facebook founder Mark Zuckerberg and his What does she mean by blurring the lines between busi- wife, Priscilla Chan, welcomed their baby girl, ness and philanthropy? “The B corporation, in Minnesota, W Max, they simultaneously announced their intent is a good example,” she says. “These are for-profit businesses to give away 99 percent of their Facebook shares “to advance with a social purpose. People are trying to figure out how to human potential and promote equality for all children in make a difference. They can volunteer, make a gift, invent the next generation.” The size of this whopping gift was new things or start a business. These approaches seem estimated at $45 billion. equally valid.” It only makes sense that the Chan-Zuckerbergs chose She and Jon Pratt, executive director of the Minnesota PERFORMING Facebook to tell their story, scripted as a letter to their new- Council of Nonprofits, agreed that the most controversial el- PHILANTHROPY born and accompanied by a picture of the new family. The ement of the Chan Zuckerberg Initiative is the lack of trans- By Sarah Lutman multi-page letter is worth a read, as it lays out the rationale parency in an LLC compared with a nonprofit organization. and likely interests of what will be a major new philanthropy. “There is a public trust that happens when anyone gives a gift What’s unusual, controversial, and therefore the focus of to a foundation or public charity. The donor gives up control most news coverage: the way the couple decided to structure and they receive a significant tax advantage in return,” Harris their “gift.” explains. But in the case of Chan Zuckerberg, “the couple is What the couple announced is the creation of the Chan preserving their options,” Pratt says. “This was not a transfer Zuckerberg Initiative, a Delaware-based limited liability of control but a structure that allows [them] to maintain it.” corporation that Zuckerberg will lead while he continues as Should nonprofits be worried about this? Neither Pratt Facebook’s CEO. Using nor Harris thinks so. “I think it’s generous,” Harris says. “It the LLC structure, the ini- follows in the tradition of the Dayton family and the Minne- tiative can do things that a sotans who founded the 2 Percent and 5 Percent clubs in the traditional foundation or 20th century” with their statements of philanthropic intent. nonprofit cannot. “It’s a public expression of commitment,” Pratt explains. “It’s a positive development when people of extreme wealth Like what? show that their fortunes should benefit the public.” Harris First, the LLC can invest in thinks the couple’s move will stimulate other people to give startups and existing busi- and reflects a willingness to innovate, exploring all the tools nesses whose purposes available to achieve the desired results. align with the initiative’s Traditional philanthropies in Minnesota are already stated areas of initial fo- exploring some of the avenues that Chan Zuckerberg can cus: personalized learning, pursue, though again, the LLC structure allows much more curing disease, connecting freedom and requires less public reporting. For example, in people through the Inter- 2014 the McKnight Foundation announced it would invest Mark Zuckerberg FREDERIC LEGRAND / SHUTTERSTOCK net, and building strong 10 percent of its $2 billion endowment assets in businesses communities. that can advance its programmatic aims. Further, many local Second, the LLC can charities and foundations have invested time and dollars in engage in public policy debates and lobbying in ways that are grassroots public policy work. While their activities fall short prohibited within the statutes governing the nonprofit sector. of the direct lobbying that Chan Zuckerberg can engage in, Third, the LLC can operate outside the regulatory envi- they’re nonetheless collaborating on major education efforts ronment of the nonprofit sector, which requires transpar- to inform public policy. The Minneminds’ campaign— ency with respect to governance, operations, investments aimed at improving families’ access to quality child care in and spending. As private entities, LLCs bear none of these our state—is a strong example. Using the LLC reporting burdens. The Chan Zuckerberg Initiative will allow all these structure, the initiative And fourth, it can make charitable gifts. It can behave activities, but under one roof. “These folks have transformed can do things that a like a traditional charitable foundation by making grants to entire industries in relatively short periods of time,” Pratt ob- nonprofits and it can fund individuals without the restric- serves. “So when it comes to solving [seemingly] intractable traditional foundation tions faced by traditional foundation structures. problems like social justice, better educational outcomes, or nonprofit cannot. Trista Harris, president of the Minnesota Council on improved health and environmental protection, they think, Foundations, shared her thoughts about the Chan Zucker- ‘How hard can this be?’ They want to get going.” tcbmag berg Initiative’s impact on the philanthropic sector. “Maybe tech entrepreneurs, in particular, don’t want to be hindered Sarah Lutman is a St. Paul-based independent consultant and by the tools they use for philanthropy,” she says. “There is writer for clients in the cultural, media and philanthropic sectors. more blurring of the lines between business and philanthro- py. Entrepreneurs see many ways to make change happen; charitable gifts are one way, but not the only way.”
20 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Put Your Money Where Your Mouth Is Employers should back up their wellness push with weight-management benefits.
ust a few weeks into 2016, most of your employees fewer workers with health problems, which mean less absen- who resolved to go on a diet and lose weight this teeism and lower health care costs. J year already have fallen off the wagon and onto What doesn’t make sense is what the aforementioned the food truck. And those who haven’t likely will have put survey found (bit.ly/1NeRgw3). The survey of nearly 7,000 on hold their plans to drop a dress or belt size until after an employed adults conducted by Pittsburgh-based Conscien- upcoming Super Bowl party. Health and published in a special edition of the American The gap between intention and execution isn’t solely Journal of Managed Care revealed that: symptomatic of workers. It’s also symptomatic of employers 16 percent of employers required employees to EXPLANATION that incent employees to lose weight but don’t give them the participate in a wellness program as a condition of OF BENEFITS tools to make it happen. receiving their full complement of health benefits. By David Burda That’s my takeaway from the results of a new survey on 17 percent of the wellness programs featured incen- efforts by employers to improve the health and produc- tives or penalties based on weight or BMI. tivity of their workforces by focusing on weight-related 70 percent of the employers’ health plans didn’t wellness activities. cover FDA-approved obesity drugs. Obesity is one of the country’s most prevalent and wors- 68 percent of the employers’ health plans didn’t ening public health issues. According to new data from the cover bariatric surgery. National Center for Health Statistics, 37.7 percent of adults 47 percent of the employers’ health plans didn’t age 20 or older were obese in 2014, up from 30.5 percent in cover medical weight management services. 2000 (1.usa.gov/1MrNcbo). The Centers for Disease Control 40 percent of the employers’ health plans didn’t and Prevention defines obesity as having a body mass index cover visits to a registered dietician. of 30 or greater. Essentially, many employers are pressuring workers to The adult obesity rate in Minnesota is 26 percent and lose weight in hopes of saving money on health care, but they ranges from 22 percent to 34 percent by county, according aren’t ponying up the money for benefits that would help to the latest County Health them lose the weight. My guess is employers consider weight WHERE THE POUNDS ARE AND AREN’T Rankings & Roadmaps and weight loss a personal choice that employees make by Minnesota counties with the five highest report from the University virtue of controllable diet and exercise decisions. Why pay for and lowest adult obesity rates of Wisconsin Population something workers should do on their own? Health Institute and the I get the point. But if reducing obesity is the secret to a County | Obesity rate 0% 5% 10% 15% 20% 25% 30% 35% Robert Wood Johnson healthier workforce, then I think employers would be wise Roseau | 34% Foundation (see chart). to offer health benefits to those serious about getting their Dodge | 33% Obesity is linked to a weight under control. It’s a smart investment. Or, as the number of chronic medical researchers concluded: “Wellness programs may have little Renville | 33% conditions and illnesses, impact on costs driven by severe obesity in the absence of ac- Murray | 33% including heart disease, hy- cess to effective treatment for this chronic disease.” tcbmag Red Lake | 32% pertension, strokes, diabetes Ramsey | 25% and cancer. It makes sense, David Burda (twitter.com/@davidrburda, [email protected]) is Washington | 25% then, that employers would editorial director, health care strategies, for MSP-C, where he serves Dakota | 25% want to do whatever they as the chief health care content strategist and health care subject could to reduce the obesity matter expert. Hennepin | 22% rate in their rank and file. Olmsted | 22% SOURCE: COUNTY HEALTH RANKINGS & ROADMAPS SOURCE: COUNTY HEALTH Fewer obese workers mean
SHORT TAKE As a native of Illinois who went to school in Indiana, vacations in Wisconsin and UPDATE In the June 2015 column, we talked about why it was important for the busi- works for a publishing company in Minnesota, I know the pecking order. Minnesota looks down ness community to start paying attention to proposed hospital mergers and acquisitions on Wisconsin, Wisconsin looks down on Illinois, and Illinois looks down on Indiana. (I’ve never of medical practices in their market. Specifically, we recommended that employers been to Iowa.) That lesson from the residents of each state added a touch of irony to the results ask hospital administrators whether their proposed merger with another hospital or of a new study that ranked the efficiency of the health care systems in each state (bit.ly/1IQn9t5). purchase of a medical practice will lead to higher prices for the services they provide. The study defined efficiency as the ratio of inputs (hospital beds and health care workers) to It’s an uncomfortable question for business leaders to ask, and it’s uncomfortable for outputs (quality, access and outcomes). States whose health care systems produced more health care executives to answer. But, as the people who pay the bills, asking the ques- outputs for fewer inputs were deemed more efficient than others. The efficiency of a state’s tion is crucial. health care system is important to employers, the study said, because it can be “a major driver A new study in the Journal of the American Medical Association explains why (bit. in terms of attracting or repelling entrepreneurs and corporations considering new operations ly/1GfzXgR). About 7.4 million commercially insured patients in 240 urban markets or expansion within a particular state.” In rank order, here are the five states with the most spent an average of $75 more per person each year between 2008 and 2012 on out- efficient health care systems: patient care provided by physicians for no reason other than higher prices for the same Hawaii | Iowa | Wisconsin | Minnesota | Massachusetts care, the study found. The researchers linked higher prices to markets with higher Indiana came in at 15th, and Illinois ranked 26th. The study was done by an economics professor concentrations of hospital-owned physician practices. If you don’t want to pay more at the University of Wisconsin-Whitewater and supported by the Wisconsin Hospital Association. for care provided to your workers by doctors, start asking some questions before you (I’ve never been to Whitewater.) start getting bigger bills.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 21 Populating Cook County The region’s leaders want to attract entrepreneurs and young people. But some big challenges—including housing—remain.
By Gene Rebeck
essa Frost calls it the “Cook County shuffle.” She didn’t invent the term, but she and her husband But Frost and others can tell you have lived it. It refers to the number of jobs that many residents have to hold down to live in a about something else the county needs place they’ve fallen hopelessly in love with. to address if it is to grow—finding places “There are people who embrace that part of the lifestyle—that they might get the month of April for newcomers to live. About five years off,” says Frost, who’s now program director for the North House Folk School. Students learn ago, a number of Cook County leaders about traditional crafts from the picturesque harborside “campus” in Grand Marais. The shuffle decided it was time to address the chal- also can be a struggle. “It can make your long-term financial planning a challenge,” Frost adds. lenges that this unique part of Minne- The Frosts have made it work. Jessa holds down a full-time job while her husband—by sota continues to face. choice—works as a musician, sells real estate and serves as a ski patrol at Lutsen Mountains, a downhill-ski area. The GO Team The Frosts are the type of new residents Cook County wants to attract—educated, entrepreneurial, hardy and artistic. For decades, Cook County’s economy was And young. Cook County’s population stagnated between 2000 and 2010. The people who moved there were mostly retirees. built mostly upon logging and fishing. Still, there’s at least anecdotal evidence that more young people want to live in Cook County. Like the Frosts, they’re attracted Those industries are much smaller these by the area’s beauty, the abundance of outdoor activities and the strong community bond. Long winters? That’s part of the days. But the establishment of the Bound- charm—most of the time. Many of the newer young residents have been willing to do the Cook County shuffle to make it ary Waters Canoe Area Wilderness in the work. And with high-speed broadband recently installed throughout the county, many more could be drawn into the dance. 1960s and ’70s helped make the county’s tourism business its dominant industry. In the 1990s, it became a popular destination for retirees and second-home owners. That boom slowed after 2000. The
22 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 county’s sparse population, the fact that times. Economic diversification would co-owner of Lutsen Mountains, also it has only one incorporated city—Grand further smooth out the peaks and valleys sees a housing shortage as holding the Marais—and the self-reliance generally of economic activity. county back. He’s bullish on the prospects: embraced by businesses and residents The GO Team sees particular prom- Skinner has been putting $7 million into (most of whom have their own septic ise in arts and crafts, which are already upgrades and an expansion at his fam- Population Climb and water systems) has created a culture established in Cook County. Successful ily’s ski resort, seeing an opportunity to Cook County, one of Minnesota’s smallest where it has been historically difficult arts businesses there include galleries grow the business even as smaller resorts in terms of residents, boomed in the to gather residents together to address founded by painter Betsy Bowen and throughout the country have been closing. 1990s—its population grew 33 percent. countywide challenges. artist/writer Howard Sivertson. The In order to survive in that marketplace But the county also has been aging, with a By 2010, there was a sense among North House Folk School, the Grand Skinner says, they need to have similar higher percentage of people over 65 than many county leaders that “we weren’t do- Marais Art Colony and public radio infrastructure as is available in Western re- in Minnesota as a whole. ing very well,” recalls Jim Boyd, executive station WTIP are among the other solid sorts such as those in Colorado. Skinner’s director of the Cook County Chamber of foundation stones for an arts economy. goal is “to strengthen the season for all of Commerce. With the school system losing Boyd also points to several non- the properties up here.” students and the economy growing slowly, tourism businesses that are flourishing That could mean even more demand there was a strong general push in Cook in Cook County. There’s Swanson and for employees and housing. Harrison says County to “look hard at our economy Heeren, a Grand Marais law firm that’s that the county is making some progress. and how we can improve it and develop one of the largest title processing compa- There are plans for new owner-occupied organizations that could help that over nies in the state, he says. Another is E.R. housing and rental workforce housing. (est.) time,” Boyd says. Perry Signs and Engraving, which has de- But more is needed. “There are zoning It required the different parts of the veloped a worldwide market for its plastic areas we have to look at,” Skinner says. “In 3,868 5,168 5,176 5,233 county to overcome some long-held signs. A more recently launched example certain areas, you have to have 20 acres 1990 2000 2010 2014 distrust and differences, but leaders did is Voyageur Brewing, which opened its to build a house on.” There aren’t many come together to form the GO Team, a Grand Marais taproom in February 2015 lots left in Grand Marais. There is enough group of concerned citizens and busi- and is now selling its bottled craft beer land elsewhere in the county to build on, nesses that drew up a list of economic throughout northern Minnesota. he says. “But I’m worried that we’ll squan- development priorities. What’s needed, Boyd says, are ways to der it” with the county’s current zoning Percentage of people County leaders spurred formation market the county “to entrepreneurs who requirements, he adds. 65 and over of a countywide chamber of commerce can pretty much locate anywhere.” For Cook County boosters, that could as well as Visit Cook County MN, which mean losing the opportunity to attract brought together three distinct visitors A place to live younger residents such as the Frosts. “The bureaus in the county. Meanwhile, the But where will those entrepreneurs reside? people who stay are the people who figure county’s moribund economic develop- One of the priorities the GO Team identi- out how to buy a house,” Jessa Frost says. ment agency, whose sole reason for exist- fied was housing. The Frosts themselves often talked about ing was owning and managing Superior Scott Harrison knows that prob- leaving, but hung on. In 2013, their perse- 24.3 14.3 National Golf Course near Lutsen, has lem all too well. As president of Lutsen verance was rewarded when they found a Cook County Minnesota become far more active. Economic de- Resort on Lake Superior, one of the home near Tofte. velopment leaders are making a renewed oldest and most popular vacation places “We came because it’s such a beautiful push to sell lots in a business develop- in Cook County, and a longtime leader place,” Frost says. “But we stayed because ment park in Grand Marais. of the county’s economic development of the people.” tcbmag No one doubts that tourism will authority, he has seen tourism businesses Median age remain Cook County’s predominant struggle to attract and keep talented Gene Rebeck is a Duluth-based industry. But the county’s business, politi- employees. Many have left area resorts freelance journalist who writes monthly cal and nonprofit leadership also want because they had no place to live. for Twin Cities Business. to diversify the economy. In April and During the 1990s, Harrison says, November, the number of visitors slumps; there was a “dramatic expansion in the winters also are slower than summers, number of ‘pillows’ ”—that is, the number and many local businesses shut down for of places for tourists to sleep. But that led weeks, even months. The visitors bureau to another problem—a shortage of local has established new events for those down workers. That required area resort own- ers to attract employees from overseas, and then to make a big investment in employee housing, Harrison says. But “it’s 37.7 49.8 still nowhere near adequate.”
Charles Skinner, co-president and Cook County Minnesota CENSUSSOURCE: U.S.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 23 And how did he buy one of the best redevelopment spots in town?
by The fortress-like Minneapolis Armory is not the most inviting piece of real es- tate. Built in 1935 to serve as a training and recreation facility for the Minnesota Burl Gilyard National Guard and Navel Militia, it also was used for civic events through the early 1980s, including trade shows, political conventions, concerts and sporting events, before being turned into a parking garage. Today, among the shiny towers rising in the new Downtown East, it sticks out like a cement airplane hangar that has seen better days. It’s also a prime redevelopment opportunity, given its location two blocks from the new US Bank Stadium, a block from two new Wells Fargo office towers, and just across the street from the planned $22 million Downtown East Commons park. Attempts to redevelop it in recent years have fallen through. But it was acquired this past July for $6 million by Ned Abdul, a tireless local real estate developer with a reputation for rolling the dice on challenging real estate bets. Downtown deal-watchers say that Abdul’s track record gives them confidence he will succeed in his plans to refurbish the armory and transform it into a new event center. But few know much about him—you won’t find him hanging out with local business leaders at breakfast meetings, musing about the future of downtown. There have been few substantial news stories about Ned Abdul over the years, and there’s only one photo of him on the Internet.
24 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 25 • Ned Abdul got his start in the real estate business in 1992, when he purchased a home in north Minneapolis for less than $2,500 and then remodeled and sold it.
• House flipping gave way to purchasing commercial buildings by the early 2000s.
• Today, he is tackling large commercial properties, doing multi- Minneapolis million-dollar deals in Armory downtown Minneapolis Downtown East and working to convert the Minneapolis Armory Abdul paid $6 into an events center. million in July 2015 for the vintage property with plans to overhaul it into an event center near the new US Bank Stadium.
The man behind represented just 10 percent of Abdul’s property to be a tremendous asset,” says Steve Cramer, the armory’s future portfolio. In the wake of that sale, he rolled president and CEO of the Minneapolis Down- up his sleeves for his latest round of real estate town Council. He toured the property in late turnarounds. December and says that he understands the bdul—whose full name is Nedal Yusuf In Minneapolis’s North Loop, Abdul is plan to call for an event center, which can ac- Abul-Hajj —has spent years carving out remaking and expanding the vintage Western commodate up to 5,000 people, complete with a niche tackling tough properties and Container building at 500 Third St. N., slated to private suites and skyboxes. finding opportunities where others have be the future headquarters for Arctic Cat Inc. The Asked to confirm those plans, Austin adds: only found roadblocks. publicly traded recreational vehicle maker, which “I’d say it’s at least 5,000 people. Could be Deal by deal and brick by brick, he has reported sales of $698.8 million for fiscal 2015, more, but as we’ve said, plans continue to be quietly risen from his days of flipping houses in will relocate its corporate office from Plymouth. in development.” As of early January, detailed north Minneapolis to become a bona fide player In the Warehouse District, Abdul is luring plans for the project had not yet been submitted in the intensely competitive arena of commer- another suburban office tenant to downtown to the city, but City of Minneapolis spokesman cial real estate. In a business where many com- to the Nate’s Clothing building, which has been Matt Lindstrom said that permits were pulled mercial properties are owned by large, far-flung sitting empty for years under various owners, as last summer to repair the roof, do some interior funds or real estate investment trusts, Abdul is redevelopment plans have come and gone. Abdul demolition and repair work, and to repair and something of a one-man band, working out acquired that building for $4.15 million in July, replace exterior windows. of his Swervo Development Corp. office in the the same month that he closed on the armory. “I think he’s been very successful in real Minneapolis Warehouse District, with support Chicago-based Coyote Logistics, which has been a estate in downtown. I think he’s well capitalized,” from a small staff. tenant in Abdul’s Northland Corporate Center in Cramer says of Abdul. “He’s spending money Last May he raised a few eyebrows when Brooklyn Park, will lease 35,000 square feet at the and he’s got a track record of success with the he sold a portfolio of three downtown Min- downtown building. Jon Austin, who is handling buildings that he’s repositioned.” neapolis buildings—including the rehabbed public relations for Abdul, says that the remainder Abdul declined several requests to be inter- 510 Marquette, 300 First Ave. N. and 123 Third of the building has been leased to another tenant viewed for this story at this time; Austin says he St. N. —for $87.5 million to San Francisco- that “will be announced later this year.” would prefer to wait until after the armory plans based Spear Street Capital. The sale reportedly And then there’s the armory. “If the vision are firmer. as I understood it comes true, it’s just going
26 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Western Container Building North Loop, Minneapolis Abdul acquired the building with other properties in August 2005 and once floated condo plans here. Abdul is now expanding the building for Arctic Cat Inc., which will move its corporate 510 Marquette headquarters there Downtown this summer. Minneapolis Abdul paid $6.7 million for the building in March 2013 when it was 90 percent empty. His renovation drew new tenants: Mithun, RedBrick Health and Weber Shandwick.
Doug Hoskin, a principal with Interstate Tough to beat During his days flipping homes, California- Parking, acquired the armory in November 1998 based WMC Mortgage Corp. filed suit against and had been working on his own plans, with a espite his real estate acumen, Abdul is Abdul and others, alleging that he was respon- proposed budget of $35 million, to renovate and not without his rough edges. Several real sible for getting the lender to make inflated loans turn the building into an event center. “I could estate professionals flatly refuse to discuss on north Minneapolis homes that Abdul was not get enough financial commitments from him and his businesses. But even those reselling. But the case was dismissed in Septem- prospective users in order to finance the project,” who may be wary of Abdul have a grudging ber 1999. he says. He also looked at options for a hotel, respect for his real estate instincts. Former NHL player Brian Lawton sued housing and office space at the armory. Many have not forgotten when agents of Abdul and others in 2010, alleging fraud over two Hoskin says that he had not been looking to the Internal Revenue Service and the U.S. Postal real estate deals where he had invested in proper- sell the armory; then David Shea of Minne- Inspection Office raided Abdul’s home and office ties that Abdul was selling in Wisconsin and apolis-based design firm Shea Inc. introduced in May 2010, prompting a flurry of local media Michigan. But once again, the case was dismissed him to Abdul. “He was very straightforward coverage. The feds were also looking at John in 2011. and said ‘I would like to buy it from you—what Barlow, a partner with Abdul in downtown Min- Abdul was cited for carrying a pistol without would it take?’ … It was a very fast and fluid neapolis nightclubs. a permit in 1996. In 2013, he pleaded guilty to a transaction,” he says. Reports in the Star Tribune at the time said gross misdemeanor on domestic assault charges, Hoskin says that they hammered out an that federal agents were looking into allegations according to court records. But his most common agreement to sell the property in June and the that the pair was skimming money from the run-in with the law is speeding. Court records transaction closed about a month later. From clubs, with more allegations of possible money detail dozens of speeding tickets over the years. Hoskin’s perspective, it was a smooth deal. laundering and tax fraud. (The Karma night- One of Abdul’s companies sued the city of “I’d do a deal with him any day of the week,” club, in which Abdul and Barlow were partners, Minneapolis in October 2010, after wrangling says Hoskin. “I have a great deal of both admira- closed its doors in 2011 after clashes with the city over development plans for the Western Con- tion and respect for Ned.” because of a number of calls to police reporting tainer building. Abdul ultimately beat City Hall. violent incidents there.) In September 2013, the Minnesota Supreme But two years later, the potential federal case Court sided with Abdul, ruling that because the fizzled out; the feds never filed charges against city took more than 60 days to approve or deny Abdul. Ultimately the case underscored another Abdul’s zoning request, the city’s denial was aspect of Abdul’s story: He’s tough to beat. moot. Construction is underway on the building.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 27 Nate’s Clothing Building Warehouse District, Minneapolis. Abdul acquired the long-vacant building for $4.15 million in July 2015. He is drawing Coyote Logistics and another as-yet-unnamed office tenant to the building.
Arctic Cat will occupy the entire mercial properties, which are more complex and potential real estate investment deals. 55,000-square-foot property and is slated to expensive deals. Then, as now, he always seemed “He can look at a deal and know if it’s a deal move in this summer. In a September statement drawn to deals with challenges: older buildings or not a deal very quickly. He has a reputation of announcing the move, Arctic Cat president and in need of fresh ideas and new investment. following through with that on-the-spot deci- CEO Christopher Metz said, “The Minneapolis One early example of Abdul’s commer- sion,” says Kolsrud, senior vice president with North Loop is an historic and trendy warehouse cial deals was his acquisition of the former the local office of Colliers International. “He’s a district, making it a terrific complement for our Schlampp’s Building in south Minneapolis. Ac- very smart guy… He works hard,” he says. “Most iconic brand.” cording to Hennepin County property records, people need an elaborate set of analyses to make in November 2002 an Abdul entity paid $1.2 a good decision; he can do it in his head.” million for the property at the northeast corner Kolsrud also notes that Abdul is no over- Laying the foundation of Hennepin Avenue and Lagoon Avenue, in the night sensation, but has been building his busi- heart of the bustling Uptown neighborhood. ness for years. oday Abdul is buying and selling promi- Abdul overhauled the tired property and “He’s been doing this for 20 years and it’s a nent Minneapolis properties for millions drew new restaurants to the corner. More re- little at a time,” says Kolsrud. “He’ s been adding of dollars. But he got his start in the cently Abdul overhauled the property again: it’s to his portfolio a little at a time for 20 years.” 1990s with much smaller deals: buying, now home to Cowboy Slim’s bar and restaurant, A 2004 profile of Abdul in the Skyway rehabbing and reselling residential properties which opened there in 2015. Abdul also owns News newspaper dubbed him “The Phenom.” in urban neighborhoods. According to a 2002 the nearby Uptown Theater property and the Although Abdul spoke to a reporter for the story, profile in the Minneapolis-St. Paul Business original Walker Library, for which he paid $1.5 he declined to be photographed; he also declined Journal, Abdul began by buying a single-family million in December 2014. His plans for the to be photographed for the 2002 Business home in north Minneapolis in 1992. He paid less vacant vintage library are not clear. Journal story. He summed up his philosophy than $2,500 for the property as the economy was Veteran commercial real estate broker for tackling challenging buildings: “If there’s no emerging from a recession. Mark Kolsrud, who specializes in broker- negative in a property, there’s no opportunity,” But even back then, Abdul seemed to have ing building sales, has been involved in Abdul told Skyway News. “Risk reaps reward.” a knack for the deal. As he built his business, several transactions with Abdul and praises “He’s one of the best real estate minds that I he began buying larger packages of foreclosed his instinctive acumen for quickly sizing up work with,” says Steve Shepherd, a vice president properties from banks. From there Abdul at Colliers International who does brokerage eventually began to turn his attention to com- work for Abdul. “He’s a very shrewd real estate
28 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 PHOTOGRAPHY CRAIG BARES Uptown Theater Minneapolis Abdul paid $1.4 million for the iconic Uptown property in December 2009. A $2 million renovation was completed in 2012.
Walker Library Uptown, Minneapolis Abdul acquired the original, vintage library building for $1.5 million in December 2014. Plans have not yet been revealed.
decision maker.” The future draw to downtown’s emerging east side. Real estate veteran Steve Minn recalls buying of Downtown East Lester Bagley, executive vice president of a property in northeast Minneapolis from Abdul public affairs and stadium development for the about a decade ago, during the condo craze. espite his apparent aversion to the lime- Minnesota Vikings, says that team representatives Minn, a principal with Minneapolis-based Lupe light, the Minneapolis Armory project is met with Abdul in the fall to get a briefing on the Development Partners, developed the project a high-profile roll of the dice for Abdul. armory project. But Bagley says that the team has into the 47-unit Madison Lofts property. City leaders are clearly watching as its hands full with stadium and the surrounding Minn recalls that Abdul had a knack for forg- money pours into Downtown East. US Bank plaza. ing relationships with people who had owned Stadium is a $1.1 billion project. Projects that “We have not zeroed in on the armory itself buildings for decades. Abdul would pay them a have been developed or are in the pipeline from or how that event center would interact with our solid price, but then turn around and sell it to a Minneapolis-based Ryan Cos.—including office game-day experience,” says Bagley. “We have not condo developer at a nice markup. towers, a hotel and new apartments—total $450 really factored in the armory into our planning. “He was very savvy, ahead of the market,” million. Fundraising continues for the $22 mil- We have enough on our plate.” says Minn. “He’d turn around and flip them … lion Downtown East Commons, the green space But in contrast to past armory plans, Bagley he took none of the condo risk. Ned did very few adjacent to the armory. Where will Abdul fit into notes, “It seems with Mr. Abdul that it is pro- condos himself.” the neighborhood? ceeding.” In one case, Abdul acquired the Sexton Build- “With all the great things going on in Down- Given his knack for making lemonade out ing in downtown Minneapolis for $4.7 million town East, I am eager to see the armory being of real estate lemons, it’s tough to bet against in 2004. In 2005, as condo fever reached its peak, redeveloped,” says Minneapolis Mayor Betsy Abdul’s instincts for renewal and redevelopment. he turned around and sold it for an eye-popping Hodges via email. “We think this is a unique property in the $12.4 million. But Abdul’s precise plans for the space are not Twin Cities in terms of size, location and the The Madison Lofts project turned out to be yet clear. And it remains to be seen how many range of events it can handle,” Abdul’s spokes- tough for Minn as the condo market cooled. But and what type of events the rehabbed armory can man Jon Austin said in a previous TCB report on he has no regrets about the deal with Abdul. this project. “There’s great potential to work with “I’d do business with Ned in heartbeat,” says all of our new and anticipated neighbors. We Minn. “His handshake is a contract.” want to talk to all of them.” tcbmag
Burl Gilyard is senior writer for TCB.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 29 30 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Airport clubs are a hot growth business, and MSP business travelers are getting a taste of the competition.
By Adam Platt
They are ubiquitous at airports: long lines of well-dressed men and women lined up against a wall, tethered to a plug socket, trying to conduct a business call in a gate area with too few seats. It’s a daily occurrence for many road warriors, and delivering them a respite has become a fast- growth business. The niche is the common-use lounge. Many call them “clubs,” but there is no membership here. Pay a fee; escape the maelstrom. Some are out-and-out luxurious, with spa services, showers, chef-prepared meals, even private spaces for meetings or a snooze. Common in Europe and Asia, they are now the hottest item for domestic airports seeking to up their game. At MSP, the battle has been joined. UK-based Manchester Airports Group (MAG) opened its first North American Escape Lounge at MSP Terminal 1 in December. Why little old MSP? “We liked the volume, diversity of carriers, outstanding manage- ment,” says Rosemarie Andolino, CEO of MAG USA. MSP was the right place at the right time. The biggest hurdle to opening an airport lounge, Andolino says, is availability of space. Few airports have enough open square footage in the right place, and rarely does raw space come available other than once a decade or so when airports renew their concessions programs. “We just went through a rebid of half of our conces- sion program,” says Eric Johnson, director of commercial management and airline affairs at the Metropolitan Airports Commission. “We benchmarked 20 other airports. A common-use lounge was an obvious opening.” The trend was inevitable, says Chris Vukelich, vice president of supplier relations at corporate travel service firm Egencia.com and a one- time British Airways and TWA executive. “It’s almost impossible to find a quiet place in an airport. You can’t make a phone call. There’s music everywhere, constant chatter. Airports have become retail environments with airplanes.” For airports like MSP, which have focused recent energies on delivering a local shopping and dining experience, lounges are the next frontier. “No matter what you do with restaurants and shopping,” says Johnson, “there’s a growing subset of people looking for quiet.”
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 31 Alternative Lounge Landscape
Airspace Lounge
Amex Centurion Club MSP
The Club
Escape Lounge
Airport Clubs @ MSP Delta Sky Clubs: C Concourse and F Concourse United Club: E Concourse Escape Lounge: E Concourse entry The Lounge Lowdown:All clubs are not created equal.
LOUNGE TYPE ACCESS WHO FOR? Escape Lounge MSP Airline-operated Annual membership fee (unlimited use) or single- Fliers who stick to prime business routes with a dedicated airline of choice Start-up costs: $2 million Club visit pass Capacity: 131 Amex Centurion Amenity of Platinum/Centurion cards Fliers in major American/United hubs who hold Amex’s priciest cards Anticipated daily use: 170 guests Common-Use Entry fee or amenity of Priority Pass membership Fliers who want flexibility and all-around lounge access Entry Fee: $45 ($40 for online bookings)
MSP Airport Passenger MSP as Proving Ground pays the MAC annual rent of nearly $300,000 plus about Boardings (2015 est.) Once a private sanctuary little known to most travelers, 7 percent of every admission. Andolino says the company Terminal 1: 34 million airport clubs in the U.S. have traditionally been operated spent $2 million to start up at MSP. Terminal 2: 3 million by airlines—typically the local hub carrier—on an annual fee-for-membership basis. In recent years, though, as A crowded landscape airlines became more revenue-focused, clubs became less MSP is not without airport clubs. It is already home to exclusive. Overcrowding became an issue. two large Delta Sky Clubs, while United operates a tiny Just five years ago, independent domestic airport clubs United Club near its gates in the E concourse. (MAG says didn’t exist. But, say industry observers, overcrowding and it is hoping to work out an arrangement with the newly the limited amenities at airline clubs led the market to fly merged American Airlines to provide club space for trav- toward something different. elers headed to its handful of E gates.) MSP conducted an RFP. “We were looking to add The MAC saw an opening for Escape in part because amenities for passengers not flying Delta,” says Johnson. of changes Delta made in 2014 to its Sky Club admission “Crowding in the gate areas has really created a need for policies and pricing. For years, under Northwest and then additional options.” There was a sizable unused space on Delta, MSP’s clubs were open to guests of members and the mezzanine level at the throat of the E concourse, the guests of holders of Amex Reserve, Platinum and Centurion one Terminal 1 concourse not used by Delta Air Lines. cards. Delta, facing club overcrowding nationwide, instituted “Airport lounges are a massive The bidders were two U.S. newcomers, MAG USA $29 fees for most guests. Spokesman Anthony Black said the growth business. The days of going and Airspace, a division of Zurich-based Swissport, which airline has recently invested tens of millions in hard and soft operates four lounges in U.S. airports. Competitor Dallas- product upgrades for Sky Club and is working to manage into a beige room and having based the Club did not bid, nor did American Express membership levels to reduce crowding. shrink-wrapped cheese and pretzels consider adding a Centurion Lounge for its premium The MAC’s Johnson says he felt Delta’s pricing and from a bin—that’s past.” cardholders. (“Amex was concerned about their partner- admission policy changes had created a new need. (Sky —MAG USA executive ship with Delta and didn’t want to compete with them,” Club memberships start at $450/year with single-visit vice president Beth Brewster says Johnson.) passes sold at $59. Unlimited entry can be obtained more MAG’s bid won out. It is a publicly owned UK corpo- cheaply with AmEx’s Delta Reserve card.) For the day-use ration that operates five common-use lounges and four traveler, Delta used to sell passes “that could be used at airports there, most notably Manchester Airport and Lon- multiple points on a connecting itinerary,” says veteran don Stansted. Johnson says MAG has a 10-year lease and business travel advocate Joe Brancatelli. But no longer, so,
32 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 “It’s almost impossible to find a quiet place in an airport. You can’t make a phone call. There’s music everywhere, constant chatter. Airports have become retail environments with airplanes.” —Chris Vukelich, vice-president supplier relations, Egencia.com
he says, “there’s not a competitive advantage” to the Sky retail price, it equates to $2.8 million in annual revenue The bar area at MSP’s Escape lounge. Clubs over common-use lounges for that customer. for the company, though a substantial cut will go to ubiq- Observers suggest the changes have been a mixed uitous airport concessionaire HMS Host, which handles bag. Rene de Lambert blogs primarily about Delta at the Escape’s food service. If Escape meets its projection of 170 frequent traveler site BoardingArea.com; he visited MSP’s paid guests per day, the MAC will take in roughly half a Escape Lounge on its opening day. “Delta has stepped up, million dollars annually in fees and rent. but Escape is a notch higher,” he says. “Plus the MSP Sky Common-use clubs will never be able to match Clubs are often packed.” airline clubs in one key aspect: Airlines staff their clubs The experience at other airports has been that even with empowered senior employees who assist members independent clubs, especially Amex Centurions, quickly with everything from seat assignments to rebooking. “If become overcrowded at peak travel times. Escape’s UK you are delayed or there are irregular operations,” says de clubs frequently reach capacity and close to walk-up visi- Lambert, “the private clubs can’t really help.” tors. “We don’t want to be overcrowded,” says Andolino. Another fly in the ointment for MAG USA, say “We’ve got 131 seats [at MSP] and expect to handle observers, is the lack of membership options. “Business about 170-plus travelers per day, but we will not admit travelers are not big fans of pay-as-you-go at airports,” anywhere near 131 people at once.” says Brancatelli. He can’t see that business model working Ultimately, though, Brancatelli thinks Escape is not at MSP. Thus, “I think the lounge will do best with origin MSP’s Escape lounge offers a buffet of hot and cold really competition for the MSP Sky Clubs. “If you’ve paid and destination leisure fliers and frequent fliers who foods with admission, plus an ala carte paid menu. for a Sky Club membership you’re likely to use it over any- aren’t Sky Club members.” thing else,” he says. “Partially for the geography, since an He believes it’s essential for MAG to affiliate its U.S. airline-aligned club is almost always closer to your flights.” clubs with the global Priority Pass club membership net- Because of that, Brancatelli says the common-use work, as it does in the UK. “I think it’s a mistake for MAG lounges are only a threat to the major carriers if they are to not be part of Priority Pass,” says Brancatelli. “It’s the Lounge life: The inside story able to lease enough square footage at space-constrained coin of the realm for the heaviest club users.” The experience at MSP’s Escape Lounge airports to deny the big three major carriers opportunities MAG’s UK airports mostly serve leisure travelers; feels premium compared with an airline club. to expand or open new lounges. accordingly, so do its clubs. The price-sensitive leisure The staff is solicitous, as in a restaurant. Food travel market would not seem to be a fertile field for a and beverage is unlimited and feels designed The lounge business luxe airport club, but Brewster says it’s a core component for palate appeal, rather than shelf stability. Industry veterans say the airlines have historically run their of MAG’s business: In the UK “we find they save on the There is a concierge staff, printing, fast Wi Fi. clubs as profit centers. But that has become a murkier cal- ticket and splurge at the airport.” Which explains MAG’s The limitations are a lack of meeting rooms culus since all the major carriers now offer free club access next U.S. Escape Lounge, in Oakland, an airport domi- (the MAC wanted to protect its fee-for-use by carrying certain of their bank-issued credit cards. nated by discount airlines and cheap flights. airport conference facility), spa services, Beyond airline clubs, the competitive lounge landscape Even if Escape thrives, it’s not clear that leisure-dom- or showers for travelers coming off redeye is in its infancy. Domestic pay-as-you-go options are limited inated Terminal 2 (T2) will see a lounge anytime soon. flights or a sweaty day of meetings. to Escape, Airspace, and The Club [see data box]. Pricing “I’m not sure there are enough people at T2 throughout Escape charges $45 for a three-hour visit, and amenities vary by company and location, but rarely are the day to feed a club,” says Johnson. “We’ve talked about $40 if you book in advance online. It expects they competing in the same terminal. The only constant in it with Sun Country, but their operations are confined to most of its guests to originate or end their the business is that more of each are on the way. very focused time periods during the day.” trip at MSP. To seasoned road warriors who At one time Amex’s upper-tier cardholders had access Brewster says MAG is convinced that it’s a pretty carry on their bags, have trusted traveler to American, Northwest, Continental, Delta, and US simple calculus. “Anywhere with 4 million total passen- IDs, and can make it from entry door to Airways clubs, but that atrophied to only Delta’s network. gers a year can work,” she says, with the caveat that “a lot gate in 20 minutes, such a niche may seem As a result, Amex created Centurion to serve cardholders of it is about footfalls. You have to have the right location.” counterintuitive, but it isn’t, say experts. without club options at non-Delta hubs. “Amex is using (MSP T2 handled roughly 3 million passengers in 2015.) “You know, I’ve been known to arrive at a it as a branding opportunity,” says Vukelich. Centurion MAG USA hopes to operate five lounges by mid-2017 club before a flight and office there for two is currently the gold standard, say insiders—offering spa and reach 20 by 2020. It is currently bidding for space at to three hours, or stay at an airport for two services, complete meal service, showers, etc. “You could Hartford and DFW airports, says Andolino. hours after I get off my flight, conducting spend your entire vacation in one,” says Johnson. For now, what’s playing out on the mezzanine level phone meetings,” says Egencia.com’s Chris The other private lounges are meant to function as prof- near the E gates is a grand experiment for both MSP and Vukelich. “A club is the only place that it centers. “Airport lounges are a massive growth business,” MAG: Whether the airport experience has become so works.” says MAG USA’s executive vice president Beth Brewster. overwhelming and chaotic that a critical mass of passen- “The days of going into a beige room and having shrink- gers will pay real money to make it smoother. tcbmag wrapped cheese and pretzels from a bin—that’s past.” If MSP’s Escape can generate 170 visits per day at full Adam Platt is TCB’s executive editor.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 33 TCB Women’s Leadership Awards Five accomplished women serve as role models in how they lead their companies and serve their communities.
Perseverance, an ability to empower others and the willingness to work hard are characteristics of the five womenTwin Cities Business is honoring with special leadership awards. Kate Kelly All five women are excellent strategic thinkers and have talents for President and CEO, business. They have risen to leadership positions in industries tradi- Minnesota Bank & Trust tionally dominated by men. Equally important, they all possess the inner drive to test themselves and persuade their employees to join By Suzy Frisch with them to help their companies excel. The women profiled in the following pages have found ways to juggle work, community and family roles, so they can make impor- ew were surprised when Kate Kelly started a bank and tant contributions to all aspects of their lives. became president and CEO. After all, she had been tell- ing people that she wanted to run a bank since she was in junior high. While that might seem like an unusual Fgoal for a teenager, Kelly always loved numbers, depositing her TWIN CITIES BUSINESS PRESENTS THE WINNERS OF THE money at the bank and learning about businesses. 2016 TCB WOMEN’S LEADERSHIP AWARDS: So when Heartland Financial USA of Dubuque, Iowa, ap- proached Kelly in 2007 about launching its first Minnesota bank, Kate Kelly | President and CEO | Minnesota Bank & Trust Kelly jumped in. Then a region president for Bremer Bank, Kelly was working on overdrive. “I was loving it, but I was working very, Jill Lloyd | President | Lloyd Security Inc. very hard,” she says. “And I thought that if I’m going to have a workaholic quality, I might as well invest in myself. And I thought Kim Nelson | CFO | SPS Commerce it would be cool to put a team together.” Kelly assembled an investment group, hired people she had Susan Park Rani | President | Rani Engineering known or admired from her 20 years in the banking industry, and secured the state’s last new bank charter. Minnesota Bank & Trust Diane “Dee” Thibodeau | CEO and co-founder | Charter Solutions opened for business in spring 2008, right before the financial meltdown. Under Kelly’s leadership the bank prospered during the down- turn, growing a bit more slowly than initially planned, but grow- ing all the same. It benefitted from a clean slate of clients without Awards Program bad real estate or commercial debt, as well as Kelly’s vision to Thursday | February 18 | 2016 deliver big-bank services with a boutique-bank feel. Another key was taking advantage of a sudden surfeit of high- 5:00p.m. Registration | 6:00p.m. Short Program | 7:00p.m. Event concludes ly experienced bankers with existing strong business relationships. Golden Valley Golf and Country Club Kelly hired entrepreneurial bankers, and together they cultivated deep connections with clients. “We attracted folks who really 7001 Golden Valley Road | Golden Valley | MN 55427 wanted to be understood by their bank,” says Kelly. “I remember Ticket Information | $50.00 per ticket one of our earliest clients saying, ‘Wow, Kate, I know more people on your team than I ever did at my old bank.’ ” Register at tcbmag.com/WLA16 Kelly also pours her energy into community service. In 2014, @tcbmag | #TCBWomensAwards she was elected to the board of the Federal Reserve Bank of Minneapolis, where the economics major with an MBA shares firsthand business information from the banking trenches. Event Sponsor She brings her passion for education to ServeMinnesota, the state’s administrator of Americorps programs, where she serves as board chair. Kelly has become an important partner of CEO Audrey Suker and a champion of the nonprofit’s work, especially its programs to help Minnesota children become successful read- ers and mathematicians. “I have to remind myself that she doesn’t
34 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 What was your first experience as a leader? My parents had a summer resort, and they had me run it {A} from junior high on with my younger sister. It was a very independent, responsible thing to do. There are three cabins, and we have rented to many of the same families for 40 years. It’s also how I got my first job in banking. A bank owner brought a group up for a family reunion, and he told me that when I got out of college, he would give me my first job. And he did.
What was your hardest lesson in work or life? To choose trust over fear. As you lead people, the more you {A} trust, the more things come together. (This realization) comes from years of working too much, when I thought I was the person who had to do everything. It was a burn-out path. When you’re going from a producer to a leader, you have to learn how to trust and hold people accountable.
What is your best habit in work or life? I’m a very early riser. I tend to everything I want to tend to {A} before 8 o’clock and get organized before the day starts. It’s been a habit for my whole career. Once the day starts, you’re off and running. It keeps me on track.
Milestones work for us full time,” Suker says. “She lives and breathes our work 1986 Rises from commercial lender to district manager 2007 Launches Minnesota Bank & Trust and the same way she does as a bank president. It’s a huge gift to me and vice president during 18 years at US Bank. becomes president and CEO. and our organization.” 2002 Becomes region president at Bremer 2012 Founds and serves as current board chair of Financial Corp. the ServeMinnesota Education Foundation. Entrepreneurial and strategic, Kelly spearheaded the cre- 2004 Becomes a director, then board chair, 2014 Selected as a board director and audit ation of the ServeMinnesota Education Foundation and chairs at ServeMinnesota, the state’s administrator of committee member for the Federal Reserve its board. She recognized that the policy-oriented organization Americorps programs. Bank of Minneapolis. needed a fundraising arm and called on her connections to make it happen, Suker says. “She’s a natural leader who is always willing to look at what Minnesota Bank & Trust needs to get done and say that we’re going to figure this out,” adds Total assets: More than $210 million, growing about 27 percent in 2015. Suker. “She’s the president of a bank, and she makes all of us at the Employees: 30 Location: Edina nonprofit feel like we’re in the same league.” Key fact: With the backing of its majority owner partner, Heartland Financial USA of Iowa, Minnesota Bank & Trust can lend $30 million to $40 million.
PHOTOGRAPHY BY TRAVIS ANDERSON FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 35 What was your first experience as a leader? I was class {A} president at St. Anthony High School for three years. It was socially awkward at times, but it teaches you basic leadership strategies and how to get others to follow the same vision. starts a business to make a solo living, in con- trast to “entrepreneurial thinking,” which has a What was your Jill Lloyd bigger goal of building a multi-employee firm. President, Lloyd Security Inc. hardest lesson in Lloyd is a member of two groups to help work or life? women grow their businesses, the National As- By Fran Howard sociation of Women Business Owners and the Getting the Women Presidents’ Organization. {A} right people “Women have a lot of responsibilities,” she in the right seats— Milestones arly in her career, Jill Lloyd learned says. “We are the primary caretakers of children accepting when 1991 Graduated with an economics degree how to hustle, a skill that proved in- and family, which can be challenging when from South Dakota State University. you have the wrong valuable in 2002, when she founded running a business. We have to get focused. person and having 1992 Hired by Honeywell as a sales Lloyd Security. And we have to be fearless.” Lloyd admits, consultant in Protection Services. the confidence to let E“I started in sales at a time when not every- however, that succeeding in business often has Became one of the company’s top that person go. I did one had a cell phone (called a car phone back its trade-offs. sales reps worldwide. not want the drama of 1995 Hired as sales manager at then). No one had email. We looked people’s “Some mornings I wake up and ask myself, Securitylink by Ameritech. numbers up in the phone book,” says Lloyd. ‘Who needs me more today, my family or my letting someone go, but 1997 Promoted to regional manager at “We couldn’t send contracts electronically. We business?’ Based on the day, I follow what is I learned it is so much Securitylink by Ameritech. had to hustle.” most urgent. I always try to prioritize fam- more damaging to 2002 Founded Lloyd Security. Her goal for the startup was to secure 1,000 ily activities and special events in addition to the company to retain 2015 Named one of 10 Women of the Year a person who is not by the Women’s Security Council. customers so the company would have enough making sure I carve out special time with each 2015 Received the Innovation in momentum and cash flow to grow at a faster of my children,” she says. “Balance is about working out. Technology Award from the pace. Lloyd’s first employee, Tim Bauman, who making the best choice on how to divide my Minnesota chapter of National is still with the firm, would install the security time between the important things.” What is your best Association of Women Business systems, and Lloyd would design and sell them. C. J. Dubé, who has been Lloyd’s Trac- habit in work or life? Owners. “It was brutal, but we basically outworked our tion EOS (entrepreneurial operating system) lack of cash,” she recalls. implementor for the past two years, calls Lloyd A do-it-now In 2015, Lloyd Security grossed $2.5 mil- a visionary. “Jill doesn’t know the definition of {A}attitude, which Lloyd Security Inc. lion, and revenue grew by 122 percent between quit,” says Dubé. “If she sees a roadblock, she can Revenue: $2.5 million (2015) also means clearing out Employees: 18 2013 and 2014. “I bootstrapped the entire also see the future. She knows how to back up email by the end of the Location: St. Louis Park venture,” she recalls. “I took a loan from myself and start at the beginning again if she needs to.” day. Key fact: Provided electronic technology and started the company slowly. Thirteen years Lloyd Security offers high-tech residential, solutions in the Governor’s Residence later, looking in the rear-view mirror, we have commercial, and construction site security in St. Paul. no debt. We have been conditioned to be frugal systems, including panic rooms, and systems and smart with money.” that monitor the sick and elderly so they can Lloyd uses her drive and business sense age in place. The company designs, installs and to help others succeed as well. “I love helping monitors the systems. women think bigger. I used to think small. Years ago if someone had said, ‘You will have a $2.5 million company with 18 employees,’ I would have disagreed with them.” She calls that type of thinking “solo-preneurial,” where someone
36 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Kim Nelson CFO, SPS Commerce
By Fran Howard What was your first experience as a leader? At Nestle in 1991, I had the opportunity to {A}move to San Francisco when the company was consolidating. By making that move, I was put in a position where I could discuss the product and the business with people who were not as close to the products as I was; I was able to convey the business knowledge to them.
What was your hardest lesson in work or life? Making the most of what I have and not {A} getting caught up in one thing. Life is short. We need to be in the moment and make the most of each day.
What is your best habit in work or life? I really try to listen and manage my time {A} effectively.
im Nelson has had the perfect stepping-stone career, receiving one Match, which links bone marrow donors with leukemia patients. As an promotion after another. Today she is the chief financial officer for alumna of St. Thomas’ Executive MBA program, Nelson also gives classroom publicly-traded SPS Commerce, a retail cloud services company presentations and is active in St. Thomas Women Connect, a networking with $158 million in annual revenue. The firm is credited with group that brings alumni and senior students together. Kproducing one of the first successful IPOs following the economic collapse “Networking really helps those just starting their career or who want to of 2009—a feat where Nelson proved instrumental. make a change,” says Nelson. “Women Connect provides a safe environment Hired fresh out of college by Nestle USA in 1989, Nelson worked dili- for women to ask questions about balancing work and family.” gently while gaining critical skills, but it wasn’t until 1991 that she realized Planning has been key to Nelson’s success striking that balance herself. just how much she had learned. When she moved to San Francisco during “By scheduling significant family, volunteer and business commitments a company consolidation, Nelson was thrust into a leadership position that first—and months in advance—I can make sure they align,” she says. “It’s continued to advance her career and her confidence. important to make time for your career, family and service opportunities, Seventeen years and two companies later, Nelson was presented with one of but you also have to set aside time for yourself. Staying balanced and focused the biggest opportunities of her career when the management team and board makes me better at all of the many roles I take on each day.” of directors at SPS Commerce started to investigate taking the firm public. “We—the CEO, CFO and COO—needed to feel comfortable that we had a business model that had a long runway, and that we could execute and deliver. While I had never taken a company public, I had spent three years running investor relations for Amazon.com, so I was comfortable developing Milestones SPS Commerce a company’s message.” 1989 Earned finance degree from Babson College, Revenue: $158 Nelson spent 2008 and early 2009 getting the SPS Commerce name out Wellesley, Mass. million to potential investors and made sure all of the firm’s financials were audited, 1989 Hired as a financial analyst by Nestle USA. Employees: 1,000 reviewed and ready for public dissection. Since going public in April 2010, SPS 1991 Moved to San Francisco when Nestle was consolidating. Locations: 1996 Hired as finance director of corporate planning Headquartered in Commerce has had 37 quarters of consecutive revenue growth. and analysis for Pillsbury. Minneapolis; offices “Kim is very thoughtful and effective in building relationships, both 2000 Hired as finance director of corporate planning in Parsippany, N.J.; inside the company and outside with Wall Street,” says Sven Wehrwein, an and analysis at Amazon.com. Melbourne, Sydney, SPS Commerce board member. “As an experienced board member, I look for 2001 Completed Executive MBA from the University of St. Hong Kong, Beijing three things in a senior executive: smarts, a team player and the will to win. I Thomas. and London can tell you, Kim has all three in spades.” 2005 Promoted to finance director of Investor Relations Key fact: More than at Amazon.com. Nelson also is a member of Women Corporate Directors. She is on the 60,000 customers 2007 Hired as chief financial officer at SPS Commerce. and 37 consecutive board of Qumu Corp., and on the finance and audit committees of Be the 2010 Instrumental in leading SPS Commerce to a successful quarters of revenue initial public offering. growth. 2014: Helped with the purchase of Australia-based Leadtech.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 37 What was your first experience as a leader? As a project {A} manager, I was on an Air Force base in a room with three subcontracting firms and 20 brass—people of rank, sergeants and colonels. I had to quickly think through who was going to do what and divide up the work. I didn’t think Rani Engineering I could do it, but it Revenue: $5.4 million worked like a dream. Employees: 50 Susan Park Rani Location: Headquarters in Minneapolis President, Rani Engineering What was your with a satellite office in Los Angeles By Fran Howard hardest lesson in Key fact: Rani was a pioneer in work or life? founding a woman-owned engineering firm in Minnesota. Realizing that usan Park Rani readily admits that it marketing efforts to water resources, transpor- {A} everyone has wasn’t easy opening her company in tation and land surveying.” flaws and no one is 1993 in a male-dominated industry. “Susan is a collaborative and very strong perfect. You should not Milestones Being a woman of color made it leader. Because of that, she is highly sought 1982: Received bachelor’s degree feel guilty or ashamed Seven more difficult. out,” says Minnesota Lt. Gov. Tina Smith. “She in civil engineering from the “When I started Rani Engineering, no is getting the recognition she deserves, which about that. Realizing University of Minnesota. one else did what I did. There were no female is the result of her many years of building rela- that everyone has flaws 1982: Accepted position as a structural engineers making decisions,” says Park Rani. tionships across various communities.” goes a long way toward engineer for a private firm in There were working female engineers, she Over the past several years, Park Rani has forgiving and living a Los Angeles. notes, “but no woman engineer took a visible become a prominent business leader. She ac- compassionate life. 1985: Worked for U.S. Army Corps of role as a leader.” companied Gov. Mark Dayton and Smith on a Engineers, San Francisco As a woman- and minority-owned startup, trade mission to South Korea in 2011. In 2013, What is your best and St. Paul. Rani Engineering was eligible for state and fed- Dayton appointed her and Smith to the eight- habit in work or life? 1988: Hired by MnDOT as a highway/ eral programs, but Park Rani never imagined member board overseeing the Mayo Clinic’s water resources engineer. how difficult it was going to be. “You were con- $5.6 billion Destination Medical Center expan- Keep working 1993: Founded Rani Engineering. sidered incompetent—but for a government sion in Rochester. This past fall, Park Rani was {A} and persevering. 1994: Earned MBA from the University program, you wouldn’t exist,” says Park Rani, named to the University of Minnesota Foun- If something is of Minnesota’s Carlson School. who came to the United States from South dation Board of Trustees, the Super Bowl 2018 difficult, break it into 1995: Landed first $1 million project Korea when she was a child. “A lot of skeptical Host Committee and a committee seeking to manageable pieces. in Minnesota. people in town were waiting for us to fail.” bring the 2023 World’s Fair to the Twin Cities. 2013: Appointed to the Destination Recently, her Minneapolis-based firm She is “a person in constant motion,” Medical Center board by grossed more than $5 million a year—about says David Oxley, executive director of the Gov. Mark Dayton. 40 percent from the private sector—and her American Council of Engineering Companies 2015: Named to the University expertise in engineering, business and cultural of Minnesota. “She has been active with both of Minnesota Foundation Board knowledge is in high demand. woman-owned and minority-owned engineer- of Trustees. This winter, her business is facing financial ing firms to try to promote them and help 2015: Named to the Super Bowl challenges. “The freight rail sector work we do them be successful.” Host Committee. is down, driven by low oil prices,” Rani says, Park Rani attributes her success to so less crude oil is being moved by rail. “We’ve perseverance, her knowledge about potential had layoffs in order to manage to our revenue engineering projects around the world, and her expectations. Our team is redirecting our work ethic.
38 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Milestones Diane “Dee” Thibodeau 1986: Becomes president of Microworx. 1990: Serves as president of EDI Solutions. CEO and co-founder, Charter Solutions 1995: Becomes executive vice president of St. Paul Software. By Suzy Frisch 1997: Co-founds and serves as co-CEO here’s little that Dee Thibodeau enjoys of Charter Solutions. more than bringing people together—for 2001: Becomes a board member and chair with the a business goal, a charitable cause, a com- Minnesota High Tech Association. munity initiative or a bit of fun. She’s the 2005: Serves as director, president, and forum chair Tultimate convener of people and companies, using of the Minnesota Women’s Health Leadership her tireless energy to power Charter Solutions, Trust. propel numerous organizations and assist anyone 2013: Becomes a director of M Health at the in her large network. University of Minnesota. A serial entrepreneur who has launched and grown diverse companies, Thibodeau co-founded Charter Solutions in 1997 and serves as co-CEO. It survived many tech booms and busts by focusing health care and technology. on technology consulting and evolving its services She also makes it her mission to help others to meet prevailing needs. Thibodeau deftly guided find opportunities to grow and lead, constantly the company as it transitioned into information meeting people for coffee or meals, and cold-call- services with core capabilities in analytics and ing others she wants to meet. “I really enjoy helping professional services that include systems architec- people be successful, and I’m very passionate about ture, planning and management focused mainly on getting women on boards, because there are not health care, financial and government clients. that many women directors,” says Thibodeau, who Currently, Charter Solutions enjoys a steady helped start Women Corporate Directors in Min- growth clip after it pivoted to analytics, leading cli- nesota. “If I can help an individual better their life ents through a process that builds a culture of fact- or move to their next career, that’s exciting. That’s based decision making. “I love consulting. You feel what it’s all about.” good when you have helped a business grow and Dr. Sheila Riggs, chair of the department of Charter Solutions expand and think differently in a short amount of primary dental care at the University of Minnesota, Revenue: $10 million to time,” says Thibodeau. “I love to be involved with got one of those calls from Thibodeau when she $50 million. Revenue the clients—I never want to be sitting at a desk all moved from Iowa to the Twin Cities. After meeting increased 35 percent the time.” her for networking, Thibodeau encouraged Riggs between 2014 and Helping businesses learn more about their to join the Women’s Health Leadership Trust, a 2015. operations through analytics reflects Thibodeau’s 36-year-old organization that Thibodeau worked Employees: 75 lifelong love of learning. She knew she wanted to to reinvigorate. She watched as Thibodeau helped Location: Plymouth emulate her entrepreneur father. Her track record grow the organization from 60 members to more Key fact: The company includes growing Microworx into the largest than 350. has a national computer training company in the Midwest, as “Dee is so high-energy and gives the whole practice that partners well as starting management consulting and hotel room a can-do spirit. She has tenacity, and she stays with customers on investment businesses. engaged at this high level for years,” Riggs says. “She analytics, professional More recently, Thibodeau joined veteran wants to make sure this community is as strong as services and systems women executives and angel investors to launch possible, and she’s in it for the long run. Dee is a architecture. Analytics the Sofia Fund, which invests in women-owned or key ingredient to why the fabric of this community is the fastest-growing -led technology and health businesses. It’s familiar is so tightly woven.” tcbmag part of Charter territory for Thibodeau, who has dedicated her Solutions’ business. career to nurturing women leaders and entrepre- neurs and helping lead organizations involved with
What was your first experience as a leader? What was your hardest lesson in work or life? What is your best habit in work or life? I first ran a computer training company To not do everything myself in my work Perseverance. People don’t persevere and {A} called Microworx. They hired me as {A} or family life. Surround yourself with {A} they show up and wonder why it doesn’t general manager, and when I started, there people who have talents you don’t have, and let happen. In business, I think of it as a challenge. was nothing there. They didn’t even have a them run with it. I’m controlling and like to have Then it’s not depressing or a downer. It’s exciting. curriculum. So I hired the best instructor in it done a certain way, but you have to let people If you approach life and business that way, then the computer field that I could, and we ended use their talent and let them go—and if they make you grow with challenges. That’s what life is all up being the largest Midwest training company mistakes, it’s a learning situation. Also, surround about. I always want to be learning and growing. in the country. I learned [you should] ask a yourself with people who are not like you. I used Sometimes you need a different approach, and lot of questions before you get involved with a to surround myself with people who are like me, that helps me persevere. company. Then jump in and make it happen. because they are fun. But if their expertise, talent and style aren’t different, it’s not good for the organization.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 39 TRENDING | BANKING Banking On A
Local lenders offer an optimistic outlook for 2016. BY BURL GILYARD
40 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 2015 proved to be a bumpier economic Let’s get to work for your business ride than many had expected at the outset of the year. Overall, many businesses remained in good shape, continuing to post steady growth. But the stock market experienced many wide swings as inves- tors tried to gauge the health of the global economy amid continuing uncertainty. In early December, New York Times colum- nist Paul Krugman surveyed the domestic outlook of the “not-so-bad economy,” in contrast to Europe, where the Central Bank’s interest rate was negative. Banks and bankers closely watch the health and mood of their business customers. Are they looking to expand We’re here to help you reach your goals their businesses and hire more staff? Do they need equipment loans? Are they At Wells Fargo you’ll find all the products and resources you need to looking to make an investment by buying move your business forward, along with the support and guidance of a building or some land for the business? a banker from your community. Are they using their lines of credit? By That’s what Wells Fargo Works for Small Business℠ is all about. It’s most measures, the Minnesota economy our commitment to helping small business owners in more ways has been healthy. In U.S. Department of than ever before. Commerce data released in December, Visit wellsfargoworks.com to: Minnesota posted a strong showing, with • Learn how Wells Fargo works for you and your business by GDP growth of 4.5 percent for the second providing innovative products, services, and programs that can quarter of 2015, the 14th best showing in meet your business needs. the United States. After years of the federal funds interest • Explore videos, articles, and other resources covering a wide range rate hovering near zero, the stage is finally of business topics including credit, cash flow management, real set for gradual rate increases, bolstered by estate, and marketing. a solid, underlying economy. In mid- Stop by or call and speak to a local banker today. December, for the first time in seven years, the Federal Reserve announced it would raise its benchmark interest rate. “People have been expecting rates to go up at some point,” says Bill Long, audit partner in the Minneapolis office of New York-based KPMG. “Overall I think the banking sector remains pretty strong. The interest rate environment is going to change. Deposit products are offered by Wells Fargo Bank, N.A. Member FDIC. We’ve known that for a long time.” He emphasized that © 2015 Wells Fargo Bank, N.A. All rights reserved. (1869502_16793) banks are much more strongly capitalized than they were a
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 41 TRENDING | BANKING
few years ago. of slowing down,” says Trier. Fargo’s Central Region, who also sits on If 2015 was not so bad, how are things “Over the last five years, the board of the Greater MSP Regional shaping up for banking in 2016? While we’ve had [annual] aver- Economic Development Partnership. there may be some wisps of concern drift- age loan growth of over Oberst says that in 2015, Wells Fargo ing in the wind, the general mood from 10 percent.” posted solid commercial loan growth Twin Cities bankers is that the year ahead throughout her 10-state territory. looks to be consistently solid, roughly on “We had double-digit loan growth,” par with last year. But there still remains Challenges face says Oberst of last year. “Every one of my a tenor of caution: The economy is not ag, energy sectors regions saw significant loan growth.” explosive, but durable. Oberst does note, however, that two “2015 was another good year,” says Laura Oberst manages a sectors—food/agriculture and energy— Phillip Trier, Twin Cities market president 10-state region including Min- are showing some weakness. “There’s of US Bank. “Our customers are feeling nesota for San Francisco-based always a cycle for every industry, and I good about the economy. When I talk to optimism across all Wells Fargo, working with companies believe they’re just rebalancing right now,” customers about 2016, they expect it to be industry segments.” that have annual revenues of $20 million says Oberst. similar to 2015.” Trier works with compa- One of the few soft spots that Trier to $1 billion. She’s equally bullish. Looking ahead, however, Oberst says nies with $10 million to $500 million in sees is that customers still aren’t tap- “We had strong loan and deposit she expects loan growth will continue, annual revenue. ping into their credit lines, a sign of the growth in 2015, and it’s been that way although it may not be as strong as it has “In commercial banking, we’re gen- cautious financial discipline that many for the last three years. The issues that a been in the past three years. eralists,” says Trier. “We’re seeing general businesses adopted in the wake of the lot of our companies are seeing is lack Smaller community banks are seeing recession. of talent. I think that is a challenge for the same signals. David Reiling, CEO of St. “We’re seeing really good capital the economy here,” says Oberst, execu- Paul-based Sunrise Banks, says that 2015 expenditure activity. We’re seeing really tive vice president and head of Wells was a busy year and that the pipeline for good loan demand for mergers and ac- business lending in 2016 looks solid. Busi- quisitions. That is not showing any signs ness lending during 2015 was “robust,”
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42 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 SBA Lending Grows in Minnesota
he total loan volume for U.S. Small Business 1. Wells Fargo Bank National Association Administration loans grew to $594 million from 1,912 loan guarantees during the federal fiscal year, which ended 2. U.S. Bank National Association Sept. 30, 2015. The total loans and dollar amount were Ranked by 3. Minnesota Business Finance Corp. Tboth up compared to fiscal 2014, when the Minnesota District Office the number of approved 1,755 loan guarantees worth $571 million. loans made, 4. Venture Bank The Minnesota District Office serves the entire state (some larger the 10 most states have more than one district office), ranking 12th among the active financial 5. Bremer Bank National Association nation’s 68 SBA offices based on the total number of loan approvals. institutions using The Minnesota office also ranked sixth in the nation for the SBA programs 6. 21st Century Bank number of 504 Certified Development Company loans, with during fiscal year 2015 in 244 loans approved valued at $139 million. The SBA 504 loan 7. Highland Bank Minnesota program offers long-term, fixed-rate financing to small businesses were: 8. Sunrise Banks National Association related to commercial real estate—for the acquisition of land or buildings, or to pay construction and renovation costs. 9. Twin Cities Metro Certified Development Co. The office also noted that in fiscal 2015, the volume of SBA loans made to veterans declined slightly, from $24 million in fiscal 10. SPEDCO 2014 to $21 million—but that the number of loans made increased from 71 to 82.
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FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 43 TRENDING | BANKING Future David Reiling, CEO of Sunrise Banks, Challenges says a slight rise in interest rates won’t be a deal breaker for business owners who need financing. Facing Private
and Reiling says he expects 2016 to be “There still seems to be a fair Equity “a very healthy year for loan growth.” amount of optimism on the real estate side. We’re probably going to see a relatively strong development Effects of interest rate hikes cycle” during 2016, says Brandt. “I still “From our business customers, we’re see people as fairly bullish.” ARE YOU READY seeing expansion of their businesses,” says Reiling. “The commercial real es- tate category certainly was a busy one Modest or robust growth? FOR 2016? for us.” Overall, he envisions general Other bankers echo those sentiments. expansion in the marketplace. “The economy—I wouldn’t say Reiling also has seen an uptick in it’s thriving—but it’s been a soft, borrowers tapping into home equity modest recovery,” says Dave Ry- loans, a source of capital for many manowski, chief business banking fledgling entrepreneurs trying to start officer for Chaska-based KleinBank. a business. Looking to the year ahead, “Most businesses are still playing PRESENTS: Reiling is not fretting much about things very conservatively, thinking slight increases in interest rates. very hard before they expand or add “I think it’s going to be a fairly people, but for us, our business is up gradual ascent,” says Reiling of rates, for 2015.” PRIVATE EQUITY adding that he doesn’t think that Rymanowski expects to chart a slight rate increases will be a deal similar path this year. In 2015, he says, breaker for business owners who KleinBank posted gains in the low PANEL 2016 may need financing. “I do think it’s single digits for its volume of busi- overall a very good indication for the ness banking, boosted in part due to WEDNESDAY, APRIL 6, 2016 economy. With moderate increases in the new loan production office that rates, I don’t think it’s going to have a KleinBank opened in April in Edina. Windows on Minnesota @ Marquette Hotel big impact on business lending.” “My forecast would be that we’re on the 50th Floor of the IDS Center Springfield, Mo.-based Great going to have a moderate growth year Southern Bank entered the Minne- in 2016,” reflects Reiling of Sunrise sota market in 2012 when it bought Banks. EVENT DETAILS Maple Grove-based Inter Savings Some national surveys have Registration and Networking 2:30 pm Bank, which had been shuttered by shown that CEOs are more cautious the FDIC. Great Southern Bank has about 2016 and may be inclined to 1st Panel Starts 3:00 pm four metro locations and focuses on temper their investments. But Trier of 2nd Panel Starts 4:30 pm commercial real estate lending. U.S. Bank says that he’s not hearing Reception w/ open bar & hors d’oeuvres 5:45 pm Carl Brandt, Great Southern’s those signals on the front lines. market manager for Minnesota, says “From the customers that we talk the bank—which is publicly traded, to everyday in the middle market has been in business for more than 90 space, we really haven’t heard that years and has assets of $4 billion—is message from our CEOs and business SPONSORED BY: larger than many people realize. The owners. Nobody has really expressed bank finances a range of projects, caution going into 2016,” reflects including apartment, retail, senior Trier. “They’ve said things are good, housing and some office projects, the outlook is good, and we kind of Brandt says. think 2016 is going to be similar to 2015.” tcbmag
Burl Gilyard is TCB’s senior writer.
FEB_ad_event_1-2pg.indd 1 1/5/2016 9:36:05 AM
44 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 TRENDING | TECHNOLOGY Data-Driven, Digitally Delivered
Marketing automation helps businesses get closer to their customers.
By Gene Rebeck ohn Schroeder has a good idea about what you want to buy— and when. You’ve already dropped several hints, giving online signals that he and his team can follow. Like a good sales associate, he doesn’t hover and follow you too closely. He’ll simply drop some suggestions of his own and be there when you’re ready to buy. As business intelligence manager for Golden Valley-based Room & Board, Schroeder helps manage the home-fur- nishings retailer’s online marketing efforts. Room & Board has more than 40 email campaigns linked to “consumer events that they’ve triggered on our website based on their browsing behavior” and the types of furnishings they’re regularly look- ing at, he says. What Room & Board sends out is “really a one-to-one email push.” It’s working. In the last year, sales have doubled over the previous year, Schro- eder says. Room & Board has sent fewer emails, while generating more sales. “We don’t want to inundate the customer with emails,” he says. “We want to make them really meaningful to the customer.”
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 45 TRENDING | TECHNOLOGY
On the surface, it might seem sell and market, which isn’t easy, especially contradictory that companies are using for sales and marketing employees who something as impersonal as automation have developed deeply ingrained habits. to create a more personalized experi- They still need good salespeople, they ence for their customers. But that’s the need to be familiar with the technol- goal of marketing automation—to know ogy, and they need plans and goals. “We customers so well that you can target your measure the results—we look at what’s The Next Big Things? messages to their specific needs at various working and what else we need to be do- In October, Gartner, a Connecticut-based technology consultancy points along what marketers like to call ing,” Schroeder says. the “customer journey.” firm, identified some high-tech trends it thinks could have a Companies gather data from consum- particularly profound effect upon businesses. ers from a variety of sources. They capture Being everywhere information online from company web- Scott Litman, managing partner for The device mesh. Gartner analysts see the Internet as sites and social media, but they also glean Minneapolis-based Magnet 360, defines becoming ever more interwoven with our lives and our various valuable information from face-to-face marketing automation as “the ability to meetings, trade shows and other so-called automate marketing programs to make devices. “The device mesh” is the focal point of Gartner’s vision, analog sources. Businesses deploy digital the business become more personal, and includes mobile, wearable, home electronics, automotive technology to follow thousands of active more relevant, more one-to-one.” Litman, and environmental devices—all interconnected, all offering and potential customers to better deter- whose agency consults with both B2B and businesses and consumers with multiple Internet access points mine what they want to buy and when B2C clients about the best uses and plat- they want to make purchases. forms for marketing automation, notes for communicating and sharing information. Room & Board’s email marketing that strong salespeople and materials such system, Schroeder says, is “automated—all as brochures, white papers and ads are 3D printing’s new imprints. 3D printing isn’t new, but it has that just runs.” But he doesn’t mean to still essential to any company’s marketing yet to fulfill its tremendous promise. Gartner says that promise is suggest that it’s entirely automated. Most efforts. What marketing automation does poised to bear fruit. Material and process innovations are driving businesses are familiar with platforms is gather all the customer knowledge and such as Salesforce, Marketo and Eloqua. information a company has and allows development of new applications in more industrial sectors. Business-to-consumer (B2C) businesses the company to better target its customers These innovations could bring 3D printing to the assembly like Room & Board aren’t the only ones online. The online realm, after all, is where line floors of small manufacturers, altering supply chains and benefiting from marketing automation. more and more customers are researching requiring new employee skill sets. Business-to-business companies (B2B) products and making purchases. also have been reaching out and staying The email campaigns that Room & in touch with customers all along their Board developed are an example of mar- Adaptive security architecture. As interconnected digital purchasing journeys. keting automation that many businesses technology continues to weave into more aspects of our lives and To use marketing automation tools use. Another one, which is familiar to organizations, cyber-security will become even more urgent than successfully, businesses need to be actively just about all consumers, is retargeting or it is now. There will be more potential points of entry for hackers engaged with the technology. In many remarketing. Let’s say you’ve visited a shoe cases, they need to change the way they retailer’s site and browsed the options to exploit. Look for new types of preventive security, including for winter boots. “self-protecting” apps and programs that look more closely at You’re not ready to user and entity behavior to better identify potential risks.—G.R. buy yet—you’re just browsing and check- ing prices. Later that day, you’re reading the headlines on a news site and voilà— there’s an ad from the retailer featuring one or several pairs of boots you viewed. Inside the busi- ness itself, one of the attributes of marketing automation that Marketing automation is all dependent more businesses are relying upon is lead upon the integrity of your data. scoring. Here, the automated system as- Nina Hale of Nina Hale Inc. signs numbers to each potential custom- er’s action. Opening an email might earn, say, one point, visiting the company’s website five points, while filling out an online form, or requesting a white paper or proposal would earn more points. Accessing other channels—a company’s
46 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Facebook page or blog, for says, many of which might service. For instance, St. Paul-based credit instance—also could be require a lot of cleaning up. union Affinity Plus used its new customer scored. The more points, the For these organizations, it data analysis system to look at members’ stronger the lead. can be as challenging as it mortgages. It identified 1,400 members Marketing automation was for business to imple- who might save money by refinancing also can measure different ment enterprise resource plan- into shorter-term mortgages. According marketing channels’ effectiveness. ning platforms in the 1990s. to Affinity Plus, total member savings via Using big data so that all of the activi- “It can be extraordinarily painful, and refinancing exceeded $1 million. We don’t want to inundate the ties—“email, website visits and interac- take a really long time, to get people to Online ad placement, particularly for customer with emails. tions, clicking on banner ads, typing in switch their habits,” Hale says. That can B2C businesses, also can be accomplished a search term on Google, what they’re be especially true, she adds, for old-school through a third-party marketing automa- John Schroeder of Room & Board liking on Facebook—all of these get fed salespeople who are happy with their tion system. The client needs to monitor into one data source that comes up with own style of making and maintaining these outside vendors carefully, however. one master data report,” says Nina Hale, customer contacts. The advantage of a “When you buy programmatic or market- of Minneapolis, who founded a strategic data-driven automated marketing system, ing automated channels, you don’t neces- digital marketing agency. Hale works she adds, is that “it’s less contained in one sarily know where your message is going with clients using this approach so they person’s memory.” to run or what inventory you are understand which types of marketing are going to have to purchase working without having to pull together ahead of time,” notes Andy 20 different reports. Avoiding creepiness Brunn, associate media “Marketing automation is all depen- For organizations large and small that director with Minneap- dent upon the integrity of your data,” are willing to commit to marketing olis-based advertising Hale adds. That can be a particular chal- automation, positive results can manifest agency Clarity Cover- lenge, she notes, for larger businesses. A themselves quickly. And the benefits can dale Fury, which advises big company might have 20 databases, she take many forms, including customer clients on online advertising
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FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 47 marketing automation. Businesses need he’s simply checking in to “see how you’re For Schroeder and Room & Board, to make sure their ads aren’t appearing on doing.” The customer replies, “That’s one of the advantages of marketing auto- sites their customers don’t visit. These can amazing that you decided to call me mation is its focus on where the customer include “adult” sites, of course, as well as today. I was just looking at Product X is on her current journey. “Behavior-based fake sites that exist only to pull in advertis- and I’m ready for it.” Of course, thanks marketing is more of an indicator than ing, and that are “visited” only by bots in to the report, the salesperson knows that past-purchase history,” Schroeder says. the customer is interested in Product X. “At least it is for the home furnishings When automating marketing programs, you can But she doesn’t tell him that. Instead, she industry. People don’t buy furniture every offers to send him more informa- day.” So Room & Board is looking for “make the business become more personal, tion to help him learn more, signals, targeting only consumers more relevant, more one-to-one. Scott Litman, Magnet 360 and to move the potential who’ve demonstrated interest, buyer along the purchas- then spacing the emails so that order to generate fake page views. ing journey. the would-be customer isn’t Reaching potential customers online That, Litman says, is overwhelmed with messages, means those customers are willing to the way the conversation which can work against a sale. receive the marketing. As Litman notes, should go. Here’s a way it But marketing automation people are willing to share a lot of private shouldn’t go: The salesperson still requires the human fac- information with a business, as long as says to the customer, “Hey, I tor—knowing what your business they sense it isn’t being abused. He lays saw you were on our website looking wants to achieve, and knowing what and out the scenario of a salesperson who at Product X. So how can I help you with how to send in marketing messages to calls a potential customer who “ranks at that?” That approach, Litman says, “is consumers. tcbmag the very top of the lead-scoring informa- creepy.” Instead of being helpful, the sales- tion.” The salesperson has talked to this person seems to be spying on the customer. Gene Rebeck is a Duluth-based freelance potential customer before and gives him Needless to say, Room & Board has journalist who writes monthly for a call. The salesperson tells the customer avoided being creepy. Twin Cities Business.
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48 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 TRENDING | INSURANCE LIGHTSPRING \ SHUTTERSTOCK Insurance for Startups Small businesses have many of the same insurance needs as large companies, and there are resources to help entrepreneurs understand insurance categories. By Nancy Crotti
any first-time entrepreneurs believe their companies are too small to need insur- ance. Others don’t even think about it. They should all think again, according to industry experts. “What we often see is folks forget about insurance. That’s the biggest issue,” says Jason Paulnock, managing director of Wells Fargo Insurance Services for Minnesota. The second-biggest issue: New business owners assume their homeowners’ insur- ance will cover their home-based businesses. But a business is a different legal entity with different insurance needs than a home, Paulnock explains. Many entrepreneurs do not know what types of coverage they need, accord- ing to Stacy Bury, small business team manager at the Christensen Group, a business insurance and employee benefit brokerage in Minnetonka. “A lot of times it’s going to be—depending on what they do—their landlord requiring them to have insurance because they’re renting a space, or they might need coverage because they’re signing a
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 49 SPECIAL ADVERTISER CONTENT SECTION teaching of students, teaching students student’s portfolio that articulates their to think critically, modeling, with a spirit solving experiences and maps their academic “We create a safe place for TRENDINGof humility, | God-honoringINSURANCE character, and journey), and servant leaders with real impact inspiring students to follow God’s will (fi ve signature learning experiences that students to be themselves; the and design in all aspects of their lives. demonstrate graduating seniors’ complex followers, the leaders, the thinkers, problem-solving competencies that contribute the questioners, the contrarians – KG: At BSM, we partner with parents and to the real world). To help us achieve these contract with somebody for their services,” damage to a person or property result- all thrive at Minnehaha.” guardians to educate the next generation of outcomes, we’ve partnered with Lee Crockett, Bury says. “It’s not so much what they can ing from negligence. —Dr. Donna Harris, Minnehaha affordservant as it leaders is what they who should will have.” leverage their faithn Fidelity to bondsan international cover loss due toleader the in Next Generation solve hard problems. The world needs suchdishonesty ofFluencies. employees. Lee chose to work with BSM The classroom is a safe place for students to leaders desperately. Last year, we begann toSurety bondsbecause guarantee he felta company that our school culture and Insuranceemphasize 101 problem solving as a new focuswill perform for curriculum obligations described aligned in perfectly with his passion ask deep and probing questions and express Thethe Minnesotaschool. This Department new emphasis of Em- is expresseda contract in orfor imposed preparing by law, students mostly for the new realities of their views about complex issues in society ploymenta slogan: and “Striving Economic Together Development to Solve Problemsfor construction the ever-changing projects. digital age. where there are no easy answers. Students describesthat Matter.” the different Built upontypes of our cover core- collegen Workers’ compensation insurance are persuaded by their teachers and coaches to stretch beyond their comfort zones even agepreparatory a small business curriculum, may need. our Here’s concentration a provides benefitsSAFETY to employees AND injured SECURITY quickon problem take. solving grows organically fromon the job. when failure lurks – we provide a safe place to n n try again, understanding that failure creates the faculty Property and insurance staff. covers It enhances the the student Group healthDH: and In life light insurance of the many tragic events that new opportunities to learn. And fi nally, we experiencephysical building by centering in which the on busi next-generation- provides medicalhave andoccurred death benefits. at schools around the world, n are a safe place for students to bring their skillsness that is located, our students and the company’s need to be successful Product liabilitythe topic insurance of safety covers and security is top of personal struggles – disappointments, the at theirassets, nextincluding educational equipment, level machin and- in life.losses incurredmind when for an all end school user sues leaders. coverage In spite for other of the items, such as valuable coverage for an affordable price.” ery, inventory, furniture, supplies and a manufacturer for bodily injury or papers and records, laptop computerspain of that loss, challengingRestaurants, obstacles. floral shops The and storiesother very real concerns related to physical safety, non-tangible assets, such as trade- property damage. employees take on the road, andrecounted signage. mostbusinesses by Minnehaha that deal in perishable alums are goods not We think of these skills as competencies at Minnehaha we focus on other aspects of marks and copyrights. n Cyber insurance protects compa- Insurers include enhancementabout endorse past- academicshould buy achievementspoilage insurance or in athletic case for the digital age: faith, creativity, problem safety nurtured within our school community n Business interruption insurance nies from losses incurred when online ments on their standard businessprowess, insur- buttheir about refrigerators the deep fail, human Bury adds. to human solving, global citizenship, collaboration, because of their lifelong benefi ts. We create covers earnings lost when a business customer or vendor data is stolen or ance forms and usually includeconnections the price theyMany made insurance at Minnehaha companies offerwhen communication, ethics, accountability, and a safe place for students to be themselves; action.must “Strivingshut down temporarilyTogether dueto Solve to Problemscompromised. in the premium, Bury says. someone reachedbusiness out, insurance listened, packages encouraged, for small fire or theft. the followers, the leaders, the“It’s thinkers, kind of built the for the small busi- companies, according to Pam McCarthy, that Matter” permeates our school; it is how and offered hope – a safe place indeed. n Liability coverage protects a busi- Business owners’questioners, insurance thegenerally contrarians nesses – toall have thrive those at so they don’t have to try who owns an insurance agency in Farm- we teach and how we learn. The primary ness against losses that arise from legal covers propertyMinnehaha. and liability losses, Students’ while quirkiness,to pick and creativity,choose,” she says of the standard ington and volunteers with the business outcomes for this initiative are: differentiated responsibility due to death, injury or enhancement endorsementsenthusiasm can and add passion arepolicies. embraced; “It’s a nice way they of giving them good support nonprofit WomenVenture in experience (using a common problem- know we celebrate how God has uniquely solving method), solving journey (each designed them.
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Successful leaders o en talk about Reservethe importance your of havingspot at TWIN CITIES BUSINESS FORUM great mentors, but rarely, do we hear about these mentors. MINNEHAHA ACADEMY’S WEDNESDAY, APRIL 13 // 11:00AM 1:30PM Help us identi such individuals,WINTER ve of whom OPEN we will HOUSE pro le Golden Valley Golf and Country Club in our August edition of Twin Cities Business. Mentees are and learn about our extraordinary programs! encouraged to nominate their mentors. Join us as we bring together leading business women and men for an invigorating and collaborative discussion about the powerful UPPER SCHOOL bene ts of women in corporate leadership roles, the challenges still Mon, Jan 25, 2016 at 6:45 p.m. facing many who want to ascend the ranks, and what’s being done to Deadline March 23 eliminate such challenges. e results of the 2015 Minnesota Census LOWER & MIDDLE SCHOOL of Women in Corporate Leadership will also be discussed. NOMINATETues, Jan 26,TODAY 2016 at 6:45 p.m. Register Today • tcbmag.com/womenleaders16 PRESENTED BY: tcbmag.com/mentorsnominationRESERVE YOUR SPOT www.MinneapolisPrivateSchool.com or call 612-728-7722 Presenting Sponsor: Venue Sponsor: PRESENTING SPONSORS: EVENT SPONSOR:
50 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Minneapolis to advise small business not anymore. A small business without payroll, for example, the business would companies, began to offer a new exclusion owners on insurance needs. EPLI coverage could be devastated by be responsible for notifying affected clause in its business owners’ and general “I always tell people to check with defending itself against or losing such a employees and responding to a breach liability/umbrella policies. your current insurance agent. A lot of suit. Insurers may include EPLI in their of the payroll vendor’s data because the The clause precludes coverage for them offer business insurance,” McCarthy standard business coverage or offer it employer owns its employees’ payroll unauthorized access to or disclosure of says. “Sometimes you can get discounts if separately, as an endorsement. information, she explains. a person’s or an organization’s confiden- you bundle.” Sensing confusion over cyber risk tial or personal information, including If an agent is unable to provide busi- exposure from its small to midsize patents, trade secrets, processing methods, ness coverage, the agent may be able to Computer-borne threats customers, Marsh & McLennan surveyed customer lists, financial information, recommend another trusted agent, Mc- Small to midsize businesses are particu- Minnesota businesses in 2013. Of the 167 credit card information, health infor- Carthy adds. larly vulnerable to losses from cyberattack, respondents, 16 percent said they had mation or any other type of nonpublic Once a company grows beyond but they often fail to understand their risk, purchased cyber risk insurance. information. The exclusion also applies one employee, it must provide workers’ according to Beth Watkins, director of In 2014, the company expanded the if a company files claims for the costs of compensation insurance. It should also management liability for national insur- survey to its customers across the country. notifying those whose information has add employment practices liability insur- ance agency Marsh & McLennan in the Thirty-three percent of the 582 total been compromised, credit monitoring, ance (EPLI), according to Paulnock. EPLI Upper Midwest. That could be the result respondents and the same percentage of forensic or public relations expenses. The covers losses that stem from employee of all the media attention to major-retailer Minnesota respondents to the national loss of, damage to, or inability to access lawsuits over allegations of sexual harass- data breaches, including one at Target in survey said they had cyber risk insurance. or manipulate electronic data are also ment, discrimination, wrongful termina- 2013 and the larger hack of Home Depot The company is still tabulating results excluded. tion, breach of employment contract, customers’ credit card data in 2014. from 2015’s national survey. Forensics to investigate a data breach negligent employment evaluation, and A retailer will have more exposure The stakes for small business owners generates the bulk of up-front cleanup other issues, according to the Insurance to cyber-liability than a manufacturer rose in May 2014, when the Insurance costs, according to Watkins. If those costs Information Institute. will, but every business has confidential Services Office Inc., a trade group that are not covered, it could spell the end of It used to be that only large companies information that needs protection, Wat- makes and issues policy forms and the business, she says. needed to worry about such lawsuits, but kins says. Even if an employer outsources endorsements used by many insurance Companies around the world resist
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FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 51 TRENDING | INSURANCE
buying cyber-liability coverage, accord- are a bewildering array of specialized components, which can be pretty says. “In order to really figure out what ing to an independent survey done by definitions, exclusions, exceptions to handy, especially for a smaller business you really need, the insured needs to do a the Ponemon Institute and conducted exclusions and other limitations. This to have all that capability immediately cyber-assessment.” for Aon Risk Services. The survey results, makes deciphering the policy (and what it available.” Retailers’ point-of-sale (POS) credit released in April, showed that 52 percent covers and doesn’t cover) a daunting task n Regulatory defense and penalties and debit card machines dominate cur- of respondents acknowledged their risk and comparison of policies even more coverage for claims brought against rent cyber-security concerns. More than of cyberattack would likely increase in the complex,” Nierengarten wrote in an email. the company by the Federal Trade 28 percent of the 2,122 data breaches next 24 months, while only 19 percent “Hopefully, in the future the insurance Commission or the Federal Commu- discussed in the 2015 Verizon Data Breach said they had cyber insurance. Fifty-four industry will move away from the many nications Commission. Intrusion Report were POS intrusions. percent said they had no plans to buy and varied forms of cyber coverage and n Liability coverage, which protects “You’ve got to figure out what types it, citing inadequate coverage, expensive achieve some standardization. Right now, against customer claims. of connections you have to the outside premiums and other reasons. however, it’s the Wild West.” n Business interruption coverage for world, how you’re managing those con- Categories of cyber liability insurance companies that must close temporar- nections, whether you need all of them, include: ily due to a security breach. whether you’re evaluating evolving cyber Wild West of policies n Breach response, which provides n Breach preparedness insurance, threats and vulnerabilities, and how your Compounding business owners’ confu- coverage for a computer security which gives a business access to a connections’ products and services col- sion about their risks is the lack of a expert, notification of customers, website that describes new laws and lectively affect the organization’s cyber- standard cyber-insurance policy form, ac- public relations to handle reputation procedures, so they can stay abreast of security risk,” Nierengarten says. “Those cording to Nick Nierengarten, an attorney issues, credit monitoring and a breach cyber issues. are the kinds of questions you have to drill specializing in insurance matters for Gray coach—a legal expert who helps man- n Data protection coverage. down and figure out. All businesses are Plant Mooty in Minneapolis. Different age notification and regulatory issues. n Cyber extortion coverage. at risk, and ignorance is not bliss in this carriers use different names for similar “Breach response is sort of a pack- marketplace.” tcbmag types of coverage, and those plans may age,” Nierengarten says. “If there’s an “This is written on an à la carte basis not offer the same protections. incident, then the insurer brings on so you can pick and choose that which Nancy Crotti is a St. Paul-based freelance “Even within a specific policy, there pre-retained experts to deal with these you think is important,” Nierengarten writer and editor.
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52 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Don’t forget to vote! Polls Close February 29 which are the best companies to do business with in minnesota? Cast your votes at: Spread the Word tcbmag.com/votebestbiz @tcbmag Winning companies will be publsihed in #MNBestofBiz a future issue of Twin Cities Business.
Best of Business February Ad.indd 1 12/22/15 3:47 PM Big Data, Big Decisions Big data is marketing’s next holy grail.
an you go more than a day or two in your business company found that while amenities like fitness centers and life without hearing somebody reference “big data”? swimming pools ranked high on tenant wish lists, next on C It sounds ominous, like some hulking monster lurk- the list for students was a quiet place to study. Based on that ing around a dark corner, just waiting to jump out from the insight the real estate company began marketing to more shadows to get you—and to some degree it just may be. serious academic students and even offered discounts to Big data is having a big impact and it goes far beyond the those with high grade point averages. Occupancy rates rose “you might also like” tips we get when we’re buying a song to over 95 percent. MARKETING MASHUP on iTunes or shopping online. Algorithms are at work sifting Another example comes from the world of entertain- by Glenn Karwoski and sorting reams of data matching our tastes with literally ment and online streaming giant Netflix. Data analysis of millions of other related possibilities. viewer habits showed its viewers stayed to the end of movies In a now somewhat famous example of big data, Target directed by David Fincher or starring Kevin Spacey. It also figured out that a teen girl was pregnant before her parents gleaned that the British drama House of Cards had unusual knew. When an angry father asked a Target manager why the staying power, remaining popular some 20 years after its retailer was sending his teenager coupons and incentives for original release. While those factors were not the only con- infant-related merchandise, the store manager apologized— siderations in the development of the U.S. version of House but later received a call from the upset dad who shared that of Cards, they were important validators of Netflix’s risk. his daughter was, in fact, pregnant. What’s happening is that businesses are able to synthesize and centralize data across multiple channels such as mobile applications and e-commerce sites, social media accounts and points of sale. Transactions and preferences based on actual purchase behavior—as well as interactions—can generate customer profiles more advanced than previous segmentation analysis, which in turn allows marketers to develop more strategically targeted messaging, offers and campaigns—not to mention products and services. It can even be used to better inform sales reps about customer personalities and preferences. Automation also plays a huge role in how big data gets used. By connecting our digital behaviors with customer relationship marketing software, marketers can “learn” the products and subjects we’re most interested in and then can automate software to send information—excuse me, content—that relates to our interests. What we click on next and how much time we spend with whatever we’re shown— as well as whether it leads to a purchase or request—gets fed into our profile, and the software gets smarter predicting what will interest us. Given all the possibilities, it’s no surprise that within a SORBETTO / ISTOCK SORBETTO few years the data budgets for chief marketing officers are The big consulting firm McKinsey forecasts $3 trillion in expected to surpass the technology budgets for IT depart- economic value from businesses making better use of data, a ments. Will all the information, insight and automation lot of that from discovering how to do the same job or task eventually suck the creativity out of marketing? I doubt it. better, such as laying out a supermarket’s traffic patterns, or I mean, can you think of some algorithm coming up with the optimal times to transport freight. something like the ALS ice bucket challenge, or any of the While the amount of data marketers have access to is other marketing programs that have gone viral? I think that Harvard Business Review unprecedented, it’s how that data gets “crunched,” or inter- the smartest marketers realize that while big data can direct, preted, that’s key to turning information into insight. And it shouldn’t dictate. says companies should tcbmag of course there are the decisions made based on that insight. focus big data marketing A seminal article in Harvard Business Review says that a Glenn Karwoski (g.karwoski@ creativepr.com) is founder and on five categories: market company should focus its big data marketing on five primary managing director of Karwoski & Courage, a marketing com- categories: market conditions, competitive activities, market- munications agency. He also teaches in the graduate school at the conditions, competitive Opus College of Business at the University of St. Thomas. ing actions, consumer response and business outcomes. activities, marketing Here’s an example of putting big data to work in an actions, consumer insightful way: A real estate investment and management response and business company owned properties in a college town and was look- ing for a way to make them more competitive. Newer prop- outcomes. erties with amenities like swimming pools and fitness centers were taking its market share. Enter big data. The property
54 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Why Should Anyone Want to Follow Your Leadership? Identifying the six most important characteristics of a leader.
CORNER OFFICE by Mark W. Sheffert Remain authentic and transparent Followers watch what leaders do more closely than listen to what they say. They may be nodding in agreement when you talk, but as soon as you walk away, they observe whether your actions match your words. Ask yourself if you are a “what you see is what you get” type of person. This characteristic is important because if a leader’s personal values are not ruly great leaders who influence and get results from oth- predictable, his or her followers will not know what to expect ers and create exceptional value are hard to find. Finding or how to act. Most excellent leaders also have a good sense of T leadership is kind of like trying to find the Holy Grail: humor and can laugh at mistakes and mishaps. It would be a heck of a lot easier if someone would just show us where it’s at. A great leader can be leading a Girl Scout troop or a Fortune 100 company. However, there are certain characteristics that Can tell a good story exceptional leaders have in common. If you want to earn the right Leaders with the right stuff are good to be called “leader,” ask yourself if you: storytellers and communicators. When they speak about their vision, they are inspiring and convincing. They can clearly explain their point of view about their products and / or services, markets, value proposition, Inspire a vision and strategies. Oftentimes, these points The word “vision” almost seems mystical, as if the leader of view are explained with parables, has a crystal ball or supreme intellectual abilities. But my anecdotes, and metaphors to get the experience is that a good visionary isn’t a prodigy, a whiz message across. Just as important kid or a genius. Rather, they are an intuitive risk-taker with as storytelling is the ability to listen. the ability to see things as they could be. They are also All great leaders I know are also rooted enough that they can inspire others to understand supremely able listeners. how the vision is attainable with current resources and competitive advantages. Hand-in-hand with this inspirational ability is confidence (not to be confused with cockiness). Leaders appear to be confident at all times, and Are competent in all functional areas in a crisis, morale and productivity improve with confident Effective leaders don’t need deep expertise in leaders instead of spiraling downward. every function of their organization, but they do need a basic competency to make sure all elements of the organization are pointed in the same direction. First-class leaders are Act with honesty and exhibit solid values able to establish priorities, make decisions Leadership is about how to be, not how to do. And the in a reasonable amount of time, delegate number one action to model is absolute honesty. Leaders appropriately and recognize talent. They know have to be able to convince their followers they are worth their business so well that they can push for following, because if there is even a scent of dishonesty in action and results without getting bogged down the air, people will turn away. With a high level of trust, an by insignificant issues. organization will achieve more than it dreamed possible. Exhibiting values such as being accountable, committed, courageous, humble and respectful of others means you are leading by example. One final note: I have listed competency, or skill, as the last important characteristic. That’s because at the heart of good leadership is the heart of someone who truly wants to make a difference in the lives of others. It’s not about what you do, but is about who you are. Sometimes leadership can be a burden, but leaders with the right stuff believe Display passion it’s a load worth bearing because they have a strong sense of purpose. And that’s the Peter Drucker, the granddaddy of modern day management, said a leader’s job is most important characteristic to earn the right to be called “leader.” tcbmag not to provide energy, but to release energy. I like that statement because I envision a leader with infectious passion. This characteristic gives leaders the ability to influence people to follow their vision. It provides the energy to never get tired of Mark W. Sheffert ([email protected]) is founder, chairman and CEO of explaining, teaching and communicating their vision to others. A leader’s passion Manchester Companies Inc., a Minneapolis-based board and management advisory firm pushes followers to overcome their fear and doubt and inspires others to take risks specializing in business recovery, transformation, performance improvement, board gover- that lead to new strategies, ground-breaking products and innovative processes. nance, and litigation support.
FEBRUARY 2016 tcbmag.com TWIN CITIES BUSINESS 55 One Person, 40 Votes to: Average Minnesota Voter St. Paul, Minn.
Dear Fellow Voters: Voters of a certain age will remember the comedy shows of that deporting all Mexicans and building an impenetrable Sid Caesar. One of the featured skits would have a peas- wall is feasible—either practically or politically. By the same OPEN LETTER ant running to the king yelling “Sire, sire, there’s a man token, there are very few people in business who think that by Vance K. Opperman out front who fights with the strength of 40 men.” “How the proper role of government is to apply a religious test to is that possible?” asked the king. “Because he has 39 other who can either enter the country or remain here. Many of men with him,” was the reply. So, too, in electoral politics: us (or our grandparents) would fail that test (the actions of Some people’s votes count a great deal more because they Germany are a too-recent memory). have more people with them. That is the basis for a pending Of course, immigration and the proper role of politi- United States Supreme Court case, Evenwel, in which the cal sanctuary in this country are serious policy issues that court is being asked to determine whether legislative district should receive reasoned discussion. But because the crazies apportionment should be on the basis of total population get to dominate the nominating system, we have neither that debate nor legislative agreement in Congress on this issue. Those of us in the business community who know better and have the experience You should attend the precinct caucus and demand a change in this dialogue. to back up our views should attend our precinct caucuses and get involved Let me give you another example. I assume that there in the delegate selection process. Failure to do this will continue to allow the are not many true Bernie Sanders supporters who read this government to drift in a financially irresponsible direction. column. To most of us, Sanders’ goal of adding $14 trillion to entitlement expenditures over the next 10 years seems like a bad idea. There are activists, often in the Democratic or total eligible voter population. This decision could have a Party, who do not believe that ever-rising levels of taxation profound effect on the way legislative districts are appor- decrease productivity because government expenditure is a tioned. superior substitute for private economic activity. But we can all have a profound effect on the 2016 presi- Those of us in the business community who know dential election. That day will come not on Election Day— better and have the experience to back up our views should Tuesday, Nov. 8—but rather Tuesday, March 1, otherwise attend our precinct caucuses and get involved in the delegate known as precinct caucus day. selection process. Failure to do this will continue to allow the Political parties can generally agree on very little, but the government to drift in a financially irresponsible direction. If state chairs of the two major parties agreed that precinct cau- you don’t attend, you lose the right to complain. As in busi- cuses would be held March 1. The reason the parties showed ness, in politics it’s mostly about showing up. this unusual degree of bipartisan comity is to maximize By law, precinct caucuses start at 7 p.m. at publicly the impact of our caucus attendees on the political process. posted locations (check at caucusfinder.sos.state.mn.us). March 1 is “Super Tuesday,” the day the most delegates are Caucuses usually last several hours. These are the founda- chosen for both the Democratic and Republican presidential tional meetings that start the process for delegate selection. I nominating conventions. It is widely believed that the results would also urge you to run for delegate and get as far in the on this day will determine what will happen at each party’s process as you can—and just as important, speak up so the convention (the GOP meets July 18-21 in Cleveland, the crazies can’t hijack the political process (of both parties). Dems a week later in Philadelphia). It is at these conventions By going to a precinct caucus, speaking up and participat- that the next president of the United States will be nominat- ing in delegate selection you will not only, like the legends of ed, and in reality, elected. The general election in November old, fight with the strength of 40 men, you’ll have the whole merely determines which of those two individuals get to electoral power of a state with you. That is the way for reason- For more information on serve. Here, one person equals tens of thousands of votes. able business people to take back their government. tcbmag caucusing, contact: So in actual fact, the important voters are the people who Minnesota DFL, Ken Martin take part in the delegate selection process, an infinitesimal Sincerely, (chair), 651-293-1200, dfl. percentage of the voting population. Minnesota may rep- Vance K. Opperman org; Minnesota GOP, Keith resent fly-over land for both major presidential candidates, Fellow Caucus Attender Downey (chair), 651-222- but the delegates chosen from Minnesota can have, and have 0022, mngop.com; Minnesota had in the past, a decisive impact on who actually gets to Vance K. Opperman ([email protected]) is owner and Independence Party, Mark run. The process is somewhat arcane, requires two or three CEO of MSP Communications, which publishes Twin Cities Business. Meyer (chair), 651-998-9156, separate conventions, and uses rules unlike anything one mnip.org. encounters in business or civic life. So why should you care? Too often our politics, hence our government, has been hijacked by extremists. Listen to the current political dialogue and what passes for serious policy debate. There can’t be very many readers of this magazine who believe
56 TWIN CITIES BUSINESS tcbmag.com FEBRUARY 2016 Celebrating 30 Celebratingyears of30 ingenuity years inof America. ingenuity in America. Your legacy has nothing to do with how old you Your legacy hasare nothingor the age to doof yourwith company,how old you and everything are or the ageto of do your with company, your impact and on everything business and the world to do with youraround impact you. on business and the world around you. If you’re running a successful company, we If you’re runningwant a to successful know you company, better. Since we 1986, EY has want to knowhonored you better. the Sinceentrepreneurs 1986, EY whose has spirit of honored the innovationentrepreneurs and whosediscipline spirit have of benefited us all. innovation and discipline have benefited us all. If you’ve been inspired by a successful If you’ve beenentrepreneur inspired by ain successful your community — or are entrepreneurone in your yourself community — submit — aor nomination are for our one yourself Entrepreneur— submit a nomination Of The Year for® our 2016 Program. Entrepreneur Of The Year® 2016 Program. To request nomination materials, call To request nominationJim Kowitz materials, at +1 612 call 371 8301, or [phone], or visitvisit us us online online at at ey.com/us/eoy. ey.com/us/eoy/um. The entry deadlineThe entry is March deadline 11, is 2016. March 11, 2016.
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