Honoring Five Lifetimes of Achievement in Minnesota Business

WHAT KILLED THE CONDO MARKET? ; INSIDE AMAZON SHAKOPEE ; LIQUOR LYLE’S: AN ORAL HISTORY

JULY 2015 TCBMag.com

HONORING FIVE LIFETIMES OF ACHIEVEMENT IN MINNESOTA BUSINESS

©2015 Ernst & Young LLP. All Rights Reserved. ED None. Visit ey.com community. Bravo! We thankyou for your contributions to our improve theway we work andlive. by the and Honorees. These executives embodythecreative of the2015Minnesota Business Hallof Fame We’re excited to celebrate theaccomplishments people, better world. Bright ideas, bright

their commitment, fresh thinkinganddrive to world —abetter place. We’re inspired every day trailblazing spiritthatmakes Minnesota — and — and CONTENTS JULY 2015

Page 26 Liquor Lyle’s clientele draws from all social strata, from media stars and insurance salesmen to tattooed musicians.

FEATURES DEPARTMENTS

22 Northern Exposure 8 Starters A Tale of Two Rails > Bottle rockets, the key to revenue growth? A project in Duluth is evidence of major changes in the global economy. > Venerable Lee’s Liquor Lounge passes the torch. By Gene Rebeck > Downtown’s condo drought.

26 Tales from the Black Hole 13 Concierge Liquor Lyle’s has been a beloved watering hole for decades—and it’s still raging. On the Town By Chris Clayton > Give your out-of-town clients another vantage point on the Twin Cities with a memorable evening on an outdoor patio. 30 Minnesota, You Will Be Assimilated By Melinda Nelson Amazon comes to Shakopee. By Burl Gilyard 14 Plugged In 34 PeopleNet’s Data Highway Opportunities in networking this month. Leading the trucking industry from cowboys of the road to data-driven drones. By Sam Schaust By Phil Bolsta 15 Beyond These Pages COVER 39 Minnesota Business Hall of Fame TCB’s CFO Forum, plus what’s happening online this month. Celebrating Five Lifetimes of Achievement By Suzy Frisch, Fran Howard, Adam Platt and Gene Rebeck 16 Life Style Kinky Boots kicks up its heels; more amor from Cuba at Sommerfest. TRENDING 55 MANUFACTURING The Minnesota innovation tradition Despite challenges, businesses continue to find solutions. AUG NEXT MONTH By Nancy Crotti A helping hand > Twin Cities Business looks at mighty mentors who have made a difference. 60 BANKING A Tougher Row to Hoe Commodity prices mean challenges for farmers and rural lenders. By Burl Gilyard

TWIN CITIES BUSINESS, Vol. 22, No. 11. © 2015 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.

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Archives tcbmag.com/issues The Ann Bancroft Foundation raised nearly $125,000 at the 2015 dreamXchange, > The State of Innovation: 50 “firsts” that Minnesota gave the world. triggering a match of $50,000 from The Barry Foundation. Thanks to our sponsors and 400 > How one visit fromDiners, Drive-Ins and Dives can change a guests – and the $175,000 raised – we can restaurant forever. continue fulfilling our mission: to support Minnesota girls age 5-high school graduation > PsyBar helps prevent workplace peril and conflict. in pursuit of their dreams through grants, mentorship, and alumnae networking.

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COMMENTARY

6 Editor’s Note Navigating to Greatness 17 Personal Brand By Roshini Rajkumar How Fit Is Your Brand?

18 Performing Philanthropy By Sarah Lutman Targeting Gender Norms 20 Explanation of Benefits Our convenient banking options leave more time for business By David Burda At Wells Fargo it’s easy to get your banking done when and where it How Far Employers Can Go to Make You Feel Better works for you — so you can focus on running your business. We offer: 70 Marketing Mash-Up • More than 12,000 ATMs and approximately 6,200 retail banking By Glenn Karwoski stores coast to coast Call 1-800-Ask-Glenn • Phone bankers who are available 24 hours a day, 7 days a week 71 Corner Office By Mark W. Sheffert • Wells Fargo Business Online® with Bill Pay, Mobile Banking, Mobile So You Want to Climb the C-Level Mountain, Huh? Deposit, and Direct Pay* 72 Open Letter Reach us your way — stop by, call a local banker, or visit By Vance Opperman wellsfargo.com/appointments to make an appointment. The Billionaires Are Coming!

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Clarification/Correction “50 Fabulous Firsts” (June) should have said that Earl Bakken introduced the first battery- operated external pacemaker; his technology helped Medtronic become the first to commercialize an implantable pacemaker. * Availability may be affected by your mobile device’s coverage area. “The New Economics of Renewable Energy” (June) should have stated that Xcel Energy © 2015 Wells Fargo Bank, N.A. Member FDIC. All rights reserved. (1251195_14953) passes on all solar garden extra costs to its entire energy customer base.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 3 Is your business ... Twin Cities Business Magazine Staff

Editor in Chief Publisher Dale Kurschner Shelly Elmore [email protected] [email protected]

Executive Editor Adam [email protected] Trending Editor Liz Fedor [email protected] Growing? Senior Writer Burl Gilyard [email protected] Online & E-Newsletter Editor Andre Eggert [email protected] Online & E-Newsletter Writer Sam Schaust [email protected] Northern Minnesota Correspondent Gene Rebeck [email protected] Copy Editor Judy Arginteanu [email protected]

Moving? Design Director Chris Winn [email protected] Senior Account Executive Traci Auger [email protected], 612-336-9214 Senior Account Executive Kylie Engle [email protected], 612-336-9215 Account Executive Theo [email protected] , 612-336-9211 Marketing and Events Manager Caitlin French [email protected], 612-336-9288 Sales and Marketing Coordinator Hailey Johnson [email protected], 612-373-9584 New? Contributing Writers Phil Bolsta > David Burda > Chris Clayton > Nancy Crotti > Suzy Frisch > Fran Howard > Glenn Karwoski > Sarah Lutman > Melinda Nelson > Roshini Rajkumar > Tad Simons > Mark W. Sheffert> Megan Wiley

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4 TWIN CITIES BUSINESS tcbmag.com JULY 2015 INDEX Names of companies and people in this issue are indexed to the first page of the articles in which they’re mentioned.

PEOPLE Lehman, Matt...... 30 Waldron, Patrick...... 22 Medtronic...... 55 Baker, Douglas...... 39 Leuthold, Steve...... 39 Washburn, Adam...... 17 Minimizer...... 8 Balsimo, Jerome...... 55 Lindee, Bill...... 26 Weaver, Charlie...... 39 Minneapolis Area Association of Realtors...... 8 Becker, Isaac...... 26 Lindeen, Laurie...... 26 Whiting, Jay...... 30 Minnesota AFL-CIO...... 55 Bils, Pete...... 17 Lindsey, Nina...... 30 Wine, Scott...... 8 Minnesota Business Partnership...... 39 Blazar, Bill...... 39, 55 Lockridge, Deborah...... 34 Wischermann, Paul...... 39 Minnesota Chamber of Commerce...... 39, 55 Bolger, Charlie...... 55 Lovik, Kathryn...... 55 Minnesota Department of Employment and Bolger, dik...... 55 Luce, Mike...... 30 COMPANIES Economic Development...... 30 Bower, John...... 17 MacMillan, Dave...... 34 3M...... 55 Modern Transportation Services...... 34 Brauer, David...... 26 Magers, Paul...... 26 Accenture...... 20 Morrissey Hospitality Companies Inc...... 39 Braun, Heidi...... 55 Maister, David...... 70 AgriBank...... 60 Mortimer’s Bar and Restaurant...... 26 Breyer, John...... 8 Martin, Tim...... 26 AgStar Financial Services...... 60 ONE Aviation...... 39 Cambell, Jon...... 39 McCaffrey, Bill...... 39 Alerus Financial...... 60 Ordway Center...... 39 Carlson, Arne...... 39 McLaughlin, Brian...... 34 Amazon...... 30 PeopleNet...... 34 Cornell, Brian...... 17 McNally, Sean...... 34 American Trucking Associations...... 34 Perkins Restaurant and Bakery...... 39 Costello, Bob...... 34 McReavy Jr., Bill...... 8 Association of American Railroads...... 22 Pine Technical and Community College...... 55 Costello, Brad...... 60 Mensink, Corey...... 60 Best Buy...... 30 Polaris...... 55 Cozzens, Patrick...... 34 Meshbesher, Ken...... 26 BNSF Railway...... 22 Polaris Industries...... 8 Cullen, Robert...... 8 Metsa, Paul...... 26 Bolger Inc...... 55 Precision Gasket Company...... 17 Dahlstrom, Todd...... 55 Morrison, Mark...... 55 Canadian National Railway...... 22 Radisson hotels...... 39 DiMaggio, Samantha...... 30 Morrissey, Bill...... 39 Canterbury Park...... 30 Residence Inn...... 39 Dwyer, Mark...... 8 Moudray, Chad...... 55 Chopper City Sports...... 8 Securian Financial Group...... 39 Gassen, Clark...... 8 Nelson, Wyman...... 39 Christopher & Banks Corp...... 30 Select Comfort...... 17 Goss, Ernie...... 55 Netz, Brian...... 30 Cirrus Aircraft...... 39 Service Corporation International...... 8 Graves, Ben...... 39 Ober, Gayle...... 18 Coborn’s Inc...... 30 Shamrock Development...... 8 Graves, Jim...... 39 Olson, David...... 39 Colliers International...... 30 Sherman Associates...... 8 Greenberg, Ed...... 22 Rarick, Jason...... 8 Datacard Group...... 30 Shutterfly Inc...... 30 Greenwood, Mark...... 60 Rodgers, Mark...... 8 Digi International Inc...... 34 Steele Fitness...... 17 Gross, Larry...... 22 Roper-Batker, Lee...... 18 Digi-Key Corporation...... 39 Summit Brewing...... 39 Gunsbury, Curt...... 8 Schmitt, Andrew...... 39 Dunwoody College of Technology...... 55 Target...... 17, 30 Guy, Danielle...... 55 Senkler, Robert...... 39 Ecolab...... 39 Tennant Co...... 55 Hersey, Liz...... 70 Sherman, George...... 8 Edina Realty...... 8 The Leapfrog Group...... 20 Jorgenson, Marv...... 8 Shoffner, John...... 30 Enterprise Minnesota...... 55 Tile Shop Holdings Inc...... 30 Kill, Bob...... 55 Smith, Lily...... 17 Evereve...... 30 Tousley Motorsports...... 8 Klapmeier, Dale...... 39 Soberg, Valorie...... 26 Foley & Mansfield...... 70 Trimble Navigation Ltd...... 34 Koch, Madeline...... 30 Stanton, Jim...... 8 General Mills...... 55 U.S. Bancorp...... 60 Konezny, Ron...... 34 Stutrud, Mark...... 39 Generous Jerry’s Fireworks...... 8 Valleyfair...... 30 Koo, Amy...... 30 Swanhorst, Jeff...... 60 Hormel Foods...... 39, 55 Washburn-McReavy...... 8 Kriesel, John...... 8 Swedberg, Joe...... 39 Kantar Retail...... 30 Wells Fargo...... 39 Kroll, Fritz...... 8 Tabke, Brad...... 30 KIK Graphics...... 8 Wischermann Partners...... 39 Kruckeberg, Craig...... 8 Tapani, Lori...... 55 Lee’s Liquor Lounge...... 8 Women’s Foundation of Minnesota...... 18 Kurowski, Rebecca...... 30 Tapani, Traci...... 55 Liquor Lyle’s...... 26 Wyoming Machine...... 55 Larson, Mark...... 39 Thomasberg, Katy...... 26 Loews Minneapolis...... 39

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JULY 2015 tcbmag.com TWIN CITIES BUSINESS 5 EDITOR’S NOTE [email protected] Dale Kurschner Navigating to Greatness While some succeed by pursuing their goals from Day One, most others do so by changing course.

his month marks the 16th year instead to major in history, joining that Twin Cities Business has the Army National Guard to help pay honored five business leaders tuition. Because he had worked for Tfor their lifetime of achievement. We his father’s clothing business as a kid, carefully vet the honorees, and through the captain of his unit assigned him to the years the magazine has found truly distribute uniforms and fit shoes for new inspiring individuals to profile and recruits. Then, as Leuthold tells it, one celebrate at our live awards dinner. (Join day the captain said, “ ‘You know some- On the way to finding us at our July event and you’ll see what thing about investments, apparently. his calling in life, I mean: Information is at tcbmag.com/ How would you like to sit in the office?’ investment guru Steve HOF15.) I took a correspondence course in Leuthold led his own Honorees have ranged from Earl securities analysis while I was there. He band, Steve Carl and Bakken (Medtronic), Carl Pohlad said ‘Just do my charts for me, will you?’ the Jags (below). (Marquette Bank, Pohlad Cos., Min- I said, ‘Sure I will,’ and I got off the line Songwriting led to nesota Twins), Curt Carlson (Gold Bond fitting shoes!” he concludes with a laugh. financial writing, but Stamps, Carlson Cos.), Stanley S. Hub- In all seriousness, though, his captain’s he kept his love of bard (satellite TV, KSTP) and Richard request steered him toward his calling: music over the years Schulze (Best Buy) to Bahram Akradi Leuthold went on to become one of and later helped (Life Time Fitness), Douglas Baker Jr. the world’s most respected institutional produce a rock (Ecolab), Mary Brainerd (HealthPart- investment researchers and managers. concert in Detroit ners), Sally Smith (Buffalo Wild Wings) Robert Senkler (2015) had a (right). and Richard Davis (U.S. Bancorp). And variety of jobs before and during college, our slate this year is equally impressive ranging from bus boy and fry cook (see page 39). at Big Ben’s Restaurant in White Bear Through the years, it’s been interest- Lake to running parts for a ing to hear how some of the inductees, bearings company and such as Pohlad, Carlson and Akradi, guarding ships in Duluth knew from the get-go that they were out while attending college to forge a new approach to doing things there. “The philosophy

or revamp an industry. A few, including was to do a job enough to STEVE LEUTHOLD AND ASSOCIATES Hubbard and Red Wing Shoe Co.’s Bill know I didn’t want to do it Sweasy, inherited a family business and for the rest of my life, and used that base to transform an industry. maybe get a little educa- practiced since 1980, but most people in But many others didn’t plan to work in tion along the way,” he says the company will probably tell you I’m the industry they would later help lead with a smile. He knew since an engineer.” and change. For example: second grade he wanted to be Douglas Baker Jr. (2012) gradu- Mark Stutrud (2015) graduated a math major, and he earned ated from college with an English degree from the University of North Dakota an undergraduate math degree and spent the following year in Aspen, with a degree in social work and prac- with plans to obtain a Ph.D. so Colo., as a self-described ski bum. But ticed in that area before deciding to take he could teach. “But after four after that, he took a job with Procter and the plunge and transform his hobby years of college I had the oppor- Gamble and quickly earned a reputa- into a business. He developed a fantastic tunity to go into the actuarial sci- benefits tion as a successful business leader. The recipe (yes, I am biased, as Summit Extra ence field and I thought making engineering [brings English major/ski bum joined Ecolab, Pale Ale is my favorite beer), conducted money and actually getting a job to corporate leadership] is that you worked his way up to the CEO chair and thorough market research and devel- was more attractive than four more years do have to understand the laws of phys- subsequently tripled the company’s sales oped a business plan solid enough not of school.” He subsequently fell in love ics. If you understand how things work, and doubled its headcount to 40,000. only to start a brewery but to grow it with an industry that he later became the laws of nature, and how man has Earl Bakken (1999) simply knew into one of the nation’s very first success- a titan of, after successfully revamping, applied the laws of nature to how things he loved to invent—and was good at ful “micro-breweries.” bolstering and steering Securian through work—whether it’s a water system or it. Before he was 18, he built a 5-foot- Steve Leuthold (2015) began his a recession that took out many of its an electrical circuit or some kind of tall robot with blinking eyes that could post-high school life writing songs and competitors. chemical process—you get into a line of brandish a knife, talk and puff on starting a band dubbed Steve Carl and Randall Hogan (2013) majored questioning where you’re bounding your hand-rolled cigarettes; invented the the Jags. He went to college to become a in engineering, but didn’t really know thoughts by the science around it,” Ho- Kiss-O-Meter to measure the emo- lawyer but found it boring and decided where that would take him. “One of the gan, CEO of Pentair, told us. “I haven’t tional connection of a kiss; and built a

6 TWIN CITIES BUSINESS tcbmag.com JULY 2015 Creativity. It’s t he Wester n way. homemade taser-like device to keep bullies away. His The key to building a business is knowing when to play it straight, first company focused on and when to improvise. At Western Bank, we understand your needs. producing records, starting with local singer Slim Jim, We work with you one-to-one, creating a banking relationship to the Vagabond Kid. He then keep you going strong. We can match our resources to your needs, partnered with Palmer Her- mundslie to start a business large or small. Growth, success, and all that jazz. servicing medical electronic equipment, calling it That’s the Western way.TM Medtronic. A power outage raised the question: How can heart pacemakers keep running without power? So western-bank.com he created the first wearable, battery-powered transistor- ized cardiac pacemaker. There are more examples of what seem like outliers to those who believe they or their children must choose and then stick to a specific career choice, or believe true greatness in business leadership only comes from those who create their own business and industry. Call them what you may, they prove there is great potential for the 47 percent of 2013 college graduates who did not find a first job related to their college major, according to a CareerBuilder survey, and the 63 percent of college graduates who as of 2010 did not have a job related to the area in which they majored (U.S. Bureau of the Census). And they help explain, in part, why the average American changes jobs 10 to 15 times between the ages of 18 and 46 (Census). But most of all, they confirm how important it is for us to listen to ourselves enough to discover, and then pursue, our passions and talents wherever they Photo by Melinda Martin melinda.smugmug.com may take us. TCB

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JULY 2015 tcbmag.com TWIN CITIES BUSINESS 7 STARTERS NEWS > TRENDS > PERSONALITIES Edited by Adam Platt

Condo Market: Neither Boom nor Whimper Developers wary; new units scarce.

Construction cranes are everywhere in the Twin Cities. The building boom for splashy new rental apartments continues unabated. But amid the real estate comeback there’s something missing: new condo units for sale. Real estate agent Fritz Kroll, who specializes in selling downtown Min- neapolis condos, says prospective buyers aren’t finding much on the market. “I don’t think the for-sale market has ever been stronger than it is today. There is so much demand for downtown buyer with prices well below what owner of Minneapolis-based Sherman Sherman says that for most develop- housing,” says Kroll, an agent for Edina Gunsbury was asking. Stanton’s recent Associates, has developed 8,500 housing ers today, the numbers simply don’t Realty. “It’s great for sellers right now 164-unit Stonebridge Lofts in downtown units over the last 35 years, including nu- pencil out. Rising construction costs and because there are so few options.” Minneapolis sold briskly. merous apartment and condo projects. a state law mandating a 12-year warranty Market statistics from the Minneap- Stanton is bolstered by studying the “I think a lot of developers are cau- on condo units are unnerving. Sherman olis Area Association of Realtors tallied resale market: “The market’s very good,” tious about the experience that they had figures that average condo prices need the median sales prices for new condos he says. “The people that bought in the last time,” says Sherman, recalling the to climb an additional 30 percent before at $377,450 in April, a 39.5 percent last few years are selling at a nice profit.” sting of the condo collapse. “We don’t developing condos becomes competitive increase compared with a year earlier. Veteran developer George Sherman, have a condo on our schedule right now.” with apartment builds. —Burl Gilyard MAAR put the median price for previously owned condos at $140,000, up 7.7 percent compared to a year earlier. But new supply is thin: MAAR reported only 26 new condos on the market in April. Many developers remain hesitant. Back to the Drawing Board Curt Gunsbury and partners recently scrapped a plan for a 30-unit boutique Mark Dwyer lost his Linden Hills condo project, but condo building in North Loop. The units isn’t done developing in southwest Minneapolis. were priced from $700,000 to $3.3 million. But finding buyers was a challenge. UPDATE Early this year, the long-delayed and exceptionally controversial 19-unit Linden “We just didn’t see a market for what Crossing condominium project in downtown Linden Hills ran aground for the we were selling,” says Gunsbury. Instead, last time, when an investor in developer Mark Dwyer’s project was unable to they will move forward with a 71-unit perform, and the site was sold out from under Dwyer. apartment project on the site. A consortium including developer Clark Gassen ended up paying Similarly, a long-planned and much- $1.68 million for the land and is planning a 29-unit rental apartment building there. (Gassen previously converted debated condo project in the Linden an apartment building at 44th and Upton to condos, so it will not be his first project in the neighborhood.) Hills area of southwest Minneapolis (see Perhaps surprisingly, Dwyer’s retreat is only partial. “It was a process I thought would take 18 months and Update this page) is now an apartment took four years,” he notes, explaining the need to wait out furious neighborhood opposition and a recession. project under a new ownership group. He insists Linden Hills would have been better off with new condos than apartments. “We know from The exception? Prolific condo devel- experience there’s demand for condos in Linden Hills and all over southwest Minneapolis. The area needs new oper Jim Stanton of Coon Rapids-based owner-occupied housing.” Shamrock Development has under con- Dwyer says he is “far from whole,” admitting that he lost more than time on the project. But the first-time struction the Portland Tower, a 17-story, developer adds he “learned a lot.” The Linden Hills resident says he is not done, but is instead scouring his 112-unit condo project in downtown corner of the city for the right venue to get back to the drawing board. —Adam Platt Minneapolis. Stanton has the market to himself and targets a middle-market

8 TWIN CITIES BUSINESS tcbmag.com JULY 2015 More Buck for Your Boom Is Minnesota ready to capture all the fireworks spending heading out of state?

The billboards lining major highways near the state border with Wisconsin are testament to the fact that dollars flow out of state for more than Sunday liquor. Fireworks are big business this time of year, but it all lands in the Dairy State or the Dakotas. Freshman Rep. Jason Rarick (R-Pine City) introduced a bill this past legislative session to legalize aerial and explosive fireworks. The bill had an information committee hearing, and Rarick plans to pursue the effort more aggressively in future sessions. His reasoning? Economics. allow sales of Class C fire- something that many stores offer. > Activist investors won “If you drive around on the Fourth works, which are limited to The prospect of legal fireworks is three seats on Imation’s of July, you’ll see people shooting off 75 grams of pyrotechnic attracting business interest, too. board of directors, displacing fireworks everywhere even though they’re composition mixture in a Jerry Breyer, owner of Generous the company’s chairman illegal,” Rarick said. “That means Minne- single tube. North Dakota Jerry’s fireworks stores in North Dakota, and ousting CEO Mark Lucas sota is losing out on sales tax and jobs.” has a similar fireworks window. said a substantial number of his custom- from his board seat. A report from 2011 says the state A similar 2012 bill, sponsored by ers are crossing the border to get more would collect about $3 million in tax former Rep. John Kriesel, passed the bang for their buck. > Target Corp.’s data breach revenue if legalization occurred. Rarick House and Senate before being vetoed by “We get a lot of Minnesota traf- settlement with MasterCard says newer estimates put that number Gov. Mark Dayton over concerns from the fic,” he says. “They don’t want to shoot was rejected by member even higher, perhaps as much as $5 mil- state’s fire marshal. off the little stuff, so they drive to get banks. lion, meaning tens of millions in revenue Rarick says he wants to work with stuff that works.” He suggested If bottle and profits are up for grabs. concerned parties to add more safety pro- rockets are allowed in the state, it might > Hormel Foods agreed His proposal would open a short win- visions to the bill, such as requiring places even suction off some North Dakota to purchase New Jersey- dow—from about the beginning of June that sell fireworks to offer videos that show trade—that state forbids the unpredict- based Applegate Farms to shortly after Independence Day—to how to properly handle the products— able explosives. —Andre Eggert organic meat business for $775 million. Hormel paid generously for Applegate with an eye on gaining traction in organics. Polaris’ Snow Turn Its latest acquisition opens up a new market segment.

When Polaris Industries bought Timbersled Polaris says it wants to use this product to capture a 2014. The company’s goal is to achieve $8 billion in in late April, CEO Scott Wine told Wall Street new customer base of off-road motorcyclists in the sales by 2020. analysts that it now had a vehicle to “take the sport of Snow Belt. Mark Rodgers, a Wisconsin-based business con- snow biking mainstream.” “It would attract some of the motocross people sultant who tracks the powersports industry, says that The Timbersled Mountain Horse resembles a dirt to try something different,” says Robert Cullen, a sales Polaris is “pushing the envelope in terms of products bike in the front and a snowmobile in the back. The manager at Tousley Motorsports in White Bear Lake, and markets.” He compares the decision to buy the machine is engineered for doing jumps on snowy hills. who is a Polaris dealer for off-road vehicles and other Idaho-based snow bike company to its “foray into the products. In May, Polaris told investors that it wants unique vehicle world of the Slingshot,” a three-wheel to increase its annual revenue by $2 billion through motorcycle. One reviewer described the Polaris Sling- acquisitions and new markets. shot as something a Marvel superhero would drive. “They want to be on the gas all the time and have Marv Jorgenson, who has owned Chopper City new products,” Cullen observes. Sports in Fridley since 1972, has been a Polaris dealer Total sales at Polaris grew since 1989, and seen big changes in what consumers by 19 percent to will buy. He sold about 450 Polaris snowmobiles in nearly $4.5 1996; he expects to sell about 80 this year. “There aren’t billion in many kids who are 21 or 22 buying snowmobiles” anymore, he says. “They are so much more money.” A new snowmobile typically costs $10,000 or more. Timbersled is sold as a conversion kit for an existing dirt bike. The kits sell for $5,300 to $6,500. Only 7 percent of Polaris sales came from snowmobiles last year, compared to 65 percent for off-road vehicles. Jorgenson says a more affordable snow bike “would bring the younger crowd.” And the 73-year-old will still jump on board: “I’m into speed.” —Liz Fedor

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 9 Frauenshuh_TCB_July2015_4.25X10.75_final_layout 5/27/15 10:54 AM Page 1

This is where your office should be Death Care Acquisitions and economies of scale have allowed Washburn-McReavy to stay independent.

In the 1960s, almost all funeral Today, the company has 19 funeral homes were independent. chapels and four cemeteries. “Chal- Today, Service Corporation lenges for others have presented op- International (SCI) owns 15 percent portunities for us,” says McReavy. “We of them, hardly a cartel situation, but have economies of scale. And I also Washburn-McReavy president Bill sometimes jokingly say that we have a McReavy Jr. says more consolidation 158-year jump on our competition.” lies ahead. “The mom-and-pop shops The company’s scale and lengthy just can’t make it,” he says. “You can’t history have allowed it to acquire sit there with one location and wait for struggling businesses, bring their the next funeral. It’s too expensive; the facilities up to par and eliminate du- overhead is way too much.” plicated costs. For instance, Wash- Bill McReavy is the fourth gen- burn-McReavy uses its maintenance eration to helm the family business, crew to gather all company trash in which started acquiring competing one location, minimizing garbage funeral service companies in 1981 collection fees as well as avoiding un- and bought its first cemetery in 2001. sightly dumpsters on premises. With

® 1857 Founded (as Washburn Undertakers) 30% Twin Cities market share LEED Gold: Existing Building–Operations and 19 Funeral chapels Maintenance by the U.S. Green Building Council (including a prearrangement center) 4 Cemeteries Lawson Commons has beautiful office space available 325 Acres of cemeteries with spectacular views of Saint Paul. 1,118 Interments in 2014 220 Employees (summer peak, when more BY THE NUMBERS BY Lawson Commons creates an immediate impression of success. grounds maintenance is required) The commitment to quality and attention to detail reflects the dedication to excellence crafted Revenue (Overall) 2015 Burial vs. into this outstanding space. 75% Funeral chapels Cremation Rates 25% Cemeteries Minnesota @ 37.7% Projected burial rate For details, contact Revenue from 59.3% Projected cremation rate Sherry L. Hastings, Senior Vice President Funeral Services Sherry.Hastings Frauenshuh.com 952-829-3468 80% Services U.S. FrauenshuhCommercial.com (embalming, visitation, etc.) 45.8% Projected burial rate 20% Merchandise (caskets, etc.) 48.2% Projected cremation rate

10 TWIN CITIES BUSINESS tcbmag.com JULY 2015 multiple properties, it can also move business, you’re tearing it down.” staff from one location to another There’s a longstanding concern in You deserve a team that will bring you brilliant depending on workload. the cemetery industry about running ideas coupled with strength, capacity, and a Although Washburn-McReavy out of space. But, McReavy says, “the operates both chapels and cemeteries, reality is, with [the growth of] crema- high level of service. Opportunities abound. the bereaved can choose to use fu- tion, [cemetery land goes] much We will help you make them happen. neral services, cemeteries or both. In further today than it was projected the industry, when family members to go.” In 1961, less than 2 percent are buried in adjacent plots it is called of Minnesotans who died were “heritage.” Heritage offers comfort for cremated; in 2015 that proportion is the grieving family and it equates to projected to be 59.3 percent. JEREMY SCHMIDT & loyalty for the cemetery. And there is As for competition from cremation, DAVE PETERSON are loyalty for many families to their fu- Washburn-McReavy has mitigated that members of Minnesota neral chapel as well. “Funeral service risk by operating its own crematories. Bank & Trust’s commercial is very personal,” says McReavy. “And “Where that’s a threat to certain busi- banking team. it comes down to relationships. We nesses,” says McReavy, “it’s an opportu- always say if you’re not building your nity to us.” —Megan Wiley

Corporate Takeover at Lee’s Liquor Lounge Local entrepreneur buying bar to “save a piece of Minneapolis.”

As Craig Kruckeberg puts it, homey small-town bars, an atmo- he’s got “a full plate.” sphere he aims to uphold. Thus the The CEO and owner of Bloom- North Loop watering hole won’t ing Prairie-based Minimizer, a poly- receive a major overhaul in terms of ethylene fender manufacturer for operation and appearance. heavy-duty trucks, was recognized “I don’t have any reason to as a 2013 TCB Entrepreneur of change it,” he says. “We’ll hire more the Year; he also owns printer KIK help and add a patio, but that’s it.” Graphics and two semi-truck race Marketing—something not in teams in the Meritor Champion- the current Lee’s lexicon—could be ship Truck World Series. Now he’s on the horizon, however, specifi- added an old-timer bar. cally a trio of billboards near the “I quickly developed a love” for bar. “I could put an arrow on each Lee’s Liquor Lounge, Kruckeberg one and have them all point at admits. When he heard Nye’s was Lee’s,” Kruckeberg says, punctuating closing, he says that’s when he really his statement with a laugh. “Likely started to push 80-year-old owner I’ll only buy one, though, because Louie Sirian] to they’re five grand sell Lee’s. a month each.” He insists the Kruckeberg Plan to grow purchase had no has a history in connection to a hospitality. His :: A TEAM FOR TODAY soccer stadium parents owned scheduled to restaurants and break ground bars, prompting nearby. “We Kruckeberg to at- started long before that was an- tend culinary school. “My endgame nounced, over a year ago. And I was to manage a resort—a hotel, don’t plan on tearing it down and restaurant, everything.” putting condos there either.” Instead he got a vintage bar on His true affinity for Lee’s came some potentially valuable land. The five or six years ago when he was sale, contingent on a liquor license looking for a spot to drink down- transfer, was expected to close as town, he says. “I wanted to find a this issue of TCB went to press. place where you could walk in and “You know how you buy an old 7701 France Ave. S. : : Suite 110 : : Edina people wouldn’t go ‘Oh my God, truck just to have it?” Kruckeberg 952.841.9300 : : MNBankandTrust.com whose dad just walked in?’ ” says. “Well, I bought an old bar just Lee’s reminded Kruckeberg of to have it.” —Sam Schaust MEMBER FDIC EQUAL HOUSING LENDER JENNY SALITA

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 11 TOUGHJOBS You thought your job was hard? Imagine having this one.

Emergency Medical Technician

rom defibrillating heart attack victims to On top of making split-second life-and- Fadministering morphine to those with ex- death decisions, paramedics like Wardell often treme burns, the day-to-day encounters of a deal with other stressors. Bystanders, overcome paramedic run the gamut. Hours of training with emotion, can disrupt a paramedic’s work— and several certifications come standard in in one situation, a man, whose older brother had the emergency medical services field, but one been shot in the chest, flipped a table when his aspect of the job is crystal-clear: “Caffeine is brother started coughing up blood. So managing something of a ritual.” the general scene, as well as the patient, can be Or so it is according to Jordan Wardell, a equally critical. paramedic for Hennepin County Medical Center “We typically find ourselves in scenes where for seven years. we really shouldn’t be,” Wardell says. “We don’t al- Average days run eight to 12 hours, although ways have police there, or they might be en route. Wardell has spent 24 hours straight on the job at Sometimes you have to act as an authority.” other institutions. And meal breaks never follow And for all this labor, knowledge and dedica- a set schedule: “Half of the time you are standing tion, the national average pay for paramedics is in line for your food and a call comes in,” he says. $14 an hour, Wardell says. HCMC sits above the Calls during daylight hours pertain largely average with $20 base pay and room to grow, but to nursing homes and clinics, but the tone shifts does not provide hazard pay. once the sun sets. Those hazards, though, are the heart of job. “At night you can anticipate having more drug “The most redeeming factor,” says Wardell, overdoses, violence and uncontrolled scenes, even “is knowing that without you there, it could have Jordan Wardell shootings and stabbings,” says Wardell, 20. been a whole lot worse.” —Sam Schaust CRAIG BARES

Strategic solutions designed to fit your business insurance needs At Wells Fargo Insurance, we can help you understand your insurance needs. We offer access to a broad range ofinsurance products — including property, casualty, and benefits — for your business. Contact us to learn more about how we can help protect your organization.

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12 TWIN CITIES BUSINESS tcbmag.com JULY 2015 CONCIERGE Star Treatment for VIP clients and guests. by Melinda Nelson

On the Town Give your out-of-town clients another vantage point on the Twin Cities with a memorable evening on an outdoor patio.

Downtown Minneapolis on the patio under a palapa-style umbrella, For clients who appreciate the smell of the surrounded by flowering hibiscus, and order a greasepaint, Skybar offers a unique perspec- round of mai tais, made with rum, fresh lime, tive on the Hennepin Theatre District, land mint and more rum. As you feast on Polyne- that used to be an American Indian footpath sian wings, potluck pickle rollups, Grain Belt- between St. Anthony Falls and Spirit Lake, battered onion rings and cheese curds, pay no Iowa. Situated on the rooftop of Seven, this mind to the Easter Island-ish sculptures gazing stylish outdoor bar provides a bird’s-eye view hungrily at your food. 1900 Marshall St. NE, of the glittering Pantages marquee and the Mpls., 612-788-9069, psychosuzis.com lights of the city beyond. Settle into the orange cabana-style sofas and order a round of Man- St. Paul Dock Café hattans, cigars from the on-site humidor, and a When in St. Paul, do as procession of hamachi kama, tuna tataki, and the locals do and stop other sparkling-fresh sushi. 700 Hennepin Ave., at the Liffey. Named Mpls., 612-238-7770, 7mpls.net for the river that flows through the center of Uptown Dublin, the Liffey is also While out-of-town clients may be intrigued a Minnesota Nice-style to hear that Uptown was once a busy hub on nod to the Mississippi. the streetcar route out to Lake Minnetonka, Join the crowd on the they’ll be more impressed by the boatload of second-floor patio fresh seafood on offer at Stella’s, a cherrystone’s and order a round of throw from the Minneapolis chain of lakes. negronis and Irish dip As the reigning queen of local rooftop dining, sandwiches layered with Stella’s Fish Café and Prestige Oyster Bar house-made corned is an amusing place to sip frosty Caribbean beef, melted Swiss and mojitos, slurp raw oysters, and peel (and eat) aioli. Toast to liffey (the a pound of steamed shrimp while admiring Irish word for life) as 360-degree views of Uptown and downtown you point out the Min- Minneapolis. 1400 W. Lake St., Mpls., 612-824- nesota State Capitol, CŌv 8862, stellasfishcafe.com designed by Cass Gil- bert (and modeled after Stillwater St. Peter’s Basilica in Rome) and the Cathedral On a beautiful July afternoon, make the of St. Paul, designed by Emmanuel Masqueray. strategic decision to end your meetings early 175 W. Seventh St., St. Paul, 651-556-1420, and head over to Stillwater. Often called the theliffey.com birthplace of Minnesota, this former lumber town is as old as St. Paul and older than Min- Lake Minnetonka neapolis. Take a table on the patio at Dock The distant Midwestern cousin of the Hamp- Café, where you can look across to Wisconsin, tons, Wayzata in July is always a good idea. In upriver to the Stillwater Lift Bridge and down- authentic East Hampton style, don’t bother river to Lake St. Croix. For a refreshing sum- trying to find a parking place. Instead, hand mer meal, order a bottle of crisp Whitehaven your keys to the valet at CŌv and use the time sauvignon blanc, crab cakes with cilantro lime saved to score a coveted table on the patio aioli, pan-seared halibut with grilled pineapple overlooking the azure waters of Wayzata Bay. basil salad, and Key lime pie. 425 Nelson St. E., Surrounded by beauties and power brokers, Stillwater; 651-430-3770, dockcafe.com and Cōv’s signature ’70s soundtrack, order a bottle of Veuve. Feast on lobster guacamole, Along the Mississippi River Skuna Bay salmon with Minnesota-grown Clients with a well-developed sense of irony wild rice, and a slice of decadent Sammi will get a kick out of Psycho Suzi’s Motor cake, and wave as the train thunders past on Lounge, one of the Twin Cities’ only restau- railroad tracks once owned by James J. Hill’s rants with views of the mighty Mississippi, the Great Northern Railroad. 700 Lake St. E., Way- lifeblood of early Minnesota commerce. Relax zata, 952-473-5253, covwayzata.com Stella’s Fish Café and Prestige Oyster Bar

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 13 PLUGGED IN > JULY The best opportunities for networking.By Sam Schaust

Urban Assault Ride Como Sunset Affair Bring a co-worker along for this two-person team event where The Marjorie McNeely riders race through numerous checkpoints in Minneapolis over a Conservatory’s 100th anniversary 20-mile stretch. Urban Assault Ride, the biggest bike obstacle race is the focal point of this year’s social event, in the country, is a unique opportunity to be active outside of the with the theme Perennials and Centennials. workplace. A party follows the race, promising free beverages, The ornate building will play host to music, contests and a raffle. 9 a.m., $50-$65, Peace Coffee HQ, roughly 550 guests, featuring community Minneapolis, 877-228-4881, urbanassaultride.com/Minneapolis leaders in business, government, philanthropy and the arts. Following the dinner and silent auction, after-hours celebrations will extend outside to show off the new Centennial Garden.5:30 p.m., $200-$250, Marjorie McNeely Conservatory, St. Paul, 651-487-8229, comozooconservatory.org

Starkey Gala The Starkey Hearing Foundation returns to host its annual gala and fundraiser packed with high-profile attendees in media, sports, politics and business. Previous honorees such as Sir Richard Branson, Bill and Hillary Clinton, Archbishop Desmond Tutu and Muhammad Ali have attended the dinner. Singer Katy Perry will perform at the 2015 event. More than $8.7 million was raised last year, which enables Starkey to provide hearing devices for those in need. 3 p.m., $1,500-$5,000, St. Paul RiverCentre, 866-354-3254, starkeyhearingfoundation.org/gala

27 Canvas Health Golf Classic Looking to play the course rather than watch the pros? Challenge three colleagues or clients to a round at the July 27- August2 Dellwood Country Club in the event’s four-person scramble format. Proceeds from the 24th annual Golf Classic support 3M Golf Championship services to treat children, adults and families dealing with Find a cozy spot along the fairway mental and chemical issues, violence and sexual abuse. or near a putting green during the 10:30 a.m., $175 per person, Dellwood Country Club, 651-275- weeklong 3M Golf Championship. It’s 4303, canvashealth.org/special-events/golf-classic a chance to socialize with Fortune 500 executives and ardent golfers, as professionals—including legends Jack Nicklaus, Arnold Palmer, Lee Trevino and Gary Player—take the course. Times vary. General admission free; club and skybox admission $30- $1,000, TPC Twin Cities, Blaine, 763- 783-9000, 3mchampionship.com.

14 TWIN CITIES BUSINESS tcbmag.com JULY 2015 TCB BEYOND THESE PAGES

Today’s News Statewide news and perspective on business- related expansions, shakeups, successes, wrongdoings and more. Go online to: bit.ly/YvzvV7

TCB’s Annual CFO Forum On June 17, four outstanding chief financial officers shared with our audience how they’re tackling, or have tackled, major challenges facing their businesses—and how they’re preparing for what lies ahead. Industry Insights The latest developments and trends in key Life Style industries, from The best places to take transportation to your VIP guests, most health care. significant networking Go online to: bit.ly/1zMkqMP opportunities in the month ahead, how to boost your personal brand Minnesota- style, and more. Go online to: bit.ly/1wkVIpk

Events The state’s most prestigious business awards program, TCB’s Minnesota Business Hall of Fame, is July 21. Honorees this year are: Jim Graves, founder, chairman and CEO, Graves Hospitality; Dale Klapmeier, co-founder, president and CEO, Cirrus Aircraft;Steven Leuthold, founder, the Leuthold Group; Robert Senkler, chairman of Securian Financial; and Mark Stutrud, founder, president and CEO, Summit Brewing Co. To register, go online to: tcbmag.com/HOF15

E-newsletters Catch the latest business news—and explore what it means—every Tuesday and Thursday in Briefcase. And our monthly Minnesota Small Business e-newsletter provides features, tips and Counterclockwise from top left: insights for small businesses across the state. Kelly Larson, Summit Brewing Co.; Jim Macaulay, the Marvin Cos.; To sign up, go online to: bit.ly/QPGKNh John Way, Proto Labs Inc.; and Tim Peterman, EVINE Live

On the Air Tune in to 830 WCCO-AM every Monday at 10:35 a.m. to hear TCB’s take on the week’s top business and economic news and trends.

Social Media > Twitter: @TCBmag > Facebook: facebook.com/twincitiesbusiness Join us as we engage with others through … > LinkedIn: linkedin.com/company/twin-cities-business > YouTube: tcbmagvideos

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 15 LIFESTYLE By Tad Simons

TOP TICKETS >

Kinky Boots ARTS PICKS > The most popular show on Broadway last year, Cyndi Minnesota Orchestra Lauper’s homage to fabulous Sommerfest footwear proves once again Fresh from its historic cultural that if you have the right pair of shoes, anything is possible. If you like infectious exchange with America’s new best friend, Cuba, the Minnesota Orchestra kicks off this year’s pop songs, world-wise drag queens and uplifting stories about blue-collar Sommerfest with a musical celebration of Cuba featuring that country’s storied 23-person choir, Coro workers down on their luck, this is your spool of cotton candy. ThinkHairspray Entrevoces. Other highlights include a performance by the Temptations, an evening of Spanish music, + Billy Elliot + La Cage aux Folles, with several doses of girlish fun thrown in. July a performance of Schubert’s Trout Quintet and most of the usual 28–Aug. 2, Orpheum Theatre, Mpls., 612-455-9500, hennepintheatretrust.org favorites—Gershwin, Strauss, Mozart, Brahms, etc. The traditional semi-staged opera finale is Puccini’sMadame Butterfly. July 5–Aug. Cities 97 1. Orchestra Hall, Mpls., 612-371-5600, minnesotaorchestra.org Basilica Block Party “Praise the Loud” is the official The Daughter of the Regiment slogan of the annual Cities 97 The little opera company that could has turned its annual outdoor Basilica Block Party, which has show at the Mill City ruins into one of the must-see shows of the become the bedrock music festival summer. Mill City Opera’s secret formula includes light comedic of the summer. Friday’s highlights operas that are judiciously trimmed, sumptuously produced and include local trio Zoo Animal, expertly sung by top-shelf talent. This year is no different. The Weezer jam-fest perennials O.A.R. and opera is Donizetti’s French and fluffyDaughter of the Regiment, everybody’s favorite emo alt-rock band, Weezer. Saturday night’s festivities with gorgeous soprano Leah Partridge in the lead role of Marie, conclude with American Scarecrows, Fitz and the Tantrums, former Drive-By and the opera world’s reigning “blond hunk” Chad Johnson Truckers frontman Jason Isbell and everybody’s favorite Jeff Tweedy band, as her love interest, Tonio. July 11-21, Mill City Museum, Mpls., Wilco. July 10–11, Mpls., Basilica of St. Mary, 800-514-3849 Leah Partridge millcitysummeropera.org, 612-875-5544

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16 TWIN CITIES BUSINESS tcbmag.com JULY 2015 PERSONAL BRAND Roshini Rajkumar

How Fit Is Your Brand? Personal wellness is at the core of professional success.

o matter where you turn, another CEO is writing a book about how he uses meditation to grow Nhis leadership skills, or a fit corporate director is waxing on about the benefits of her daily yoga practice. A recent Fortune cover story shared how Target CEO Brian Cornell starts his days at the gym and often “returns to the gym for a second session after work.” The profile goes on to share how Cornell is a “zealot for optimizing performance not only When you are with exercise but with adequate sleep.” What do these athletic leaders have fit within the in common? They understand that we definition of your must not neglect any part of ourselves if we truly want to be productive, a nobody type and tion that is backed by statistics. I used lifestyle, your to marvel at how former President Bill personal brand Clinton read multiple books per week. As a college student, I thought, “How thrives. does he find the time?” Considering Clinton’s day job, we can theorize he was extremely efficient and didn’t sweat the small stuff.

Body magic ness mindset manifests the company’s produce for our families, our employers recently about the detrimental effects Speaking of sweating, a strong body isn’t commitment to its employees, which and our teams. of caffeine on our sleep. He said caf- about fat or skinny; it’s about fitness. increases retention and thus saves pre- No matter the stage, your audience feine’s half-life is dangerous. In fact, he When you are fit within the definition cious capital. wants you to succeed. Think about it. says if you can’t cut it out entirely, stop of your body type and lifestyle, your Whether you have the benefit of If you go to a rock concert, you want consuming caffeine (in beverages or personal brand thrives. If you’re used to a company wellness program or are to be entertained. When you listen to a food) by noon every day. Otherwise, it swimming laps three times a week, but a in charge of your own fitness, there is presentation by a colleague, you want will damage sleep cycles and prevent the crazy travel schedule means those swims no single right way. “You should set to learn something or move a project deep sleep our bodies need to thrive. are cut short or eliminated, what hap- your own individual goals and then get forward—not see a train wreck. When Last year, I had the privilege of pens? You are most likely sluggish, a little on a path to achieving them,” advises I share this notion with clients, they are interviewing Arianna Huffington while irritable and your work suffers. Minneapolis-based personal trainer both relieved and a bit surprised. I often she was promoting her book Thrive. She Edina-based Precision Gasket Co. Adam Washburn. Along with those say that the calmer you are on the inside, told me and my radio listeners she’s on had work product in mind when it goals, set specific dates on the calendar the more powerfully you will commu- a mission to make sleep a priority for decided to bring a corporate wellness for achievement. But, Washburn stresses, nicate to the outside. All of this starts in people. She suggests you set an alarm at program in-house three years ago. “never set an end date to when you can your head. What inner narrative are you night to signal bedtime, then get to bed. “Every week, PGC staff have the option stop reaching for more fitness, because telling yourself to get through your tasks Sleep research also shows that electronic of joining the company fitness coach having a mindset that you can always do today? If the inner narrative is negative, screens like tablets or TVs inhibit sleep for two one-hour sessions of custom- better” will keep you motivated. you will have a hard time communicat- when viewed within an hour of bedtime. ized training at PGC’s on-site wellness ing successfully with any audience. Lots of research backs up how body, and exercise gym,” explains John Bower, Mind games mind and spirit alignment contributes director of sales and marketing. “Being fit boosts confidence, relieves Proper rest to the whole person. The first step is for Bower says results have proven to be stress and makes the brain sharper,” says The inner narrative starts with your you to decide you want a fit brand that priceless, because people are exercising Lily Smith, marketing director for Steele mind, but is fueled by your body. When starts with your own fitness. TCB next to others, blind to title: “If you wit- Fitness. She reminds us that not only will your body is functioning at optimum nessed a training session, you wouldn’t you look great, but attention to fitness capacity, which includes adequate sleep, Roshini Rajkumar is a communication be able to decipher a machine opera- “will lead to general overall happiness, chances are your mind can do what it coach, host of News & Views on WCCO tor from a director or manager. This calm and perceived smarts.” Not bad, needs to produce intended results. Radio, and author of Communicate environment allows everyone to focus right? What’s going on in our minds Select Comfort’s Pete Bils shared That! For additional communication tips, on wellness.” PGC also knows this well- has a lot to do with what we are able to scientific research at a wellness panel visit CommunicateThatBook.com.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 17 JOB TITLE CateringAd FINISHED SIZE 4.5625"x5.25" JOB ITEM Ad COLORS CMYK JOB NUMBER FD7645 # OF SIDES 1 TRIM/FLAT SIZE 4.5625"x5.25" DESIGNER Mitchell Lewis NOTES

PERFORMINGPHILANTHROPY Inside the business of nonprofits

Targeting Gender Norms The philanthropic community has moved beyond simple feminism to ask fundamental questions about gender roles.

iki Wilchins, executive director gender norms, says executive director of TrueChild, is regularly in Gayle Ober. “As we look at two of our the Twin Cities to meet with emerging funding areas (advanc- Rphilanthropy leaders and nonprofits ing women and girls, and youth to advance TrueChild’s advocacy development), we realized we wanted for “gender transformative philan- to learn as much as we could about thropy.” In plain English that means these two very broad fields before we asking the philanthropic sector to settled on our grantmaking strate- take a leadership role in challenging gies. While race, ethnicity, education rigid masculine and feminine norms level and socio-economic status get through their grantmaking programs a lot of attention, the full palette of and practices. TrueChild conducts gender doesn’t. We consider women/ research—and amplifies the work of girls or men/boys, but not always how other scholars—to document and gender in all its forms influences us as highlight the damage done in areas individuals and as a society.” like education, employment and Advocates believe that gen- interpersonal relationships. I attended der must be viewed along a broad a recent half-day workshop with continuum, and that gender norms Wilchins sponsored by the George are as much socially constructed Family Foundation, and came away as biologically innate. While the with new insights. feminist movement has expanded The George Family Founda- opportunities for women and girls’ tion (GFF) has a history of interest empowerment, Wilchins’ advocacy in funding for women and girls’ for “gender transformation” goes programming including grants for much further. She says that when leadership development, anti-sex- grantmakers merely “apply a gender trafficking efforts and reproductive lens” to help ensure gender equality, rights. GFF is trying to learn from they are failing to address how rigid Wilchins’ work and that of other ideals of femininity and masculinity social scientists who specialize in negatively impact people and society.

18 TWIN CITIES BUSINESS tcbmag.com JULY 2015 Sarah Lutman Make Cloud a Reality

It is not enough to promote equal further concludes that when a small opportunity or to support women’s number of women break with estab- empowerment programs. It is neces- lished norms, with no critical mass, sary to challenge the norms that keep traditional norms will remain uncon- women—and men—from achieving tested and may in fact be reinforced. their full potential, by embracing the The Women’s Foundation of idea of gender as a continuum. Minnesota is one local philanthropy As background Wilchins offers engine that has fully embraced the 2013 World Bank study that inter- Wilchins’ work and changed its grant guidelines and grantmaking as a result. In its State of the Foundation report for 2015, Lee Roper-Batker, president, says that a key question in When its work is “How do concepts of mas- grantmakers merely culinity and femininity serve as barriers to women and girls—and men apply a gender lens and boys—and what will we do to Stop just talking about the cloud to ensure equality, change it?” She also cited a 2014 grant and get started with Evolving to Hnub Tshiab: Hmong Women they are failing to Achieving Together, through which Solutions. Our dedicated cloud address how rigid the foundation provided funds that helped this group “confront gender team is the perfect resource to ideals of femininity and norms within their community.” She make cloud a reality for your masculinity negatively described Hnub Tshiab’s approach as unique: Project leaders worked with company. impact people and male clan elders to facilitate discus- society. sions about why gender equality is important to girls and women and Cloud Assessments & Workshops benefits women and men. TrueChild is presenting work- Backup & Disaster Recovery shops at major philanthropic confer- Cloud Computing ences and at smaller gatherings like viewed 4,000 people in 20 countries the recent one in Minneapolis. At the Public/Private/Hybrid to identify obstacles to progress in local meeting, a particular emphasis women’s rights. The report, On Norms was on programs that reach adoles- Migrations and Agency, was the result of what the cents during the vulnerable early-teen Hosting study calls “the largest dataset ever years when gender identity is being collected on the subject of gender and established. Collaboration & Productivity development, providing an unprec- A few things struck me about the edented opportunity to examine dialogue at Wilchin’s local workshop. Monitoring & Performance potential patterns across communities First is that a broader definition of Virtualization on social norms and gender roles, gender equity seems like a needed pathways of empowerment, and fac- evolution in our thinking about tors that drive acute inequalities.” personal freedom and the empow- Its conclusions both ring true erment of individuals. Second, the and identify challenging obstacles. conversation about gender trans- “Despite diverse social and cultural formation brings into focus the settings, traits and expectations of the many ways gender stereotypes are ideal ‘good’ woman and ‘good’ man constantly reinforced in media and were remarkably similar across all communications. Finally, gender sample urban and rural communi- stereotyping is not a cycle that will be WWW.EVOLVINGSOL.COM ties. Participants acknowledged that easy to break; religious, cultural and women are actively seeking equal family traditions, ideals and norms power and freedom, but must con- around gender are a defining part of stantly negotiate and resist traditional our social fabric. But must it be so? expectations about what they are to That’s the question Wilchins asks us Contact our Cloud team today do and who they are to be. When to consider. TCB women achieve the freedom to work for pay or get more education, they Sarah Lutman is a St. Paul-based must still accommodate their gains independent consultant and writer 763-516-6500 to these expectations, especially on for clients in the cultural, media and household responsibilities.” The study philanthropic sectors.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 19 EXPLANATION OF BENEFITS Translating the language of health care for the business community David Burda Taking Employee Wellness to the Limit EEOC, HHS lay out the regulatory do’s and don’ts for workplace wellness programs.

Short Take ’m not an early adopter. It’s not that Carrots and Sticks I’m risk-averse or afraid to take a What large employers do to encourage worker participation in wellness Speaking of early adopters, it seems that chance. I just don’t have the time to programs, health risk assessments and biometric screenings > mid-size employers are the business segment Iwork out all the bugs of the first version Percentage of driving the initial wave of interest in private health Action of anything. I’ll let the cool kids do that large employers* insurance exchanges. That’s according to a report before they run to the next big thing. I’m Offer financial incentives to employees to complete health 52% from Accenture, the Chicago-based management happy to buy Version 2, which works bet- risk assessments consulting firm (bit.ly/1FumFWT). The report said the ter and will stick around a lot longer. Offer financial incentives to participate in wellness program 36% number of employees who receive their health benefits If you’re an employer and you were through a private exchange doubled this year to 6 Reward or penalize employees for meeting or failing to meet 8% an early adopter of workplace wellness, biometric screening goals million, from 3 million in 2014. To date, large employers, Penalize employees with an identified health risk factor who you may have to retool your program in 7% which Accenture defined as having more than 2,500, light of two new pieces of legal guidance don’t complete wellness program have shied away from private exchanges because from the federal government. If you Require employees to complete health risk assessments to 3% big companies traditionally don’t want to be first, the were a workplace wellness laggard, then enroll in health plan benefits packages available through exchanges didn’t you’re in luck. The government just Require employees to complete biometric screening 1% mirror what big companies currently offer workers and * EMPLOYERS WITH 200 OR MORE WORKERS handed you two sets of rules to follow, SOURCE: KAISER FAMILY FOUNDATION/HEALTH RESEARCH & EDUCATIONAL TRUST the exchanges themselves didn’t have the enrollment so when you do set up your program, capacity anyway. Accenture predicted that the situation you won’t be feeling your way around the Americans and employee contribution) of providing health ben- will change, and change fairly quickly. As any lingering with Disabilities Act or the Health Insurance Portability efits to the individual. So if the total cost is $10,000, then regulatory concerns dissipate, the exchanges’ coverage and Accountability Act. the maximum reward or penalty would be $3,000. capacity and offerings expand and smaller companies The first piece of legal guidance comes in the form of > And fourth, employers must tell workers in boast of the cost savings they’re enjoying from using proposed regulations published by the U.S. Equal Em- advance what medical information will be collected, exchanges for their group coverage, big companies ployment Opportunity Commission. In a lengthy set of how it will be used, who has access to it and how it will join in the fun. Accenture projects that private proposed regulations, the EEOC defined the features of will be protected. Employers are required to protect exchange enrollment will double again to 12 million workplace wellness programs that won’t violate the ADA the confidentiality of employee health data and can employees in 2016, then more than triple to 40 million (1.usa.gov/1H7AMHt). The ADA prohibits employers from only collect it in aggregate form. The EEOC suggests in 2018. This will be fascinating to watch. discriminating against workers based on their health status. that company individuals who handle the employee The EEOC’s guidance falls into four buckets: Pro- health data not be in positions responsible for mak- grams, participation, incentives and health data. ing employment decisions. Update > First, the workplace wellness program itself “must The second piece of legal guidance comes from the Forgive me for staying on this patient safety be reasonably designed to promote health or prevent U.S. Department of Health and Human Services, which > jag, but it’s important. You already know this if disease.” A program meets that standard if it has a “reason- is charged with enforcing compliance with HIPAA. one of your employees came back from the hospital able chance” of making workers healthier or keeping them HIPAA is the federal law that defines “protected health or doctor in worse shape than when they went in. from getting sick. That means it’s OK to ask employees to information” (PHI), who has to protect it, how it has to In the May column, we talked about employers’ take health risk assessments or undergo biometric screen- be protected and what happens to those who don’t. In responsibility to steer workers to the safest hospitals ings to alert them to potential health problems. It’s also OK a two-page policy clarification, HHS explained when and doctors possible (bit.ly/1OAg872). We listed for employers to look at aggregated employee health data HIPAA applies to workplace wellness programs and some national resources available to employers to to identify common health problems and develop wellness when it doesn’t (1.usa.gov/1DPHI9q). help them do that. In the June column, we followed interventions to address those In short, if an employer offers employees a workplace up with a list of three Minnesota-specific patient Passing Grades problems. wellness program as part of a group health insurance plan, safety resources available to employers in the state Most of the 39 > Second, employee participa- the health data collected as part of that program is consid- (bit.ly/1QggeMN). The Leapfrog Group, a national Minnesota hospitals tion must be voluntary. That ered PHI, and the plan and the employer administering the organization that I mentioned in the May column, just that participated in the Leapfrog Group’s most means you can’t require workers plan are subject to HIPAA. If the wellness program is not released its latest hospital-specific safety grades for recent patient safety to participate, you can’t deny or part of a group health insurance plan and is administered 2,523 hospitals. Less than a third got an A. Of the 39 survey were above average limit health benefits to workers by the employer directly, the health data is not considered Minnesota hospitals in the mix, 13, or a third, got an A who don’t participate and you PHI, and the employer is not subject to HIPAA. (see “Passing Grades” chart). That’s better than the can’t punish, retaliate, in- HHS guidance stands as is. The EEOC proposed rules national average and good enough to place Minnesota timidate, threaten, coerce or fire are not final, but in an explanatory document accompa- 12th on the group’s ranking of states with the safest Grade of total

hospitals anyone who doesn’t participate. nying the rules, the agency says you should follow them hospitals. That’s helpful if you send your employees to Number of Percentage > Third, employers can incent anyway (1.usa.gov/1P3ykCV). I think it’s safe to follow the one of the 39 hospitals that voluntarily participate in A 13 33% employees to participate or pe- workplace wellness early adopters into the pool now. TCB the Leapfrog patient safety survey process. That’s not B 14 36% nalize those who don’t (or who helpful if you send your employees to one of the other C 11 28% don’t meet certain health goals). David Burda (twitter.com/@davidrburda, dburda@ 104 hospitals in the state. As an employer, you should But the incentives or penalties msp-c.com) is editorial director, health care strategies, for ask your hospital what their Leapfrog Group patient D 1 3% are limited to 30 percent of the MSP-C, where he serves as the chief health care content safety grade is. And if they don’t participate in the F 0 0%

SOURCE: THE LEAPFROG GROUP total cost (combined employer strategist and health care subject matter expert. program, you should ask them why not.

20 TWIN CITIES BUSINESS tcbmag.com JULY 2015 Jan Hawkins, VP of Operations and Human Resources at John Henry Foster, Eagan, MN

My Plan by Medica allows employers to set a budget to control health insurance costs while offering employees more choices. Your employees are able to select a health plan option that fits their life and financial needs best. It’s a win-win for everyone. Just ask Jan. She can offer some true insight about JHF’s experience with My Plan at medica.com/privateexchange. For more information about My Plan call your broker or Medica at 952-992-3055. A Tale of Two Rails A RAIL-IMPROVEMENT PROJECT IN DULUTH IS EVIDENCE OF MAJOR CHANGES IN THE GLOBAL ECONOMY. BY GENE REBECK

Many miles south of the Aer- each year CN trains move billions of of trailers and shipping containers by has been crude oil, which “didn’t even ial Lift Bridge, the Canal Park dollars’ worth of freight around north- rail. More than half of intermodal freight exist prior to the recession as a rail com- and the ore docks, the global economy is ern Minnesota between Ranier, Minn., a enters or leaves North America through modity,” he adds. “Now it’s significant.” reshaping a quiet part of Duluth. small town near International Falls, and the coastal ports. The rest moves within (While oil carloads have increased from Canadian National Railway (CN) is in the Proctor freight yard west of Duluth, the continent. According to AAR figures, 9,500 in 2008 to 493,126 last year, AAR the midst of a two-year, $30 million project as well as from the Iron Range to the U.S. intermodal freight was up 5.2 per- figures put crude oil at about 1.6 percent to build approximately 4½ miles of double Duluth and Two Harbors docks. cent over 2013—which was also a record of total U.S. rail freight in 2014. Coal, by track on Steelton Hill, which rises from The Steelton Hill line was origi- year. Intermodal accounted for 47.1 comparison, made up about 20 percent.) Duluth to the north and west. “The project nally part of the Duluth, Missabe & percent of total rail traffic last year. In addition to oil from Alberta, the will essentially add a passing lane on CN’s Iron Range railroad (DMIR) that once What’s fueling the intermodal freight that CN moves via its northern busy freight corridor,” CN spokesman Pat- dominated Iron Range ore transport. boom? Imports from Asia have climbed Minnesota corridor includes forest rick Waldron says; it’s designed to reduce Steelton Hill was DMIR’s connection as the U.S. economy improved. Larry products, general merchandise, grain and and eliminate congestion faced by the 20 to between the Range to Duluth’s U.S. Steel Gross, president of New Jersey-based fertilizer. But CN’s Steelton Hill project is 25 freight trains that operate through Steel- plant, which was torn down in the early Gross Transportation Consulting, also largely driven by the increase in container ton Hill each day. The project, due to be 1980s. CN acquired the DMIR in 2004, notes that railroads have been picking up traffic. And it appears that many more completed next year, also includes a couple and the Steelton Hill line took on a new market share from trucks “primarily be- containers will be coming through. of new rail bridges to accommodate the role as part of CN’s core route between cause the service in recent years has im- double-tracking, as well as some smooth- the major North American rail hubs of proved to the point where it’s sufficiently The Canadian challenge ing of curves. Winnipeg and Chicago. reliable for people to use. It was always aught flatfooted by the recent boom The project’s size and scope reflect CN’s Waldron notes that as the cheaper than truck, but you always paid Cin traffic—a boom that overtaxed how northern Minnesota has become general economy has rebounded from a big price in terms of service in the old Minnesota’s rail system in 2013 and an increasingly important passageway the downturn, traffic across CN’s system days. Nowadays, though it’s still not as 2014—railroads are now in the midst of for global freight between Canada’s West increased 8 percent in 2014 over 2013. fast as a truck, its reliability has improved a big capital improvement push. Accord- Coast and Chicago. Nearly a fifth of all That reflects a trend throughout North to the point where it’s tolerable.” ing to AAR’s Greenberg, railroads in the freight traffic from Canada to Chicago America. “In 2014, the freight rail indus- That’s not to say that trucking has U.S. are spending about $29 billion on comes through Steelton Hill, and that try moved more traffic than any time declined. “It has now recovered to the infrastructure and equipment in 2015. amount is expected to increase. It’s a rail since 2007 and the last recession,” says point that it was prior to the recession,” CN, meanwhile, is spending $2.2 billion boom that could mean a new economic Ed Greenberg, spokesman for the As- Gross says. “It did take a big hit during across its system. development opportunity for Duluth. sociation of American Railroads (AAR), the recession, and it’s been very slow to Steelton Hill is just one of those which represents the American freight recover altogether.” That said, he notes parts of Minnesota seeing a spending rail industry. Shipments of chemicals, that trucking still accounts for the vast increase. The Twin Cities “was one of Rail drivers grain, cars and automobile components majority of shipments in the U.S. Inter- the epicenters of congestion last year, in he project is CN’s latest investment were all up over 2013. modal is a small player in comparison. particular because of the huge jump in Tto improve the safety and efficiency The main driver in the rise of freight Still, Gross says that intermodal is crude by rail moving out of North Da- of its 424-mile rail network in Minne- rail has been the record amount in inter- the fastest-growing sector of the surface kota,” Gross says. The BNSF line to the sota. One of the largest railroads in the modal shipments. In railroad terminol- freight transportation world in North Twin Cities is “essentially a single-track state, employing more than 460 people, ogy, intermodal refers to the movement America. A fast-growing freight category railroad. And they were trying to stuff

22 TWIN CITIES BUSINESS tcbmag.com JULY 2015 A CN freight train (below) crosses the current single-track bridge while its double- track replacement is under construction. The photos at left show parts of the Steelton Hill project construction in Duluth.

A Tale of Two Rails SHAWN CHRISTIE SHAWN KRISTI JOHNSON

Faster Track: Steelton Hill Project a lot of volume over that railroad”−not stress on another chokepoint in CN’s Steelton Hill is part of Canadian National’s core line connecting only crude but grain and also a lot of Winnipeg-to-Duluth core line. This Canada’s Pacific Coast container ports and the rail-hub cities of intermodal from Seattle and Tacoma. roadblock runs across the mouth of the Winnipeg and Chicago. Between 20 and 25 freight trains pass through “You had a 10-pounds-in-a-five-pound- Rainy River between Pither’s Point in the area each day, which is located near CN’s rail classification yard in bag problem there,” Gross says. BNSF Fort Frances into Ranier. Proctor. Additional tracks are being installed to reduce congestion and has been “spending copiously to address According to a May 11 article in the those bottlenecks.” Duluth News Tribune, about 18 percent increase efficiency on a route that CN expects will become busier. For intermodal freight, another of all rail freight from Canada to the Location: Duluth (Gary-New Duluth neighborhood) chokepoint has been U.S. ports, which United States comes through Ranier, and have been overwhelmed by the hyper- the number of trains coming through Cost: $30 million abundance of container ships and their this entry point has nearly doubled since cargo. Canadian ports and the railroads the recession. Those trains then head to What the project entails: that serve them see an opportunity to Steelton Hill. u Double track: 4½ miles of second tracks to relieve congestion take market share from the U.S. port CN projects that the number of u Two new bridges: One will accommodate the double-tracking; freight system. A nine-month labor trains will continue to increase, making the other will be higher than the one it’s replacing to allow taller slowdown at West Coast ports that end- improvements to this part of its north- ed in February resulted in a significant ern Minnesota corridor crucial. CN’s trucks to pass underneath u amount of freight being diverted north Waldron says that the railroad is looking Smoothing curves: For greater speed of the border to the ports of Vancouver to decrease congestion and increase ef- u Estimated completion: 2016 and Prince Rupert, Gross says. ficiency at the border crossing. The state The port at Prince Rupert, he adds, of Minnesota also has proposed a new was not a big container port until recent bypass that will make it easier for drivers years. “And it was created with the to avoid getting stuck when a freight associated with the U.S. Steel plant site. shipped by trucks or by ship via the Port express purpose of accepting freight for train rolls through. Part of the project includes the replace- of Duluth-Superior, which is spending forward movement by rail into Eastern A recent episode highlights infra- ment of an old rail bridge that prevented $17 million on improvements. That’s Canada and the Midwest U.S. So that is structure stresses on the important CN tall trucks from passing underneath. being done to accommodate more and competing with Seattle-Tacoma and the route. On May 27, an old timber rail This improvement could assist with the diverse cargo, and to more easily transfer U.S. [rail]roads that connect the Pacific bridge about 15 miles south of Ranier Duluth economic development agency’s cargo to trucks and rail lines. That cargo, Northwest to the Midwest.” An ongoing burned and collapsed as a train carrying efforts to redevelop the land into a multi- by the way, could include containers. expansion project will allow Prince potash was crossing. No one was hurt, modal freight facility. Trucks bearing And though Duluth is no Prince Ru- Rupert to accommodate the massive but the collapse closed off freight traffic containers and other tall freight would pert, the Steelton Hill project could raise new ships, some carrying as many as on the route. be able to pass underneath the bridge on its profile in an increasingly complex 20,000 containers, that several shipping The improvements CN is making their way to nearby Interstate 35. global transport network. TCB companies are planning to introduce. in Duluth could lead to some new eco- With more containers and other rail As more intermodal traffic comes nomic development projects. Duluth has freight coming through Duluth, the sites Gene Rebeck is a Duluth-based freelance from Canadian West Coast ports and hopes that CN’s Steelton Hill project can also could serve as a transfer location journalist who writes monthly for Twin flows in to the United States, it’s putting help it redevelop empty industrial land for containers and other goods to be Cities Business.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 23 Congratulations!2015 Minnesota Star Awards Winners

Best Event Logistics & Best Public Event Colleen Healy - Irish Fair of Minnesota

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7-15 TCB ISES.indd 2 6/1/15 2:40:00 PM Tales from

LIQUOR LYLE’S MAY LOOK SEEDY, BUT IT’S BEEN THE BELOVED WATERING HOLE FOR MULTIPLE GENERATIONS OF PROMINENT TWIN CITIANS—AND IT’S STILL RAGING.

here Lyle’s faithful are concerned, the big bang might well have occurred in May 1926, when concrete was poured on a small Hennepin Avenue commercial lot just southwest of downtown Minneapolis. The resulting 5,800-square-foot structure was a welcome addition to the area, which had recently been branded “Uptown” by business owners hoping to replicate Chicago’s retail district of the same name. Wedged between Colfax and Franklin avenues, the building housed, at various points, a barbershop, a café, a Laundromat and a vacuum supply store. The vacuum shop failed, and in its place came the bar in question, opened by CHRIS CLAYTON in 1963 by Lyle Dorian, a lawyer and member of the group that raised funds to build Metropolitan Stadium in Bloomington. Lyle’s started as a neighborhood joint but soon became a destination as word got out about its cheap, strong drinks and mixed clientele—everyone from artists to news anchors, soccer moms to skid-row denizens. Lyle himself is long gone, but his eponym reigns as one of the few rite-of-pas- sage bars left in the city (you haven’t gone for drinks in Minneapolis until you’ve survived Lyle’s infamous 2-for-1 happy hour). And in case you’re wondering where the old, weird Uptown went after the condos and contemporary furniture stores moved in, look no further than the windowless building at 2021 Henne- pin. It’s been hiding there this entire time. Interviews have been edited for length and clarity.

photography by Craig Bares

“People remember what they can live with more often than how they lived.”

—David Carr, The Night of the Gun

26 TWIN CITIES BUSINESS tcbmag.com JULY 2015 1960s-1970s

VALORIE SOBERG | GENERAL MESHBESHER • We didn’t have the red vinyl booths MANAGER, LIQUOR LYLE’S when we bought it. We got those when the Sheraton-Ritz in • When Lyle’s opened, it was KEN MESHBESHER | downtown Minneapolis closed. The hotel had this great bar at the first liquor bar on this side of PARTNER, MESHBESHER AND the top called Annie’s Parlor, and when that went down, we Hennepin. [Editor’s note: Until then, SPENCE LAW FIRM; PARTNER, were able to get the booths. Same ones you see today. blue laws had prohibited the sale LIQUOR LYLE’S of hard alcohol east of Hennepin • The partners in our law firm Avenue in south Minneapolis.] at the time—Ron Meshbesher, Lyle had previously owned a bar Russell Spence, Jerry Singer SOBERG • There was a fire at Lyle’s in the mid-’70s, in downtown that was torn down, and myself—bought the bar and that’s when they moved the bar from the back room and that’s how he acquired the in 1973 because Lyle wanted to the front, where it is now. A guy named Joseph Palin license for Lyle’s—he was sort of to open a new place around built the new bar—he also built the bar at Lee’s Liquor grandfathered into this area. 50th and Minnehaha. It was Lounge and [defunct downtown Minneapolis bar] Moby When it opened it was called an investment for us. We were Dick’s. I worked at Moby’s in those days and used to be Lyle’s Liquors. There were great tipped off to it by Jerry, who a regular at Lyle’s. First time I went in, I thought, “This rolling yellow lights out front and a was representing Lyle. When is my kind of place.” In the late ’70s, Lyle’s started two- neon sign that said “Liquors.” You we bought in we gave Bill for-ones at night from 9 to 10. As far as I know, it was know the granite squares on the Lindee, the bar manager, an the first place in south Minneapolis to do that. I’d walk in outside of our building? That was interest. Lindee was fabulous. with my friends and we could take over the place and the display area for the vacuum He ran a great bar. drink for cheap. place, and then there was also a shoe repair place and a dry cleaner’s all in the same building. And as they all closed through the PAUL METSA | SINGER-SONGWRITER years, the bar kept taking over LINDEE • I’m 87 now, so you’re • I moved to Uptown in the fall of 1978. BILL LINDEE | each portion. When it opened, asking me to remember a lot, Mortimer’s, the C.C. Club and Lyle’s were like FORMER PARTNER/ though, it was just two rooms and but when we took over in ’73, the holy trinity for drinkers in the area. They BAR MANAGER, the bar was on the back wall. Lyle’s was very busy. I put up each had their own vibe. Mortimer’s was kind LIQUOR LYLE’S Lyle always maintained an with no nonsense. If people got of low on the psychic totem pole—it wasn’t your • Lyle Dorian’s father office in the basement. He came in in trouble, we’d bar ’em. It was a first choice, sort of sad. The C.C. was a lot of had owned a bar every day, through the back door mix of customers in those days: musicians [Editor’s note: City Pages’ oral history on Franklin when all dressed in his suit with a stogie rednecks, run-of-the-mill folks, of the C.C. is required reading]. Lyle’s was Lyle was growing hanging out of his mouth. Lyle’s college folks. A lot of northern probably the most accepting of the three, very up. That’s where he was a big neighborhood spot in the Minnesota people liked it—they’d non-judgmental. A lot of artists and freethinkers learned the business. 1960s—a workingman’s bar, too, come down and say it reminded hung out there, but it was also an everyman’s Nice guy, real quiet. with a lot of attorneys and police them of the bars back home. bar. There was a guy at the end of the bar, officers drinking there. There Friday was our big day. The he would come in in a wheelchair. He had an weren’t many places around this theater people came from the oxygen tank and was smoking and could have part of town—you had the C.C. Tap Guthrie, the Aflac insurance guys blown up the whole goddamn block. [now the C.C. Club], Uptown Tap came from downtown. At 4 o’clock Lyle’s kept a lot of people fed back then, [which became the Uptown Bar sharp, the hard drinkers came too. I remember they’d set out this block of until it closed in 2009] and Chip’s in. Everybody got a fair shake. government cheese that was the size of a Tap [now Mortimer’s]. Everything We kept the bartenders in line. small pickup truck. That and Ritz crackers. else was downtown on Hennepin Nobody was a favorite. They had chicken wings and pickled herring, and on Washington back then. too—a five-star meal for the underemployed.

General manager Valorie Soberg (left) with bartender Blair Pearson.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 27 1980s-1990s

SOBERG • I started working at Lyle’s in November of 1991 as a server. When I SOBERG • This woman dropped the government cheese on the floor once. She picked up came in, bartenders still wore white dress shirts, black pants and an apron. The the cheese, wiped it with her dirty sweatshirt and set it back on the bar. There wasn’t any owners wanted their pockets covered so you couldn’t steal. But we changed cheese after that. Lyle’s also had a soup bar for a time, but that had to end, too, when one that—today we’re known for tattoos and colored hair. There was a big lunch man grabbed the ladle, took a big slurp and stuck it back in the soup. crowd at the time—there weren’t many places for lunch in the area back then. In 1994, Bill Lindee sold his interest to Mike Andrews [late owner of the Loon Café, J.D. Hoyt’s, and other bars and restaurants]. When he bought in, DAVID BRAUER | it was a boom period. Mike knew this business inside and out. His passing LAURIE LINDEEN | JOURNALIST [in 2014] really upset me. He was so hands-on here, and when he bought in, WRITER, MUSICIAN, • I lived in the East Isles he had me get all the liquor up to snuff—we didn’t have much back then. He FORMER MEMBER OF neighborhood in the mid- really helped bring in a lot of business. ZUZU’S PETALS PAUL METSA • 1980s to early 1990s. • I moved to Minneapolis David Carr, Tom Lyle’s served schooners in 1985 from Madison, Arnold and I ran of alcohol back then, not BRAUER • One of the big appeals of Lyle’s in the 1990s was that Wisconsin. I rented a place heavy for a while. like the smaller pours Mike Andrews was there. He was a great impresario. He was very at 25th and Hennepin, so We used to have you see there today. good at making people who mattered feel comfortable. David Carr Lyle’s was just down the fun—none of it There were a couple and I were friends and we’d go in and get the charming treatment. I street. That was our go-to. It was malicious or things going for Lyle’s—a don’t know that there was a guy like him at the C.C. or Mortimer’s. used to have black Astroturf violent. We were funky name and sign, and on the walls. It was just knuckleheads. We a vibe that hit that retro really easy—big booths, free opened up Lyle’s thing in a way the other food, and it was cheap and from ’84 to ’86 semi- places didn’t. Its location PAUL MAGERS | NEWS ANCHOR, CBS2 LOS ANGELES; really dark. Everything a regularly. Cocaine helped, too, being in one FORMER ANCHOR, KARE 11 23-year-old needed. I went helped. Everybody of the busiest pedestrian • I lived near Lyle’s and was best friends with Mike, so after he through a scotch phase at had it: bartenders, areas in Minneapolis. assumed a partnership into it, I stopped in now and then for a Lyle’s, which turned me into bouncers, my band And then there’s the scotch. The place cracked me up. I liked people-watching there—you a huge liar. I used to tell lies members, the sound legendary 2-for-1 could go in and sit next to a college kid or a Pillsbury executive. to men at the bar. Pointless guy. The beautiful happy hour, which was Once, after church, I went to Lyle’s with my daughters. We wanted a things, like that I was Irish thing about Lyle’s renowned among the burger. They said, “Sorry, Mr. Magers, you can’t have kids in here.” and my grandmother was was you’d walk in young hipsters and the I go, “What?” and walk out to the car to call Mike. I asked what the from County Cork. and it was so dark old chronics that sat at hell was going on and he says, “Least of all your kids!” [laughs]. I used to work with you’d lose all track the bar. Mark Olson from the of time. There were Jayhawks and when we no windows so you’d TIM MARTIN | LYLE’S BARTENDER, 1991 TO 2004 weren’t working or playing have no idea if it was • Mike put some life into the place. He got rid of pinball music we’d go to Lyle’s. morning, last call and pull-tabs, redecorated a bit and made it more Our friends in Soul Asylum or the middle of the accessible for a large volume of people. He changed the and Babes in Toyland afternoon. jukebox, too. It used to be country-western standards, and were always there. We We call that the we made it hip. Put some local bands on there. Turned the preferred Lyle’s to the C.C. black hole. There music up and created an atmosphere that brought people Club because by that point were no clocks in in. In the mid-1990s, the hipster kids started digging us. the C.C. had developed a Lyle’s when I started. There’d be a line out the door. We went from doing $2,000 mystique, and we were The owners wanted or $3,000 a night in liquor sales to $10,000 a night. It got against that [laughs]. it to be like Vegas in crazy there for a few years. I once saw a guy come out of Bartender John Roberts delivers the that way. the bathroom naked, get kicked out the front, then come 2-for-1s day in, day out. back through the back door wearing a robe.

28 TWIN CITIES BUSINESS tcbmag.com JULY 2015 2000s-today ISAAC BECKER | CHEF-OWNER, BURCH STEAKHOUSE, BAR LA GRASSA AND 112 EATERY I was working at a place called Lowry’s, basically across the street from Lyle’s. I worked there for five years starting when I was 20, in 1989. My first time at Lyle’s was my 21st birthday. We were going to bar-hop but ended up staying there the whole night. Lyle’s became my second home. One thing that really sticks with me is this bartender named Howie [longtime Lyle’s bartender Howie Wenlund, who died in 1996]. After last call, he would say, in a very distinct way, “Drink ’em up, we gotta go.” I think he carried a blackjack knife in his back pocket, but I thankfully never saw him use it.

SOBERG • So many KATY THOMASBERG | LYLE’S BARTENDER different people hung I started at Lyle’s as a cocktail waitress in 1998. It was always packed. There was a real community here. The staff was a little out at Lyle’s in the ’90s wild. We’d smoke behind the bar. I remember a couple of the bartenders used to grab the edge of the dumbwaiter and swing and early 2000s. Local under it and land on their feet in the basement. The owners had to put a backing on the dumbwaiter to shut down those types of celebrities like Vince stunts. But the smoking ban came in 2004, and that really hurt us for a while. Flynn—who was friends with Mike Andrews— used to write at the bar. SOBERG • We had to reinvent ourselves after no smoking came in. Mike Andrews and Josh Hartnett used to I added a longer happy hour. We offered a free drink with breakfast. We put in HDTVs. come in all the time. And then when all the rooftop patios came in, we were hurt for a time, but things are He’s a good guy. One pretty steady now. Not as good as they used to be because there are so many more BRAUER• I still go to Lyle’s. In fact, I Saturday morning he restaurants and bars in Uptown, but we’re holding our own. We sell more craft beer got thrown out three years ago for being came in and he had than domestic these days because that’s what people want. A lot of the younger kids belligerent. There’s a bunch of local his sunglasses on and from the condos are coming in, which is great. They’re very polite. We hear a lot of journalists who get together in town on a baseball cap and he “please” and “thank you.” semi-regular basis, and we decided to meet goes, “Hey Val, how’s it Part of why we last is we respect our customers. We don’t belittle them or at Lyle’s. We had like 20 people in the back going?” I said, “Can I see downgrade them because they’re wasted. Lyle’s is hard-drinking, but it’s far from room and somebody went to get a chair your ID?” We’ve always seedy or scary. from the middle room. This pissed off one of had a strict ID policy. the managers. The chairs had to stay in their And I see it’s Josh and various rooms for whatever reason. I was he looks at me and goes, MESHBESHER • Our heyday was probably in the early feeling owly that night, so I got into it with the “Shh.” And we started 2000s, but we’re doing all right. Bars close left and METSA• After David manager. When you pick a fight with Lyle’s, laughing. Dave Pirner right, but Lyle’s is iconic. We own the property, which Carr died [in February], Lyle’s wins, so I was thrown out. There was and the Soul Asylum helps. We don’t change much, and that’s our secret. they held a wake for a “boycott Lyle’s” hashtag on Twitter for a guys loved us—still do. A lot of places can’t pay their bills; we do. And him at Lyle’s, which was while. It took me until I was 52 to get 86’d They wore Lyle’s T-shirts we have always paid above minimum wage. We fitting. I hadn’t been back from Lyle’s, but you can’t stay away from on the Letterman show really think highly of our servers and our help. Our there for years until that that place for too long. TCB in the mid-’90s. A genetic cook, Inez, has been there for almost 20 years. She’s night. I’d like to say the scientist used to sit at the terrific. And Val runs the place with an iron hand. memories flooded back, end of the bar every day I don’t know what the future holds for Lyle’s. We but the thing about going working on something. I have no plans to close for now. But we’ll see what to a bar you haven’t Chris Clayton is a asked him what he was happens. Look at Nye’s. Who would ever believe been to in years is that Minneapolis-based doing and he told me he Nye’s would close? Nye’s is to Northeast what we memories aren’t at the freelance writer whose was developing a patent are to Uptown. top of the list of things work appears in a variety for an artificial heart cell. you can access. of local and national titles. He said, “I bet no one’s ever done that here!”

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 29 AMAZON PLANS TO LAND HERE IN 2016; SAME-DAY SHIPPING AND GROCERIES MAY BE NEXT.

BY BURL GILYARD

Amazon.com is finally landing in says Nicole Santosuosso, junior analyst If consumers can have free, fast ship- the hometown of two of the nation’s with Boston-based Kantar Retail, who ping from Amazon, they wonder why largest retailers. follows Amazon. “It’s about getting items they can’t get the same features from The e-commerce behemoth is as quickly to the shopper as possible.” other retailers, says Amy Koo, principal set to lease a massive, yet-to-be-built Santosuosso also notes that Amazon analyst with Kantar Retail. 820,000-square-foot “fulfillment center” has been pushing to grow its Prime Now “Frankly, the appeal of Amazon has warehouse in Shakopee, where orders service, which offers delivery within an been pushing forward expectations for are packed and shipped. The $220 mil- hour or two in select cities: “From an Ama- shoppers,” says Koo, who follows Target lion project—set to open in the fall of zon perspective, it’s rolled out pretty quickly for Kantar. “The Target shopper who 2016—is slated to employ approximately within the past few months. They’re really shops online typically already shops in the 1,000 people and will be Amazon’s first expanding and investing in it.” Target stores. They tend to be operations facility in Minnesota. Spokesmen for both Minneapolis- the most loyal [customers].” The looming question for retailers based Target Corp. and Richfield-based Meanwhile, Amazon in the Twin Cities is whether Amazon Best Buy Co. Inc. declined to comment continues to do more to will offer same-day delivery here, as about competing with Amazon. compete directly with the likes it does in 14 other U.S. metropolitan St. Cloud-based grocer Coborn’s Inc. of Target. Its latest move has to areas. Another question: Will the Twin has no retail stores in the heart of the do with broadly expanding its Cities become yet another city in which Twin Cities, but delivers groceries in the lineup of private-label brands the company expands its AmazonFresh metro under the CobornsDelivers ban- to include an array of grocery grocery delivery service? ner. The company acquired the former items such as milk, cereal and Amazon, well known for being secre- SimonDelivers operation in 2008. baby food, according to a Wall tive, isn’t saying yet. “We haven’t made Rebecca Kurowski, a spokeswoman Street Journal report at the end any announcements about AmazonFresh for Coborn’s, says that the company of May. Its Elements brand will or same-day delivery for this area,” says has not yet seen any indications that also soon include coffee, soup, Nina Lindsey, an Amazon spokeswoman. Amazon is looking to sell groceries here: dog food and household items. But clearly, Amazon wants to be “It’s just speculation,” says Kurowski. Amazon also has private label closer to its customers here. “We look “We have been watching closely and we brands called Basics, Strath- at a variety of factors when deciding will continue to.” wood and Pinzon. Amazon relies on robots where to place a fulfillment center. The Such private labeling helps to help fill orders. most important is being as close to our Traditional retailers: drive sales. Target’s group of customers as possible so we can offer Is resistance futile? private labels, ranging from fast shipping speeds and a great Prime Brick-and-mortar retailers are always Cherokee to Up & Up, Room Essentials service,” adds Lindsey. scrambling to compete with Amazon. and Market Pantry, brought in about one- Close watchers of Amazon think Target, for example, offered free ship- third of its $72.6 billion in sales last year. it’s a safe bet that the company will ping on anything people purchased on And despite its lower price tags, private- ultimately look to roll out faster delivery its website for one week ending June 6, label merchandise tends to have higher options for the Twin Cities. and during last year’s holiday season. In margins than name-brand items. “I definitely think there’s potential February, Target dropped the threshold Amazon also has plans to lease for same-day delivery there. Their value for free shipping on online orders from a separate building in Shakopee, the proposition is centered on immediacy,” $50 to $25. 162,000-square-foot Minnesota Valley

30 TWIN CITIES BUSINESS tcbmag.com JULY 2015 JULY 2015 > > > > > available infive U.S. cities: grocery deliveryservicewas end ofMay,theAmazonFresh competitive groceryarena.At the foray intotheintensely AmazonFresh isthecompany’s andBrooklyn) > > > > > > currently availableinsixcities: an hourortwo.PrimeNowis of “everydayessentials”within allows customerstogetdelivery Prime Nowisashoppingappthat > > > > > > > > > > > > > > available in14metroareas: the same-dayserviceiscurrently Amazon spokeswoman JulieLaw, for ordersover$35.Accordingto noon andprovidesfreedelivery service for ordersplacedbefore service offers thesame-day Prime freesame-daydelivery many channels.Thecompany’s faster andfaster deliveryacross Amazon continuestopushfor FASTER! FASTER, FASTER,

tcbmag.com TWINCITIES BUSINESS Seattle Seattle San Francisco Philadelphia New York (select areas) Los Angeles New York (Manhattan Miami Dallas Baltimore Austin, Texas Atlanta Washington, D.C. Tampa Bay Seattle-Tacoma San Francisco/Oakland San Diego Phoenix Philadelphia New York Los Angeles Indianapolis Dallas-Ft. Worth Boston Baltimore Atlanta 31

SOURCE: AMAZON.COM INC. Distribution Center I for use as a “sorta- tion center,” where “customer packages are sorted and consolidated based on final destination zip code to enable fast ship speeds and Sunday delivery for our customers,” according to Amazon’s Lindsey.

Of robots and tentacles Amazon has 109 global INDUCTEES When the dust settles, fulfillment centers. Amazon will have Jim Graves nearly 1 million square feet of space at the announced plans to hire Graves Hospitality Corporation edge of the Twin Cities. more than 6,000 full-time Before the Shakopee employees at 19 of its Dale Klapmeier City Council voted to fulfillment centers across Cirrus Aircra approve Amazon’s the U.S. That includes plan, two members Kenosha, Wis., where Steve Leuthold of the council—Mike Amazon occupies 1.5 mil- Leuthold Strategies, LLC Luce and Jay Whit- lion square feet of space in ing—traveled to New two new buildings. (Ama- Bob Senkler Jersey to tour an Amazon fulfillment zon declines to disclose the precise Securian Financial Group center there. (John Shoffner, director number of fulfillment centers it has of business development for the Min- in the U.S.—it’s more than 50—but Mark Stutrud nesota Department of Employment the company currently has 109 such Summit Brewing Company and Economic Development, as well as centers across the globe.) a representative of Greater MSP, were In contrast to Kenosha, which is also on the trip.) “They’ve got it boiled just south of Milwaukee, Shakopee down to a science,” recalls Luce. “The got off cheap. The City of Kenosha Tuesday, July 21 robots bring the stuff right to them.” provided two up-front grants to Amazon’s retail tentacles keep Amazon totaling $22 million, which Hilton Minneapolis expanding. In late May, the company will be paid back through future 1001 Marque e Avenue

To purchase tickets, visit: LOOK: FREE SHIPPING! (BUT NO PROFITS) tcbmag.com/HOF15 lymouth-based Christopher & Banks Corp. is by no means a dominant P national retail player. The company’s annual sales are less than 1 PRESENTED BY percent of the revenue that Amazon generates. But in its most recent fiscal year the women’s apparel retailer did something that Amazon didn’t do: It turned a profit. So did many other Minnesota-based retailers, including Best Buy Co., Inc., fast-growing Evereve (formerly Hot Mama) and Tile Shop Holdings Inc. Christopher & Banks reported net income of $47.1 million on sales of $418.6 million for its year ending Jan. 31. Amazon, on the other hand, PRESENTING SPONSOR SILVER SPONSORS reported a net loss of $241 million on revenue of $89 billion in 2014. Amazon, which began operations in 1995, is long past the bumpy start-up phase. But if Amazon is so smart, why is the retail giant having so much trouble turning a profit? Amazon’s sales continue to climb at a dizzying clip—growing 19.5 percent from 2013 to 2014. From 2012 to 2014, Amazon has reported $224.5 billion in aggregate sales. But Amazon has reported net losses in two of the last three years. Over that same period, the company has been essentially a break-even operation. Despite its high sales numbers, the business has a combined net loss of $6 million over the last three years. Although there is increased grumbling on Wall Street about the company’s elusive profits, Amazon still remains one of the most revered and richly valued companies. At the end of May, the company’s stock closed at $429.23 per share, strongly up from $313.78 per share a year earlier. —B.G.

32 TWIN CITIES BUSINESS tcbmag.com JULY 2015 ear

28th Y TO TIF OR NOT TO TIF? of Service hen the buzz began about Atlanta-based Seefried Properties W a large company circling is developing the vacant site, which Sure Stop Floor Safety Shakopee last fall, Mayor Brad Tabke has been owned by Bloomington- “your fast and dependable solution to any slippery floors and steps” says that the city did not yet know that based United Properties. At the May call 763 571-1769 it was Amazon. But as the nuts and 19 meeting, Tabke noted that Amazon We do Splash Pads, Pool Decks, bolts of the discussion began, early is signing a 15-year lease for the Concrete Walkways, Ceramic Tile plans called for the city to provide $6.4 fulfillment center. Customer Service Aisles, Kitchen Quarry Tile, Concrete million in tax increment financing to “These infrastructure Washing Booths! Amazon to help subsidize the project. improvements are needed to facilitate www.surestop.com Tax increment financing involves growth in this area,” Samantha redirecting increased property tax DiMaggio, economic development INDUSTRY EXPERTS revenue to help pay for development- coordinator for Shakopee, argued at related project costs. But amid the meeting. debate about the financing package, But not everyone embraced Tabke says that the city was trying to the deal. Shakopee Councilor Matt whittle the TIF package for Amazon Lehman cast the lone dissenting vote down to something in the range of in the 4-1 action to approve the plan. $1 million to $2 million. Lehman argued the city was “That was our target that we spending too much for too little thought would guarantee a deal return on the deal and argued that it would get done,” recalls Tabke. would exacerbate traffic problems But just before the May 19 in area: “[Highway] 169 is a parking meeting to vote on the deal a new lot every morning,” he said. plan emerged: Amazon would get no Madeline Koch, spokeswoman TIF money. There is still TIF in the for the Minnesota Department deal, however. Under the approved of Employment and Economic plan, $5.7 million in TIF will go to Development, tells Twin Cities Scott County and the city to upgrade Business that Amazon has not roads and infrastructure around the requested any subsidies from the Amazon site. state. —B.G.

tax increment financing on the site. Minnetonka, that’s changing. Amazon is also slated to receive $10.3 Brian Netz, an industrial real million in state tax credits for the deal. estate broker with the local office of At the outset of the process in Colliers International, says that Sha- Shakopee, Amazon sought $6.4 mil- kopee has rolled out the red carpet for lion in tax increment financing to business, but also offers something subsidize the deal. But in the end, the that other cities don’t have: large direct money going to the company tracts of land ready for development. turned out to be zero (see “To TIF or “Shakopee has been very bullish Not to TIF,” above, for a look at how on chasing these companies in the last Shakopee plans to help Amazon.) few years,” says Netz. Zohrab Khaligian, community The Amazon site at Shenandoah development specialist with the City Drive and County Road 101 is an of Kenosha, says that the Amazon expansive swath of 66 acres. “You’re jobs start at $11 an hour, but are slat- not going to find that in Eden Prairie ed to increase to $18 an hour—a key or Minneapolis,” says Netz. point for the city and its assistance In the past, Netz says, projects to the project. Samantha DiMaggio, were driven by developers, who rolled economic development coordina- the dice on speculative projects to tor for Shakopee, says that starting draw tenants. But now, he says, it’s wages here will be $12 an hour, and the corporate users who are driving $16 an hour for another tier of more deals: “It’s not the developers coming complex jobs. in and doing it, it’s the actual end user companies coming in.” The landing pad Shakopee’s primary cheerleader, Shakopee is known to many for the Mayor Brad Tabke, says that available Valleyfair amusement park and the land and the city’s solid workforce Canterbury Park racetrack, but not have drawn companies to Shakopee. thought of as a business center. But with “Our flywheel is spinning: We’ve got a numerous deals in recent years, includ- really good track record.” TCB ing the new Shutterfly Inc. facility and the relocation of Datacard Group from Burl Gilyard is a senior writer at TCB.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 33 34 TWIN CITIES BUSINESS tcbmag.com JULY 2015 A MINNETONKA FIRM LEADS THE TRUCKING INDUSTRY’S EVOLUTION FROM COWBOYS OF THE ROAD TO DRIVEN DATA DRONES.

BY PHIL BOLSTA

he long-haul trucking industry, once the province T of latter-day cowboys galloping cross-country nonstop to deliver goods, has been overhauled. Rising fuel, insurance and equipment costs, combined with federal regulations and steadily eroding freight rates, have forced out most independent truckers and produced a nationwide shortage of up to 40,000 drivers (see “Data but Not Drivers,” page 37). Today, the vast majority of over-the-road drivers work directly for trucking companies, 95 percent of which operate fewer than five trucks. “It’s a very competitive industry,” affirms Sean McNally, spokesperson for American Trucking Associations (ATA), the largest national trade association for the trucking industry. Trucking outfits seeking to trim costs and improve paper-thin margins are turning to companies like Min- netonka-based PeopleNet, the second-largest telematics and fleet mobility provider in the U.S., with more than $200 million in annual revenue, 2,500 customers and 300,000 vehicles served. PeopleNet focuses on two areas of benefits for fleets: safety through increased regulatory compliance and safer driving behaviors; and efficiency through automating paper processes and managing labor, fuel and regulatory costs.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 35 Drivers utilizing a PeopleNet touch-screen interface to access the company’s eDriver Logs service.

In the last year or so, PeopleNet devices in commercial motor vehicles developing them. “From a technology ahead of the truck, which is a good shifted its focus from core telematics— to perhaps five million, an estimate perspective,” he says, “what’s possible is thing, but now they’ve got them facing essentially a computer on a truck that’s that sounds right to the ATA’s McNally. bound only by our imagination.” inside and focusing on the driver. They delivering location-based information Currently, truck drivers, who are limited While PeopleNet’s turnkey tech- claim that the in-cab video only activates and messaging—to a complete mobile to driving 11 hours a day, can manually nology is designed to improve vehicle in a panic stop situation, but when you suite. PeopleNet has pioneered (and manage their hours through a log book, efficiency, the company’s first priority watch the video the camera is running trademarked) the phrase “The Internet but those days are coming to an end. is fleet safety, which not only saves lives, all the time. Technology like that will of Transportation Things” to describe “We’ve already seen a lot of new demand but also lowers insurance costs. While force the old, experienced guys like me the ways that its new mobile gateway and new competitors,” McLaughlin says. McLaughlin asserts that “trucks that use right out of the industry. They don’t technology brings together, connects and “It’s pushed us to up our game.” our technology are indisputably safer trust me enough to look at my record integrates many devices, processes and Dave MacMillan, a 40-year trucking than those that are not,” he is just as and say, ‘Oh, this guy’s never had an ac- systems via an Android platform. veteran who contributes to Smart-Truck- concerned about the people in passenger cident in 40 years but we’re going to film Harnessing this machine-to-ma- ing.com, a trucker advocacy website run cars. While making sure that truck driv- him anyway.’ I’m a little insulted by that.” chine (M2M) data allows fleets to store, by his wife, Catherine, has used People- ers are awake, alert and correctly operat- Everything the PeopleNet video manage and analyze vehicle-centric data Net’s on-board system. “I have no prob- ing their vehicles minimizes the risk of cameras see will be written to a DVR and (e.g., temperature, fuel consumption, lem monitoring everything I do because accidents, PeopleNet’s new on-board preserved for about a week. The technol- tire pressure) and driver-centric data I’m not ever doing anything I shouldn’t video camera system, dubbed “video ogy can produce live video streaming, (e.g., hours of service, messaging, driving be doing,” he says. “As for electronic logs, intelligence,” goes further. “We want to which can be helpful if a driver is in behavior) simply and efficiently. When they will be a fact of life. I’m a supporter create a safety zone around the truck,” danger or needs to monitor loading dock businesses know how their drivers and because it regulates the hours that you McLaughlin explains. activity behind the truck. PeopleNet is the trucks are performing, they are better can drive, which should be the case.” Video intelligence, which is now in first in its space to bring together telemat- positioned to correct driver behavior, beta, with about 200 units in the mar- ics and video in a fully integrated system, maximize gas mileage, choose optimal THE MOBILE GATEWAY ketplace, is not baked into the mobile which allows users an all-encompassing routes, avoid challenging weather condi- SEES ALL gateway; it’s a separate offering that can snapshot of what happened when an tions and take advantage of other ways even work with a competitor’s on-board accident occurs. “The on-board event re- to improve efficiency and safety. eopleNet’s mobile gateway—which device. It can include up to four separate corder is extremely useful when there’s an For instance, drivers can be em- Pincorporates 4G communications, video cameras: one forward-facing, incident or collision,” confirms PeopleNet powered with location-based data that a Wi-Fi hotspot and a web server so one on each side of the vehicle, and one customer Patrick Cozzens, president of let them know why, when and where customers can write their own applica- rear-facing. The side-mounted cameras Pittsburgh-based Modern Transporta- to stop for gas, food and other necessi- tions—is all about connectivity options. provide a 150-degree view on each side tion Services (MTS), a provider of dry ties, and provide them with incentives However, the Internet of transportation of the vehicle, eliminating blind spots and liquid bulk material logistics. “It gives to do so through special discounts things is still in its infancy. McLaughlin and providing drivers with real-time you all kinds of data, from GPS to speed and promotional offerings. “Given the expects fleet command centers to be able images on the in-cab display. to how hard the driver was pressing the tremendous shortage of truck drivers to track driver health and performance Technically, the system can accom- accelerator or brake.” in the U.S., making every driver more through heart-rate monitors, wearable modate up to eight cameras, including PeopleNet units have helped MTS efficient becomes that much more devices and retinal monitors. McLaugh- one in the cab. “We currently don’t shorten the billing and payment process. important,” notes PeopleNet president lin not only envisions creating wireless offer a driver-facing camera because “Manual invoicing could take up to two Brian McLaughlin, a 14-year veteran of bubbles around trucks so that they’re we want to respect the drivers’ privacy,” weeks,” Cozzens says. “Today, when a load the company. able to sense and communicate truck-to- McLaughlin says, “and we don’t want is delivered, that information is automati- A pending federal mandate promises truck and truck-to-infrastructure (pass- to [push them out of] the workforce by cally populated into our billing system. If a to increase PeopleNet’s customer base in ing information electronically between stuffing a camera in their face.” customer is operating in an EDI [electron- the next year or two. Legislation mandat- a computer on the truck and some form A wise decision, according to driver ic data interchange] environment, we can ing the use of electronic logging devices of government or commercial system), MacMillan. “I watched a video by a com- send invoices every single night electroni- (think high-tech time cards for truckers) he says PeopleNet’s corporate par- pany called DriveCam,” he says. “They cally with no human intervention. will likely boost the number of on-board ent Trimble Navigation Ltd. is already have dash-cam recorders videotaping continued on page 38

36 TWIN CITIES BUSINESS tcbmag.com JULY 2015 DATA BUT NOT DRIVERS

ccording to Bob Costello, chief economist for American you’re working 70 to 90 hours for $600 a week. That’s why you can’t get anybody Trucking Associations (ATA), the country is short 35,000 to interested in driving a truck anymore.” 40,000 long-haul over-the-road truck drivers. “As the economy The facts bear MacMillan out. According to ATA’s Costello, long-haul driver gets better, the driver shortage becomes more of an issue,” turnover was 95 percent last year. He estimates that the industry needs on average says ATA spokesperson Sean McNally. “One, because there’s 100,000 new drivers each year over the next decade. Although Costello warns that more freight to move, which needs more drivers. But also our “the shortage will get worse before it gets better,” he notes that driver pay increased driver pool has more career options; we find that many drivers transition to the 8 to 15 percent over the previous year and a similar uptick is expected this year. Aconstruction industry.” While the ATA applauds stricter hours-of-service (HOS) regulations that Forty-year trucking veteran Dave MacMillan, quoting research by the late Mike effectively limit drivers to 11 hours a day on the road, Costello acknowledges that Parkhurst, a former over-the-road trucker and longtime editor of Overdrive magazine, the regulatory-dominant “safety first” environment reduces driver productivity. says that 80 percent of cross-country trucking traffic in the 1960s was performed by Consequently, carriers need to add more trucks and drivers to haul the same owner-operators, a figure that has dropped below 10 percent today. MacMillan himself amount of freight, which further exacerbates the driver shortage. recently parked his truck and trailer, “effectively retired” from long-haul trucking and Another factor contributing to the shortage is the cost of obtaining a commercial went to work for a local shipping company. Why? Follow the money . . . or the lack of it. driver’s license, which can take up to eight weeks of training and cost thousands of He notes that since the 1980s, freight rates have been cut in half, fuel prices dollars. ATA is exploring a licensing model that would make it possible for drivers have quadrupled, insurance has more than doubled, licensing has tripled, truck under 21 to participate in interstate commerce. “Forty-nine states allow drivers as maintenance has doubled, equipment costs have almost doubled and the cost of young as 18 to drive intrastate,” McNally says. “It’s crossing state lines where it eating on the road has tripled. “If you’re going to be away from home, you want to becomes a federal issue. We’d like to figure out ways to get these younger drivers make a salary that makes that worthwhile,” MacMillan says. “It used to be that way, behind the wheel of a large truck.” and it’s not anymore.” McNally adds that ATA is also looking into ways to make it easier for returning The economics of driving as an employee of a trucking company aren’t much veterans to convert their military experience to experience behind the wheel. better. “Driving a truck today is subsistence living,” MacMillan says. “You clear “There are men and women returning from overseas who spent a lot of time $800 a week but spend $200 of that eating on the road, and that doesn’t include operating heavier equipment,” he says. “If you can drive a truck in Kandahar, you 20 hours a week sitting and waiting for your truck to be loaded and unloaded. So can drive a truck in Los Angeles.” —P.B.

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JULY 2015 tcbmag.com TWIN CITIES BUSINESS 37 continued from page 36

BEHIND technology itself has changed,” she THE CAMERAS says. “What started out as driver messaging and truck tracking has evolved ounded in 1994 by four partners, into a business where the management Fincluding former president Ron of data is a key factor in a trucking Konezny, who left in December to company’s success. I see it as a strong become CEO of Digi International company with a good reputation.” Inc., PeopleNet was acquired by McLaughlin challenges his em- Sunnyvale, Calif.-based Trimble Navi- ployees to think outside the black box. gation in 2011. Trimble, a 37-year-old “Every quarter we have a hackathon, $2.4 billion public company, applies where the best and the brightest on positioning technologies such as GPS, the technology side get locked in a lasers and optics to make field and room for 36 hours with lots of food mobile workers in businesses and and caffeine,” he says with a smile. government more productive. “We ask them, ‘What is possible in “Whether it’s money for acquisi- mobile transportation technology tions, or new technologies or expertise that hasn’t been done before?’ It’s TUESDAY, NOVEMBER 17 on supply chain, they’ve provided us amazing what they come back with. with the leverage and capability of a Typically, we’ll commercialize one or $2 billion-plus company,” McLaughlin two of those ideas every year.” Register HYATT REGENCY, says, “which allows us to move quickly The “people behind the net,” as MINNEAPOLIS within our marketplace.” McLaughlin says, may be PeopleNet’s now! Trimble wasted little time adding to its collection 5:30 PM of transportation logistics companies. In 2012, it acquired Cleveland-based Legislation mandating the TMW Systems, a provider use of electronic logging devices will of transportation software Join us as we honor outstanding family- to commercial and private boost the demand for onboard devices fleets. Several months later, in commercial motor vehicles. owned businesses, and the value they add to Trimble acquired New Jersey- based ALK Technologies, a Minnesota’s economy and overall quality of life. developer of geologistics and naviga- greatest strength, but they’re also tion software solutions that can notify its greatest challenge. “We’ve been drivers of traffic and weather patterns. growing so quickly—our annualized For tickets, visit tcbmag.com/MFBA15 “PeopleNet and its sister companies growth has been 10 to 20 percent over are now aligned at the hip to provide the last three years,” he says. “It isn’t joint support between our products,” easy to find engineers and technology @tcbmag McLaughlin says. “If you use products people; at any given time, we’ll have from more than one of us, you should 20 to 30 open [positions]. We’ve had #TCBMFBA have one number to call.” to look at hiring in cities like Toronto, PeopleNet has created and capital- Raleigh, Dallas and Princeton, New ized on other opportunities. Trimble’s Jersey, where we have field sales offices Presented By 2012 acquisition of Calgary-based or service and support offices. We’d GEOTrac Systems, a provider of love to have everybody here in Min- fleet management and worker safety nesota but it’s not always possible.” solutions for the oil and gas industry, To that point, as this issue of TCB jump-started PeopleNet’s entry into went to press, PeopleNet announced that marketplace. Energy services is the purchase of New Hampshire-based expected to account for 20 percent of trucking software developer Cadec new subscribers going forward. Global. Terms of the purchase were PeopleNet’s success has been two not disclosed. decades in the making. “PeopleNet McLaughlin refuses to define his arose in the late ’90s as one of many company around ones and zeros. “We challengers to Qualcomm’s Omni- don’t view ourselves as a technol- Platinum Sponsors tracs, a pioneering satellite tracking ogy company. Having a technology and communications system which platform that can adapt to many pro- at the time dominated the industry,” cesses and markets is key, but we’re notes Deborah Lockridge, editor in all about solving customer prob- chief of Heavy Duty Trucking maga- lems through technology solutions. zine. “PeopleNet is one of a handful Anybody can throw out a widget. of companies that has been flexible What withstands the test of time is a enough and in touch with the indus- relentless focus on the customer.” TCB try enough to still be a major player.” Lockridge notes PeopleNet’s Phil Bolsta has been writing relevance in a dynamic niche: “It’s a for Twin Cities Business since segment that has changed rapidly, as its inception.

38 TWIN CITIES BUSINESS tcbmag.com JULY 2015 CELEBRATING FIVE LIFETIMES OF ACHIEVEMENT.

Jim Graves | Dale Klapmeier | Steven Leuthold | Robert Senkler | Mark Stutrud

> Each year, Twin Cities Business recognizes the ac- fly and as comfortable to ride in as a luxury automobile. ies, even though nearly all of its sales are in the Upper complishments of Minnesota executives who have The Duluth-based manufacturer has built more than Midwest. Stutrud’s success and his commitment to made lifetime contributions to our state’s economy 6,000 planes for customers worldwide, and Klapmeier quality have inspired the numerous craft brewers that and to our greater community. Each has developed already has orders for his next industry-altering innova- have opened in Minnesota in the past few years. industry-leading businesses that are poised to continue tion: a personal jet with a built-in parachute. Twin Cities Business also is remembering the legacy such leadership well into the future. Each has persisted Steven Leuthold created the Major Trend Index, of David Olson, the longtime president of the Minne- through extreme business and economic challenges a highly detailed tool for analyzing companies and sota Chamber of Commerce who passed away last year and in some instances, personal tragedies as well. Each stock performance, at a time few others were doing so. at the young age of 57. Olson was one of our state’s most is inspiring—to colleagues and employees, as well as to Founding his own investment research firm in 1981, he passionate business advocates. Besides his effectiveness the next generation of business leaders in Minnesota became Minnesota’s best-known investment strate- at the State Capitol, he is revered for his ability to bring and beyond. The following pages tell their stories: gist globally, gaining a reputation for foresight and opposite sides together, his support of small businesses Jim Graves is a teacher turned hospitality entrepre- innovative research, while bucking Wall Street’s herd throughout the state and for his focus on sustainability neur who developed the AmericInn small-hotel chain mentality—to great success. and workforce development. in markets previously unserved by such hotels. He then Robert Senkler became CEO and president of The five 2015 Minnesota Business Hall of Fame shifted to upscale hotels, building the Graves 601 in Minnesota Mutual Life Insurance in St. Paul in 1994 at honorees join an elite group of individuals who rank downtown Minneapolis, one of the first of the new-wave the age of 41. He led the company, now called Securian among the most accomplished and respected Min- of luxury hotels in the Twin Cities. His company now Financial Group, through two major economic crises, nesota business leaders of all time. Our Hall of Fame manages several hotels and restaurants in Minnesota acquisitions and divestitures by focusing on conserva- honorees will share more about their journey at our and elsewhere, and is making plans for new properties. tive investments and serving the life insurance market annual Minnesota Business Hall of Fame dinner on Dale Klapmeier co-founded Cirrus Design in with seamless service and digital efficiency. July 21. 1984 to produce an innovative type of personal airplane Mark Stutrud founded Summit Brewing in 1986, Please join us as we celebrate their lives, accom- that included a parachute for the plane itself. The SR20 building his pioneering St. Paul company into one of plishments and positive impact on our state’s economy that Klapmeier helped create was designed to be easy to the country’s most successful and largest craft brewer- and culture.

2015 Minnesota Business Hall of Fame Awards Dinner Hilton Minneapolis | Tuesday, July 21 | 5:30 p.m.

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PRESENTING SPONSOR EVENT SPONSORS

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 39 Jim Graves Graves Hospitality He built a brand in hotels and restaurants by consistently raising the bar. By Adam Platt

im Graves has been a successful brand of limited-service hotels, Julie and Jim Graves; innovator in two volatile and developing 65 of them in small the two were a folk- perishable fields—hotels and and midsize cities such as music duo in college. restaurants. “It’s an art form Bemidji and Owatonna. for me,” he says. “We strive to be “These were communities the best in class. I wouldn’t get a solely served by mom-and-pop kick out of cookie cutters.” motels with outdoor [room] costly to build and execute, REITs and funds own most [ur- He is best known in Minne- entry,” Graves says. “We focused but Graves found himself ban] hotels,” Morrissey explains. sota for developing the Graves on quiet rooms, a sense of drawn to the challenge. “And it’s challenging as hell to 601 in 2001, at the time argu- arrival, nice appointments. We Originally affiliated with the do independent hotels because ably the only full-service luxury were the first to build swim- Le Méridien chain (it became lenders want the security of hotel in downtown Minneapo- ming pools at this level because Graves 601 in 2005), Graves’ big brands.” The big brands lis. Along with Cosmos, the even though only 3 percent high-style hostelry “was a don’t typically own their hotels, hotel’s restaurant, it earned rave of guests used them, it built pioneering hotel when Jim devel- but receive a licensing royalty reviews among discerning trav- our reputation [as a place that oped it,” says Paul Wischermann that often comprises more of a elers. With his family-owned delivered more].” of Wischermann Partners, a Twin hotel’s profits than ownership company now operating several AmericInns lacked restau- Cities-area hotel development receives, Morrissey says. hotels and restaurants here and rants, so Graves frequently sited and management company. “It In the past decade, Graves elsewhere, Graves is one of the them near Perkins restaurants. was a courageous move.” had flagship hotel and condo last remaining independent He developed several hotels Last year, Graves sold the projects in development in hoteliers in Minnesota. And he with Perkins CEO Wyman hotel to the Loews chain for $65 Chicago, Manhattan and remains ambi- Nelson, who eventually bought million. Loews was expansion- Brooklyn. Only the Brooklyn Graves has proposed tious and driven. Graves out. Limited-service minded, lacked a Midwest project, now called the Mc- a six-story, nine-unit His ca- hotels in smaller markets of- market presence and made Carren, was completed. Graves condo development reer has been fered a lower cost of entry and what Graves describes as “a very quickly received an offer for the at 31st and Holmes in distinctive and the simplicity of meeting guest compelling offer.” property; its financing partners Uptown Minneapolis. entrepreneurial. expectations, Graves says, but In a town once deep in insisted on the quick payoff. After a couple of they provided little in the way prominent local hoteliers, The Chicago project fell victim years of teaching of creative satisfaction. Graves is one of the last to the recession; in Manhattan, school in his So Graves pursued higher- remaining “patriarchs” of the land was sold. Year founded: 1979 hometown of St. end projects. First came a the local hotel scene, says Bill Most of Graves’ recent ven- Cloud, he was Radisson Suites in St. Cloud in Morrissey, CEO and presi- tures are lower-risk hotel man- Location: Minneapolis attracted to the 1991. Ten years later, he opened dent of Morrissey Hospitality, agement contracts, reflecting Employees: More than 1,500 hotel industry. the Graves 601. which operates the Saint Paul the challenges of the develop- After a quick It was a risky venture. Hotel and other hotels and ment market. Owned proper- 2014 projected revenue: $100 million two years work- Graves recalls Bill McCaffrey, restaurants. Graves Hospitality ties are limited to a Residence ing in hotel de- Block E’s developer, ap- currently manages five hotels Inn on Eighth Street in down- Hotels under management: 5 (3 owned) velopment in St. proaching him about a hotel (it owns three of them) and 13 town Minneapolis, a Courtyard Cloud, Graves because the developer needed restaurants (10 owned). Marriott in La Crosse, Wis., and Restaurants under management: 13 (10 owned) ventured out additional valuation and ame- That an independent ho- an independent in Marquette, on his own in nities per his subsidy agree- telier would find itself without Mich. Graves also manages the Properties in development: 10 1979, launching ment with the city. Upper- a signature hotel isn’t as odd as Doubletree and Crowne Plaza the AmericInn bracket properties are more it might sound. “These days, hotels in downtown St. Paul for

40 TWIN CITIES BUSINESS tcbmag.com JULY 2015 1953 > Born in St. Cloud.

1974 > Earns B.S. in education from St. Cloud State University; teaches school for two years.

1977 > Enters the hotel industry working for St. Cloud-based developer Buchter Co.

1979 > Launches AmericInn hotel chain after starting his own company.

1991 > Opens a Radisson Suites hotel in St. Cloud, his first step toward the luxury hotel market.

2001> Opens Graves 601 Hotel (now Loews Minneapolis).

2012 > Runs for U.S. Representative in Minnesota’s Sixth District as a DFLer, losing to incumbent Michele Bachmann.

2013 > His company’s Carriage House restaurant in Chicago earns “Best New Restaurant” honors fromEsquire and Chicago magazines. TRAVIS ANDERSON TRAVIS

2014> Sells Graves 601 to Loews the Mille Lacs Ojibwe. owned and managed, including a prop- Hotels for $65 million. Restaurants have lower barriers to erty in Chicago’s Hyde Park neighbor- entry, and Graves now operates four hood and a nine-unit condo building at independent restaurants in Chicago and 31st & Holmes in Uptown. Minneapolis; the company also offers Graves would like to get back into 2015> Graves Hospitality selected to distinctive food in most of its hotels. “It’s the New York City market “but real operate a 300-room hotel at the face of a hotel to the local communi- estate there is frothy, and the entry- MSP international airport, to ty,” Graves says, “and the source of much level cost creep is intimidating to many open in time for the 2018 Super of your event and function business. [financing] partners,” he says. Bowl in Minneapolis. Graves Hospitality needs to build its It appears that Graves’ next local hotel portfolio because “we have to grow hotel venture will be located at MSP if you want to keep talented people,” he international airport. In March, his says. He has turned over the duties of company was selected to develop a Graves campaigning in his president and CEO to his son Ben. “I’m a nine-story, 300-room hotel there. The unsuccessful 2012 run for big-picture guy,” Jim Graves says, “look- hotel should be ready in time for the Minnesota’s 6th Congressional ing at locations, structures of deals.” He’s 2018 Super Bowl. In short, Jim Graves District seat. pursuing several other projects, both is still in the game.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 41 Dale Klapmeier Cirrus Aircraft His vision of a personal plane that anyone can fly revolutionized an industry. By Gene Rebeck

Aircraft) already has more than was hit in a midair collision. design attracted a tremendous 500 pre-orders for the seven- While he was able to land his amount of attention in the seat jet, which will cost about badly damaged plane safely, small-aircraft community, $2 million each and could the pilot of the other plane was Klapmeier says. Word of the open up new markets for the killed. Dale Klapmeier describes design reached the ears of an company. the event as traumatic and life- Israeli aviation investor. He The Vision SF50 will build changing for both of them. “It liked what he saw so much that upon an already impressive drove us from the invincibility he bought the rights to produce legacy. In 2001, Forbes magazine that we all felt, both as kids and the Klapmeier-designed plane described Cirrus’ SR20 and as pilots,” he says. And it made in Israel. When the contract SR22 planes as “the first genu- safety a focus in the brothers’ with the investor ended in 1994, inely new planes in the sky in plane designs. the Klapmeiers chose to manu- ale Klapmeier many years” shortly after they Cirrus Aircraft’s origins facture planes themselves. They glances through his hit the market. Cirrus’s aircraft date back to 1984, when the moved the company to Duluth, office window at Duluth were designed to be “intuitive Illinois-born Klapmeier, who lured by financial enticements, International Airport’s long to fly,” Klapmeier says. Flat- grew up “dreaming, thinking, the local workforce and a runways, recalling how much panel screens with GPS digital breathing airplanes,” co-found- small-city airport with big-city they helped over the years give mapping and fuel gauges are ed a business in the central amenities, including a control his personal aircraft business “depicted in a way that is very Wisconsin city of Baraboo, tower and those long runways, plenty of room to not only take easy for the pilot to under- designing kit planes—personal which make the airport ideal off, but transform an industry. stand,” he notes. The design aircraft that buyers would as- for testing planes. And Cirrus Design looks poised also includes lots of windows, semble themselves. The broth- To lift its manufacturing to transform it once again. including one in the back, ers’ design was “big, comfort- operation off the ground, The company he and his which he says can help reduce able and safe,” Dale Klapmeier Cirrus attracted funding from brother Alan founded more airsickness for passengers. In says. It was also “complex and Arcapita, the investment arm than 30 years ago made its other words, Cirrus planes have difficult to build.” of the First Islamic Bank of name with its SR20 and SR22 been designed to make flying But while the project failed Bahrain, which became Cirrus’ single-engine turboprop planes feel more like driving or riding as a kit plane, its distinctive majority owner in 2001. “They with built-in parachutes. With in a luxury car. pushed us to grow very fast,” Alan Klapmeier departing in “There are planes that are Klapmeier recalls. In 1999, 2009 to start a new company, faster, there are planes that Cirrus built nine airplanes. In Dale has since piloted Cirrus carry more, there are planes Year founded: 1984 2006, it launched more than through heavy turbulence—the that can fly higher,” Klapmeier 700. Great Recession, then acquisi- says. “But that combination of Location: Duluth Then suddenly, it looked as tion by new investors. Now, speed, comfort, safety, utility, if it might crash. At the onset of with sales and headcounts carrying capability, range—we Employees: About 900 the recession in October 2008 rising again, he’s preparing have the right combination of 2014 projected “we couldn’t give an airplane to launch the Vision SF50, a all those things.” revenue: $217 million away,” Klapmeier recalls. Arcap- “personal jet” that can be flown The component that earned ita didn’t have additional funds by someone who needn’t be a Cirrus’ planes the most atten- Number of planes to put into Cirrus, and its pro- Klapmeier aside an early fuselage professional pilot. It, too, has tion early on is the parachute. It produced to date: duction plummeted to around plug of the VK30 (top); posing with a parachute built into its tail was an innovation born of trag- More than 6,000 250 planes per year from 2009 Tuskegee Airman Joe Gomer. section. Cirrus (dba Cirrus edy. In 1985, Alan Klapmeier through 2013. In 2009, Alan

42 TWIN CITIES BUSINESS tcbmag.com JULY 2015 1961 > Born in Rockford, Ill.

1983 > Graduates from the University of Wisconsin-Stevens Point.

1984 > Founds Cirrus Design with brother Alan Klapmeier; licenses plane design for production in Israel.

1994 > Moves company from Wisconsin to Duluth to manufacture its own planes.

1997 > Cirrus opens facility in Grand Forks to manufacture the plane’s composite materials.

1999> Cirrus’ SR20 is FAA-certified.

2001 > Bahrain-based Arcapita assumes majority ownership of Cirrus.

2009 > Company renamed Cirrus Aircraft; Klapmeier takes over sole leadership.

Klapmeier departed Cirrus stability it needed to not only tion of the jet will require to start Kestrel in order to ramp up plane production, but adding floor space. Whether 2011> Cirrus Aircraft is acquired by manufacture an all-composite, to advance development of its that will happen in Duluth China Aviation Industry General six-seat turboprop plane. (The personal jet. is unclear as of this writing: Aircraft (CAIGA). Superior, Wis.-based company, “Financially, the last couple Cirrus has requested $4 million now called ONE Aviation, has of years have been great,” he from the state to help it add a yet to begin production.) says. Cirrus has hired more new production facility.) Dale Klapmeier was forced than 300 employees since 2012. Even with the continued 2015> Announces plans to expand, with to shed dozens of employees Its annual production numbers good fortune at Cirrus, Klap- an additional facility planned for as he found ways to keep Cir- soon could return to pre-reces- meier admits he’s still surprised Tennessee. rus aloft. He also found new sion levels. And its Vision SF50 that “we were able to pull this financing: In 2011, China Avia- jet, which he says is scheduled off—kids that started in a barn tion Industry General Aircraft to be FAA-certified by the end in southern Wisconsin.” Despite (CAIGA) acquired the compa- of 2015, is being well received all the struggles and some long, ny and provided it the financial in the marketplace. (Produc- hungry years, “we were able to build an extraordinary team of talent that made it possible to take the step into certified production aircraft,” he says. “We designed a product that turned Tennessee Gov. Bill Haslam (left) into the best-selling airplane in and Klapmeier viewing a Cirrus the industry.” aircraft; the Vision SF50 (far left).

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 43 Steven Leuthold The Leuthold Group Far from Wall Street’s herd mentality, this Midwest investment sage has racked up a national reputation for profitable contrarianism. By Fran Howard

Steve Leuthold and longtime partner Sharon Hovey.

teve Leuthold’s career years, Leuthold captain’s portfolio. has been the antithesis gained an inter- That experience vaulted the of conventional. And that national following young analyst into a position might be one of the among sophisti- with the Minneapolis office of reasons he’s been cated investors. now-defunct investment firm so successful as And his foresight Paine Webber. There he devel- Minnesota’s best- proved accurate oped his Major Trend Index, an known investment once again before the Great advice on what stocks to buy analytical tool he still uses. The strategist. Recession, further bolstering and which ones not to buy, and index tracks over 130 compo- Leuthold his reputation. As a result, his he built a team to back him up.” nents, including P/E multiples started out as a Leuthold Group’s assets under Leuthold began building his and even investor attitudes. “It fry cook, then a management soared from expertise after graduating from gave you confidence that you songwriter and $1 billion in 2005 to $5 billion the University of Minnesota covered all the bases you could,” guitar player in a rock in 2012. While not always right, with a degree in history, when Leuthold says. “If you got a band that had a No. 8 Leuthold has a pretty good he took a job at Cargill. In 1960, positive or negative reading, hit in Arkansas, and then track record. Leuthold joined the Army Re- you could act on it.” He left a law student turned history “He is an extraordinary fi- serve, where he leveraged what Paine Webber to open a bar major, before a request by his nancial analyst and investment he learned about markets at (the Alps) on the 494 strip for a captain in the Army Reserve manager,” says Kate Welling, a Cargill. “I started trading com- few years, then joined Minne- turned him on to analyzing former Barron’s reporter and modities for myself,” Leuthold apolis-based Piper Jaffray. investment opportunities. founder of Welling on Wall says. “And I did pretty well.” His While at Piper Jaffray, Leu- The more he worked on it, the Street, an investment research captain noticed and assigned thold also began writing for the more he developed a passion and analysis journal. And un- Leuthold to a desk job where he national financial press. At the for discovering and sharing like many of his peers, she says, was responsible for tracking the age of 32, he published his first with investors smarter ways for “who truly are sociopaths, he’s article in the national financial them to invest—advice some of a nice guy.” In addition, she media, a trenchant analysis of the industry’s more established notes, Leuthold “never forgot Year founded: 1981 the American Stock Exchange pundits criticized from time his Minnesota roots. He never in Barron’s. Since then, his work to time. In the mid-1980s, for caved into the Wall Street/New Location: Minneapolis has been published globally in instance, he predicted a market York City-centric nature of the hundreds of publications, and crash, and his fears were industry. And he always main- Employees: 27 he has become one of Min- dismissed by the bulls who tained his business headquar- Assets under nesota’s most highly quoted dominated market thinking. ters in Minneapolis.” management: financial pros. Then the stock Being far from the herd $1.6 billion Whether it’s a national A teenage Leuthold market correc- mentality of the Street isn’t the article or his many in-house in the early ’50s. tion of 1987 whole story of Leuthold’s suc- Number of funds: publications, “Steve writes (later named cess. “Steve ascended to promi- Six total; five mutual in a very accessible or down- “Black Monday”) nence because he has a very funds and one limited home way—straight to the proved him right. highly disciplined qualitative partnership client,” Welling says. “He never Because of process that investors respond hid behind a lot of technical that, as well as to,” says Byron Wien, vice chair Current ownership: jargon.” She also notes that it’s his innovative of Blackstone Advisory Partners Majority employee- more than Leuthold’s wit and research over the in New York. “He gave good owned firm personality that makes the fi-

44 TWIN CITIES BUSINESS tcbmag.com JULY 2015 1937 > Born in Rockford, Ill.

1960 > Graduates from the University of Minnesota with a degree in history.

1961 > Leuthold develops the Major Trade Index while working at Paine Webber.

1969- Works as an officer and 77 > investment strategist at Piper Jaffray.

1981 > Starts The Leuthold Group, an institutional investment research firm.

1987> The firm’s Registered Investment Advisor division begins managing investment accounts.

1995 > Launches Leuthold Core Investment Fund, a no-load mutual fund.

2005 > Assets under management reach $1 billion. TRAVIS ANDERSON TRAVIS nancial press keep coming back carrying on without Leuthold at 2008> Assets under management reach for more: “It helps that he’s right the helm. In 2012, he resigned $5 billion. more often than wrong.” to start the Leuthold Family Of- After years of perform- fice, which comprises Leuthold ing and publishing research, Strategies, a limited partnership Leuthold struck out on his own that invests money for family 2012> Resigns to manage Leuthold in 1981, founding the Leuthold and friends, and the Steven C. Family Office. Group, which specializes in Leuthold Family Foundation, working for institutional inves- which supports a variety of en- tors. With Perspectives and Leu- vironmental, medical and social thold’s other publications, the causes. In 2015, the foundation Leuthold Group had become had assets of more than $41.5 the third-largest independent million, according to the Inter- U.S. research firm by the early nal Revenue Service. 1990s, with numerous clients Leuthold also continues to overseas as well as domesti- keep his contrarian eyes open cally. In the mid-1980s, his firm for market opportunities. His Before he became known in the financial world, Leuthold launched its own funds and latest tips? Asian equities and was an avid musician and even led his own band. added investment management uranium. “I’m not giving up on to its capabilities. uranium,” he says. “Eventually, it The Leuthold Group is now will pay off.”

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 45 Robert Senkler Securian Financial Group He made Securian Financial Services a life insurance and retirement services powerhouse by being conservative. By Gene Rebeck

Senkler working at Minnesota Mutual Life in 1985.

ob Senkler admits so that we knew we’d survive team to run that business,” he competitive position. Case in he was surprised that,” he says, recalling that says. Before he became CEO, point: In group life business, when the 2008 because of this strategy, “in ’05 Minnesota Life also had added where Securian serves numer- financial tsunami and ’06, there was criticism in homeowners and auto insur- ous Fortune 1000 clients, “we hit. “The depth of the the industry that we were too ance. “We found that we were went from the 17th-largest financial crisis in conservative.” very good at marketing,” Senkler writer in America to the third- ’08, where good He’s heard nothing but praise says. “We weren’t as good at largest last year over a 20-year assets—assets since: Securian not only survived managing claims.” period.” Technology makes that I felt from but thrived, acquiring competi- it easier for people to an investment tors that weren’t so well prepared. enroll. And when a claim standpoint The situation was classic Senkler, needs to be paid, neither were good— who over 20 years navigated the employer nor beneficiary were being val- company through several other want any difficulties, Sen- ued at 60 cents major changes—including its kler says. on the dollar,” says conversion from Minnesota Life He’s particularly Senkler, who stepped to Securian—while developing proud of the $55 billion down from his long tenure what is considered to be one of in benefits Securian has as president and CEO of St. the best workplace cultures in paid out over the last 20 Paul-based Securian Financial Minnesota. years. It’s a reflection of Group at the end of last year. While he was at the helm, Senkler (left) at Securian’s headquarters the company’s financial Yet he had positioned his Senkler doubled the company’s groundbreaking. strength—and its longev- insurance and financial services size to $4.2 billion as of 2014. ity. The oldest client went company so that the business He and his team focused “on Many competitors “were 88 years before requesting a wasn’t that surprised. “We things we had been good at for still trying to be good at too payment. “We were still there to modeled our balance sheet decades,” such as life insurance, many things,” he adds. “From pay the claim,” Senkler says. and what he calls “accumula- a distribution and technol- A lifelong St. Paulite and tion,” a category that includes ogy perspective, we thought a major hometown booster, 401(k), annuities and other re- we could out-execute and Senkler joined Minnesota Life Year founded: 1880 tirement income vehicles. They bring more capabilities to the right out of college, attracted also chose to invest company markets.” One of the ways by its values—“telling the truth, Location: Duluth holdings in less-than-flashy of doing this was to develop [and] treat customers and investments: No high-yield, digital technology for claims each other with respect,” he Employees: 4,000; 2,500-plus in St. Paul headquarters high-risk securities backed by processing and other transac- says. Senkler climbed the ranks 2014 projected revenue: $4.2 billion dodgy mortgages, for instance. tions. Minnesota Life commit- quickly, becoming CEO in 1994 Besides avoiding high-risk ted to digital technology very at age 41. His leadership and Insurance products and financial services:Individual ventures, Senkler also shed lines early, Senkler says, and was able collaborative approach helped insurance, individual annuities, investment advisory, that didn’t play to the company’s to acquire companies that were maintain those values. trust, group insurance, 401(k) plans, asset management strengths. Disability income was doing half of their transactions “During the late ’90s and one of Minnesota Life’s offerings on paper. “We were doing 95 early 2000s, when we saw a lot Metrics (2014): More than 15 million customers, $46.6 when he joined the company. percent electronically.” of financial services companies billion in assets under management, $1.07 trillion worth But with all the legal and verifi- This gave Minnesota Life getting into trouble, Bob Senkler of insurance in force cation complications, “it was just greater efficiency in handling and Securian were held up as very hard for this management claims and thus a stronger a beacon of integrity—as a

46 TWIN CITIES BUSINESS tcbmag.com JULY 2015 1952 > Born in St. Paul.

1974 > Graduates from University of Minnesota Duluth with a B.A. in mathematics.

1974 > Joins Minnesota Mutual Life Insurance Co. as an actuarial analyst.

1994 > Named CEO and president of Minnesota Life.

1997 > Sells property and casualty insurance business.

1998> Restructures Minnesota Life into a mutual holding company, allowing it to add shareholders.

2000 > Sells disability income insurance business to focus on life insurance products.

2005 > Minnesota Life changes its name to Securian Financial Group.

2006> Forms task force to help the TRAVIS ANDERSON TRAVIS Ordway Center for the Performing Arts solve its financial difficulties. company that was doing it the the money in a tough bonding chairman and will continue right way,” says Charlie Weaver, year was Senkler’s talent for “get- his work on civic endeavors. executive director of the Min- ting things done quietly. He’s not Though he’ll miss aspects of nesota Business Partnership. someone who needs attention.” day-to-day company manage- 2014> Securian acquires majority Weaver has known Senkler for Douglas Baker, chairman ment, one thing he won’t miss interest in Chicago-based Asset more than 20 years, and the two and CEO of Ecolab, describes was the last big financial crisis. Allocation and Management Co. have worked together on several Senkler as “an easygoing guy “I don’t want to go through ’08 public policy issues. While some but also a no-nonsense guy.” again,” Senkler says. But even involved insurance, the one Baker, who has worked with if something like it happens Weaver remembers best was Senkler on civic and business- again, he’s positioned Securian 2014> Senkler retires as CEO and Senkler’s leadership in obtaining related activities, adds that he to withstand the shock—and president; remains Securian’s $7.5 million in state bonding to brings a “direct, analytical, calm even thrive. chairman. expand the Ordway Center for view of how we move forward the Performing Arts in 2006. to almost any project.” What’s “He was successful, and more, “when Bob calls, he’s a that wasn’t easy,” Weaver recalls. guy you don’t say no to. You Senkler in 1975, his first year of “He was able to work across the want to work with him on actuarial training at Minnesota aisle.” Weaver says one of the whatever he’s working on.” Mutual Life. reasons the Ordway could get Senkler remains Securian’s

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 47 Mark Stutrud Summit Brewing Co. Stutrud and his staff The Twin Cities beer pioneer now runs one of the largest craft breweries at the opening of their in the country—and continues to seek new growth opportunities. By Gene Rebeck University Avenue brew house in the 1980s.

in Minnesota. And in 1986, he predictability that comes from size, producing about 35,000 started brewing his first Sum- working with components like barrels a year? Or, as Stutrud mit Extra Pale Ale and Great yeast, “which is a live organism,” puts it, move into new digs and Northern Porter in a former he points out. Working with start all over? auto parts store on University those ingredients requires “an With his investors’ support, Avenue in St. Paul. Once it was unwavering, uncompromis- Stutrud went big. “We wouldn’t rolling, he expected it to remain ing focus on quality,” he adds. be in business today, I don’t a micro operation. “If somebody really enjoys the think, if we hadn’t taken that It didn’t. Stutrud now flavor profile of any of the beers risk,” he says. “People would oversees a campus of two large we produce, they expect to have gotten really tired of not buildings that he projects will replicate that experience.” And being able to get the beer.” In produce 150,000 barrels of beer that, he says, takes a lot of work. 1997, Summit broke ground in 2015—the equivalent of Andrew Schmitt, who on its current brewery in an about 55 six-packs per barrel. surveys the emerging beer scene industrial area off West Seventh That makes Summit one of the as director of beer advocacy Street and moved in a year later. ll Mark largest regional brewers in the organization Minnesota Beer The expansion allowed Stutrud planned to do was country. It also makes Stutrud Activists, calls Stutrud a pioneer, Summit to expand the number open what, back in the mid- an inspiration for the new wave “and it’s not just in terms of of beers it makes. Craft beer 1980s, was called a “microbrew- of craft brewers now drenching Minnesota but in terms of craft fans love trying new brews, and ery.” Seeing that the niche that the metro—and someone to beer in general,” crediting the certain styles (notably, hoppy coastal “craft” brewers such as emulate. Summit founder for “taking India pale ales) have become Sierra Nevada and Samuel Ad- Those who’ve known risks in an unknown market and particularly hip. In 2009, Sum- ams had been able to carve out Stutrud since Summit’s early blazing a trail.” What’s more, mit launched its Unchained in the beer market, he believed years know he hasn’t changed Schmitt says, “Mark’s commit- series, which gives the com- he could do something like that much. True, his role has shifted ment to quality and consistency pany’s nine brewers a chance from brewer to executive— are certainly things that new and to make other styles of beer. “and I use the term ‘executive’ upcoming brewers should be And last year, Summit began loosely,” he says with a laugh. striving for.” In fact, Summit has canning. Stutrud expects cans Year founded: 1986 He still projects an air of mild provided free quality testing to to make up 10 to 12 percent of amusement. But there’s a numerous local brewers, includ- the brewer’s sales in 2015, and Location: St. Paul seriousness about him, too. ing Steel Toe, Fulton, Lucid, “without any significant can- Stutrud loves good beer, and Bang and Excelsior. nibalization of the bottled beer. Employees: 75 full-time, 13 part-time he knows that a home-brewer’s It’s all been a labor of love Essentially, it’s all new business.” romance can only take you so for Stutrud, not only because To accommodate the 2014 projected revenue: $4.2 billion far. “Standing on concrete for he loves beer and beer culture, company’s continued growth, Production: 132,870 barrels in 2014; 2015 projected: 10 hours a day for a stretch of but because of his deep loyalty Summit purchased a neighbor- 150,000 barrels days—it can wear you down,” to his customers—beer afi- ing building, which now accom- he says. “You can start to think, cionados, of course, but also modates the canning line as well Revenue: $30 million (2015, projected) ‘Gosh, there are easier ways to distributors and retailers. As as Summit’s business offices. It make a living.’ ” Summit took hold in draft lines also gives Summit the capability Beers produced Eight year-round, five seasonal, plus Brewing, after all, is a and liquor stores, Stutrud soon to double its current production the limited-release Union and Unchained series special type of manufacturing, faced a big decision. Should capacity to 300,000 barrels a Stutrud notes, one with the un- Summit stay roughly the same year. There are no firm plans for

48 TWIN CITIES BUSINESS tcbmag.com JULY 2015 1952 > Born in Aberdeen, S.D.

1975 > Earns B.S. in social work from the University of North Dakota.

1980 > Moves to Minneapolis to take a job in chemical dependency counseling at St. Mary’s Hospital.

1986 > Founds Summit Brewing, which begins brewing two years later; brewery operates inside a former auto parts store on University Avenue in St. Paul.

1991 > Earns diploma in brewing technology from the J.E. Siebel Institute of Technology, Chicago.

1998> Summit moves into current location near West Seventh Street in St. Paul.

2009 > Introduces Unchained Series of specialty beers.

2013 > Introduces Union series of beers, which incorporate TRAVIS ANDERSON TRAVIS unusual hops and malt styles. that now, but who knows? gins are better when you have In any case, Stutrud believes your sales closer to home. The the local market could soak up farther away you get from the 2014> Launches canning line. that added production. For all brewery, the more the per-unit its growth, Summit remains cost you spend on marketing.” largely a local beer. Minnesota It also means fewer distribution accounts for 88 percent of its relationships, which “keeps our 2014> Summit completes expansion sales, with about 72 percent in lives simpler.” Above: The Summit into adjacent building (purchased the metro; the rest come from Building a brewing com- logo; Stutrud named the in 2013), which houses neighboring Iowa, Wisconsin pany of Summit’s current size brewery after St. Paul’s its canning, warehousing, and the Dakotas. (The company “is not some kind of ego trip mansion-lined avenue. administration and training also established a small presence I had,” Stutrud says. “That’s a Left: Hoisting a glass facilities in the Chicago area.) The extra- testament to our customers. with beer writer Michael pale ale remains the flagship, They led us down this direction. Jackson (right). making up of 50 percent of the When I think of the people that company sales; Sága India pale are a part of this organization, ale, introduced in 2012, now is our customers, the products 20 percent of sales. that we make, the technologies “I’ve never really had the that we’re applying—it’s all ambition to be a national been a marvelous experience.” brand,” Stutrud says. “The mar- —Gene Rebeck

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 49 Recent Inductees (through 2011)

2014 BMW and Citibank. He has more First Bank Systems and founded 2013 major suppliers of pumps and Lynn Casey didn’t join than fulfilled his original vision of Manchester Cos., which since Rod Burwell began as an valve equipment for the energy prominent Twin Cities public an agency focused on creative 1989 has provided financial industrial engineer designing industry and water-related relations firm Padilla Speer messages backed by deep restructuring, management barge covers that replaced the products and services. Hogan Beardsley expecting to someday understanding of the consumer. consulting and investment heavier and rust-prone steel put together a 2012 deal that lead it. But when the opportunity banking services, to more than tops in use before he introduced merged Pentair with a division of came in 2001, she took firm hold, Mark Larson took over a 700 clients. Thanks to his work, his product in 1969. Over time, Swiss industrial giant Tyco. leading Padilla through difficult small electronics reseller in he has kept companies operating he branched out into business times and making it stronger and rural northwestern Minnesota in Minnesota. turnarounds in storage tanks, Dave Mona built on his more broadly based. The merger and turned it into a $1.75 environmental testing, and experience as a journalist to she directed with a similarly billion worldwide distributor Bill Sweasy represents the leisure and entertainment create one of Minnesota’s most sized agency in 2013—her firm of components to designers of third generation of leadership companies. Through Burwell prominent public relations now is called PadillaCRT—added electronic device prototypes. and ownership at Red Wing Enterprises, he has continued agencies. Founded in 1983, new markets and capabilities, Based in Thief River Falls, where Shoes. During his tenure, he to solve challenges in other Mona Meyer McGrath and including brand strategy, website most of its 2,600 employees work, kept the 110-year-old boot and businesses in areas as diverse Gavin became the largest PR design and content development. Digi-Key picks, packages and shoe manufacturer operating as bottled water, aquarium firm between Chicago and the sends out 16 million parts annually and thriving in its small-city attractions and testing West Coast, and one of the Pat Fallon founded an from more than 650 vendors. hometown of Red Wing. He also laboratories. Burwell passed chief U.S. agencies in the global advertising agency in 1981 acquired a tannery, opened away in March 2015 at age 76. Weber Shandwick group. Mona with big ambitions and no Mark Sheffert is the first additional stores and expanded remains a high-profile figure in clients. Three years later, the person whom numerous troubled its footprint in other countries, Randall Hogan became CEO of Minnesota’s philanthropy and agency, known today as Fallon companies have called to where Red Wing’s made-in- Pentair in 2001, transforming sports communities. Worldwide, won a major industry guide them back to profitability. the-USA ethos has given its it from a holding company award and began earning Minnesota’s premier turnaround products cachet among younger of various businesses to an Ron Peltier joined Edina national clients, including the expert, Sheffert took his banking consumers. operating company that has Realty in 1977 after obtaining Wall Street Journal, Lee Jeans, and management skills honed at become one of the world’s his real estate license, then

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50 TWIN CITIES BUSINESS tcbmag.com JULY 2015 worked his way up to become the country. Starting with its Curtis Sampson led the 2011 from 500 stores with sales of its CEO and president in 1992. first location in Brooklyn Park, formation and growth of a series Mary Brainerd, HealthPartners $150 million in 1987 to nearly He bought back the firm from the chain now has 110 national of significant telecommunications CEO since 2002, doubled the 12,500 stores in 2011, reaching what is today U.S. Bancorp locations, plus one in Canada. companies, including revenues of the Bloomington- $2.4 billion in sales in 2010. in 1995, then proceeded to The Chanhassen-based company Communications Systems Inc., based business, the country’s build a national real estate reached $1.2 billion in annual from the small town of Hector, largest not-for-profit, Guy Mingo became Marsden brokerage powerhouse called revenue with 22,500 employees. Minn. Most of his ventures are consumer-managed health Building Maintenance’s youngest HomeServices of America, now part of the world’s largest care organization. She also district manager at age 19. At age acquiring real estate firms Douglas Baker Jr., CEO and communications companies. directed a partnership between 42, he was named the St. Paul- throughout the country. chairman of Ecolab, has guided Sampson also found creative HealthPartners and insurance based company’s CEO. Under the St. Paul sanitation supply and solutions to keep Canterbury giant Cigna that further extended his leadership, Marsden Holding Phil Roberts is one of food service equipment company Park racetrack from closing. HealthPartners’ geographic has become one of the nation’s Minnesota’s most successful into new markets through savvy presence. largest privately owned facility- restaurateurs. A founder of acquisitions. Ecolab now has Sally Smith transformed service providers. Parasole Restaurant Holdings, operations in more than 170 the small restaurant chain William Cooper, the straight- Roberts is renowned for creating countries and generates annual Buffalo Wild Wings into a major shooting CEO of TCF Financial Christopher Twomey was “contemporary adult” restaurants revenue of more $13 billion. company that sates a nationwide for most of the past 30 years, CEO of Arctic Cat for nearly that combine informality, stylish but hankering for chicken wings. guided its transition from a quarter-century. During his accessible food, and a sometimes Richard Davis climbed the In 1996, she took over one of troubled Twin Cities thrift to a tenure, the Thief River Falls- edgy marketing sensibility. ladder from bank teller to entrepreneur Ken Dahlberg’s multi-state banking system that based snowmobile manufacturer Parasole’s concepts cover several president, CEO, and chairman investments and became CEO had delivered 64 consecutive enjoyed 22 years of profitability, kinds of cuisine; it also spun off the of U.S. Bancorp., one of the and president, growing the quarters of profit as of 2011. thriving on a base of intensely Buca chain of Italian eateries as a nation’s largest regional banking company, now based in Golden loyal customers. In 1990, he public company. systems, with 3,000 branches Valley, from about 50 locations Paul Finkelstein joined Regis took the company public. Five in 25 states. Among Davis’ to more than 1,000. Corp. as COO in 1987 and years later, he led Arctic Cat 2012 successes as the bank’s leader: became its CEO in 1996. He into the ATV business, which Bahram Akradi is founder and avoiding risky investments that grew the Edina-based hair salon accounts for half of its revenue. CEO of Life Time Fitness, one tripped up other banks during management firm into a Fortune He returned as temporary CEO of the largest fitness chains in the recession. 1,000 company. Regis expanded in 2011.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 51 David Olson In Memoriam The longtime Minnesota Chamber of Commerce Olson began his business 65 business trade associations task. In addition, he started the president is remembered for his dedication, humor advocacy work after college, at the Minnesota Legislature Energy Smart and Minnesota and ability to bridge divides. By Suzy Frisch serving on the Greater Minne- and has a retention rate of 95 Waste Wise programs to help apolis Chamber of Commerce percent—the best of any state companies adopt more sustain- ne year ago this month, legislative changes to improve committee that persuaded the chamber in America. able business practices. David Olson succumbed the business culture, Olson was Metropolitan Sports Facilities Olson also was known for Olson wasn’t afraid to take to lymphoma at the age steadfast in his belief that all Commission to build the Metro- building strategic alliances across controversial stands, even when Oof 57. But his achievements and sides eventually would come dome in downtown Minneapo- political lines and for his efforts they divided his own member- his dedication to the state’s busi- together to solve problems. lis. He held a variety of positions to visit chambers and businesses ship. He lobbied persistently ness community live on, both in “David had the ability to in business development before across the state. He helped create for transportation funding existing legislation and the hearts bring people together through joining the state chamber in several workforce development increases, culminating in the of that community. his outgoing personality, his 1990 as vice president of opera- organizations, including Hiring 2008 legislation that raised the President of the Minnesota ability to make each person tions and development. Minnesota Heroes and the gas tax—a hike many busi- Chamber of Commerce for 23 feel special, and his love for his In less than a year, he was school-to-work grant program nesses opposed. years, Olson employed relent- work,” says Joe Swedberg, the named the chamber’s presi- WorkReady Minnesota, and “He took on a tough issue less optimism, a drive to better recently retired vice president dent. Under his leadership, the he served on the Metropolitan and stood tall all the way along, his home state and doses of of legislative affairs for Hormel chamber became the state’s Economic Development Agency in spite of lots of pushback humor to support and nurture Foods. “He always wanted to largest and most influential board, among others. from people he respected,” says businesses and economic devel- do the right thing for the mem- business advocacy organization. Olson convinced lo- Jon Campbell, executive vice opment throughout Minnesota. bers, the business community, It currently represents more cal chamber executives that president of government and Whether he was transforming and the state to make Minne- than 2,400 Minnesota compa- business retention should be a community relations for Wells organizations or lobbying for sota a better place.” nies, 130 local chambers and priority—not always an easy Fargo, who worked with Olson

Leading the way from vision to reality

Being a leader takes more than hard work. It also takes dedication, courage and integrity.

We congratulate Mark Stutrud and the other honorees for being inducted into the Minnesota Business Hall of Fame. We applaud them for all they’ve done for the Minnesota business community.

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52 TWIN CITIES BUSINESS tcbmag.com JULY 2015 33324-3 TCB July_A5.indd 1 5/21/15 10:20 AM 24890-2015-Minnesota Business Hall of Fame Ad v2.indd 1 5/22/2015 11:17:36 AM on transportation funding bills. of government affairs before ances and influence public types and grow the Minnesota “He built a big tent of people becoming the organization’s policy—in order to support economy—will be an enduring who rarely would even talk interim president upon Olson’s Minnesota businesses of all part of his legacy.” TCB with each other, and through death. “Every twist and turn that eclectic group forged a was more of an opportunity coalition and ultimate success.” than a frustration or cause for Perhaps Olson’s most notable cynicism. That fundamental success came after he and the attitude made all the difference chamber spent several years in the world, and it was a great advocating to reform workers’ leadership model.” 1978 > compensation laws in Minnesota, Arne Carlson, who was Graduates from St. Olaf College with a degree in political science and urban studies. legislation that finally passed in Minnesota’s governor during 1978 > Starts first job as assistant to the Minneapolis city clerk and the city’s legislative liaison. 1995. It was a difficult struggle. the battle over workers’ comp About a dozen companies threat- reform, notes that Olson’s skills 1982 > Named executive director of the Burnsville Chamber of Commerce. ened to leave Minnesota or stop “resulted in people coming expanding in the state, including together who normally don’t 1985 > Becomes president of the TwinWest Chamber of Commerce in Minnetonka. 3M, and the Minnesota Chamber come together, and then they 1990– was sharply split over the legisla- would end up with results.” Joins the Minnesota Chamber of Commerce; named president 10 months later. 91 > tion. Using his pragmatic style, Ol- Carlson also praises Olson’s son persuaded chamber members honesty about what his mem- 1995 > Successfully lobbies for workers’ compensation reform legislation. to back the proposed bill. bership would accept in terms As proposals went through of final legislation. “That built a 1997 > Successfully lobbies for property tax reform legislation. numerous iterations, many be- lot of trust,” he says. came discouraged. “David went Olson’s talent for fostering 2004 > Named to MnSCU board; twice elected board chairman. forward with the same kind that kind of mutual respect is 2012 > Minnesota Chamber recognized by Association of State Chamber Professionals for overall of excitement and enthusiasm one of his lasting contributions. accomplishments and 95 percent member retention. with Plan R as he did with Plan As Mark Larson, president of A, B and C,” recalls Bill Blazar, Thief River Falls-based Digi- 2014 > Dies at 57. who served for many years as Key Corp., observes, “David’s the chamber’s vice president ability to build strategic alli-

EXEMPLARY LEADER. EVERYDAY GUY.

A salute to Securian Financial Group’s chairman and retired CEO

Ask Bob Senkler what his greatest accomplishment was as Securian’s CEO, and he’s quick to answer: “No one ever questioned our ability to keep our promises.”

During Bob’s 20-year tenure, those promises added up to more than $55 billion in beneﬁ ts paid to people when they needed us most. Helping them keep their homes. Pay for college educations. Maintain family businesses. Enjoy comfortable retirements. That is our ultimate purpose.

From the mail room to the board room, Bob is known as a servant leader whose mix of optimism, a able charm, kindness and common sense inspires others to succeed. Making a di erence at work and in the community, he has touched millions of lives including Securian customers, our associates and the people in our community. Congratulations, Bob – and thank you for your commitment, your wisdom andhi your leadership. ab F- A-

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 53 Congratulation to the 2015 Twin Cities Business Hall of Fame inductees!

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SMALL AND LARGE COMPANIES ADVANCE THE MINNESOTA INNOVATION TRADITION CHANGING TECHNOLOGY AND LABOR SHORTAGES POSE CHALLENGES, BUT BUSINESSES CONTINUE TO FIND SOLUTIONS.

By Nancy Crotti

nesota farms feed people, animals and Blue Cross and Blue Shield organizations a food-processing industry that ranges across the country, other insurers and from companies that prepare fruits, health care organizations whose identi- vegetables, hogs and poultry for sale to ties he declined to disclose. companies that make parts for food- Eight years ago, Bolger landed packaging machines. privacy-regulated business from the Although its manufacturing giants financial industry. More recently, the grab attention, Minnesota’s small manu- company started doing secure print- facturers employ more people overall, ing for retailers. The privacy part of the hat makes Min- stay in families for generations, and are business generates about $10 million a nesota’s manu- no strangers to innovation. year, one-third of annual revenue, Bolger facturing base reports. The company is growing at a stand out from its SNARING A DEVELOPING pace of 15 percent a year, he says. neighbors’ and the MARKET Security is tight at the second plant, rest of the nation? Consider Bolger Inc. Founded located in an industrial area of north- It’s the diversity by John and Genevieve Bolger east Minneapolis. Everyone must wear of its manufacturers, in 1934, the Minneapolis com- badges that indicate their security level. small-town work ethic, pany was a traditional printer Employees wheel printed materials, urban cachet, embrace shop until about a decade ago, when the locked in rolling cages, from one depart- of technology, history of innovation, couple’s son, dik, realized that medical ment to the next. location, and its academic and natural patient privacy regulations could be a “We’ve hired down there, but the resources. gold mine. real focus for me has been to create less Put the words “Minnesota” and The federal Health Insurance Por- touches and to automate it more,” Bolger “manufacturing” together, and giants tability and Accountability Act of 1996 says. “From a manufacturing perspec- come to mind: 3M, General Mills, (HIPAA) went into effect in August of tive, there are a lot of opportunities to Hormel Foods, Medtronic, Polaris and that year, resulting in strict regulation to streamline it.” others, including the jolly green one keep medical records confidential. The other plant is devoted to that welcomes travelers to Le Sueur as a Somebody had to print all those traditional printing. Racks hung outside towering sign. documents in compliance with federal workers’ cubicles display colorful, glossy The Iron Range might have become a law. Bolger brought in computer ap- advertising materials for high-end clients rust belt if not for University of Minne- plication developers, bought a second in Manhattan. A wall display holds sota researchers who figured out how to plant and dedicated it to the privacy samples of college alumni magazines turn taconite into a marketable product. printing business. and other clients’ brochures. “Even taconite is a technology-rich “It’s the same thing that has com- Beyond the offices, a cavernous form of manufacturing, and based on pelled us throughout the history of the room holds a printer the length of two Minnesota innovation,” says Bill Blazar, company,” explains Bolger, who is CEO. school buses, and several smaller ones. interim president of the Minnesota (His brother, Charlie, is CFO.) “We Chamber of Commerce. “The reason listened to where the pain was with our TACKLING LABOR SHORTAGES that Minnesota manufacturing is as customers and worked to alleviate that While Bolger wants to automate for healthy as it is today is that it’s innovative and provide solutions in that world.” efficiency, many manufacturers have and it’s made to order.” Eleven application developers write turned to automation Other reasons include Minne- programs that keep clients’ private out of desperation. The sota’s proximity to Canada, which fuels information flowing, save them money nationwide skilled-labor exports; the state’s medical technology and give them the security compliance shortage has a variety of industry, which employs more than required by the federal government, ac- causes, according to local, regional and 35,000; and its agricultural base. Min- cording to Bolger. Those clients include national experts:

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 55 TRENDING MANUFACTURING

> Waves of retiring baby boomers. SPLIT DECISION ON ECONOMIC GROWTH > A widely held belief that the only In a spring survey of 400 Minnesota manufacturing executives, 42 percent projected an economic expansion ticket to a good life is a four-year for 2015 and 42 percent expected a flat economy. Only 13 percent said they forecast a recession. The survey college degree. was conducted by a national polling firm for Enterprise Minnesota. > An outdated yet widespread notion that manufacturing is dirty, menial work. 55% > A lack of government funding for 54% community and technical colleges, 49% and for their students. 46% A failure of business and industry to > 42% 42% engage with and support those two- 40% year institutions. 37% 34% “In terms of employee recruit- 32% ment, I think every state has got the same challenge that we have,” says Bob Kill, president and CEO of Enterprise Minnesota, a manufacturing efficiency consultancy that studies the industry. 15% “The more rural a state is, the more chal- 13% lenging it is.” 9% 10% Ever-resourceful Minnesotans are 7% coming up with solutions. Traci Tapani, co-president with her sister, Lori, runs Wyoming Machine in Stacy, Minn. The JAN. 2011 JAN. 2012 MAR. 2013 MAR. 2014 MAR. 2015 sisters left successful careers in finance in 1994 to run their parents’ precision sheet-metal company. They have built ECONOMIC EXPANSION FLAT ECONOMY RECESSION ENTERPRISE MINNESOTA

HONOREES

Successful leaders o en talk about the importance of having Mark Cohn great mentors, but we rarely hear those mentors’ stories. Join Charles Denny Jr. us on August 18 as we honor marvelous mentors who have Don Divine helped others become successful Minnesota business leaders. Esperanza Guerrero-Anderson To purchase tickets, visit: tcbmag.com/mentors15 Joan ompson @tcbmag #TCBMentorAwards

PRESENTED BY: PLATINUM SPONSOR: August 18, 2015 | 5:30 pm Nicollet Island Pavilion

56 TWIN CITIES BUSINESS tcbmag.com JULY 2015 HEALTH CARE COSTS, GOVERNMENT REGULATION REMAIN TOP CONCERNS such a reputation for speaking out about Among 400 Minnesota manufacturing executives surveyed for Enterprise Minnesota, the cost of health care coverage was the lack of skilled labor in manufac- rated a top concern by more than half of them. However, the breadth of the concern has changed. In 2011, 71 percent of turing that Tapani recently attended a those surveyed said health care costs were a major concern, and that rating has steadily dropped, to 56 percent in 2015. White House conference to discuss her The second-biggest concern rated by the manufacturers was government policies and regulations. The level of concern on ideas on “upskilling” the workforce. that topic has declined from 61 percent in 2011 to 46 percent in 2015. Wyoming Machine employs 56. When the company had a job opening last year, the leadership realized that Percent Ranked someone accustomed to working with Issue a Top The costs of health care coverage 56% processes might be a good fit. They hired Concern Danielle Guy, 23, who had spent the pre- Government policies and regulations 46% vious four years managing a McDonald’s. “She did have a lot to offer,” Traci Ta- pani says. “She just needed more skills.” Attracting and retaining qualified workers 33% Guy is obtaining those skills on the job and from classes at Pine Technical Economic and global uncertainty 29% and Community College in Pine City. She takes the classes in the company break Costs of employee salaries and benefits, not including health insurance 18% room, via interactive TV. A U.S. Depart- ment of Labor grant is paying her tuition. Competition from foreign sources 15% Guy can receive a national certifica- tion after completing each of the series’ The shipping and logistics of getting products to market 14% four classes on manufacturing basics, according to Heidi Braun, contract Future leadership within firm 13% training program manager at the college. Companies will hire students with these credentials on the spot, Braun Managing supply chain relationships 9%

ENTERPRISE MINNESOTA says.

ursday, October 1 Hya Regency Minneapolis @tcbmag #OutstandingDirectors

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JULY 2015 tcbmag.com TWIN CITIES BUSINESS 57 TRENDING MANUFACTURING

The program has trained 1,379 and gives the company a competitive workers since October 2014 through advantage, according to Mark Morri- four post-secondary institutions, she son, vice president of Tennant’s global notes. supply chain. The company sells within the U.S. APPRENTICES and exports to Canada, Europe and IN MANUFACTURING Asia. It employs 2,800 worldwide, with The AFL-CIO recently began work- other plants in Kentucky, the Nether- NOW ACCEPTING ing with a handful of Minnesota lands, the United Kingdom, Brazil and manufacturers on an apprenticeship China. program that the union and business Tennant is one of 74 Minnesota NOMINATIONS associations developed in Wisconsin. manufacturers that employ more than Funded by a differ- 500, according to Kill. ent federal grant, the Deadline: August 19 at noon Industrial Manufactur- MANUFACTURING ing Technician program CHALLENGES provides about 2,800 Besides the skilled-labor shortage, Do you know a successful Minnesota small hours of on-the-job Minnesota manufacturers face other business? Twin Cities Business is searching for training and 300 hours challenges, according to the experts. companies with unique stories. Whether it be a of coursework, taught in the work- Minnesota levies higher business place by technical college instructors. taxes than some other states do, needs successful turnaround, rapid early growth, a new Jerome Balsimo, the union’s more road and highway funding, and product innovation, notable longevity or perhaps manufacturing coordinator for the must conquer the achievement gap in the overcoming of an unusual challenge, we want Wisconsin Regional Training Partner- education, they say. ship, says he expects 18 apprentices Professor Ernie Goss of Creighton to know about it! enrolled in Minnesota by mid-year. University in Omaha, Neb., a regional “This program has been a great economist, argues that employers and Honorees will be featured in the January issue of partnership between the unions and government should siphon some of the Twin Cities Business and celebrated at an awards employers,” adds Todd Dahlstrom, money provided to four-year schools dinner and program in January. organizing and growth director for and funnel it to technical and commu- the Minnesota AFL-CIO. “It really has nity colleges to help close that gap. increased the loyalty and morale in Goss conducts monthly surveys the plants where this program is up of Upper Midwest manufactur- and running.” ers, value-added producers and To nominate a company visit: rural bankers. He thinks TENNANT’S Minnesota’s large food INNOVATIONS processors have recovered tcbmag.com/SBSSnomination One of Minnesota’s oldest manu- well from the recession, facturers, publicly traded Tennant while rural manufacturers Co. works closely with Dunwoody may lose some of the jobs Presenting Sponsor: Institute in Minneapolis and other they added due to falling energy and technical colleges to train employees, agricultural prices. according to company spokesperson In a June 1 report released by Kathryn Lovik. The industrial clean- Goss, he noted that “firms linked to ing equipment manufacturer also energy and agriculture are experienc- used current and retired employees ing pullbacks in economic activity” in to train the roughly 65 employees it a nine-state mid-America region. hired in 2014. “Minnesota’s economy has Presenting Sponsor: Event Sponsor: The 145-year-old company expanded in 2015, but at a slower headquartered in Golden Valley con- pace than for the same time period in tinues to innovate. It recently added 2014,” Goss says. advanced cleaning technology to its “Our surveys over the past several machines, some the size of Zambonis. months point to even slower, but It has launched ec-H2O NanoClean, positive, growth in the months ahead a technology that electrically converts for the state,” Goss adds. “Despite water into “nanobubbles” that can the strong dollar making Minne- clean as well as or better than sota goods less competitively priced chemicals, Lovik says. abroad, durable goods manufacturers, A company that makes including metal producers, expanded equipment as large as Ten- for May and for 2015. Growth for nant’s needs a strong local the heavy manufacturing, or durable @TCBMAG #SBSS supply chain. Proximity goods, will slow in the months ahead, to suppliers offers short lead times, spilling over into the broader state simplifies research and development, economy.”

58 TWIN CITIES BUSINESS tcbmag.com JULY 2015 Bolger Inc. in Minneapolis has expanded its printing business by targeting clients who have privacy needs. Wells Fargo presents 1stTuesday DINE, NETWORK, AND LEARN WITH RENOWNED BUSINESS AND COMMUNITY LEADERS.

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Now through July 28, you can reserve your spot to see Tennant Co., a 145-year-old Minnesota business, has developed international markets five in-demand speakers, all for the price of four. for its range of cleaning products. Based in Golden Valley, it employs 2,800 worldwide. Your season pass covers the following speakers:

Minnesota’s high-tech, computer theirs are more than manufacturers. Asha Sharma August 4 and electronic component manufac- They’re entrepreneurs. COO, Porch turers, which together employ about “We’re problem solvers,” Traci 45,000, set it apart from other states, Tapani says. “An entrepreneur is not Dimitrios Smyrnios September 1 particularly its neighbors, Goss says. going to say, ‘I can’t grow my com- CEO, Schwan Food Company Chad Moudray, chief econo- pany because I can’t find anybody.’ mist for the National Association of We’ll try anything.” Manufacturers, calls the strong dollar Blazar, of the state chamber, cited Ken Bouyer October 6 a “huge headwind” for exporters. companies such as Bolger as emblem- Director of Inclusiveness Recruiting, EY Americas Goss emphasizes Minnesota atic of Minnesota ingenuity. would benefit greatly if Congress gave “The printing industry, not just Mary Brainerd November 3 President Obama the authority to ne- because of the recession, but because President & CEO, HealthPartners gotiate the Trans-Pacific Partnership. of the changes in the usage of print- Obama has argued that the pact, ing and paper, that industry is sort Pam Edstrom December 1 which would ease trade with Asian of a shadow of its former self,” Blazar Agency Partner and Co-Founder countries, would lead to thousands of says. But “thanks to innovation and Waggener Edstrom Communications new American manufacturing jobs. creativity, a lot of those companies are The 2.3 percent tax on medical finding new futures, and that’s Min- McNamara Alumni Center, University of Minnesota equipment sales, part of the Afford- nesota manufacturing.” To purchase a season pass or register for individual events visit: able Care Act, will continue to hurt He argues that the expanding Minnesota’s med tech sector, these global economy will be critical to the carlsonschool.umn.edu/firsttuesday experts agreed. future of Minnesota’s manufactur- Register early. Limited passes available. Now the labor shortage is taking ing base. He cites the growth of the the spotlight, as manufacturers realize middle class in India and Mexico as a The 1st Tuesday Speaker Series convenes Twin Cities’ professionals to they can’t find the employees they reason for optimism. address hot topics in business, management, and leadership. A Carlson need. “When a country gets a middle School tradition since 1992, the monthly event is one of the largest gatherings Although many Minnesotans are class, people start going to the gro- of corporate and community leaders in the area. working hard on the problem, “there cery store,” Blazar says. “We make a Presented by are just as many who are throwing lot of stuff that gets sold in grocery their hands up and saying, ‘There’s stores.” TCB nobody available,’ ” Tapani says. The Tapani sisters want others to Nancy Crotti is a St. Paul-based know that owners of companies like freelance writer and editor.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 59 TRENDING BANKING A Tougher Row to Hoe Low commodity prices mean challenges for farmers and rural lenders.

By Burl Gilyard

fter several years bushel of corn sold for more than $6. try: 17 years as a feed salesman and 18 cycle,” says Greenwood. “If grain prices of gradual progress in the wake of the But in 2014, prices started to spiral years in agricultural lending. He’s seen are going to stay at this level, what are Great Recession, many business own- downward. As of mid-May, Greenwood past downturns and says that he and his the things you need to do? Overall loan ers—and their employees—are finally says, the price for corn was sitting at colleagues are talking with farmers about volume is probably actually up.” He adds feeling optimistic again. roughly $3.40 per bushel. how to weather the storm. that “on the grain side we’re doing some But outside of the heart of the Twin That lost money adds up. Green- “Usually it seems like a three-year rebalancing.” Cities metro area, it’s a different story wood says that an acre for many in Minnesota’s rural economy, of land yields approxi- where agriculture is a dominant force. mately 150 bushels of Most crop farmers, for example, saw corn. For a farmer with good years during the larger economic 500 acres, a price drop Survey Finds Minnesota Small Business Owners Upbeat downturn, due in part to expanding of $2.60 per bushel export markets. But today, with a drop translates into a loss of May 2015 survey from US Bank found business owners say that they are likely to add in commodity prices, those same crop $195,000 in revenue. A small business owners in Minnesota to be employees in the next year, compared with 25 farmers are facing a challenging financial “That’s substantial,” slightly more optimistic than business owners percent of business owners nationally who are outlook in the short term. notes Greenwood. “I in other parts of the country. At the same time, looking to add staff. Rural lenders are on the front lines. think everybody’s won- the survey showed local business operators to US Bank’s survey also found that 29 Mankato-based AgStar Financial dering: ‘Is this the new be more cautious about expansion plans. percent of Minnesota small business owners Services, with approximately $7 billion norm?’ ” The US Bank survey indicated that 72 plan to make a new capital expenditure in the in assets, lends almost exclusively to Greenwood says percent of small business owners in Minnesota coming year, compared with 34 percent of agriculture customers. For lenders deal- that approximately 35 think that the national economy is in an business owners nationally who are planning ing with farmers, depressed commodity percent of AgStar’s total expansion or a recovery, which compares new investments. prices are on the front burner. portfolio is with grain with 67 percent of business owners across the The 2015 US BankSmall Business Annual “Probably the biggest thing right farmers who are feeling country. The study also found that 49 percent Survey polled 3,202 small businesses during now is in the corn and soybean group. the pinch of lower prices of Minnesota small business owners believe the first quarter of the year in the 25 states Prices have dropped very dramatically for their products. that the state’s economy is in better shape than where US Bank provides small business compared to what they were a few years Greenwood grew up the overall national economy is. banking. US Bank surveyed companies with ago,” says Mark Greenwood, senior vice on a farm in southern Yet Minnesota business owners are $10 million or less in annual revenue, including president at AgStar. Minnesota and has deep still cautious. Only 20 percent of Minnesota 200 companies in Minnesota. —B.G. Greenwood notes that in 2013, a experience in the indus-

60 TWIN CITIES BUSINESS tcbmag.com JULY 2015 Advertising_Print_TCBM_Financing_2015_Layout 1 5/5/2015 2:16 PM Page 1

Â É All of the forecasts that we see [indicate] commodity prices are not expected to rebound É Á dramatically. ” —Jeff Swanhorst, chief credit officer, AgriBank �%'(,�,)-�+$�),-�"'**&*��-",')*-�+),-'�+$(-(%,- ),#+$)!,#-'�'&"'�",-'(-�*!%+)-�'*�-(+-%,"�-�+$-�,( Greenwood says that AgStar is territory covers about half of all of the (%,),�-�%,(%,)-�+$�),-"++�&*�-(+-�,,(-�+$)-#%+)(� seeing more customers tap into their cropland in the United States. Agri- credit lines this year, as margins get Bank does not lend directly to farm- (,)�-�$* &*�-*,, #�-$��)' ,-�+$)-,�$&��,*(�-+) tighter. At the same time, he notes ers, but makes its loans to farm credit ('�,-' �'*('�,-+�-$*,��,!(, -+��+)($*&(&,#�-�*!%+) that despite the current climate, associations such as AgStar, which, in many crop farmers are in solid shape, turn, lend to customers. �&""-�,-�&(%-�+$-,�,)�-#(,�-+�-(%,-�'�-�&(%-,��,)&� thanks to some good years prior to Jeff Swanhorst, chief credit officer the decline in crop prices. for AgriBank, says that commod- ,*!,�-' �&!,-'* -'-�$""-#$&(,-+�-"+'*#�-",'#,#-'* “If we look at our overall equity ity prices are the dominant issue in "&*,#-+�-!), &(-(+-%,"�-�,,(-�+$)-�&*'*!&*�-*,, #� on a lot of our balance sheets, pro- today’s rural economy. ducers still have a lot of equity,” he “It’s affecting everybody, but it’s says. “I think they’re probably more really quite a small minority of farm- �&#&(-�*!%+)�&*��!+�-(+-�&* -�+$)-*,'),#(-�'*�,)� cautious on their spending.” ers that are needing to have changes But, he says, “you’re not going to made in their payment structure,” be buying a new piece of machinery says Swanhorst. this year. That does have a little bit of While the larger economy was a ripple effect.” in tough shape from 2008 to 2011, St. Paul-based AgriBank is one Swanhorst recalls that farmers did of the largest banks in the national just fine during that period. �*!%+)�&*��!+�--�---�,��,)-�� Farm Credit System, established by “Agriculture in general was doing ��-�*!%+)-�'*��-��-�""-)&�%(#-),#,)�, � Congress in 1916. AgriBank’s 15-state very well,” reflects Swanhorst. “We

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 61 TRENDING BANKING

had quite significant growth in some export markets during that period.” Cash Crops: AgriBank’s Growing Business But now things have changed sharply. A report from the World Bank St. Paul-based AgriBank is one of the largest banks in the national Farm Credit System, with a 15-state in fall 2014 noted that commodity prices were expected to “remain weak” for most territory and $94.4 billion in total assets. In recent years, AgriBank’s loan volume has been growing. For 2014, of 2015. the bank’s loan volume was $77.5 billion, an increase of 5.3 percent compared with 2013. “All of the forecasts that we see [indicate] commodity prices are not expected The bank’s loan volume is upa robust 30 percent since 2010, when it stood at $59.5 billion. The growth is to rebound dramatically,” Swanhorst notes, being driven by increases in the amount of loans made to its affiliated associations, which are lending more to leaving most farmers in what he describes as “a very tight margin situation.” farmers, ranchers and other customers. The bottom line for many crop For 2014, AgriBank reported net income of $569.6 million, an increase of 1.1 percent compared with 2013. farmers? Tightening their belts—cutting costs in hopes of boosting margins. For But it’s slightly lower than the net income of $580.9 million that AgriBank reported in 2010. —B.G. farmers, that might mean tapping their credit lines, spreading out payments on loans or trying to negotiate lower rents with landlords. “Most producers are doing various kinds of things to reduce their cost structure,” says Swanhorst. “It isn’t something that you do in one year.” While the climate is challenging for crop farmers, Swanhorst adds that live-

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62 TWIN CITIES BUSINESS tcbmag.com JULY 2015 stock farmers are still doing compara- we can deal with that.” Minnesota. He works with both small volumes may not have changed, the con- tively well. Some farm customers are adjust- business and agricultural customers. versations have become more strategic.” “In general 2014 was a very positive ing loan terms in response to market On the small business side, Mensink At the same time, Mensink says that year for livestock producers and dairy conditions. says that he is seeing some fresh opti- some issues are the same for business farmers,” says Swanhorst. “We’ve done some restructures. I ex- mism from business owners who are owners whether they’re in the middle of At the same time, real estate values pect that credit lines will be used a little starting to weigh investments or expan- the metro or sitting in a smaller commu- for agricultural land are tempering after bit more this year,” says Costello. sions in their businesses, and is also talk- nity. He notes that many employers have several years of gains. He adds that small business opera- ing to others who are now considering concerns about finding workers who “I would describe the ag real estate tors are faring better than crop farmers starting up new businesses. have the specific skill sets that they need. market as kind of choppy. That trend of in the current economy. “From a small business perspective,” “It’s a challenge right now to find increasing land values over the last 10 “The small businesses that we deal he says, “there’s a general sense that the the right people,” says Mensink. “I think years does appear to be over,” says Swan- with are actually doing quite well,” says economy has turned some pretty critical businesses in outstate Minnesota face horst. “Those farmers that rent a lot of Costello. “Equipment dealerships are corners.” Mensink notes that there’s “a lot many of the same challenges as busi- their land are probably going to have the feeling a little bit of the pinch—not as of cash that’s been sitting on the sidelines.” nesses in a metro market.” most stress.” much equipment is being purchased. He’s seeing the loan volume holding But in the rural economy, the current Brad Costello, agriculture relation- Things have slowed down, but that was steady compared with last year, but he state of crop prices casts a long shadow. ship manager for Grand Forks, N.D.- to be expected at some point.” says he’s encouraged by the tenor of “Low commodity prices are what’s based Alerus Financial, is seeing similar As the fifth-largest commercial discussions that he’s having with busi- driving a lot of the stress right now,” says trends. Although his office is in Grand bank in the nation, Minneapolis-based ness owners. Mensink. “We’re having to have a proac- Forks, a chunk of Costello’s customers U.S. Bancorp is a big player nationally. “We’re having a lot of conversations tive conversation with every one of our are in western Minnesota. But US Bank also has a presence in about the future,” notes Mensink. “A lot of farm customers to get through this period “For the most part we’re coming off smaller markets. existing businesses are now taking those of low commodity prices.” TCB a lot of good years,” says Costello. “If the Corey Mensink serves as market forward looks. They’re feeling a lot more [commodity] prices remain low, I still president for US Bank in Owatonna and positive and optimistic than they did a Burl Gilyard is a senior writer at feel comfortable for the most part that a commercial team lead for southern couple of years ago. Although the [loan] Twin Cities Business.

Thanks for helping us see the world differently, Dale.

DALE KLAPMEIER Co-Founder & CEO, Cirrus Aircraft | Minnesota Business Hall of Fame National Aviation Hall of Fame | 51 Heroes of Aviation | Living Legends of Aviation | Founding Chair, AirSpace Minnesota

AirSpace Minnesota Board of Directors

John Andrews, Northern Star Colonel Bernard Gruber (retired), Orbital ATK Joe Mulford, Minnesota State Brigadier General Dennis Schulstad (retired), Council, Boy Scouts Brigadier General Greg Haase, Colleges & Universities Employer Support of the Guard and Reserve Rex Boutelle, Sun Country Airlines National Guard Bureau Ann Novacheck, Lindquist & Vennum Jerry Schulz, MN Air National Guard Neil Brackin, Premier Jet Center Jeff Hamiel, Metropolitan Airports Commission John Olson, Ph.D., Sierra Nevada Corporation Historical Foundation Steve Bruss, Wings Insurance Bob Jasperson, Wings of the North Colonel Michael Ott, U.S. Bank Mark Skarohlid, UTC Aerospace Systems Dr. Clayton T. Cowl, Mayo Clinic Bruce Kitt, NWA History Centre Dr. Doug Paulson, Minnesota Department James Smith, McGladrey LLP Don Craighead, DHC Enterprises Commander Chip Laingen (retired), of Education Jana Webster, Airport Foundation MSP Aisha Friswold, Swedish-American Defense Alliance Don Piccard, Piccard Balloons Brad Westphal, Honeywell Aerospace Chamber of Commerce, MN Michael Madigan, Madigan, Dahl & Harlan, P.A. Cheri Rohlfing, Delta Air Lines Tom Wiesen, MN Submarine League Woodson M. Fountain, Northwest Airlines Alan Matson, Civil Air Patrol Kristi Rollag Wangstad, AirSpace Minnesota Jonathan Yuhas, KSTP-TV/Hubbard Broadcasting Dr. William Garrard, University of Minnesota Ray Rought, Minnesota Aviation History & Education Center

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expectation. We’d be a lesser partner if we didn’t promote interface: “What do we want our users to do, see, read?” Q: It seems like everyone talks about usability, user the importance of user experience in the mobile space - When instead they should be answering the question experience and user engagement. What exactly is the particularly with regard to accomplishing revenue goals “What do our users need to know, accomplish, find?” difference? - because usability is now more important than ever. User experience design is all about having an intimate understanding of your audience, what they need and how MA: These terms are often used interchangeably, but best to give it to them. If your app isn’t designed accord- they shouldn’t be. User experience defines how someone Q: Why do you think user experience matters in mobile ing to this kind of understanding, you’ll lose customers to feels about using a product. Usability is an aspect of user applications now more than ever? a competitor who does provide that value. experience that answers the question “How easy is this product to use?” User engagement is also a component Quite simply: competition. If your customers MA: Q: Are you saying that mobile isn’t the place for brand of user experience that answers the question “How apt is download your app, but find it difficult to accomplish messaging? someone to use this product?” It may be in reference to a the task that inspired the download, there are numerous certain feature of a product, or the product itself. other options at their fingertips. Being in the app store should not be the end goal - not when frustrated users MA: We understand that brands want to tell their Usability and user engagement are only two of many fac- can simply delete your app and select another. Users are story, because that’s how we’ve been taught branding tors that contribute to the entire user experience, but they savvier now, and they expect more. If they don’t get what works. If you have an audience, you use that opportunity are critical factors to look at when it comes to accom- they need from your app, loyalty is limited, especially to tell your story. Mobile can support this, but it should be plishing business objectives and strategy. when alternatives are within a couple of clicks. in a subtle, experiential way. Mobile is the vehicle where your actions speak louder than words. Words that don’t service your user’s objective are just in the way. Instead, Q: Is that why you advise your clients to invest in a user Q: What mistakes do you see brands making with regard your brand story is supported by the value you provide in experience designer? to their mobile user experience? helping your user efficiently accomplish their task. Your brand story is supported by caring about your users and MA: Yes. When businesses come to us to create a MA: Not putting their users first. Your online presence ensuring that they get what they need out of their en- mobile app, we recognize they are making an investment needs to give your audience value, and it needs to be gagement. Information about the company or the brand in order to accomplish a business objective. That business about them. Many brands are operating from a self-serv- has its place, but it should be peripheral to serving the objective is inevitably tied to some sort of revenue-based ing point of view, answering the question in their user user’s needs. continued on next page SPECIAL ADVERTISER CONTENT SECTION

There was a time when we saw a lot of agencies Q: Where do you see mobile user experience con- MA: In the case of wearables, your mobile device using the same designer to produce their brand siderations differing from PC user experience? becomes a part of you – and not just metaphori- advertising as they were using to design their online cally. When it resides on your body, and the screen experience. But usability is a separate discipline and size is limited, the user experience is necessarily expertise, particularly with regard to the level of MA: The context of use is distinctly different from different. For example, smart watches include knowledge required for mobile application design. personal computer to mobile device, and the great- functionality that doesn’t require intent at a partic- Development efforts and associated costs may er context of engagement fi gures into the overall ular moment, as would be the case when reaching increase dramatically if a lesser-savvy designer does user experience. An overly-simple-but-illustrative for your phone or tablet. A smart watch might be not understand how to leverage iOS and Android example is Google Maps. When accessed from a tracking your steps, your location, your pulse. We system conventions, for example. personal computer, it demands print capabilities. will also see “single-action” apps on the rise. Check While the Google Maps mobile app could provide in at Target Field. Signal your friends to meet you at print capabilities, it doesn’t, because the map and the State Fair. The intellectual capital in this space directions are right there with you. Q: What do you want decision-makers to know about before they dive into creating a mobile appli- is only beginning to emerge as the fi rst generation cation? wearables start to gain popularity, but there’s a A personal computing experience allows for, and clear need to expand the user experience conversa- promotes, “exploring” additional areas of the appli- tion. cation because screen real estate allows for it and MA: It is important to understand that user en- user expectation is open to it. The mobile app expe- gagement is directly correlated to business objec- rience, however, is expected to be concise, effi cient, tives. As user engagement increases, so does the Q: What developments are you most excited about task driven because contextually, these users are degree to which your objectives are achieved. If in mobile user experience? “on-the-go.” To echo a familiar anthem among user you provide the type of value that makes the use of experience experts: mobile users want what they your app nearly required because it has become so MA: While still in its relative infancy from a want when they want it. integral to task completion, you’ve not just given us- commercial standpoint, we’re excited about con- ers value, you’ve also driven them to use that value. tinued advancements in biometric scanning as That’s when business objectives ﬂ ourish. Q: We know that budgets are always of concern. seen in Apple’s Touch ID. Soon enough, the idea of

Why should a company invest in a user experience remembering passwords will go the way of the card Even when an application is being created for inter- designer specifi cally? catalog. It’s the starting point for what can or will be nal purposes and objectives, and your users don’t controlled by a simple fi ngerprint. have a choice but to use the app, use of the app will dissipate if frustration mounts. We’ve even seen MA: Companies put an immense amount of effort Google Wallet and Apple Pay are also exciting. You instances where frustrated users will default back to into developing and promoting their app. Once a may no longer have to carry a physical credit card. offl ine, manual processes. user has been acquired, losing that user or receiv- As technology enthusiasts, we are always excited ing less-than-stellar online reviews can represent a to see the future - as depicted in our imaginations - signifi cant loss. This can be prevented by investing come to fruition in real life. in user-experience design. Bottom line: users won’t Q: How do you see the topic of user experience changing as mobile devices evolve? use apps that are confusing, hard to fi gure out or Ultimately, user experience will be at the helm of they simply don’t like. all types of innovation as it defi nes value for both businesses and users. SPECIAL ADVERTISER CONTENT SECTION Communication Upgrade DAVID SCHORNACK, Director of Sales and Business Development at ARVIG, discusses the use and benefi ts of Hosted PBX phone systems, which optimize employee effi ciency and provides customers better service.

Q: What’s new in telecom for Hosted PBX appealing and scalable Employees want tools that increase companies? to companies of all sizes. their effectiveness in their jobs. Hosted PBX also offers many Hosted PBX allows employees to features not found in traditional work from any location and still DS: Like many industries, telecom phone systems. Some of the more remain connected to the offi ce Perham has evolved as customers are popular features include a direct- phone system; and because increasingly using the Cloud for dial number for each employee, the system is easy to use, each more services. This has created two call waiting and Unifi ed Messaging, employee can set up his/her phone important trends. First, businesses where voice messages are routed the way that best suits them. are moving to Hosted PBX systems to an employee’s email inbox (only Unifi ed Messaging with voicemail to instead of traditional premise-based one place to check). Of increasing email, e-mail notifi cations, carbon systems. In a 2014 report, research importance to a mobile workforce copy email to other users, and Eagan fi rm Infonetics predicted continued is a feature that allows calls to other capabilities enhance user strong worldwide growth over an offi ce number to ring a cell productivity. Other features include the next fi ve years for the Cloud phone simultaneously, making it selective call forwarding, remote PBX and Unifi ed Communication easy to connect and receive calls offi ce, hoteling and click-to-dial with market and it’s projected to reach and messages from customers, Group Directories. $12 billion in 2018 with 62.6 million coworkers, etc. seats in service. Second, companies Will I save money? require greater access to dedicated For businesses, Hosted PBX is also Q: bandwidth, both upload and appealing because it provides the download. In many cases, they capability to connect multiple-offi ce DS: The short answer is yes, Minnesota need the high bandwidth and and home-offi ce employees in one but the savings extend beyond increased speed of a scalable fi ber easy-to-manage system. the monthly telephone bill. Great Business connection. customers and employees are hard to fi nd, but having the right Q: What type of company is this technology allows a business to Community Q: What is Hosted PBX? technology right for? grow both. The rich feature set of a Hosted PBX solution enables Arvig’s statewide fiber DS: Hosted PBX is an upgrade DS: Hosted PBX is a fi t for any employees to be more effi cient, network is ready to from a traditional premise-based company. Businesses that utilize this which can mean happier customers. provide you with service! phone system. With Hosted PBX, technology are as small as a handful Both of these costs are hard to the equipment is in your offi ce but of people and scale to thousands of quantify but everyone understands • Managed Internet Access the “brains” of the phone system are users. that it’s less expensive to retain a located in the Cloud. Hosted PBX satisfi ed customer than it is to go • Point-to-Point delivers rich business-class features out and acquire a new one. to end-users. This Cloud-based Q: How will Hosted PBX help • Dark Fiber service minimizes capital investment my business (customers and and provides ease of management employees)? Q: What are the initial costs? Are • MPLS there cost savings over the long run? with an intuitive web-based • Wavelength interface. DS: When customers place a call to a business, they simply want to DS: One of the best things • Voice get to the right person to effi ciently about Hosted PBX is the lower Q: What are the benefi ts of Hosted • Hosted PBX PBX? handle their concerns. Because capital expense involved in the of its many features, Hosted purchase. Hosted PBX systems Arvig has the experience PBX provides different ways for also have a lower total cost of DS: There are many advantages customer calls to be routed to the ownership for the lifetime of the your business needs of Hosted PBX. First, since Hosted right individual, department, etc. system than traditional premise- and local experts you PBX solutions are Cloud-based, Some features allow the person based systems. It also provides can trust. capital investments are less than answering the phone to screen protection from technological traditional premise-based solutions. and route high-volume inbound obsolescence because the system is Second, the company that provides calls, which expedites customer always up-to-date with the newest the solution handles the network service. Another important feature technology. While I am not sure wiring and management, so for customers is Fixed Mobile where technology will be in the customers are not bogged down in Convergence; this capability unifi es coming years, I know that today’s the implementation details. Hosted the calling experience between a businesses need a phone system PBX also provides multisite support desk phone and (carrier agnostic) solution that will grow with them, and access to time- and cost-saving wireless device. giving them access to the latest 888.99.ARVIG features. All of these features make features as they become available. arvig.com/business SPECIAL ADVERTISER CONTENT SECTION

Experience Matters Keeping Businesses Safe Highly experienced integrator of BRIAN STEVENSON, Vice President of Sales and Marketing enterprise security and infrastructure. at MILESTONE SYSTEMS, discusses the importance of internet security and how companies can protect internal data from an attack. Honored by F5 as Application Optimization Partner of the Year.

Honored in 2012 by F5 with the rst Q: How have companies been af- Q: Why is security within applica- Not only are employees accessing ‘Lifetime Achievement’ award for fected by cyber attacks as of late? tions important? enterprise applications on mobile sustained excellence. devices, they’re increasingly using their own devices. Making appli- Milestone is an F5 GUARDIAN BS: Unfortunately, most com- BS: Security solutions function cations always available anywhere Professional Services Partner. panies have underestimated the to help businesses protect sen- on any device is critical to lowering sophistication of today’s hack- sitive data and intellectual prop- costs and maximizing productivity, First F5 Partner to Achieve Unity ers, even up-to-date anti-virus erty while minimizing application but it’s important to have a secu- software and fi rewalls can be downtime and maximizing end-us- GUARDIAN Platinum designation. rity system in place so users can breached by technically sophisti- er productivity. Applications, along use the network when and where cated hackers. For businesses, it with their users and data, are First F5 Partner to Achieve GUARDIAN® they need it, without a threat to is no longer a question of if, but exposed to enormous risk as they security. Our enterprise organiza- Advanced Implementation and Security when, they will be compromised travel from device to data center tions can remove the roadblocks Provider Status by these attacks. In 2014, 42.8 server and back again. in your network to effi ciently and million security incidents were de- securely deliver applications that US JNAEP Partner of the Year tected, a 48 percent increase over are available to users when and Highest Growth 2011-2012 the previous year, and those fi nan- where they need them. Juniper Networks Healthcare Partner cial hits cost $2.7 million, accord- “Companies should Juniper Networks Partner of the Year ing to PricewaterhouseCoopers. have an incident re- When companies move to new sponse plan in place. systems, like Offi ce365, Lync, Palo Alto Innovative Partner Award Q: What precautions and steps SharePoint or Dynamics, it’s should companies take to protect Today’s enterprises important to ensure intelligent themselves from cyber attacks? application delivery by placing a Milestone Systems’ Milestone University must prepare them- strategic point of control in the is an Authorized Training Center (ATC) for selves for not only infrastructure to increase the secu- F5 Networks, Juniper Networks, Check BS: First, companies should ed- rity, availability, and performance Point, Blue Coat, Palo Alto Networks, ucate their employees. Advanced known threats, but of Microsoft applications. ForeScout, Infoblox, FireEye and Cisco. cyber attacks take many forms, including viruses, Trojans, spyware, also the new reality phishing, malicious email attach- Q: What is Software-Defi ned ments, and drive-by downloads. of unknown threats.” Networking (SDN) and how does Employees should not download it work? attachments or click on links from Most organizations are more emails sent by unfamiliar sources, distributed than ever before, in ad- BS: SDN is a network architec- as these can potentially create a dition to a traditional, centralized ture that changes how we can breach scenario. corporate headquarters, enterpris- design, manage, and operate the es include branch offi ces or em- entire network so that changes to Second, companies should seg- ployees who work remotely, and the network become practical and ment their networks. By the time users may move from one location reliable. most organizations realize they’ve to another within the span of a suffered a data breach, they have business day. While this fl exibility More applications, evolving securi- actually been under attack for enables new gains in productivity, ty threats, demands for faster de- weeks, months, or even years. it also leads to dangerous com- ployment, and an explosion of new Limiting network privileges is also promises in terms of information devices are all pushing traditional important, users and applications security. No matter where users IT models to their limits. SDN should only have access to the are, reducing vulnerabilities and works to make the network more information and resources they ensuring ongoing performance fl exible and responsive so orga- need in order to function. Security Simplified of critical business applications is nizations are better positioned to www.milestonesystems.com crucial to improving security. respond to these challenges. Finally, companies should have an 12400 Whitewater Dr, Suite 100 incident response plan in place. Minneapolis MN 55343 USA Today’s enterprises must prepare 866-646-9211 themselves for not only known threats, but also the new reality of unknown threats. Your brand channels are exploding. Your customers are hungry. How will you feed the beast?

CMY

Trust is the new engagement. MARKETING MASH-UP The art and science of the sell Glenn Karwoski

Call 1-800-Ask-Glenn What constitutes an effective marketing strategy for professional services?

e’ve all seen the services marketing, former sional services firm, you need to open a giant outdoor Harvard Business School pro- conversation in order to open the door. and transit signs fessor David Maister, has said Think of it like dating. Unless you’re Wtelling us to “Ask Gary” that the ultimate position for interesting in some way to someone when we’ve been in an auto someone in professional ser- you’re attracted to, you’re not going to accident, and for years you vices is to be seen as a trusted get a first date. During that first date, if couldn’t listen to AM radio advisor, someone who always you don’t engage that person to the ex- in the Twin Cities without has the client’s best interest tent that they want to learn more about hearing an ad for the “know in mind, whether or not it you and spend more time with you, your rights” law firm. means business and profits for there’s no second date. Content market- Both are examples, albeit the advisor. ing for professional services is like that: If borderline obnoxious, of It may be generating you want someone to be interested, you the category of professional awareness, name recognition, have to be interesting. services marketing. and warm sales leads that get The ability to discuss a subject that While we’re accustomed you into the game, but until the target audience is genuinely inter- to a barrage of advertising you move from what Maister ested in learning about, which can be ex- when it comes to choos- calls “capabilities, contracts plained in a way that is easily understood ing between Doritos or and costs” to more meaning- and engaging, is critical to developing Cheetos, when it comes ful conversations about the great content. to finding professional real problems and opportu- “Branding professional services is service providers, the waters nities a business has, you’re broader than name recognition,” says become a lot murkier for far from walking the trusted Liz Hersey, marketing director at Foley marketers. advisor path, which is typified & Mansfield, a national law firm with A friend of mine, one of by a dialogue versus a sales offices in the Twin Cities. “It’s about the managing partners at a monologue. influencing the influencers that get you large Minneapolis law firm, says that all big boys in New York. It was motiva- Like everything in marketing, tech- referrals and get your name out there.” prospects are not equal, and any pros- tional and also provided reassurance to nology has changed the landscape. Be- Hersey, who has been in profes- pect is not necessarily a good prospect. current clients that they were working sides personal contact, word-of-mouth sional services marketing for several The process by which lawyers, ac- with a firm of substance. And maybe marketing is the No. 1 door opener or decades, says that in marketing legal countants, architects, advertising agencies that phone wouldn’t feel too heavy to all closer—and social media is word of services, a lot of content is directed at and other providers market themselves the broker trainees when they picked it mouth in an exponential cacophony of other lawyers—kind of a “look how has always been challenging. Making a up to make a cold call. reviews, recommendations, shares, likes, smart I am”—but the ability to generate decision about buying a snack food ver- So does advertising for professional re-tweets and comments. something of value to a client or pro- sus hiring an organization to retool your services work? Mass marketing—although we spective client is far more important. brand is significant, to say the least, and I’m struck by one of the long- still see our fair share of billboards That applies to professional services there are a wide variety of options and running ironies about the effectiveness at the airport advertising a variety of beyond law as well. opinions about which way to go. Keep in mind that just because you One thing virtually everybody agrees have something to say doesn’t necessarily on is that it’s not easy. mean anybody wants to hear it. Know- Even though some firms may ques- ing your audience and what they’re tion advertising, it does have its place One of the long-running ironies about interested in, and engaging them when in building brand awareness for new and how they want to interact with firms, as well as part of an ongoing brand professional services advertising is that the vast you are key to any professional services awareness strategy. majority of advertising agencies don’t advertise. marketing program. It’s not like you’re RSP Architects uses paid media selling Doritos—although if you get a thusly; marketing manager Tiana Young bad chip, I know a lot of law firms that explains that “you never know exactly would take the case. TCB when someone will need an architectural of such advertising: the vast majority consulting firms—has largely been firm, so maintaining a regular [media] of advertising agencies don’t advertise. replaced by targeted social media ef- Glenn Karwoski (g.karwoski@creativepr. presence is important to us.” Magazines like this one are filled with forts and inbound marketing. The key com) is founder and managing director I did work for a regional brokerage ads for professional services firms, to success for both is creating valuable, of Karwoski & Courage marketing com- where the entire paid media strategy but almost never for an advertising engaging content. munications agency. He also teaches at the was to convince the brokers they were agency—yet they’ll recommend “institu- Remember, you want to establish Opus College of Business at the University working for a substantial firm that had tional advertising” for their professional a conversation, whether that’s through of St. Thomas and in the School of Jour- the resources to do television advertising services clients. your website, LinkedIn, Twitter or nalism and Mass Communication at the during golf tournaments, just like the Perhaps the dean of professional Facebook account. If you’re a profes- University of Minnesota.

70 TWIN CITIES BUSINESS tcbmag.com JULY 2015 CORNEROFFICE Insights on corporate leadership, governance, and ethics Mark W. Sheffert

Want to Scale the C-Level Mountain, Huh? Be sure you’re prepared when you finally reach the ascent.

limbing the mountain to the C- the sales staff as approach a common task with level is a journey around which part of my due multiple disciplines. When many people build their entire diligence, I con- climbing the ranks within a Ccareers, only to find disappointment cluded that wasn’t business sector, it’s easier to and frustration when they get there. It the best course. It build teamwork because of the doesn’t have to be that way, though, if was evident the team’s vertical orientation. But you prepare yourself for what you’ll find sales department at the executive level—where once you ascend to the top. didn’t respect the each team member brings While you are moving up in your CEO as an effec- multiple horizontal viewpoints career, your skills will need to be an inch tive leader because and priorities to the table— wide and a mile deep in your area of he was perceived sometimes a food fight erupts. expertise—accounting, finance, market- as arrogant and New C-level leaders are often ing, human resources or technology. uncommunica- unprepared to handle these nu- But once you get to the top, the skills tive. ances and must quickly learn required for C-level leadership shift. The I advised the the skills to motivate others to old dog’s gotta learn some new tricks CEO of my find- work together to achieve a task, about leadership and high-level strategic ings and recom- project or goal. Good team thinking, communication, building mended he not leaders also give credit to the teams, corporate culture and building hire a president team, rather than taking credit support structures. Now you will need between him and to promote themselves. to be a mile wide, but an inch deep. This the sales force, but is a new bag of skills that many aspiring instead schedule The personal toll executives don’t pack before they get to meetings to listen Perhaps the most surprising the C-suite. to their issues and aspect of a new C-level job to communicate is the personal sacrifice and Leadership and strategic thinking his vision, strate- Perhaps the most surprising aspect of a new mental toil it requires. It really While I was climbing the corporate gies and priorities. is lonely at the top, and many ladder I was fortunate to have a board of The CEO agreed, C-level job is the personal sacrifice and mental executives are too proud to directors that was interested in my devel- and his meetings toil it requires. It really is lonely at the top. ask for help or support, or opment and encouraged me to expand with sales resulted fear they will appear weak if my skills by attending a university execu- in quadruple they do so. Spending 18 hours tive program. I found that experience growth. I talked a day at work takes its toll on fulfilling, as it forced me to think outside myself out of the friends, spouses and children, my area of expertise and take into con- job, but it was that nobody talks about or prepares new and doesn’t leave time for a sideration other areas of the company right for the company. executives to handle. Many new C-level balanced life. I know this first-hand, as it that I didn’t oversee at the time. C-level leaders who are able to leaders get blindsided by culture when was the reason I left corporate executive Managers can only be effective when relate to and help employees visual- they don’t understand that new strate- life over 25 years ago. they understand the nuances and details ize how their job fits into strategy are gies also require new ways of thinking, I’ve counseled many burned-out of the business area they are leading, but especially effective in executing strategy. behaving, rewarding and responding. executives who finally achieved their when they get to the top, it’s imperative The tie that binds is communication. In Strategy is carried out one person dream job, only to sacrifice everything that they are prepared to provide leader- other words, don’t just sit in your office and one task at a time, and if the corpo- else and end up losing support, encour- ship and a strategic vision for the future. blasting out emails and demanding rate culture that affects actions, assump- agement and valuable relationships. This is a skill that requires different reports—interact with employees, ask tions and values is fighting the strategy, New C-level executives who are enlight- thinking, so new C-level leaders must questions and build relationships based it will become a victim of the culture. ened enough to maintain balance and train themselves to look up and ahead, on transparent communication. Effective new executives are mindful of ask for help and support when needed not down into details. creating a sense of urgency for change, are the ones who successfully climb the Corporate culture becoming a role model for desired C-level mountain and enjoy it when Communication Successful new executives also appreci- behaviors, changing the reward system they get there. TCB Executives who are most effective when ate that corporate culture eats strategy if need be, and creating new traditions they ascend to the C-level are effec- every time. It’s not enough to simply or habits. Mark W. Sheffert (mark@manchester- tive communicators. Many years ago I communicate vision, strategic direction, companies.com) is founder, chairman and was recruited to become the president priorities and major actions; rather, Teambuilding CEO of Manchester Companies, Inc., a of a large financial services company. these must be executed in the context Along with culture, new executives must Minneapolis-based performance improve- The CEO wanted me to lead sales and of the organization’s culture. Culture understand the value of teamwork and ment, board governance, and litigation marketing, but after spending time with is the unseen force in an organization be effective in motivating people to advisory firm.

JULY 2015 tcbmag.com TWIN CITIES BUSINESS 71 OPEN LETTER Vance K. Opperman The Billionaires Are Coming! The Billionaires Are Coming!

To: Charles Koch a billionaire by the name of Norman corruption of democracy and a failure of in the political process. Simple as that. CEO Braman. In this telling, Sen. Rubio’s government. There are those who believe all David Koch patron has already spent approximately But what is American is the First campaigns should be financed by the Executive vice president $10 million for the senator’s pursuit of Amendment of the United States government. In a way, this is kind of the the White House. Constitution. And it is this bulwark ultimate leviathan—the government Koch Industries Not to be outdone on either the po- against the censorious among us that is becomes so big that it ends up swallow- Wichita, Kansas litical or personal fortune level, pundits frequently under attack. Most so-called ing its own tail and becoming its own will have a field day kicking around the campaign finance laws are ultimately lobbyist. Or as I recall Gene McCarthy various sources of finance institutional- struck down when they get to a court once testified, “putting the Exchequer in ized in the Clinton Foundation and precisely because they restrict freedom charge of the Exchequer is a bad idea.” Dear Koch brothers: Clinton Initiative. The New York Times, of speech. Politicians who are hon- For a good idea, if one is really seri- no doubt to temper its later endorse- est about trying to change this system ous about fighting the Koch brothers e are entering the season ment for president, has, to and other billion- where most of us will be some degree, led the attack on aire patrons, one receiving emails about your various funding to those non- should look to the Wcontinued political perfidy, so I thought profit entities. We can expect a experience of Great we might as well write you directly. In great deal more of this type of Britain. Great Britain fact, anyone who has ever contributed coverage. just had a national any amount of money to a Democrat Academics have jumped Most so-called campaign finance laws are ultimately election. It lasted six running for federal office, or into this bashing of the struck down when they get to a court precisely weeks. There were no for that matter, a number because they restrict freedom of speech. political advertise- of liberal Republicans, ments on television has probably received an and the total cost was email warning them that approximately $50 “the Koch brothers” are million. Short politi- buying the election and cal campaigns vastly otherwise destroying reduce the amount of democracy. Apparently, generally advocate money needed to run them. Something the way you destroy amending the Consti- to ponder from across the pond. democracy is by spend- tution to achieve that Lastly, there are a lot of ways to raise, ing your money in support result. Amending the for example, $1 million for a political of your rather public beliefs—in other U.S. Constitution candidate. One patron can give a mil- words, putting your money where your is a spectacularly lion dollars. Or 10,000 voters can give mouth is. Generally in politics, one bad idea, but in $100. And with crowdsourcing and objects to a person putting their money any event, it takes social media, the latter is pretty easy and where their mouth is, unless it is their decades to achieve, so the inexpensive. mouth, in which case it is a matter of advocating politician’s election (and, Meanwhile, while the Koch brothers supporting principle. they hope, reelection) is not affected. continue to subvert our political process News reports are filled with But there is a deeper hypocrisy here. by writing their checks in support of stories of billionaires who seem to billionaires as patrons of Many of the very same people who their views, I hope they continue to have captured a politico. Several years politicians. And in a way, who should wish to pass restrictions on freedom of employ tens of thousands of people, ago, Sheldon Adelson, the gambling know better than those beneficiaries of expression also want the government to some of them in Minnesota, in produc- mogul from Las Vegas who, among foundations and billionaires than the get inexorably larger. When the govern- ing Dixie cups, Brawny paper towels and other things, owns the Venetian hotel, professorship? Professor Martin Gilens ment impacts one-third of the entire all the other products that we enjoy from boasted of getting former Republican from Princeton and Professor Benjamin economy, it’s not unreasonable that a Georgia-Pacific. TCB U.S. House leader Tom DeLay to do his Page from Northwestern University have third of that economy will impact the bidding. It was also revealed that he had just published a much-reported study, government. In the early days of Micro- Sincerely yours, almost single-handedly financed the which basically shows that policy changes soft, Bill Gates was quite proud of the fact 2012 presidential primary campaign of in Congress supported by economic elites that the company employed no lobbyists Vance K. Opperman former House Speaker Newt Gingrich. became law approximately 60 or 70 per- in Washington. Microsoft got large, and In Favor of More And so, like the House of Borgia of old, cent of the time, and policies supported the government instituted an ill-advised Financial Participation modern-day political gladiators have by business lobbies also became law 60 to antitrust action against Microsoft; Micro- their patrons. 70 percent of the time, but policy changes soft added battalions of lobbyists. Vance K. Opperman (vopperman@key The New York Times and the Miami favored only by voters became law ap- If you have a large state apparatus, investment.com) is owner and CEO of Herald have carried stories to the effect proximately 30 percent of the time. This, there will be many who see it in their eco- MSP Communications, which publishes that Sen. Marco Rubio has as his patron it is alleged, represents an un-American nomic self-interest to be deeply involved Twin Cities Business.

72 TWIN CITIES BUSINESS tcbmag.com JULY 2015 �hank you

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