The science of a startup
TECH MATTERS | Lucent alum hires serial startup executive to take Velocent Systems to market
Of the seven telecommunications companies Mark McIlvane has helped launch, two have achieved billion-dollar valuations. McIlvane's formula is designed to carry any early stage outfit that hires him from point A to point Z.
"Startup companies are a science and they will succeed if managed properly," said McIlvane, 54, who recently joined Naperville-based Velocent Systems as chief operating officer. "There are two reasons why a startup fails. Entrepreneurs don't watch their cash, or they come up with a great idea but forget to sell stuff."
(Danielle Gardner/STNG)
Velocent, founded in 2005 by former Lucent executive Bruce Peterson, develops software that helps wireless carriers identify and respond to customer service issues. The 11-person company has raised more than $4 million to date -- largely from traders based at the Chicago Mercantile Exchange -- to fund the development of its deep packet inspection technology. In July, Velocent launched its first commercial product targeted to carriers in Europe and Asia. McIlvane says the company expects to generate $3.5 million in 2008 after not sending a single invoice out last year.
Peterson, 55, founded Chicago-based telecommunications software developer VoiceCue Technologies in 1994. After selling that company back to his investors for a seven-figure payout in 1999 and then spending five years at Lucent, Peterson set out to move the decimal point one or two zeroes to the right for his next venture.
"I never got VoiceCue to a tier-one $100 million company," he said. "I wanted to surround myself with people who can get to that level."
McIlvane joins Velocent after serving as CEO of Fort Lee, N.J.-based converged communications provider Personeta. Previously, he was an early sales and marketing executive with voicemail pioneer Comverse Technology and telecommunications manufacturer Clarent Corporation. Both companies at one time had market caps that hovered into ten figures.
Scores of big brains converged April 15 for a glimpse into the future of online social media and virtual reality networks. A recurring theme among the panelists hosted by the Chicago Chapter of the MIT Enterprise Forum was that while user-generated Web sites are drawing most of us away from television, a sustainable business model for the category is still lacking.
"All bets are off," said Scott Stephens, general manager of Playboy Online. Last year, Playboy launched www.playboyu.com as a clothed, college-student-only competitor to Facebook.com. "It is not our goal to make money, but to provide a medium for younger people who resonate towards the true principles of the Playboy brand," Stephens said.
Kevin Harvey of the Center for the Advancement of Distance Learning at the University of Illinois at Chicago spoke of a "Metaverse" where all virtual worlds like Second Life are ultimately connected into one network. While Harvey acknowledged clumsy commercialization efforts within these networks to date, he reminded the audience that the Internet existed for several years before the first banner ad was sold.
"We are on the verge of a new paradigm for conversations on the Web and beyond," he said.
Time to tighten up your business plan! Companies and entrepreneurs interested in participating in the Chicago city treasurer's 2008 Small Business Expo and Business Plan Competition have until May 14 to submit a two-page executive summary to be eligible for any prizes. Winning companies will receive as much as $5,000 in grants. Previous winners include educational software developer Free Rain Systems, pharmaceutical manufacturer SanoGene Therapeutics and identity theft detection service ArrestFree.com.
As part of Chicago Smart Money Week, interested entrepreneurs are invited to participate in a series of free business-plan writing workshops beginning tomorrow night at the Dawson Technical Institute at 3901 S. State Street. Winners will be announced on Aug. 1 at the Expo. For more information, visit www.chicagocitytreasurer.com.
