Scale Up Milwaukee seeks to create entrepreneurship ecosystem

Phase One of the entrepreneurship project Scale Up Milwaukee is now underway. The multi-year project is a new initiative commissioned by American Express OPEN, a division of the company that focuses on entrepreneurs, and it has begun its efforts to create an “entrepreneurship ecosystem” in Milwaukee.

The project is based on a model developed by Daniel Isenberg, founding executive director of the Babson Entrepreneurship Ecosystem Projects at Babson College in Wellesly, Mass., and author of the new book, “Worthless, Impossible and Stupid,” published by Harvard Business Review Press. Both the book and the entrepreneurship project focus on “extraordinary value creation and capture.”

“One of the principles underlying Scale Up Milwaukee is to rebalance the emphasis of entrepreneurship so that it’s not just about startups, but it’s also about companies that exist, a certain small percentage of which have the potential or the desire to grow dramatically. We call these, ‘Scale Ups,'” Isenberg said. “This is not about small business. This is about big businesses that happen to be small right now. This is about growth, not about size.”

In addition to American Express OPEN, the Scale Up Milwaukee project has convened a number of partners in the public-private project, including the Wisconsin Economic Development Corp. (WEDC), the Wisconsin Housing and Economic Development Authority (WHEDA), the Milwaukee Economic Development Corp. (MEDC), Mayor Tom Barrett’s office, the University of Wisconsin-Milwaukee (UWM), and the Greater Milwaukee Committee (GMC), which has played a large role as a convening force in the project.

What is unclear, however, is the amount of funding that will be put toward Scale Up Milwaukee. UWM Chancellor Mike Lovell told BizTimes that American Express is putting forth the “lion’s share of the costs” when the project was initially unveiled in late March, but representatives from American Express OPEN declined to disclose any details of their funding for this project at this stage. Other partners on the project, including the GMC and Isenberg, declined to provide any detailed funding information.

The WEDC, however, will commit $50,000 to the project “as a co-investing partner,” said Lee Swindall, WEDC vice president of business and industry development.

What is clear is the enthusiasm that American Express OPEN and the other convening partners have for this project in Milwaukee.

“We’ve put a lot of time and effort into this project because we really believe in it and Milwaukee has impressed us every step of the way,” said Benjamin Stone, director of small business and startup development at American Express OPEN.

American Express OPEN compiled a report on the outlook of small business owners in Wisconsin, which showed that 87 percent of Wisconsin business owners plan to grow their businesses over the next six months, well above the national average of 74 percent.
“That reflects the reality that I’ve seen on the gound: the palpable enthusiasm…to grow businesses,” said Stone. “You can just feel it.”

“I think American Express is bringing a certain amount of legitimacy in terms of this being a pilot that can be replicated nationally,” said Brian Schupper, director of policy at the GMC. “That’s not to say that we don’t have large corporate partners in town that aren’t interested in similar activity, but I think it’s a strong statement about Milwaukee that they’re gung-ho.”

Enter the “Scalerator”

One of the project’s major efforts is what’s being called the “Scalerator,” which will officially begin in mid-September. Roughly a dozen companies will be a part of the “Scalerator,” which will run for about two months.

“We’ll be inviting them to participate in a series of very intensive seminars with world class experts we’ll bring in specifically for this purpose to get them laser-focused on growth and very specific things they can do to increase their sales tangibly in a very short run,” said Isenberg. “We’ve learned from experience that this happens and it actually can be done.”

An open application period will begin in a few weeks, and Isenberg and his team will determine the companies that will be selected for the program.

“We’re going to be opening the application process to everybody. We’ll be selecting a very small number because first of all, it’s a pilot,” he said. “Second of all, it’s a myth that every business can grow and every startup can be successful. All the research shows that it’s a very small number, so we’re going to be selecting those that, first of all, have the ambition to grow, and secondly, have other characteristics that we think allows them to scale up.”

Schupper said the goal of the “Scalerator” will be to help already established companies that are already generating revenue and have a customer base realize their potential.

“There will be four seminar sessions, probably each one a good day and a half, where Dan Isenberg is going to be in town, bringing in faculty that he’s worked with that are going to teach skills,” said Schupper. “It’s not just a mini-Executive MBA, it’s much more than that. It’s really diving deep, working with these folks, helping identify the stuff that maybe they don’t teach in business school, and helping overcome barriers, whether real or perceived.”

The WEDC is also assisting in the development of a profiling application for identifying businesses for the “Scalerator.”

“WEDC’s long-term objective for the ‘Scalerator’ is to create an ongoing, integrated, multi-university entrepreneurial management acceleration pipeline for profiled businesses,” said Swindall. He also said that the Scale Up Milwaukee project is being integrated in the state and the WEDC’s Transform Milwaukee efforts.

“We’re not going to transform Milwaukee if we don’t create a system of serial entrepreneurship that creates vibrancy over time,” Swindall said.

Also occurring in the first phase of Scale Up Milwaukee are four workshops and seminars. The first focuses on faculty case-writing aiming to change how business professors teach entrepreneurial activity, said Schupper. Another will focus on groups such as accountants, lawyers and other groups who provide non-financial resources for entrepreneurs. Another will focus on investments, and a fourth will focus on engaging with both traditional and non-traditional media. The first of these took place on July 15.

A major component of the activity in the first phase of Scale Up Milwaukee has been fact-finding and discussion. In addition to the core partners, these discussions have involved a variety of leaders in the Milwaukee area, including Milwaukee County Executive Chris Abele, Barrett, Tom Still of the Wisconsin Technology Council, Eve Hall of the African American Chamber of Commerce, Pat O’Brien of the Milwaukee Development Corporation, John Torinus of the Wisconsin Super Angel Fund, and several others.

“The beginning of the phase is what we’d call a fact-finding mission,” said Schupper. “That was a lot of Dan leading some conversations, meeting with many, many stakeholders…to kind of get a fresh look at where the challenges and opportunities are here.”

Isenberg said that beginning in mid-April, there have been roundtable discussions, workshops, meetings and online Google Hangouts that have been part of the project.

“We haven’t really done anything except for encourage dialogue,” said Isenberg. “The dialogue is important.”

Schupper said all of the discussions and conversations address some of the challenges the city faces.

“To me, the challenge is changing the perception, in terms of ‘can-do.’ I think there’s a lot of great activity here, but all too often, we hear the negative stories. I think part of what we need to do is change that perception so that people say, ‘I can do that here. I want to do that here, and I can do that here.’ And part of what we need to do is get those stories out, and I think that’s a challenge,” Schupper said. “One of the challenges we have in Milwaukee is we’re too quick to look at the deficiencies.”

Now, with the focus beginning to shift to the seminars, workshops and the “Scalerator,” the rubber is starting to meet the road.

“We’re moving to the action phase right now,” said Stone. The second phase of Scale Up will begin roughly at the beginning of 2014, he said.

“Right now, we’re formulating programs,” said Isenberg. “This is a process that takes anywhere from four to five years to really generate the tangible benefits that we’re talking about. What we’re doing in this, phase one, is a proof of concept to convince or to persuade ourselves and all the stakeholders that we’re on the right track.”

“Tremendous assets”

Through the early discussions and roundtables, Isenberg has learned several important things about Milwaukee’s entrepreneurial landscape.

“There are a tremendous number of assets in the environment,” he said. “There are success stories, there are entrepreneurs, there are corporations who can buy things, there are great educational institutions, and there’s a very strong civic spirit that’s reflected in a number of organizations, the Greater Milwaukee Committee being just one example. There are organizations to support entrepreneurship. There are a lot of pieces in place.

“Another asset is a sense of frustration that it could be a lot more. I think that’s an asset. If people were happy with the status quo, I would view that as not an asset. People are not happy with the status quo – that’s an asset. All the good things combined with the sense of frustration that it could be better, these are wonderful building blocks for growth.”

The genesis for this project came soon after Lovell became chancellor at UWM, when he, school of Business Dean Timothy Smunt and Sheldon Lubar, founder and chairman of Lubar & Co., traveled to Babson College because of its reputation for entrepreneurial activity. There, they met with Isenberg and later, in spring, 2012, invited him to Milwaukee, where he spoke at the Greater Milwaukee Committee. Not long after, Isenberg was contacted by American Express OPEN about their new pilot program.

“Part of my job is just to be tapped into the conversation around entrepreneurship and I thought it was an opportunity to bring Isenberg’s work to the United States for the first time,” said Stone.

It was at that time that Isenberg suggested Milwaukee as the pilot city, which soon became Scale Up Milwaukee.

“We weren’t looking to do a project as much as the project found us,” said Schupper. “I think (Isenberg) saw a community that was ripe for this kind of injection of activity. We have a lot of preexisting stakeholders, partners and institutions that can be leveraged and somewhat realigned to help foster the ecosystem…It was a nice marriage waiting to happen.”

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