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CRAIN’S CLEVELAND BUSINESS
WWW.CRAINSCLEVELAND.COM
JANUARY 9 - 15, 2012
Critic(s) works hard to make points By CHUCK SODER csoder@crain.com
THURSDAY, JANUARY 19, 2012 11:30 am Registration • 12 Noon Lunch & Program
JOE TAIT
TERRY PLUTO
If you’ve ever read negative online comments about JumpStart Inc., Mike Burkons may have had something to do with it. Mr. Burkons, a local entrepreneur and an outspoken critic of JumpStart, is not the only member of the region’s business community to criticize the nonprofit online, but he easily is one of the most active. Not all the comments are under his own name, however. Mr. Burkons has admitted that he has anonymously posted critical comments on CrainsCleveland.com, Cleveland .com and Tech.MN, a technology blog in Minnesota, where JumpStart is helping economic development groups create a plan to boost entrepreneurship in that region. He occasionally has used multiple anonymous names to comment on a single news story or blog item. In
those posts, he sometimes would write that he agreed with previous comments that he made under another name, making it look like multiple people held the same point of view. All three websites have removed at least some of Mr. Burkons’ comments. Mr. Burkons also recruits other critics of JumpStart and encourages them to post comments on blogs and news stories about the organization, which gets nearly half its money from the state of Ohio. Some of those comments are anonymous, too. Mr. Burkons — who founded Charitee Golf LLC, a small business in Shaker Heights that provides a video monitoring service designed to help golf courses award prizes to people who get a hole-in-one or win a closest-to-the-pin contest — said he would respond to the posting issue only if Crain’s agreed to include his entire quote. Here it is: “As for posting under different
names, I guess my poor writing is easy to spot. In some instances it is because Cleveland.com will take down a post and if written under a different name it will stay up. Other times it is to keep some anonymity. The group we are trying to shed transparency on has a state-funded $13 million budget allotting much of it to support a large number of marketing and PR professionals as well as interns. “Jumpstart’s marketing and PR efforts used to be larger until those pesky anonymous bloggers publicly questioned if this was an effective use of our tax dollars. Here is a solution … if Jumpstart gives us half of the funds used to support their marketing and PR efforts, I will always post under Mike Burkons. With so many resources dedicated towards defending and promoting themselves one would think they would address the content of the criticism instead of the source?” ■
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JumpStart: Board needs tech expertise continued from PAGE 3
Board makeup targeted
first to have worked for JumpStart, which will receive from the state of Ohio 43% of its $13.8 million budget for the fiscal year that ends next June 30. Mr. Birchall’s recommendations echo criticisms of JumpStart that three area entrepreneurs made last April in a lengthy series of emails they forwarded to business leaders and politicians throughout Northeast Ohio. For instance, Mr. Birchall said JumpStart should place more technology entrepreneurs on its board, spend less on marketing and on salaries for its management team, and revamp the way it measures its economic impact in Northeast Ohio. Public criticism — which since April has continued on blogs and in the comment sections of online news stories, often in the form of anonymous posts — hasn’t convinced JumpStart CEO Ray Leach to make significant changes to the organization. Mr. Leach said one reason why is because none of JumpStart’s financial backers, including the state of Ohio, have suggested it change course. And the funders, he said, are making informed decisions. According to Mr. Leach, JumpStart regularly submits to the state the number of hours its employees spend working with young technology companies in the region, the number of dollars the group has invested in area startups and the number of new dollars — be they in the form of sales, investments or grants — that those companies bring in after working with the nonprofit. Similar organizations that receive money from Ohio’s Third Frontier economic development program submit the same information to the state. The data play a big role in how private consultants rank grant requests those organizations submit to the Third Frontier, Mr. Leach said. “When scored against everyone else in the state, we rank No. 1 and have for the last five years,” he said.
JumpStart encouraged Mr. Birchall to leave because it was planning to have an affiliated organization, the Youngstown Business Incubator, provide more services to information technology companies on behalf of the nonprofit, Mr. Leach said. Mr. Birchall, who worked with IT companies at JumpStart, said he does not hold a grudge against the organization, adding that the group even helped him look for other opportunities. He acknowledges in his document that JumpStart also turned him down last year when he applied to receive an investment for Sports Director Online LLC , a software company he started. Besides helping start AxioMed, Mr. Birchall was an executive at spinal implant maker AcroMed Corp. of Cleveland, which was acquired by DePuy Inc. for $325 million in 1998. He also served as a part-time chief financial officer for Clevelandbased eBlueprint Holdings LLC, helping sell the electronic blueprint company to American Reprographics Co. for an undisclosed price in 2007. Mr. Birchall said if he could make one change at JumpStart he would add to its board more technology entrepreneurs, early stage tech investors and people with expertise in the fields that are the group’s focus. “A good, solid board would address all the other issues,” he said. Mr. Leach and JumpStart chairman Doug Weintraub, both of whom have started and sold companies of their own, agree that only a few of the 21 people on JumpStart’s board have started technology companies. There are a total of 10 entrepreneurs on the board, when including those who have formed companies in other industries. Three board members are investors and eight are considered “functional experts” who provide advice in areas such as finance, accounting and community engagement, according to information from the organization.
“People have different interpretations on what it is to be an entrepreneur,” said Mr. Weintraub, adding that JumpStart also wants the board to reflect the broader Northeast Ohio community. Many tech entrepreneurs don’t want to join the board because they are too busy running businesses or because doing so would prevent them from receiving money from JumpStart, Mr. Leach said.
Now’s the time Mr. Birchall said JumpStart has too many layers of management and spends too much on marketing. The organization has 46 employees, including seven who work mainly outside the region as part of a business development effort supported by federal grants. JumpStart has six marketing positions. One employee works in marketing part time. “They have a bigger marketing team than (AcroMed) had for a $100 million company,” Mr. Birchall said. Mr. Leach says JumpStart has grown only because the state and its other funders have asked it to do more, which includes getting the word out about JumpStart, affiliated groups that provide entrepreneurial services and the companies they serve. JumpStart’s responsibilities may grow again this year: The Third Frontier program has increased by about 30% the amount of money it will award through its Entrepreneurial Signature Program, which funds programs for entrepreneurs. JumpStart, the hub through which all Northeast Ohio organizations receive that money, is putting together a grant application this month to secure money from that program. And if anyone knows of a better way to serve entrepreneurs trying to start technology companies, they’re welcome to become one of the many groups that will join JumpStart’s application, Mr. Leach said. “If they have an idea … if there was ever a time to bring it, it’s now,” he said. ■
Volume 33, Number 2 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for combined issues on the fourth week of May and fifth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877-8249373. REPRINT INFORMATION: 800-290-5460 Ext. 136