In a blog post in mid-August, EyeVerify CEO Toby Rush wrote about a critical lesson he learned a decade earlier: He was the one getting in his own way.
In the post, Rush recalled meeting with an advisor at Pipeline Inc., a Kansas City, Kan.-based entrepreneurial fellowship program. When Rush told his advisor his “big vision” to bring in $20 million to $30 million in revenue, the advisor told Rush he was thinking too small: What would it take to make $100 million?
That lesson paid off for Rush in a big way. Last month, EyeVerify, which makes mobile authentication technology, was acquired by a subsidiary of Alibaba, the Chinese e-commerce giant. The deal reportedly was worth more than $100 million.
On the eve of the application deadline for Pipeline’s 2017 class (applications are due Wednesday), Missouri Business Alert caught up with Pipeline CEO Joni Cobb to talk about the fellowship program, what it offers entrepreneurs and what trends she sees in startups across the state.
This interview has been edited for length and clarity.
Missouri Business Alert: What do you think made EyeVerify such a success story?
Joni Cobb: When Toby entered Pipeline, he was running a former company of his, Rush Tracking. He was already doing really well, but during his fellowship year, I watched him have a lot of “aha” moments he’s blogged about.
He realized that the extent of his vision, how big he thought something would get was pretty small compared to what it actually became later, and that he was the one getting in his way.
So he when he exited that company and he looked at what to do next, he wanted to make sure whatever he focused his energy on, he was finding something with the potential of significant scale and a model that would work for a high-growth company.
MBA: What does the Pipeline fellowship provide for entrepreneurs like Rush?
JC: Pipeline exists to be the place where a leader or founder — usually a lonely person who is running the venture — can be with other entrepreneurs who have similar goals and challenges. We bring them together so they can utilize each other and our network to block those challenges and accelerate the rate at which they move their company forward.
I always have to ensure that people understand Pipeline is not just a “program.” The fellowship is an entry point into an organization. Once you complete the fellowship, you can be a full member of the organization.
Toby was always very open about saying that the highest value in Pipeline has been in the membership. They spend a lot of time within the module format and with each other during in-between time. He is very clear that his most valuable pieces of insight come from years and years of trusted friends that are members of Pipeline that talk very frankly, openly and supportively with each other.
MBA: As you prepare for the next class of fellows, what do you look for in an applicant?
JC: We’re looking for one individual, usually the person running the company. We don’t have any requirements on revenue or stage of growth. All of our entrepreneurs are in completely diverse industries.
Every entrepreneur is different, but we see these common denominators: We see an intense passion for what they are building; a lot of knowledge about their markets, their models, their weaknesses, challenges and their competition; and they show high propensity to flourish in a mentoring environment. Sometimes we see people who could check off the first two boxes, but they don’t like outside opinion, or they might only be focused on fundraising.
MBA: Who are some other entrepreneurs who benefited from the fellowship?
JC: Laura Steward, who founded Video Fizz, was in last year’s class. … She’s been very open about the first module, when she figured out she was pursuing something that was not going to work. She’s said it was a really scary moment for her, but by being surround by Pipeline and the network, she was able to put together a new idea for which she had a lot of validation. She ended up finding her first significant investor as part of our network.
Another example would be Davyeon Ross and Bruce Ianni of ShotTracker. Bruce Ianni was in the 2008 class and he had a company called Chemidex, and he sold that company a couple of years ago. Davyeon was in the next class, and he had a company called Digital Sports Ventures. And because of their trust and respect for each other, they found each other through the network and they co-founded ShotTracker, which is a very high profile company doing very well raising lots of rounds.
And there’s Jason Tatge of Farmobile. Jason was in the 2009 class. He had a company called Farms Technology and had a successful exit out of that company. Then he came back with another idea and worked with our experts on his model and he said he’s been able to go from idea to validation to prototyping at such an accelerated pace, that they’re finding it’s so efficient to start their next venture using the Pipeline network and peers.
MBA: What are some trends that you see in Kansas City? Do you see any particular types of startups that caught your or Pipeline’s attention?
KC: We’re seeing all-over-the-board diversity in the type of companies these entrepreneurs are running. They create from the problems they see and the skill sets they have.
With that said, there are a couple of things I’ve noticed lately. I’m noticing an uptick in the number of female entrepreneurs that are applying, which is great. We love to see that. And I’m seeing that entrepreneurs are more prepared. … I think that’s a testament to all the other programs and resources that are out there both locally and on the internet.
MBA: Do you see any sectors that are crowded or under-tapped?
JC: I think there is more interest in agriculture tech and there are some great success stories there. While I’m not seeing a ton of ag tech applications (to Pipeline), I’m definitely seeing more. I think there’s some support or interest early on in our region that gets people to think about how to solve problems in agriculture using technology.
I’m also seeing an uptick in some of these consumer products that we didn’t used to think of as necessarily able to scale. We used to think it would have to be a technology or a life science company, and we weren’t looking at some of these consumer products like food or health items as that type of opportunity. I’m seeing more and more of these like Tommy Saunders’ FEWDM this year and Callie England’s Rawxies from last year.
MBA: Pipeline expanded the fellowship program to St. Louis in 2014, and in recent years, there have been a lot of new startups in the area. What do you think is driving this flood of new startups there?
JC: Back in the early days of Pipeline, it was very evident that St. Louis was focused on a lot of efforts around life science-related activity. I think a lot of other cities were envious that they had venture firms that were focused on investing in local startups in this space. Anytime you attract entrepreneurs to your area for the work they’re doing and provide seed funding as they grow, the entrepreneurs meet each other and the whole fabric of that community becomes even more attractive.
MBA: What challenges do you see across the state as more entrepreneurs start new ventures?
JC: Most Midwestern entrepreneurial markets or any market that is not in a busy coastal hotbed for this type of activity have some of the same challenges: Access to enough talent and professional capital as they’re scaling.
We put a lot of resources behind the early stages of startup activity. We have a lot of great early-stage accelerators, incubators and mentoring programs to ensure they’re navigating problems quickly and finding resources efficiently. And it would be a shame to do all of this work in our communities, then see our entrepreneurs have to pick up the stakes and move to become big.
I think it’s imperative that we do not lose sight — that we not just write about great, successful entrepreneurs, but that we’re listening to them about the things they’re struggling to find in order to continue that type of scale and growth and remain where they reside. What’s not often talked about is the unattractive middle ground right before you get big, when you’re hiring people or trying to raise rounds to scale. But those are some very perilous times when they need resources.