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Business Incubator Series: Troy Henikoff, Excelerate Labs – Chicago, Illinois (Part 3)

Posted on Friday, Apr 29th 2011

By guest authors Irina Patterson and Candice Arnold

Troy: SurePayroll eliminated the cost of all those pieces: the paper checks and reports, the delivery guy, the car he drove in, and the building drove from and the operator. It really reduced the cost and make it much simpler and easier for small businesses to process their payrolls. We started working on that in 1999, launched it in early 2000, raised a bunch of venture capital.

SurePayroll continued to grow and grow. I’m an early stage guy, so I ran it from an idea through the first three years of operation. SurePayroll was acquired by PayChex, who decided that they wanted an Internet component to their payroll services. They completed the transaction if February 2011. It took 11 years for us to build that business and exit.

After Sure Payroll, I ran a data company called Amacai, for a couple of years. It is the biggest provider of address and telephone number information to marketing and online directories. Through the Localeze brand of Amacai, we power a lot of the major directories, people from YellowPages.com to the big search engines, Facebook Places, stuff like that.

I ran an online wedding planning site called One Wed for a couple of years, which was a lot of fun. I learned a lot about consumer-facing marketing. I learned a ton about SEO, understanding how to leverage a market like that.

Along the way, I started teaching entrepreneurship at Northwestern University. In 2008, one of the groups of students from my class had a great idea around online music called Next Big Sound.

They put the plan together in class, ended up trying to launch the business themselves that summer, struggled with it. They continued to work on it through following fall and into the next year.

In 2009, they got accepted into TechStars, one of the early accelerators, in Boulder. They went down to Boulder. They iterated on their design, actually pivoted the business rather significantly while they were there, and came out the back end with an amazing business. They’re comScore for the online music world.

I watched them through the process, went down there for demo day, and was so impressed with how great the TechStars program was, how much it offered these entrepreneurs, and how far they had come in such a short time.

While that was impressive, the other thing that was impressive was that TechStars had a total of 19 companies in 2009. They had 10 in Boulder and nine in Boston. Of those 19 companies, five were Chicago companies.

Chicago represents less than 1% of the U.S. population, but we represented over 25% of the startup population of TechStars nationally. That sounded really cool, until you realized that most of those companies leave Chicago to do the companies and they don’t come back.

In August 2009, a handful of us who were in Boulder for TechStars’s Demo Day said, “We need to do a program like this in Chicago, because we can’t have this kind of brain drain.”

Over the fall and winter, four of us got together and figured out how we were going to do it, how we were going to fund it, put the straw man together and then started executing on it.

We launched our first program in the summer of 2010. We took 10 companies, ran them through an accelerator that’s very similar to TechStars. We actually used Tech Stars as a model. David Cohen, the founder of Tech Stars, was an advisor to us. He was very helpful in helping us structure it and set it up.

It culminated with a demo day on August 31 where all 10 companies presented on the main stage at the House of Blues in Chicago. It was incredibly successful. I was pleasantly surprised by the quality of the presentations, how well received they were.

All that work, we had been heads down for 90 days working on these companies. Then on August 31, we got to put our heads up and take a deep breath and see the results of all that work. It was phenomenal to see those 10 companies on stage and to see the investor response.

The most current data I have on the companies is the six-month data point. Six months after the demo day, eight of them had received funding, a total of $7.2 million in funding. They had created 65 net new jobs. All of that was done in just six months.

This segment is part 3 in the series : Business Incubator Series: Troy Henikoff, Excelerate Labs - Chicago, Illinois
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