By guest authors Irina Patterson and Praveen Karoshi
I am talking to Ross Sanders, executive director of Bizdom U, which is a not-for-profit business accelerator, that is in some ways similar to Y Combinator and yet different in others. The founder of Bizdom U is Dan Gilbert, a serial entrepreneur, chairman and founder of Quicken Loans, among his many other companies. Bizdom U originated in Detroit in 2007 and is now expanding into Cleveland.
Irina: Hi Ross, Let’s start with a brief overview.
Ross: Bizdom U is located within a business incubator called TechTown in the cultural district of the city of Detroit.
We provide entrepreneurs with the training and funding necessary to launch businesses. In exchange for that, we take a share of ownership in those businesses. But since we are a non-profit, whatever proceeds we get from that, that needs to be channeled back into the future businesses launched by future Bizdom U participants. So, that is kind of the high-level summary of the program.
Irina: Could you share with us how you arrived to this point in your life?
Ross: I worked within Quicken Loans for approximately 12 years. I worked with Dan Gilbert, within his family of companies, just doing different projects associated with those enterprises and then I wanted to do something in the non-profit world.
[Dan Gilbert is chairman and founder of Quicken Loans Inc., which consists of Quicken Loans – the nation’s largest online home lender – as well as One Reverse Mortgage, In House Realty and Title Source. Dan is also majority owner of the NBA’s Cleveland Cavaliers, the American Hockey League’s Lake Erie Monsters, and is the operator of the Quicken Loans Arena in Cleveland, Ohio.]
So, Dan Gilbert approached me about setting up this Bizdom U. He described the concept and I really loved it. I knew my way around within the family companies, and I thought I could try and help him come here in the city and set it up and so that is what I went to do.
Dan has connections with a variety of different organizations, which we utilize to help us with Bizdom U. We get a lot of pro bono training and the assistance from these organizations. We really have relied on those organizations to help us train and mentor and guide the entrepreneurs that come out of Bizdom U.
Earlier in my career, before coming to work for Dan, I spent 10 years at Met Life, where I managed large projects for clients including General Motors and General Electric. I led the development of the GM National Retiree Servicing Center and managed a GE Benefit Center.
I have bachelor’s in business from Michigan State University and a master’s in business from Wayne State University.
Irina: Does Bizdom U have any particular industry preference?
Ross: We are focused on what we call the brain economy businesses that leverage the internet, the social media, the companies that we can grow and scale from a limited number of locations without having to open up a lot of brick-and-mortar stores. So, we do not invest in mom-and-pop stores. We do not invest in city restaurants and things like that.
I mean, we need to have them. They are very important. But what we are focused on are these brain-economy businesses that will create jobs and create growth in the city of Detroit.
Irina: Would you give us an example?
Ross: Sure. We have a training company that we launched that trains folks in getting their licenses to sell insurance.
[Launch Learning Group (LLG) is a training company specializing in innovative pre-licensing courses for state licensing exams in the State of Michigan. Courses are offered in the four main lines of insurance — life, health, property, and casualty. ]
They do that training online. They are expanding into 18 different states, and the great thing about this training company is that they have a pass rate of over 75% which is significantly higher than the competition.
I think their largest competitor has a 50% pass rate, and that is a problem for insurance companies. If they want to get their sales people out selling, it behooves them to go to a training company that would get those people to pass quickly. The more times people have to take the tests to pass, the longer it takes for them to get in the revenue-generating mode and to sell insurance.
Insurance companies want these people to come in and get trained and pass this test quickly so that they can move on to selling insurance. So, LLG has a 75% pass rate like I mentioned and their competitors are about 50% pass rate.
The great thing is that they are an online training company. We build an online platform and a curriculum. Once you build that, now it is just a matter of getting the insurance companies to understand the service and pay for that service.