Read the article regarding business in the state of Colorado and learn how Blackstone Entrepreneurs Network assists new companies.
At Times, Newly Established Businesses Require Advice More Than Capital, and That Is the Purpose of Colorado’s BEN
Technology in Denver has not been fully established yet. However, experienced entrepreneurs make up for it by helping new businesses grow along with the Blackstone Entrepreneurs Network. Lately, BEN has undergone a process of transition.
One month prior to announcing an investment of $80 million in his travel tech firm, Brian Egan was aware of the fact he would need assistance in order to successfully manage that particular phase of his business. The joint founder of Evolve Vacation Rental shared his dilemma with a group of established entrepreneurs who had already made their empires worth millions and sometimes even billions of dollars. The meeting happened at the invitation of a low-key business organization whose goal is to assist fast-developing firms.
According to Egan, during the meeting that happened in July, he explained that he was essentially the CEO but that he sometimes assumed the responsibilities of a COO (Chief Operating Officer) and CFO (Chief Financial Officer), as well as those of the head of HR and general counsel, which, as claimed by him, is completely normal for a growing business. He said that the meeting included his explaining the situation to his interlocutors and observing their reactions. Egan stated that they had obviously been shocked and claimed that one of them had told him he should invest time in that as soon as possible to avoid burning up.
Egan followed their advice and appreciated their free help. Within a six-month period, Evolve Vacation Rental had a new CFO, general counsel, and senior vice president of people. The public was never informed about the help Egan had got.
The organization recognized for its acronym BEN, which stands for Blackstone Entrepreneurs Network, keeps a low profile. In case the technological aspect of the community seems to be thriving, this organization of experienced entrepreneurs who have already built their empires should certainly get some credit. They focus on mentoring founders and CEOs and request no money whatsoever in exchange for their help. They enter the stage when local businesses seem to be outgrowing their startup phase. The organization has offered valuable pieces of advice to firms such as Guild Education, retail software company GoSpotCheck, and real estate company Trelora.
Two things are to happen during the current month. BEN, the nonprofit organization, is being left in the cold since its original $3 million funding from its extension, the Blackstone Charitable Foundation, has been drying up. Additionally, Greg Greenwood, who was the organization’s director, has chosen to resign. BEN is at the moment on a lookout for a new director.
According to Greenwood, who was supposed to work for a two-year period but stayed for one additional year at the request of the board, the network is not going to cease to exist. Greenwood helped the organization pile up $1.5 million worth of capital it needed in order to be able to operate for several more years. He has also developed the program further so that it would comprise younger and more diverse firms that have yet to become profitable. Finally, he established a partner network with the purpose of raising more money and creating donations. (Boulder Venture investor and Brad Feld, a BEN advisor, have just made their contribution by donating $100,000.)
According to Greenwood, it is high time BEN entered the next phase of building firms that interest more talent, attention, and investment.
As stated by Greenwood, there is wealth within the community. In his opinion, new businesses will thrive as long as the experienced entrepreneurs keep investing. He called the organization an arbitrator with some tent poles to offer. However, he posed a question of whether BEN would ever get its own tent pole firms and added that in a decade, additional possibilities would arise from what is being built today.
Reason(s) BEN Is So Exceptional
BEN is neither a vendor nor a consultant for hire. It does not require ownership, and it implies no membership fees. However, companies usually interact with BEN at the organization’s invitation, and they have to be prepared to share their financial secrets and inner struggles.
As a result, they might be able to enjoy having lunch with Larissa Herda, a former TW Telecom’s CEO who was on the position for 17 years; developing strategies with Chris Onan, a joint founder of Galvanize and project investor, and discussing candidates that are suitable or not suitable for the job; or having an informal conversation with Andre Durand, CEO and founder of cybersecurity company Ping Identity, who has managed to hire 1,000 people within a three-year period to discuss the company’s development.
BEN is an organization that practices the spirit of the region that relies on sharing experience acquired over time, and it represents a sort of a never-ending circle. Moreover, it is a group whose purpose is for Colorado to find its signature force that will attract numerous workers and generate more enterprises in order to enrich the state’s business aspect the way Amazon did for Seattle or Dell for Austin.
Several companies have made it possible for Denver to find itself on that map. Some of them are Telecom’s Zayo Group and an email provider SendGrid. Although companies from out of the state acquired both of them during last year, they remain devoted to Colorado. That was not the case in the past when such an occurrence would lead to a decrease in local operations.
Egan, who became aware of BEN last year when his company began its growth, said that newly established businesses were offered so much support. He explained that there were meetups, events, and blogs provided for them. However, as claimed by him, nobody does for scale-ups what is done for start-ups since there is a limited audience.
Firms that aim at scale-ups and assist them during the expansion process exist, but their concept differs from the one of BEN as they put a price on their services. The Young Presidents’ Organization is a frequent example of such a company as it implies membership fees as well as other costs. Techstars from Boulder also has teams of experts who mentor multiple groups of founders that have just begun developing their businesses. However, they usually require a certain provision.
Nevertheless, there is something special about BEN, which was established in Colorado in 2014 with an endowment to Silicon Flatirons Center for Law, Technology, and Entrepreneurship at the University of Colorado. The latter, which was established by General Phil Weiser, current state Attorney, used the Blackstone’s similar operation in North Carolina as an example for developing the organization in return.
While being guided by J.B. Holston, its original executive director, who is at the moment dean of the Ritchie School of Engineering and Computer Science at the University of Denver, BEN developed a network of experienced business people in certain industries, such as natural foods and energy, and started targeting “gazelles” — companies that develop fast and are likely to become tent poles in the state’s business area.
While Greenwood was in charge, BEN comprised only entrepreneurs, without salespeople, lawyers, or business development distractions.
According to Nicole Barbera, who is the operations director of a four-member team in BEN, CEOs frequently get invited to networking events and asked for mentorship by service providers who shower them with their business cards. She added that one CEO had expressed his infatuation with the possibility of being evaluated and evaluating others provided by BEN and that the CEO in question actually loves attending BEN events.
Within a five-year period, BEN has got numerous devoted founders and CEOs who happily attend events, receive and offer advice, and even open emails sent by the organization. An estimated rate of 75–80% of such emails is opened, which is significantly more in comparison to the more realistic average rate of 20–30%.
Sherisse Hawkins, joint founder and CEO of Pagedip, the company that has a tool to incorporate multimedia, spreadsheets, and similar data in documents, stated that she expected that BEN would succeed and added that she regularly opened emails sent by the organization. According to her, the fact that she opens those emails instead of some others is a proof of BEN’s usefulness.
BEN does not keep track of the number of occurrences a certain company gets a piece of advice in terms of hiring or operating. However, it does keep track of the company’s performance prior to becoming involved in the network and after receiving advice. The 105 firms that have been involved in the network have had their income rise from $1.5 billion to $5.22 billion and the number of their employees rise from 9,628 to 16,866. The advisor network has expanded and now comprises 345 people.
According to Amy Stursberg, the executive director of the Blackstone Charitable Foundation in New York, the entire purpose was to expand the market and then step back. She explained that following their interference, there were enough funds for them not to be needed anymore, which was the whole point of the program.
However, the Denver region will achieve the success of a coastal tech network only when a significant number of companies have tens of billions in income and tens of thousands of people.
According to Andre Durand, whose firm, Ping Identity, was once considered a gazelle, Denver is still nowhere near the ultimate goal. He also considers Denver a risky place for such endeavors.
Durand, whose firm was bought in 2016 by Vista Equity Partners, stated that the fact Denver is almost a billion-dollar city was a huge accomplishment. The collaboration with Vista Equity Partners enabled him to interact with even more select CEOs that had been gathered by the private equity company operated by billionaire Robert F. Smith. Smith happens to be from Denver, and he is famous for being the wealthiest African-American in the country. To top it all off, he paid off Morehouse College’s graduating class’ student loan this spring.
Durand stated that the city of Denver was rich in innovation and new businesses. However, as stated by him, if coastal firms acquire all of them, Denver will never manage to profit from everything it has. He explained that once the senior management acquired a company, it stayed at the East Coast, even if it had previously come to Denver.
As claimed by Durand, one successful company that manages to achieve the ultimate goal would be enough.
In the opinion of a significant number of people, that firm should have been SendGrid. The company, which had been established in 2009, went on to join Boulder’s Techstar accelerator and concentrated on transitional email or messages containing receipts and welcome messages firms regularly send. It achieved success and became the most reputable company in its niche when it went public in 2017. However, once it was acquired by Twilio in San Francisco for about $3 billion, it became its business unit. SendGrid’s headquarters are now in the state of California.
According to the chief people officer for Twilio SendGrid, Pattie Money, the transition did not make the firm less devoted to Denver, its technological scene, or the company’s presence in the city. However, she refused to disclose the particular information regarding the number of the firm’s employees that continue to work in the state of Colorado. At the time of writing this article, there were 400 of them.
She stated, as if highlighting the bright side of the situation, that Twilio was eager to expand their brand as well as their leadership presence. According to her, they have continued their expansion in Denver and have not ceased to hire people.
Many Small Steps
Following the meeting with advisors from BEN, SuiteHop, that sublets luxurious apartments at sports stadiums, eventually hired two of them to assist with technology and operations.
The firm grasped the concept of switching from owning apartments to adopting an Airbnb and Uber model in order to be provided with technology that enables private apartment owners to sublet their spaces.
Todd Lindenbaum, the company’s CEO who established it in 2007, stated that carrying the inventory had made the scaling process difficult. He continued to explain they hired two BEN advisors, one for a year, and the other one for a 16-month period, to help him execute the transition. He added that they had made an unsuccessful attempt at increasing venture capital. However, as claimed by him, the transition caused the business to make a profit and become self-sustainable.
He concluded that the firm had gone from providing the service in three metro areas to an extended market of 42 places in North America and that it had grown by 400% during the five-year period since the transition.
BEN is not an organization that is suitable for everyone. According to Greenwood, although BEN added firms in Colorado Springs and Grand Junction, it has been rather challenging to build peer and advisor networks outside of Denver.
Moreover, the organization is not meant for every newly established company. Tech firms have to have $5 million in highest-ranking income or have increased $10 million in capital. Natural product firms have to have $2 million in income and distribution or out-of-state agreements with a national partner. There are different requirements for other industries.
Certain entrepreneurs are hesitant towards BEN’s approach and would rather develop their businesses on their own. Greenwood said they were fine with such decisions. Whether a company develops on its own or with the help of BEN is irrelevant because a developed business is a success, regardless of the path entrepreneurs choose. BEN only helps newly established companies that are able to be educated further and prepared to share their weaknesses and failures, both financial and otherwise, in addition to their hopes and goals.
Greenwood stated that BEN was willing to help any company prepared to be coached and willing to make progress as it is a serious organization. He added that unless a trainee shared everything there was to share, BEN was unable to guide it towards success.
Newly established businesses can benefit a lot from a deal with BEN, and advisors get their fair share from it as well. Herda joined the organization’s executive committee last year after she had turned some other opportunities down. She had known Weiser for quite a while and became an advisor whose job is to listen to CEOs who turn to BEN for help and guidance.
As stated by Herda, at whose home some BEN events have been hosted, it is interesting to listen about the challenges young companies face and think about establishing a business all over again. She said that she was not the one to turn to for funding but a person who could help with various cultural and operational issues common for a thriving business. According to her, people who turn to BEN are glad to have someone who is not interested in personal gain help them. As for her, she is happy to share her knowledge and see the companies she has worked with succeed.
Stursberg commented on Colorado’s culture by claiming that people are willing to help just for the sake of getting to see new companies flourish. According to her, people helping companies thrive without an agenda is an attitude specific to the state of Colorado.
There are some who consider that mentality to be the reason Denver is unlikely to have a company like Amazon for Seattle. However, its residents may not even want that as they have been complaining lately about the crowded roads and increased cost of housing.
According to the words of Brian Egan, who settled in Denver in 2004 after getting a job in Exclusive Resorts, a members-only vacation home rental firm, people of Denver ought to concentrate on being them instead of looking up to someone.
Egan launched Evolve, a vacation rental website, in 2010. The business area of the region has changed significantly for newly established companies since that time. Nowadays, small amounts of capital are more easily attainable. Egan’s own firm now has more than twice as many employees as it had two years ago. The goal is achievable, but it takes time.
According to Egan, the entire process is like a funnel leading towards success, which is something people often disregard. He mentioned the original 25 Exclusive Resorts employees and how they have all started compelling businesses all over Denver and concluded that it was great having examples of true growth firms in the city.