Topics discussed: Presidential Tech Town Hall, Airbnb regulations in Des Moines, Iowan fighting food waste in Washington, DC, Sioux City startup wins Chicago pitch competition and a discussion of funding options for startups
Matt Patane, technology and innovation reporter for the Des Moines Register and Geoff Wood, community builder at Gravitate, sit down for an in-depth discussion of the companies, events and ideas making news in the Iowa innovation community.
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Geoff: Hey there. This is the Minimum Viable Podcast, Episode 7. I'm Geoff Wood, a community builder at Gravitate and he is Matt Patane, the technology and innovation reporter at the Des Moines Register. Hi, Matt.
Matt: Hey, Geoff.
Geoff: Each week, we take an in depth look at the companies, events, and ideas making news in the Iowa innovation community and discuss them here for the fun of it.
Well, Matt. What is it that is new with you this week?
Matt: Pretty much the same as last week. A lot of caucus stuff still but getting into some other tech stories, one of which I don't want to talk about quite yet but as related to just computer science in general, this is computer science education week, I think.
Geoff: Yeah. I haven't really plugged into that, but I've seen it on my own.
Matt: Yeah. Earlier on Monday there was this big press conference with the governor at one of the local elementary schools about the hour of code. There's apparently a bunch of Iowa schools, Iowa teachers, Iowa students digging into this idea of just taking an hour of the day, no matter what grade level you are to learn some bit of code. Kind of getting that mentality in there early.
Geoff: One hour of one day or consistently taking an hour a day?
Matt: I think it's one hour of one day.
Geoff: Okay. So not like every day do an hour?
Matt: Right. Now I think there's probably some leeway. I'm sure some schools can adjust depending on what they want to do but the idea is that some schools are doing multiple grade levels or maybe it's just 8th grade or whoever has time. Some teachers are taking part in it as well. Kind of what we talked about last week, just that idea of how early do you start?
Matt: Last week, we talked about entrepreneurship education. This just being computer science education.
Geoff: Makes sense. The earlier the better I think is the general opinion on that. As for me, this was ... We had a big potluck holiday ...
Geoff: ... kind of gathering at Gravitate this week, which was a lot of fun.
Matt: This was your Thanksgiving potluck or Christmas, holiday?
Geoff: Christmas, Hanukkah, all this winter time holidays. It was a very nondenominational holiday.
Geoff: But it was designed very well. One of our members, Andrea Metzler, actually put time and thought into it. I've been joking it's the minimum viable potluck.
Matt: That's good. Actually, we should start doing that. Just start branding stuff. Just start bringing minimum viable coffee, minimum viable lunch, just ... Maybe it will catch on.
Geoff: I should say I've been joking. No one laughs at that joke, but I have been joking about that and I will probably bring that up again.
Matt: Maybe they're laughing inside?
Geoff: Hopefully. Like my journalism jokes before we started recording. There's our sneeze of the week.
Well before we start talking about stories, big thank you to the folks who have backed our patriotic campaign at patreon.com/welchavenue. Patreon, as you know, is a place you can go support this very podcast by pledging an amount, say $1 per episode per week. We did have some new people that pledged this last week, so I want to say thank you especially to them as well as everyone that's been there for a while.
Matt: Yeah thanks guys, we appreciate that.
Geoff: Alright, let's start talking about the news. Monday I was in Cedar Rapids for an event that the register wrote up. Headline was Cyber Security STEM Education Lead Tech Issues at Tech Forum. Megan Banister summarized it this way, "Technology Association of Iowa hosted its 9th Tech-Town Hall Monday with a presidential installment in Cedar Rapids. Presidential hopefuls Martin O'Malley and Carly Fiorina joined a handful of panelists from Iowa's Technology Startup Communities to discuss issues, like policy, inclusivity, and STEM education. Issues in our community, including the ways in which government can play a role in innovation and access to invest your capital and the ways that we can make sure we are educating our future work forces so they are creators of technology, not just consumers of technology have been at the front and center of the cycle." That's a long sentence by the way. "And we want to make darn sure that they are" said TAI President Bryan Waller to the Des Moines Register.
We need to work on Bryan's quotes there.
Matt: Well, I wonder if that was part of his speech maybe. So maybe he just kept going.
Geoff: That could be.
Matt: This was something I had to miss, but I had talked to Bryan before about it. I actually talked with Executive Director of Engine last week about it. A little bit about kind of why they were doing it.
Geoff: Is it Julie Samuels?
Matt: Yeah Julie Samuels, who was great to talk with and just the idea being that ... Bryan made the point this point. These issues are not being talked about that much. You have a couple photo-op moments like Jeb Bush getting into an Uber in San Francisco. Other than Fiorina being from that background, being the former CEO of HP, tech and innovation or startups aren't really talked about unless they're a throwaway comment a lot it seems. It's kind of like the economy, in general.
Geoff: Yeah, they're not talked about and Julie did bring that up. I noticed in the coverage of this that everybody who covered it, Gazette, Register, Register's Courtney Crout I think wrote this story.
Geoff: She did the best job of actually talking about the local piece of this. All of the coverage in the local papers were about the national policy things they were talking about. They kind of skipped the first hour of the day, which was talking about the local issues, which was a little disappointing for me but [crosstalk 00:04:47]
Matt: And that's interesting because it sounded like it was ... Well the Tech Association, they've been doing these Town Halls across the state.
Geoff: We've both been at many of those.
Matt: Right. It sounds like this was a mix. It was like the Town Hall at the start and then the candidates came on later.
Geoff: Right. Yeah, but the panel for the Town Hall stayed and asked questions of the candidates. I don't know much about O'Malley, didn't know before that, but personally was really impressed with his grasp of startup issues, of the startup community, of ... Using words like "ecosystem" that we use when we talk about this stuff. It clearly that he was aware of this topic and it was something close to his heart and he talked about what they did when he was at Baltimore when he was in Maryland. The way they created some offices around innovation and the issues that come up.
Startup Maryland which would be an equivalent to Startup Iowa if you remember. It wasn't an entity, it was initiative here. Maryland was one of the other places that was really going forward with that and he was tied into that. That was really encouraging to see, I don't know that he has a lot of a chance here as a long term candidate but if he gets plugged in somewhere high up depending on who wins, I would feel comfortable with him or at least I'm excited by his knowledge of that.
Matt: Right. He seemed to be ... It sounds like he was engaged.
Geoff: He was engaged. He didn't give a stump speech. He really dialogued about his history. He came to Tech Brew afterwards. As I tweeted, he got several favorites. He chose the Iowa Pale Ale from the Millstream Brewery in Amana.
Matt: See that's interesting because, so O'Malley, I mean right, out of three democratic candidates he's third but it's like he's no one and this is going to end up ... the politics out of things. A lot of people aren't really considering him. You can go to the Des MoinesRegister to see all of our stories on O'Malley though.
It's interesting because he seems to have that idea like he plays guitar all the time. He seems to be a little bit more informal. He does play up, obviously, his different positions in Maryland because that's his experience, but the fact he went to Tech Brew is interesting.
Geoff: Which was immediately following. It was right in the same place, but he showed up. Carly wasn't at Tech Brew.
Geoff: She was actually on the O'Reilly Factor. Fox News was filming a live remote from their ... She left the stage and went into a room next door and filmed that.
Matt: What were the ...
Geoff: Oh, the other thing on O'Malley. He said something you don't often hear from candidates. He said, "I don't have this all figured out. I look to you for some answers on this and we're looking for your help." That contrasts with Carly who was very much, "Here's everything wrong with the current administration and Hilary Clinton is an extension of that, so we're going to do these things differently." She was very much on a rail, "I have all these things that I know are right, please give me your vote." That's her speech and it was really cyber-terrorism focused. It was not, it was a loose tie to technology.
Matt: Which she has spoken about at other events from what I've read and what I've seen. Yeah, but since you were there, what were the main topics that, I guess for this podcast, I'm more interested in what the panel talked about less so than O'Malley and Fiorina. So what did the panel talk about?
Geoff: Yeah. I think immigration as a way to access new talent was brought up quite a bit. Helen form Care Academy, she was on the panel. She talked a lot about opportunities for minorities and women as well and the access and access to capital, like that whole thing for that specific group.
Eric Englemann was on the panel. He talked, of course the Iowa Startup Accelerator, he talked about some of those same things. He asked a question of Carly, I remember saying being an entrepreneur it's traditionally hard to get healthcare pre Obama Care and he asked this of Carly, "Assuming you want to repeal Obama Care, as most people on the GOP side do, how are you going to replace that in a way if I have a relative that needs something, it's not going to deter me from being an entrepreneur because I need the healthcare coverage?" Yes, in a good way.
Matt: That's interesting. I hadn't actually thought about that.
Geoff: She did answer. She basically said that the ideas behind Obama Care have merit, have value, the implementation is wrong. So, that's what she would change and she had some other things. So they dialogued a little bit about the free market and things like that from there, but I thought that was an interesting topic.
One thing that Eric brought up prior to the candidates coming out, or maybe it was to O'Malley, he said "None of the candidates are talking about these issues. That's why we're having this forum. Why is that?" He said even Chris Christie has been to the Iowa Startup [crosstalk 00:09:25] to do an event.
Matt: He went there for a Town Hall.
Geoff: Town Hall. So it says startup behind his head as photos are being taken. Did not talk about technology at all. Did not talk about entrepreneurship as a thing as part of his platform, and what Julie from Engine said, I believe I might be misquoting her, but the gist of it was during caucus time and primary time candidates feel they have to stay on par with the party message and entrepreneurship technology is a muddled thing in the middle because entrepreneurship is typically business ownership as a GOP thing, so you won't have democrats talking about small business ownership like you would GOP, but technology entrepreneurship, a lot of the big Silicon Valley companies have traditionally supported Obama, so it's kind of a democratic issue. So neither side feels like they can own the issue so they just don't talk about it unless you have some of these secondary, tertiary candidates like Carly with her background and O'Malley with his that are willing to ... Because they asked every candidate to come to this and they chose not to about these issues.
Matt: And to be fair, part of that probably has to do with busy schedules and there's a million events across Iowa. This was on Friday, I was at a different event in ... Was it Friday?
Matt: Monday. Sorry, and I was at something on the Saturday before also in Cedar Rapids and there was a huge event as well.
Geoff: Yeah, this event actually was not huge. I think I heard they had 350 people RSVP, not nearly that number showed up. That was a bummer but not unexpected I guess. We had less people at this town hall than we've had at the town hall in Cedar Falls just talking about technology. Maybe people are tired of the candidates by this point, I don't know.
Matt: Also, politics in general. It's like tech, if you're not that person, you're not going to flock to that information. There's rare people who are that intersecting line that like politics and also like technology or startups or entrepreneurs.
Geoff: I think one other issue that just popped up in my head that Julie said, I think she said this several times "You guy's have heard this before so I apologize for saying this again but you are Iowa. You dictate the conversation." If these issues are important to the tech community and you want the candidates to have positions on them, you need to ask about it. You need to go to rallies, you need to go to any point where you can interface with candidates. Make sure that technology and entrepreneurship and those types of things are being brought up because that's how they formulate what they're going to talk about. So if you care about this being part of the platform, it's up to us, as the Iowa Technology Entrepreneurship Community to ask those questions, to get that service.
Matt: Right, and I think that's probably an important point.
Geoff: We may be six months late to that, but ...
Matt: Possibly, but at the same time because I've been talking to a lot of people about caucus stuff this week alone and there whole point is on deciding candidates and it really doesn't come down until caucus time. On February 1st, that's when things matter.
Matt: But I think that's a good point to make not just for the tech side of things but just in general. If there's something that you care about, there's not a whole lot of better places to be right now than Iowa where all the candidates are. I think the thing with caucus is that it's usually a lot of older people or those that have time and are really politically invested but if you're really tech invested and you want this direction, you have a stage right now.
Matt: So, and whether that actually turns into anything is dependent ... At the same time, there's a lot of conversations about tech is moving too fast for government anyway. I was at this Yahoo thing a couple of weeks ago and that was basically one of the points. We're moving past all this stuff. Government has to catch up or not get involved or do something but we're already past it and we're not going to stop, which is probably a good point.
Geoff: Right, but overall I'm glad I was there it was probably as much of a dipping of the toe in the water that I'll do as far as going to one of these. It was interesting and like I said, my personal paid for by Geoff Wood the individual is just I was impressed with O'Malley and I didn't expect to be. Carly was so off topic that I think she may have got a, it might of helped her set the stage for what she was going to talk about on Fox later, but wasn't really talking about technology in a way that seemed to fit and I didn't read that. That was the feeling in the room, that was the discussion after at Tech Brew, but it wasn't any of the stories either. It was that she was not addressing the reason shew as supposed to be there not in either story.
Matt: Well that stuff from a journalism side to dip in, some of that stuff is difficult to analyze because ...
Geoff: Because you're commenting at the point.
Matt: Well that and it's was that our feeling? Was that everyone's feeling? Was it just two people that I talked to?
Geoff: Well, I think that everybody [inaudible 00:14:15]
Matt: But I don't think that's a surprise. I think from where Fiorina would be coming from she wants to focus on the national security stuff because that's what Republicans and Democrats are focusing on. Again, switching and I think Julia has a point that switching to the even more specific topic of just tech or innovation is a lot harder to do and actually one of the stories that we'll talk about later has to with Des Moines and policy and innovation.
Geoff: Yeah. Well, you want to talk about that right now?
Matt: Yeah, might as well.
Geoff: Do you want to introduce this one?
Matt: Yeah. I don't have a formal introduction to this but our watchdog reporter at the Register, Lee Rood had a story following up on a community story that one of my other colleagues wrote about. Kind of this short term rental clash in the Des Moines area. Basically the idea of Airbnb, VRBO, and central Iowans using these services but now it's becoming a problem for the cities because they're starting to get complaints from neighbors of the people that operate under Airbnb. It was similar to what happened when Uber came to town and whenever any of these services come to town in any city. They're here for a while and it takes them a while to catch on but then eventually they make their way to the local officials and those people have to deal with it somehow because you can't just ignore your constituents complaining about something.
In this it's basically what are Des Moines cities doing to regulate or tax or enforce their rules on short term rentals. Kind of a problem and each city has a little bit of a different stance. I would suggest people go check that out if they're interested and how the different cities are dealing with it, mostly Des Moines, West Des Moines.
Geoff: Yeah. I was trying to bring up the story right here. It is basically it's coming to head in City of Des Moines proper, right?
Geoff: I'm not seeing it here.
Matt: But essentially the idea is that there's this one guy in Des Moines he rented out his home and for him it was great because it was another way to make money, help pay off his mortgage but apparently some neighbors complained and he, according to them, wasn't taking care of the property, wasn't managing the people who were renting out his home. That caused some problems because the idea is that if you have your home, it's not a hotel. You can't just start leasing it out at will.
Geoff: Yes and I believe West Des Moines has already said something like this, they made a guy shut it down, right?
Matt: Right and if I remember correctly, West Des Moines was basically let's not shut it down completely but you have to be ... it's limited. You can't just do it permanently, I think.
Geoff: Yeah. You can't have a property that is only used for Airbnb. It has to be your place and then they define[ crosstalk 00:17:02]
Matt: Or then there are some rules, you can do it if it's a bed and breakfast, but if it's a bed and breakfast you have to then be there, which kind of defeats the purpose of Airbnb and services like that when you're not supposed to be there.
That's two sneezes for the week.
Geoff: That's two sneezes.
Yeah it's interesting. As we talked about before, "interesting" that's a word we're not supposed to use. My general feeling in all of this is this is different than Uber because Uber came in and said, we are going to be here whether you like it or not until you kick us out.
Matt: Or until they left, which is what happened in Iowa City.
Geoff: Right. But that's kind of like Uber tries to help work with the laws and they try to flaunt the laws if they're not in the right place and then something comes dread. They left Iowa City, Des Moines decided that they would allow the process and that's been great. This is ... That was more of an industry issue I think, this is the neighborhood complaining. It's a little bit different to me than Uber because Uber always felt the taxi companies didn't want a new competitor. I don't think this is coming from the hotel industry saying this is eating into our profits.
Matt: That's a good point.
Geoff: It's neighbors saying this is a nuisance in our neighborhood, take care of it. So I see them as a little different.
Matt: There's also a tax angle.
Geoff: Yeah, but they also said in there they don't know how much of ... There's no data on how many people are using Airbnb to stay in Des Moines.
Matt: Right. Not that I know of. I'm sure Airbnb has some of that some and I haven't dug into it. This is something that I have been interested in looking at and Lee rightfully and she did a great job beat me to it and before that our West Des Moines reporter had it on the local scale too.
Geoff: Somebody's been following Ted Cruz too much.
Matt: I've got to do it, part of the job. I think that's a good point. When Uber came, it came to Des Moines and it came to a couple of other cities and then it was a state issue. That legislative session, it was here ... they didn't pass anything but it was there. Then last year though Airbnb has been around here in spots for a long time. It doesn't get talked about as much because it's a quieter industry.
Geoff: There's no industry pushing back on it like there was with Uber. The VRBO which I think is Vacation Rentals By Owner, I think is what it stands for, I've never used. There's a movie that my wife and I watched a long time ago, The Holiday where they switch holidays. Do you know what I'm talking about?
Matt: I haven't seen it but I know what you're talking about.
Geoff: One of them is in LA. It's a great rom comedy, you should really see it.
Matt: I'll think about it.
Geoff: But that's like 10 years old. This is not a new concept, right? It's the same thing. She goes on a site like this to find a home and all of those types of things have been around a long time. The issue is the complaints happening now. In general, all of these things to me feel like this is just Des Moines not being a progressive city. I think Lee mentions in here not just Uber but food trucks. Anything that comes to Des Moines and is thought of as new or different like we have to push back and challenge this way and I don't understand why we are that way.
You know I was in Toronto, the last time I traveled I was in Toronto in September and the first thing I did was go to Airbnb. I found an Airbnb and it was somebody's flat, apartment that I stayed in for like 50 bucks a night or something like that and it was great. It was exactly like ... It would have been way more expensive to stay in a hotel and that type of thing. It was definitely something she was doing, I never even met her like she just left the keys, it was something she was doing to make more money out of her flat and it's just expected. I knew when I was going to a big progressive city like Toronto, I was going to find an Airbnb next to this conference I was going to. Des Moines does not want to be the city where it's like you can't take an Uber when you get here, which is something you expect in all cities or you get stay at an Airbnb. I don't think that's the right, not legally but as the reputation of our community, I don't think that's what we want.
Matt: Right, not if we want to attract people here. It's now expected in New York and San Francisco or St. Louis or Kansas City. We actually had Uber before St. Louis but that's a separate story. I get your point that it's kind of expected that we have some of these new types of services. In addition to taxis, which some people would want to take, we also have Uber or Lyft or something. In addition to a hotel, we also have the Airbnb option so that you're not forced into one of the more expensive hotels downtown or forced out into Waukee or West Des Moines where there are good hotels but cheaper but farther away.
Geoff: I heard a story and I have not idea if this is true or not that what finally tipped the city in the favor of working with Uber and figuring out a solution was some of the big company leadership in Des Moines, the like stalwart companies here saying, our customer expect this when they come visit us. Our partners, our vendors, all these people when they come to Des Moines, they want to go to the airport, they want to jump into an Uber and go and it is silly that we haven't done this yet, just make it happen. I don't know if that's true or not, but it sounds reasonable to me.
Matt: I don't know if that's true either but I wouldn't be surprised if there was someone that said that, especially around caucus time.
Geoff: I heard that in an Uber, I think an Uber driver told me that so I don't know if that's true or not but that's where I heard that. Exactly, around caucus time you have all these visitors.
Matt: I think the point with the rental part now, is you're right, it's a lot more of a local neighborhood issue. Because you're not going to see houses all over the street that are going up for rentals. You'll have one or two in a neighborhood maybe or 20 in Des Moines or whatever it is right now.
Geoff: This one in the story was the Beaverton area.
Matt: Right but it's the same issue or the same concern as Uber because you have these companies coming in and they have the right to come in some would argue but then where does the city government, which we do expect in some regards to protect us or regulate certain things.
Geoff: They have a duty to ...
Matt: They also have to collect money and that's the balance. We're not the only city like San Francisco and New York and everywhere else, some of these cities are still dealing with this and they've had these services a lot longer than we have.
Geoff: I feel like there it's an industry problem. When I've reports about New York talking about this, it's the lodging industry or whatever in New York basically saying, there's enough of this that's it's eating into ... Which we could get to as well.
Matt: Lee put on a forum today when we're recording this, we're recording a bit early in the week but on December 10 she had a forum bringing people to talk about this issue. If people care about it, they can check for it. I think we should have a story on the forum itself and kind of what was discussed. They can check the Register on it later this week or this weekend for that.
I doubt this issue will go away or maybe it will. Maybe you're right. Maybe because it's a quieter issue maybe it just gets handled at the city level and maybe there isn't a lot of push back. When Uber and not just Des Moines but when Des Moines and Iowa City and Cedar Rapids were dealing with this, everyone was talking about it, at least in my circles, everyone was talking about it. It became a citywide issue and a state issue and then when they left Iowa City, we heard about it. I don't know if that'll happen with this because it's not as disruptive maybe.
Geoff: I have noticed that, because I follow the Uber Iowa Twitter account that they're now tweeting to people in Iowa City. Because the tweets will come in, why doesn't Iowa City have ... They're now tweeting people saying, talk to your officials about this. That's new for them. I don't know if it's a marketing strategy or what so maybe that will come back in the news.
Like I said before, are we going to be a progressive community that does new things or are we going to be backward. Uber coming to us was late.
Geoff: Comparatively, Uber had been around for years.
Matt: Some of that I have to imagine is a demand issue.
Matt: It wasn't just Des Moines but one of the things that I was told when I first moved to Des Moines was everything comes to Iowa, it just takes a while. Some of that is just the nature of the Midwest. But I think you're right, some of it is where Uber could go and some of it is how open the city was.
The food truck thing is not something I ever really understood but I also came from Denver and then came here. In Denver, food trucks have been around for a long time and they have whole festivals around them.
Geoff: I've talked about this and Zach Manheimer was instrumental in the program with the food trucks but people celebrate these things when they come to Des Moines like we're being innovative but we're not, we're catching up with these things. They're everything else and I feel like if we for some reason get rid of Airbnb we're going to be that way. It also isn't very welcoming. If we want to be an inclusive welcoming city and a city that's growing, these are things we've got to have so figure out how to make it work. I don't vote in Des Moines so I can't really talk to my ...
Matt: You don't vote in Des Moines?
Geoff: I vote in Windsor Heights, which is a wonderful, wonderful suburb in between Des Moines and West Des Moines for those who don't know.
Matt: You just kicked out an Aldi.
Geoff: Of course we did, because we did not need three grocery stores within two blocks in a city of 4,000 people.
Matt: That's a separate story, that's a non-innovation story but I just wanted to bring that up.
Geoff: We did not kick one out, we never had one we just made sure. Actually, it was a grass rootsy like get the community together thing.
Matt: Political movement.
Geoff: Yeah, we got two new councilmen out of that.
Matt: We'll just have to see what happens with short-term rentals. Speaking of Uber, I'd be surprised if the legislation regulating these ride hailing companies doesn't come up again at the state level because it came up last year and kind of got washed away with some other discussions but I'd be surprised if that doesn't come up again.
Geoff: Yeah, we'll look for that. We have two more stories this week that are a little bit shorter than I wanted to bring up. One from the Washington Post, "A revolutionary technology helping to fight food waste. Iowa natives Marie Rose Belding and Grant Nelson who are now college students in Washington, D.C. were featured in the Washington Post this week for the online network they created to connect thousands of food pantries in nearly half of the country's states. It's called MEANS, which stands for Matching Excess and Need for Stability. It helps to close the gaps in the needs and the excess in food pantries across communities. Food waste needs to be addressed on multiple levels says Matthew Stanislaus, a senior official with the EPA. Part of it is a wider knowledge of the problem but also tools like this to reduce waste."
This was interesting. I first picked up on this story through Brad Dwyer from Hatchlings who posted it a couple of times in Startup Iowa because there was an honor for Maria as part of this which was kind of got me interested. What do you think of this idea?
Matt: I think it's coo that someone from Iowa is getting attention. I also think the idea of connecting food pantries is fascinating to me. There's a kind of a quote or a paraphrase in the Post story that Belding hadn't, like she was looking at the same college, oh someone must of come up with this idea already.
Geoff: In high school, I think.
Matt: Right, or in high school. That actually got me interested in something I've been thinking about for a while which is entrepreneurship through help nonprofits.
Geoff: Social entrepreneurship?
Matt: Right, which I know exists and people have talked about it but it's not something that I see a lot of in Iowa and maybe I'm wrong. I know that there area a couple of groups doing things and I don't see a lot actually. I know I think one of the Iowa Startup Accelerator teams was kind of about helping nonprofits with planning, strategic planning initiatives.
Geoff: Strat Base, I think.
Matt: I think so. Just this idea of using entrepreneurship to help nonprofits do better is a fascinating idea to me.
Geoff: Yeah. It is interesting. I said it again, interesting.
Matt: See, it catches on.
Geoff: It's a filler word man, I've got to stop saying it. I don't know how much of that happens here. Nonprofits are not always good customers because they don't have a lot of money.
Matt: That's why I find it fascinating that you would go after this. They're nonprofits, they don't make a lot of money.
Geoff: You go after it because you believe in the issue. I didn't catch, is MEANS itself a nonprofit?
Matt: I don't believe so but I don't know what their corporate structure is.
Geoff: I don't remember from the story either. Interesting, the two ... I said it, dammit. The two people here are both from Iowa, both in college in DC but they're like 4-5 years difference in age. One is a friend of a brother or something like that. I like this and there's actually a whole ... Do you ever listen to the Point of Money podcast?
Geoff: There was an episode on, not MEANS, but this issue. This is actually something that's a little bit troublesome when you're building technology for nonprofits. She said she didn't find anybody else dealing with this but there are probably dozens of other people trying to deal with this and they're just not doing it well so you don't hear about it.
There was episode last week or two weeks ago that I listened to called, The Pickle Problem, episode 665 if you want to check it out. The issue there was the exact same thing, it's food rescue at food banks. Food banks may get, in this case it was a truck full of pickles but they don't have the need to put out a truck full of pickles. Do they throw it away, what do they do with it? I think Maria used a truck full of peanut butter was her idea. The pickle problem, I don't remember the organization that they were talking about, they basically built an entire market system where you get credits and you choose what you want to buy and they ship things around between food banks. It's not dollars but I will bid on a crate of cereal. I think they said cereal is the best thing for food banks because everybody, you can feed it all around and it doesn't spoil very fast. They're trying to solve the exact same thing that she is but it just so happens that this came up recently that I heard this podcast.
I'm part of a class right now at the Greater Des Moines Leadership Institute, which is a program here in central Iowa. We do service projects as part of this yearlong class and the project team that I'm on is actually working on food rescue here in Iowa but not for food bands, it's for like the Drake University Cafeteria. What do they do with the food that they've made that they don't serve? Rather than throw it away, how do we get that not necessarily to food banks to ...
Matt: People who need it.
Geoff: Shelters and different people that need it. I'll bring up Drake because they are the best at this and they actually do donate all that. They're the model in Iowa right now, is Drake. Also, if you think about the big corporations here that have cafeterias do the same or the High Bees, and the Come and Goes, and KCs that have food left over that they can't serve, putting sustainable business practice to match what they have available to what they don't. We just had a power lecture today. But also like figuring out what do we do with the extra food there?
I wind up throwing a ton a food away at Gravitate. These people will come here and have lunch meetings and they'll cater them but there's always food left over. That doesn't get eaten but it's tough for me to spend my time tracking down where to take that. There's an organization called Eat Greater Des Moines is the nonprofit that's looking into that. We're kind of the project team assigned to them to help build something this all ties together.
They have created an app with the Emerge Program at Simpson College called Chow Bank, which is really like finding matches between like you could go on there and you could say, I have a plate of sandwiches and it's ready to go now and then people can say they want things like sandwiches and somebody can claim it and if they don't, then I can throw it away. If somebody has the need, then we can find them. It's not rolled out yet. We're doing a whole kind of like marketing program for them right now but it's funny like this all kind of came up today because we're in food rescue focusing more on businesses and left over food whereas they're doing it more focused on what's left over in a food bank already.
It's a big deal, it's a big problem nationwide. I think just pulling a stat from the Post story, Maria said they started with 50 large food banks in June and they've already scaled to more than 200 and they expect to have a network of thousands of smaller pantries that work underneath those two hundred umbrellas. They're working on this at scale is my understanding of it. Any thoughts there?
Matt: I'm looking at this from the broader scheme of just that whole idea of social entrepreneurship or helping nonprofits, not necessarily that you're a nonprofit yourself or maybe you are but this idea that going after the people that are trying to do good things do it better, not that for profit companies are not good people. In other words, the nonprofit probably doesn't have a lot of resources to figure out the best way to save the food so they're just doing the best that they can to do the best work. How do you go about doing that? Whether it's for food or recycling or whatever else. I know that there are people here working on similar issues. It's just an interesting story, I would tell people to go check it out.
Geoff: You certainly can be a for profit company that serves nonprofits as your customers. Volunteer Local would probably be an example of that.
Matt: I was just going to say that Volunteer Local is a good example of just connecting nonprofits or organizations that just need people or need to inform their volunteers.
Geoff: They've identified a need that nonprofits have also for profits have but I think a lot of their customers are nonprofits. They do a good job and people are willing to pay for that even though it's from a nonprofit perspective. I'm sure they get asked all the time if they can get a discount because it's nonprofit because that always happens.
Similarly here the way I look at my business, Gravitate is a for profit company but there is a social entrepreneur or altruistic bent. We're trying to grow the startup community in Iowa. We're trying to do that whole type of thing. Not a particularly lucrative area to be working in but I always stay for profit just because it's a lot less paperwork than going the nonprofit route. That is not exactly a social venture but kind of in that sphere.
All right, one more story this week. Are you good for this one?
Geoff: Shark Tank's Damon John crowned safe farming startup You Pitch winner. This comes from the Built in Chicago website. "Agtech startup Seed Slide from Sioux City won $5,000 this week at Chicago's Future Founders You Pitch competition, which was hosted with Capital One. Joshua During, a student a Morningside College created a remote-controlled seed box product that allows farmers to open the heavy boxes from a safe distance reducing the risk of accidents in the process. Farming is one of the most dangerous occupations according to the Department of Labor During told Built In Chicago. Falls put farmers out of their ability to work and provide for their families." I knew nothing about Seed Slide. I was not aware of it. Did you know this company?
Matt: I did not know them either. That doesn't surprise me especially if he's a kid at Morningside College even doing great work. I think there are a lot of college age kids or even kids in college that are trying ... I shouldn't say kids because they're probably adults but students in college that have these great ideas that are building, especially in Iowa building an Agtech startup or anything to do with agriculture is a great idea. From the Built In Chicago post, it sounds like he has a background in agriculture, watched his father and grandfather having to climb up on equipment that if they off of would be very dangerous. It's a great look at what can come out of Iowa. We talk about entrepreneurship a lot in this community and kind of what that focus is but a lot of the companies that are coming out have to do with agriculture. I think maybe they're not as well known. Unless you're in agriculture, you're not going to think about if a farmer slips off a piece of equipment. You just don't know that that's a thing they do, why would think about it?
Geoff: If you think about the idea of clusters and what are we good at here in Iowa? There's a reason we have an insurance accelerator because we have a network of insurance people and a network of insurance companies that will fund it so that makes sense to have here. Something similar could happen with fintech. Agriculture is probably the bigger broader thing.
Matt: I was just going to say, some one should make an agriculture accelerator.
Geoff: I think there are three of them in progress I think I've heard at various points. I've decided the word accelerator is meaningless like interesting because accelerator basically means, like we get called accelerator here and I was want to be like, no we're not. That word has ... I think of accelerator like the 90-day programs. That's probably an inside the startup community look at it and not ...
Anyway, lots of people especially around the Ames area are talking about accelerators or agriculture but that's a state-wide industry that we're good at here. We have high net worth individuals who have made individuals in agricultural and know they can invest back in it. We have lots of people currently in agriculture to test the products and work on them and then we have lots of people with bright ideas to create things going forward. I think we'll see more of these things. I think you're right. I think we don't hear about them because they're not as sexy as Dwolla or Workiva that's scaling big software. I'm sure if you're doing something with seed boxes, I don't even know what a seed box is.
Matt: That's exactly it. It's like fintech is kind of the same way. We talk about the fintech companies here because we know about them.
Geoff: But Dwolla makes sense to me like everybody has paid somebody else.
Matt: You're one of the few people ... I think in the startup community here, that's different and for the fintech community outside it's different or for the financial it's different. But if you went up to someone on the street and gave the one sentence pitch on financial tech or Dwolla or anyone else, that's not an easy thing to do.
Geoff: You're right, I just think it's more relatable because it's consumer touching and [inaudible 00:39:31] is considered consumer touching like you can go use it. You have to farm to use this but that doesn't mean ... I'm sure there are plenty of customers for what they're doing and there's ability for that to be a big company. I think as you said earlier, there are probably hundreds of these types of innovations being built around our city that we don't hear about that could scale.
Matt: There are a bunch of companies that are doing this too. John Deere would be one example, they're looking at new technology every day just to keep their customers happy.
Geoff: Well, congratulations to Joshua During, we hope to learn more about what you're doing. I'm also curious if Josh happens to be listening to this, let me know, how he got connected to this Built In Chicago idea, specially from Morningside. I don't know if it was a class thing that got there or if he just applied or what but that's pretty awesome for him. Congrats on that.
This week's question comes from Larry Anderson from Central Bank. He says, "Have the two of you ever made a best of or top three list of funding options for startups? Surely, go ask the bank doesn't even breach the top ten." He's a banker. "What ideas do the startup tech innovation community to solve for that. Unfortunately, the seemingly more logical question what can the bank do to solve that is not one that I've hears an answer to."
Let's start with the first part of that. What do you think are the best funding options for startups in Iowa?
Matt: Saying this to someone who has never raised money and probably will never have to go down that route, I don't know what the best options are. I can say that I think the most common, which we've talked about before is you bootstrap it, you get your friends and family on board for a while. One, you bootstrap it and hope you get customers fast enough. Well not fast enough but where you just build and bootstrap as much as you can. Two, you rely on angel investments. Three, eventually you get to the venture capital stage. I have heard very few people say they went to a bank to get funding and either like that probably wasn't even on their mind or if it was it probably wasn't successful, which from the bank's standpoint, startups are risky, they're not venture capitalists, that's not their role. There are differences. A credit union helped out with Dwolla and other financial institutions have come on board for other companies but it's a rarer option. I don't know what the best option is.
Geoff: Usually, those are financial companies.
Matt: I think the best option is kind of the most general, which is whatever you think is best for you. If you want to take on advisors and people that take equity from your company because you want to scale very quickly or if you're at a stage where you need to hire people and that's the best way for you to do it, do it. If you want to crowd fund because you think that's a good option, do that as well. I think the point is for anyone don't just jump into anything because you think it's easy. Even if you go to the bank, make sure you know what that bank loan says. It's most easiest advice anyone could ever give.
Geoff: Read the doc?
Matt: Right, read the document.
Geoff: I think the best option I would say is to finance it based on your sales. If you can create something that you can begin selling or even pre-selling before you've built it, which kind of leads into the crowd funding a little bit. If you can pre-sell ten instances of your widget and then go out build those ten with money that's obviously, the question really is what's the best option. I think that's the best option. It's probably going to be slow. When you get into crowd funding, not necessarily equity crowd funding, but the crowd funding like a Kick Starter campaign to launch something. There are a lot of pitfalls with that because you have to deliver on all those backer rewards and things like that which takes time and money away from ...
I think crowd funding, not with a business but with a podcast actually, I have done a little bit of kinds of friends and family money in a company at one point and that's okay. I think that's probably the most common thing here in Iowa. I don't know if it's the best but it's the most common. I approached a bank one time about getting a loan for Gravitate actually when I was starting because I needed to move fast. Wow, that's a process that's tough. That's when you have to write the business plan. That type of thing. They want to see a business plan. They want to see all this and it was like I need to move faster than you can do for me if I'm going to get this place started by the date we need to be started. What I actually wound of doing was taking a loan against my life insurance policy so I was really kind of self-funding it through the life insurance and absolutely paying that back. It's maybe an unconventional way to do that but that's part of, I guess an asset I can pull to be able to do that.
Matt: In advance of this question, I actually just did a quick Google search it was like, best way to fund a startup.
Geoff: The hard hitting news you get from [crosstalk 00:44:35].
Matt: It's not hard hitting news but it's basic reporting. Also, again as someone who hasn't had to raise money, I was curious what other people had said. There was this 2014 article from entrepreneur.com and it kind of lays out like ten, it's called the Ten Most Reliable Ways to Fund a Startup. Again, I think the caveat being do what you think is best for you.
Geoff: The only one I would throw out there that I haven't said is credit cards. A lot of people will advance credit cards.
Matt: I think a lot of people will tell you not to do that.
Geoff: Right, but people do. I'm curious of the ten, how many have we hit so far?
Matt: Number ten is seek a bank loan or credit card line of credit. The columnist writes, in general this won't happen for a new startup unless you have really good credit. Number nine is trade equity of services for startup help. In other words, someone could come to Gravitate and promise you to do the tech stuff that Gravitate needs in addition for your funding or support or whatever else.
Geoff: I think where this happens is like here in the building is Levi Russell from We Write Code who does a lot of technical build out for startups and that would be like if somebody said, Levi I've got this great idea, I can't pay you but you can have 40% of the company. I think that's what they're talking about or like hey, I'm building Facebook. Didn't Facebook primarily or has a story about like they gave equity to somebody to paint a mural which is now worth hundreds of thousands of dollars to paint this mural because they didn't have any money at the time when they did it. I think most people would say that's not a good way to do it. This is more like business school stuff coming back to me but never give up equity for something you can pay for because it only gets more expensive as your company matures.
Matt: Number eight is negotiate and advance from a strategic partner whether it's a customer or another business. Number seven is join ... I thought this was interesting. Join a startup incubator or accelerator. When I think of as accelerator, I don't think of them as funding models primarily but that makes some sense because if you need $40,000 to give going and you also happen to get mentorship maybe that works. The trade off is you actually have to do work.
Geoff: You do get money, so yes you're right. But I think most of the accelerator folks that I've talked to say that the money is the least important part of the accelerator.
Matt: They will tell you that you shouldn't go to the accelerator for the money, the money is just to make sure you're focused when you're in the accelerator.
Geoff: It covers your living expenses to be there.
Matt: That's pretty much all it'll cover for the three months. Number six was solicit venture capital investors, pretty common and pretty normal. Five was apply to an angel investment group, also pretty common. Number four was crowd funding. I should say I don't think these are in any order of best to worst, these are just random order. Number three was request a small business grant so out of like the US SBA or something along those lines.
Geoff: Or the State of Iowa.
Matt: Or the State of Iowa. Number two is pitch to your friends and family and number one was fund it yourself. Those are some of the more common options. Again, I don't know what's better. I think in Iowa what you'll see is people bootstrapping then angel investment funds or family and friends helping out and then venture capital. I don't see a lot of ... Or like the state, the state funds. I think that's what you'll see more often. I don't see a lot of bank loans. Also, I'm not asking everyone for all of their money sources. Who asked the question, again?
Geoff: Larry Anderson?
Matt: I think Larry is right. I don't think that's a common approach for a lot of folks.
Geoff: Larry is one of the members of the banking community that you see the most often in the startup community. He'll come to First Friday that type of thing. He cares about this community and I think most bankers aren't as much familiar with it as Larry is. Thank Larry for the question. Good question this week.
Just one more thing before we wrap up then today. What did you bring for a trivia question?
Matt: I do not have a trivia question once again.
Geoff: All right, anything else you want to share today?
Matt: No, one of these days I'll have a trivia question although I probably won't ever have a trivia question. I had one like the first week maybe.
Geoff: Indian motorcycle.
Matt: Something like that.
Geoff: That is it for this week, folks. Thank you Matt for being here today. We will be back next week for another edition of Minimum Viable Podcast. Thanks everyone.