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Idea Factory
The new generation of business is built on startups, not small businesses; “makerspaces,” not offices; and a highly caffeinated workforce. Can it thrive in Milwaukee?

Photo by Adam Ryan Morris

They’re idealists, young Milwaukeeans with “innovative” ideas founding startups, opening “makerspaces” and looking beyond business as usual. They sound a lot like the bright young entrepreneurs that Eric Ries, a Yale grad, describes in the introduction to his 2011 best-seller, The Lean Startup. “Stop me if you’ve heard this one,” the book begins. “Brilliant college kids sitting in a dorm are inventing the future.” Next, Ries confesses he was one such wunderkind, though his first attempt at business stardom rose only as far as a mass-market bottle rocket. “I particularly remember,” he says, “the moment I realized my company was going to fail.”

There’s enthusiasm in Milwaukee, for sure, and an Internet generation coming of age that’s as familiar with HTML and Photoshop as its parents were with 8-tracks and typewriters. Startups are popping up everywhere, often with a Web or design focus, and sometimes guided by business “accelerators” or “incubators” that serve both as business plan proving grounds and buzzword vortices.

According to a report released in June by Creative Alliance Milwaukee, there are now some 25 “collaborative” or “maker” spaces in the region, places like Hudson Business Lounge in the Third Ward; the South Side’s Milwaukee Makerspace, an open workshop for fabricating high- and low-tech inventions; and the long-running Bucketworks on South Fifth Street, which styles itself as a health club for innovators to work out ideas.

Milwaukee isn’t the only city where innovation and entrepreneurship have suddenly become rallying cries: White House initiative Startup America, launched in 2011, sells startups as the surest course to major job growth.

Common Pitch
According to Greg Meier, a Milwaukee startup pro, that’s not a wild claim. “When there aren’t a lot of jobs, you either sit at home or start something yourself,” he says. One of his latest ventures, VETransfer, won a pilot contract with the federal government to mentor veterans who are founding startups. Meier initially hoped to admit about 20 to the program in its first year, but the company has received more than 300 applications since kicking off in March 2011.

The powers that be in Milwaukee’s corporate ecosystem, including the Greater Milwaukee Committee and Kohl’s, are getting behind these young innovators by sitting on boards, lending advice and sometimes going a step further – Kohl’s hosted an “Idea Challenge” earlier this year, a “hack-a-thon” competition for young programmers. This unorthodox pairing of old and new business models is trying to do what many have dreamed of for some time: transform Milwaukee into an innovation hub, the Silicon Valley of the Midwest.

On June 7, this unlikely partnership was on full display as a few hundred innovators and economic development leaders gathered at Turner Hall Ballroom for Common Pitch Milwaukee. An international business-pitch competition, it provided 10 startups with a shot at a pretty massive break – make your pitch, make it good, and you might leave with $30,000 in cash and prizes. A New York-based startup took home the top prize, raising eyebrows ever so slightly.

Landing Common Pitch was promoted as a major score for Milwaukee, and local startups passed over for the prize included Brighter12, which is developing a website that helps substance abusers work the 12 Steps, and Cold Fizzin’, which hopes to market and promote the inventions of garage-dwelling engineers.

Only three other cities in the world have played host to Common Pitch. Romke de Haan – president of Spreenkler, a Web development and design firm that's also one of the city’s startup incubators – facilitated the event’s planning along with MiKE, also known as Innovation in Milwaukee, an “economic development cluster initiative” launched by the Greater Milwaukee Committee in 2010.

“[Milwaukee] can’t be afraid to compete on the global stage,” says GMC President Julia Taylor, though she admits the city’s innovation scene is still under construction. “A big part of what we need is to attract more talent and more startup companies here.”

MiKE started with $500,000 in funding from a national push, ArtPlace America, bankrolled by some of the nation’s top foundations. The half-million helped to sustain 18 months of activity, including the Open MiKE workspace in The Shops of Grand Avenue, which is used for free by the group’s 120 members to test ideas and link up with funding.

Taylor estimates that about 20 startups have come through the space so far. Some have already bombed, no doubt, but given the “lean startup” philosophy popular today (and popularized by Ries’ book), many say that’s perfectly fine. “Ideas can happen more quickly now,” says Tina Quealy, associate director of Marquette University’s Kohler Center for Entrepreneurship. “You can fail faster, learn from it and move on.”

Wisconsin has long scored low on the Kauffman Index of Entrepreneurial Activity, a ranking produced by the Kauffman Foundation in Kansas City, Mo. In the ranking, based on the rate of business creation in all 50 states, Wisconsin tied for 38th place in 2011.

But Quealy and others say Milwaukee is on the rise. “People seem to be coming out of the woodwork to champion innovation,” she says.

Last year, Meier co-launched 94 Labs, a business accelerator in Milwaukee that seeded 19 new software companies. Almost all were run by college students, some of whom have moved on from their initial ventures but have stayed in the startup milieu. “It kind of becomes your way of life and the world you exist in,” he says.

Startups incubated at 94 Labs include 72 Web Design, which designs websites for political candidates; Date Check Pro, a system to track expiration dates for grocery store owners; and ScioMD, software that would make medical records easier for patients to read.

More and more people, Meier says, are promoting startups like these. “It was trendy five years ago to go to Wall Street and become a banker,” he says. “And it’s trendy now as economic development people to jump into the entrepreneurship arena.” Not that this is bad – Meier, like Startup America, says startups are essential to upping the country’s net job growth.

But John Kissinger, president and CEO of GRAEF, an engineering consulting firm in Milwaukee, says he’s seen investors get cold feet when it comes to raw, unproven ideas. “I still don’t see a lot of acceptance of it,” he says. However, “We see the potential there for some value, and we’re trying to get involved.” GRAEF, for instance, has installed workspace in its offices for employees to explore their own ideas, and Kissinger sits on MiKE’s Leadership Council.

Briggs and Stratton is a key MiKE supporter, too: Its CEO, Todd Teske, serves as co-chair of the Leadership Council. As has always been the case, untold numbers of small businesses are doomed to failure, but Teske adds that solid business plans, or at least a heartening portion of them, are bound to prevail.

“Good ideas get money,” he says.

So what’s next?

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