NorthwesternBusinessReviewSp

ring

201

2

When Gursimran Singh enters the crowded classroom of 37 com-

puter science students, profes-sors and programming enthusi-asts, he scrawls only two items on the worn chalkboard detailing the agenda for the night: a break for pizza at 9:30 PM and “sleep at some point.” Rows of long desks divide the students but everyone sits in front of a laptop, hands typing fervently on a keyboard. Conversations are sporadic but the topics of exchange indicate that the students know what they are talking about. “Why are you using Python for that?” “I hate Beta structures.” “Facebook did something really amazing with PHP.”

Most students work on pet projects – think a social net-working application utilizing “QR Code” in bathroom stalls or a crowd-driven music player based on hashtags and geotag-ging – but everyone in the room is dedicated to some sort of programming-related task. The occasion is “Hack Night.” Singh, a third-year Computer Science ma-jor, describes the event as an in-formal setting to provide Chica-go-area computer programming students with a space to “share resources and foster student creativity, entrepreneurship and hacker spirit.”

Although a general upsurge in demand for programmers and engineers exists across the country as up-and-coming start-up companies battle with tech giants such as Google and Microsoft for the best students, Chicago start-ups are finding it difficult to find, never mind keep, the most talented programming

Chicago's Exodus of Tech TalentEach year, dozens of young, smart computer programmers graduate from Northwestern University and the University of Chicago. So why is Chicago’s emerging star t-up scene failing to recruit and retain the city’s local talent? A local “Hack Night” provides some answers.

Matt Wong

and engineering graduates from the area’s top universities. Only one local start-up company, the online payments firm Braintree, was represented at the 2012 Mc-Cormick Tech Expo, the largest career fair for engineering and science students at Northwest-ern held every January.

Back at “Hack Night,” the disparity in thought between student programmers and engi-neers and the Chicago-area tech start-ups hoping to recruit them is on full display. At the front of the classroom is Jonathan Chan, a Computer Science major at

Northwestern graduating in June. His project, called Sound-ing Board, was devised at hack@uchicago’s Spring Hackathon at the University of Chicago and organizes music artists based on mentions and hashtags on Twit-ter. Chan calls it “Turntable.fm in the real world,” a reference to the popular interactive music shar-ing website in which users act as virtual DJs.

Sounding Board is a prom-ising concept, perhaps even promising enough to turn into a start-up company in Chicago. But Chan is taking an alternative

route: an entry-level job at Mi-crosoft working on the Windows operating system. Chan only be-gan programming in college, but an internship with Microsoft in Seattle last summer led to a job offer. “I didn’t really have time to think about other career op-tions,” Chan recalls.

Originally from Silicon Val-ley, Chan is quick to point out the prosperous tech center’s influ-ence on his career decision. But the non-existent pull of Chicago’s growing start-up community also played a factor.

Continued on page 7

PHOTO FROM HACKNORTHWESTERNJason Rowley (front left, blue shirt and glasses) and James Thoburn (right, gray hoodie), two University of Chicago dropouts, work diligently at a “Hack Night” hosted by Northwestern students.

Tech

Special

2 | NorthwesternBusinessReview.org | June 2012

PHOTOS FROM CODEACADEMY.ORG, BOXCO., KICKSTARTER AND ZYNGA

Inside This Issue

Kickst a r ter Br ings Cr o wd t o Online Fundi

ng, 9

SPONSORS

The E

du

cation of Neal Sales-Grif f in, 4-5

Pincus Visits NU, 7

Q&A w i th the Founders of BoxCo., 1

0

June 2012 | NorthwesternBusinessReview.org | 3---

Q&A with William Poundstone

Author of “Are You Smart Enough to Work at Google?”

Design an evacuation plan for San Francisco. What is the most beautiful equa-tion you have ever seen and why? How much would you charge to wash all the win-dows in Seattle?

All of the above are real questions you may be asked at a job interview for Google or a number of other top companies. In today’s new economy, one marked by sig-nificantly more job applicants than posi-tions available, many employers are free to choose among a pool of well-qualified appli-cants in order to find the best fit for the company.

For many firms, this means throwing “oddball” ques-tions at inter-view candidates in order to test creativity and mental thought process. Wil-liam Poundstone, author of the recently released book “Are You Smart Enough to Work at Google?” took some time out of his busy schedule to answer some questions from the Northwestern Business Review on the historic evolution of the job interview, the different types of questions job candi-dates can now expect and the effects of the tough job market on interviewing.

NBR: What is the main message you are trying to get across in your book?

Poundstone: Today, in the tight job market, employers are obligated to be a lit-tle pickier than they have been. This started in the technology industry but it has spread across the board. Employers now expect to see how you think during a job interview. It is not so much that the new questions are incredibly hard, it is more a matter of being prepared about what to expect.

NBR: In your book, you talk a lot about the new economy. What is it about the tough job market that is prompting companies to throw “oddball” questions at interview candidates?

Poundstone: There is this feeling that things are changing so quickly that a com-pany can’t hire someone for a certain set of skills because that job will be obsolete in six months. Google is the most extreme case of it but the phenomenon is happening everywhere. At Google, a lot of people are hired for one job but now work in a com-pletely different department doing some-

thing else. It is creative thinking type ques-tions that address that concern.

NBR: Could you briefly go through a couple of these different types of ques-tions candidates can expect in a job in-terview at Google?

Poundstone: The most common are Fermi questions, where the candidate will be asked to estimate something really crazy like the amount of window cleaners in Se-attle or golf balls in a bus. These questions have become common not only in tech-

nology but also in banking, insurance even at companies like Volkswagen. These questions test certain thought processes, such as how you evaluate a certain population or put a lot of infor-mation together.

Of course, once you are hired no one will ask you these types of questions but this

is something you need to know how to do to get hired. Another type of question that candidates can expect is the logic question, pioneered by Microsoft. However, a lot of companies are moving away from ques-tions with clever, defined answers to more open ended questions. One example is “How would you weigh your head?” which can be viewed as an engineering problem with many different answers.

NBR: What is the best advice you can give a young graduate looking to work at Google or any innovative company today in terms of getting through one of these tough interviews?

Poundstone: These are very tough in-terviews and you cannot fake your way through them. So you have to be comfort-able and understand that the first idea that pops into your head is most likely going to be the wrong answer. That gives you a running start; you can identify to the inter-viewer that the obvious answer would be so and so and then explain why its wrong. It is really the thought process that matters and not your final answer.

Companies really want to see how you develop your thoughts. Also, if asked to answer a trick question or difficult puzzle, many people don’t realize that it is an in-teractive process and do not ask the inter-viewer for clarifications or assumptions they can make. That is also really important during the interview stage.

“These are very tough interviews and you cannot fake your way through them. So you have to

be comfortable and understand that the first idea that pops into your head is most likely going to

be the wrong answer.”—William Poundstone

May 19, 2012The Start of Turkish Youth Week

The DoodlesGoogle is always changing...so shouldn’t its staf f be able to do so as well. Check out some of the latest Google Doodles below:

Mar. 14 2012Akira Yoshizawa’s 101st Birthday

Jan. 21, 2012Grandparents’ Day 2012

April 27, 2012Tato Bores’ 85th Birthday

April 4, 2012Senegal Independence Day 2012

Matt Wong

IMAGES FROM GOOGLE.COM

4 | NorthwesternBusinessReview.org | June 2012

naturally gravitated towards the groups that aligned themselves with these industries. In par-ticular, he got involved with the “Nugget Group,” a collection of finance-oriented students who ran an on-campus investment fund, and then later became a founding member of the Insti-tute for Student Business Edu-cation (Full Disclosure: NBR is a product group of ISBE). Hav-ing established himself in the student business community, he also gained attention for his work ethic in the classroom.

“I had never taken a real class before,” Sales-Griffin said, explaining the C- he received in Introduction to Macroeconomics in his first quarter at Northwest-ern. Undeterred, Sales-Griffin said he “worked three hours later than everyone in Micro and killed it.”

Two upperclassmen, Rishi Shah and Derek Moeller, took notice. Before Sales-Griffin knew it, Shah and Moeller had invited him to become a member of the venture backed start-up Context Media, a company that provides LCD monitors with patient-spe-cific information to health care facilities.

That summer, he worked in

their office downtown in sales and marketing while taking night classes back at Northwest-ern. The success of the company – Context Media now operates in all fifty states – ultimately forced Sales-Griffin’s hand. By the end of the summer, Moeller had graduated and Shah had dropped out of school. Sales-Griffin was asked to do the same, but he opted to remain at North-western.

“It took a lot for me to go

to college so I felt like I needed to finish,” he recalled over five years later.

He no longer worked for Context Media, but Sales-Griffin had been bit by the entrepre-neurial bug. Back on campus as a sophomore, he “bullied” his way into an entrepreneurship class for juniors and seniors taught by Troy Henikoff, a person who would go on to become CEO of Excelerate Labs and one of Sales-

Griffin’s professional mentors.He also decided he was go-

ing to fix the barbershop indus-try. As a college student, even with some income leftover from his Context Media days, he knew that going to the barbershop twice a month, for twenty dol-lars a visit, was not sustainable.

He also realized that being an entrepreneur meant “solving problems for people”, so he de-vised a business plan that would appease both profit-driven bar-

bers and college students who wanted to look sharp without breaking the bank. He then be-gan the process of peddling it to every barber he could find, even-tually entering into a partner-ship with one of them.

Helping manage barber-shops on the South Side, howev-er, soon became too demanding for a full-time Northwestern stu-dent, so as he did with Context Media, he gave up the venture in

While a NU student Sales-Griffin received a C- in his introduction to microeconomics

class, but now he is the CEO andco-founder of Code Academy in Chicago.

PHOTO FROM CODEACADEMY.ORGAt Code Academy, individuals are tought how to build web applications in a three-month time span.

Let’s call it the Winklevoss dilemma. You’ve got it, the next big Internet sensa-

tion. The only problem is, well, you need a technical co-founder. Former Northwestern ASG pres-ident Neal Sales-Griffin (SESP ’09) thinks he can help.

As the CEO of Code Acad-emy, an intensive three-month programming course that at-tracts applicants from all over the world to their classrooms in Chicago, Sales-Griffin wants to equip entrepreneurs with the skills to make their ideas an In-ternet reality.

Sales-Griffin was born and raised on the South Side of Chi-cago. Although he lived only thir-ty minutes away from Evanston, he arrived his freshman year at Northwestern sight unseen. That being said, he had little trouble acclimating to college life. After moving into Ayers CCI, a resi-dential college centered on com-merce and industry, Sales-Griffin found his way to some of the business organizations on cam-pus.

As jobs in investment bank-ing and consulting promised the economic freedom he had always dreamed of, Sales-Griffin

Robert Galliani

The Education of Neal Sales-Grif f in

The Journey from Northwestern Student to CEO

June 2012 | NorthwesternBusinessReview.org | 5---

PHOTOS FROM PLAY.GOOGLE.COM

order to return his attention to his schoolwork and a more tra-ditional career in finance.

After working the summer after his junior year at the Chi-cago venture capital firm OCA Ventures, Sales-Griffin spent his senior year serving as the ASG president and wrapping up his degree in Learning and Organi-zational Change.

When graduation rolled around, the man who, for four years had to be among the busi-est on campus, walked across the stage with no plans for em-ployment. Instead, he spent that summer “working out and play-ing video games,” and that fol-lowing fall, served as “the first alumni SafeRide driver in North-western history.”

Nearly six months after graduating, the longtime video-game enthusiast had packed his bags for Seattle and was pre-pared to work at the intersec-tion of education and gaming. A few weeks before he was to leave, however, he went out to lunch with Harper Reed, who at the time was the CTO of Thread-less. The lunch soon turned into an ambush by a number of VPs from the Chicago innovation firm Sandbox Industries. They offered him a job in their incuba-tor division and ultimately con-vinced him to stay in Chicago.

His experience with Sand-box taught him several things, but his biggest takeaway was the respect that coders commanded; they were the people putting ideas into action. Where the cod-ers were coveted, he viewed an analyst like himself as more or less dispensable.

Then it hit him. If he wanted to have the financially secure, independent, and impactful life-style he had always wanted, he needed to learn how to code. After this revelation, Sales-Grif-fin decided to leave Sandbox. He then called Northwestern’s 2010 ASG president, Mike Mc-Gee, a person who had a general background in graphic design, to share with him his plans. The two pledged to spend the next year teaching themselves as much as they could about web develop-ment with the hope of building a valuable product along the way.

“For over a year we strug-gled through anything we could get our hands on to learn these skills. After that we realized there had to be a better way,” re-

calls Sales-Griffin. And just like that, Code Academy was born. Well, almost. The two had to de-cline Harper Reed’s offer to join the Obama re-election campaign after he became the campaign’s CTO.

Code Academy began taking applications, for both students and instructors, in March of last year. They determined that they needed fifteen students to cover their expenses for the first ses-sion; they ended up receiving applications from eighty-eight,

and the classes have grown each application cycle since then.

What’s more impressive is that 60 percent of Code Academy applicants are from prospective students outside Chicago, even though imitator programs have sprouted up in cities like San Francisco, New York, and Wash-ington, D.C.

They are also not just as-piring entrepreneurs. Code Academy students boast pro-fessional backgrounds in real estate, finance, consulting, and

even computer science. Sales-Griffin serves as CEO and McGee operates under the title of Chief Creative Officer. Looking back on everything that has become of Code Academy, Sales-Griffin emphasized that although the company has been “profitable from day one, we’ve also been impactful from day one.”

People who know Sales-Griffin aren’t surprised. Entre-preneurs solve problems, and Neal Sales-Griffin is an entrepre-neur.

6 Must Have Smartphone Appsastrid: This app will organize and sync your tasks and give you reminders at the appropri-ate times (without you having to set them). You can share a todo list with a student group or friends working on joint tasks. It’ll send you a daily di-gest analysis of your tasks and productivity. The main app is free. Extensions like location based reminders can be purchased for a small price.

Lemon: This app gives you a simple way to keep track of your finances. Simply snap a picture of each receipt and the character recognition software figures out how much you spent and where you send it. You can access the data from your phone or from www.lemon.com. No bank account or personal infor-mation are required.

ScanCard: Unlike other busi-ness card scanners, ScanCard is free and reliable. It stores images of the cards you snap and uses character recogni-tion to download contact in-formation.

Airborne Free: This app turns your Android into a track pad for your computer. I find this great for scrolling across your screen while leaning back away from your laptop or having a great time connecting your computer to a large screen or TV and controlling from the comfort of your bed. Purchase the pre-mium version for no ads and extra features.

Dragon Go: If you use a Google search app, Dragon Go will make searching simpler and more en-joyable. The interface combines Google, Wikipedia, Twitter, You-Tube, CNN, NYT, Yelp, or anything else you wish to search. Simply scroll across the top bar to see the results of your search in each of your preset sites.

Circle Launcher: Save space and beautify your home screens with circle launcher. I’ve got my apps organized into circles such as “news,” “utilities,” “food,” etc… A bonus? You can make a circle for your bookmarks and access them easily (something that proves to be otherwise oddly difficult in the default an-droid browser.

Dhrumil Mehta

PHOTO CONTRIBUTED BY SALES-GRIFFIN

Neal Sales-Griffin sits at the Code Academy classroom. He serves as CEO of the com-pany along with Mike McGee.

6 | NorthwesternBusinessReview.org | June 2012

Continued from page 1While Silicon Valley shares

deep, entrenched ties with Stan-ford University, the relationship between Chicago’s top universi-ties and its tech scene is less than defined. For example, renowned venture capitalist Peter Thiel, an early investor in Facebook, teaches a course titled “Start-Up” at Stanford and the success of companies that trace their ori-gins to Stanford’s sunny Palo Alto campus, which include Google, Yahoo, Cisco Systems, eBay, Hewlett Packard and LinkedIn, keeps recruiters and prominent alumni close.

Besides the indefinite suc-cess of Northwestern alum An-drew Mason’s Groupon, few established networks exist in Chicago. “At Northwestern, we are not pushed to take program-ming opportunities in Chicago and we don’t really talk about jobs here,” says Chan. “Computer Science classes here are usually about theory, its up to us to learn web development on the side and help each other out.”

Brad Weinberger, another soon-to-be Computer Science grad at Northwestern, is in many ways similar to Chan. Both learned to code in upon arriving as freshman at Northwestern and both took many of the same class-es as Computer Science majors. Most notably, both Weinberger and Chan will work in the same office at Microsoft next year.

But Weinberger differs from Chan in one significant aspect: he grew up in Chicago. Even so, it is hard to turn down compa-nies with meticulous human re-sources departments that can lure students such as Chan and Weinberger with perk-filled in-ternships and a dominant pres-ence at recruiting fairs and ca-reer-related events on campus. A 2011 study by consulting firm BDO found that 46% of top U.S. technology companies planned to increase their employee head-count last year.

“All the big tech companies are out west,” says Weinberger, who considered finding a job with a local start-up company af-ter interning last summer with a proprietary trading company in downtown Chicago but ultimate-ly decided between Microsoft and Google. “Chicago is a more finan-

Tech Talent Leaves Chicago’s Universities

cially oriented scene, its tech cul-ture is not there yet.”

When James Thoburn saw a link to the “Hack Night” at North-western posted on Facebook, he immediately called his friend and co-founder, Jason Rowley. “We need to go to this,” Thoburn told Rowley.

Last year, Rowley and Tho-burn dropped out of the Univer-sity of Chicago in order to devote themselves full-time to their col-laborative note-taking start-up, Merge Note. “Technically I’m on leave,” Rowley explains, adding that his parents had no qualms about his decision.

Rowley and Thoburn are the

exception to Chicago’s inability to recruit and retain local tech tal-ent and they are not shy to men-tion it, or at least Rowley is not.

“I want to make Chicago a great place to start companies,” Rowley says.

Rowley, the well-dressed CEO of the company in designer jeans and dark brown shoes, gestures with his hands as he talks and he talks fast, speed-ing through his words. Thoburn, on the other hand, avoids small talk,

favoring instead the lines of code and web design on his 27-inch iMac computer that he brought with him to the event.

By simply placing them-

selves at Northwestern’s “Hack Night,” the two emphasize that Chicago may not have many ad-vantages over Silicon Valley but it does have one that may prove vi-tal to the city’s development into an innovation hub: loyalty.

“Everyone here is loyal to the Chicago scene,” Rowley says. “You’re not defined by the brand names you work for here, people will look past whether you worked for, say, Facebook or Google and focus on what you are accomplishing.”

If Chicago is to develop a spate of innovative companies, turning its top universities into a farm system of tech talent that flows into the city’s start-up com-munity will be intrinsic. Hack Nights at Northwestern could be a start. Because for Chicago-area start-ups, the war for the city’s tech talent must begin some-where.

“All the big tech companies are out west. Chicago is a more financially oriented scene, its tech culture is not

there yet.”–Brad Weinberger

PHOTO FROM HACKNORTHWESTERNStudents participated in the first “Hack Night” ever held at Northwestern University.

June 2012 | NorthwesternBusinessReview.org | 7---

Mark Pincus, founder and CEO of Zynga, brought Silicon Valley to Northwestern Univer-sity in a talk before 125 inno-vation-minded students and faculty members. The event, sponsored by the USA Today CEO Forum, revolved around Pincus’ career path and the lessons in perseverance, entrepreneurship, and leadership that have accom-panied it.

Taking questions from USA Today technology reporter, Jon Swartz, Pincus looked the part of the Silicon Valley CEO, which is to say he looked very unlike the classical vision of corporate upper management. Wearing a short-sleeve checkered button down and high-top Nikes, with one foot dangling above the floor and the other crossed under-neath his thigh, he laughed in ap-proval when Swartz said that he personally “distrusted anyone in the Valley who wears a suit.” In fact, it was refusing to wear a tie at a venture capital firm in D.C. that ultimately convinced Pincus to become an entrepreneur him-self.

Unlike Mark Zuckerberg or Steve Jobs, Pincus was forty-one when he started Zynga, having first worked for six years in finan-cial services. As an undergradu-ate at the University of Pennsyl-vania, Pincus described himself as being chiefly concerned with starting salary, a fixation that led him to lucrative jobs in invest-ment banking. When he reached Harvard Business School, how-ever, a creeping disinterest in financial services affected his performance in job interviews. As a result, after having job of-fers that made him the envy of his Wharton graduation class, he found himself, for a while, the only one in his HBS section not to have one upon graduation. He then begrudgingly worked brief-ly at Tele-Communications, Inc., which has since become AT&T cable, and the aforementioned D.C. venture capital firm, Colum-bia Capital. A man sometimes haunted by his own ambition, Pincus had convinced himself that he was “washed up” even before he was thirty.

“People choose not to be entrepreneurs because they feel

that the opportunity cost is too high,” he said, “at that point in my life, I felt like I had nothing to lose.”

In 1995, having left Colum-bia Capital, he built his first of four companies, FreeLoader, the first web-based push service. Af-ter selling it for $38 million, Pin-cus experienced the professional success he had long waited for. With his confidence restored, he moved to San Francisco to pur-sue entrepreneurship in what he described as the “Motor City of the Internet.” It was there that he founded Support.com, an auto-mated tech support service, and Tribe.net, one of the first social networks. These both achieved moderate success, but Pincus’ desire to create a “forever brand” that would be more “recogniz-able than the Nike swoosh” re-mained. Since founding Zynga in 2007, he has felt as if he is on his way.

Pincus’ first piece of advice was to “know your goal.” His goal, since reading George Gild-er’s Microcosm (about a revolu-tion in economics that, as a result of the tech boom, values mental capital over physical capital) had been to create a technology that changed the world. The years he spent in finance, without this goal in mind, left him dissatis-fied. But even when one has a goal in mind, he cautioned, lack-ing a strong conviction about it leads to compromise. After com-promising his vision with some of his earlier ventures, Pincus has taken to reminding his team at Zynga that we “want to build a house that we can live in.” Evoca-tive of Google’s motto, “Don’t be evil,” this mantra has both practi-cal and ideological implications.

He urged his employees, for example, to bring their dogs to work, even if it meant sneaking them past the security guards hired by those who owned the building they were leasing. Since then, dogs have been central to Zynga’s work en-vironment. In fact, they have always been central to the identity of Zynga; its name and logo were inspired by Pincus’ own American bull-dog. The reminder to “build a house that we can live in” is also the driving force be-

hind the company’s philanthrop-ic bent. Pincus beamed with pride when he shared that Zynga was responsible for the first mil-lion dollars of relief to Japan after last year’s tsunami.

“Zynga is now kind of known for disaster relief, but we have plans to move onto something more in the future,” he said, men-tioning Zynga.org, the company’s philanthropic subsidiary that has raised more than $10 million for nonprofits.

To the aspiring entrepre-neurs in the audience, Pincus emphasized what he called be-ing a “ninja product maker.” This means knowing what consum-ers want and then devising a way to give it to them. Zynga is cognizant of the fact that people want both games and the sense of being connected with friends; FarmVille, MafiaWars, and Hang-ing With Friends were all built with these two ideas in mind. “Loving data” is also key.

“By the time you launch your prod-uct, you should be counting winnings and not making bets, Pincus said. When asked about building a business team, Pincus com-pared it to dating in that, “you’ve got to be upfront,” something that will allow you to “reduce bad leads” and keep you from “getting stuck in bad relationships. It took me a while to figure

that out,” he said, glancing to-wards his wife, Ali, who was in attendance. On leadership, he shared his belief that “it starts with complaining and dissat-isfaction…followed up by solu-tions.” He cited the example of a twenty-one year old engineer who, in a meeting with Pincus and other new hires, challenged him on seemingly every point. Instead of becoming defensive, Pincus made him his personal technical assistant. The forum came to a head when Pincus was asked whether there was any sense in waiting until one is es-tablished in their field, as he did, before developing an idea that might have the potential to be the next Zynga.

“There are very few Inter-net treasures,” so unless the idea really is the next big thing, “you should be developing your game. Go join a pro ball team to see how pro ball is played.” That be-ing said, Pincus assured the au-

dience that “the biggest opportunity is ahead

of us.”

Pincus Brings Entrepreneurial Lessons, Leadership to NURobert Galliani

Mark PincusZyngaCEO

8 | NorthwesternBusinessReview.org | June 2012

Nic Adler is not your typical Pinterest user.

As owner of The Roxy The-atre, a popular and historic nightclub in Los Angeles, Adler is more in tune with heady rock-stars, popular DJs and up and coming indie acts than the cake recipes and fashion accessories “pinned” on the online scrap-book. He is also a rare male user on a website dominated by wom-en. Over 68% of Pinterest users are female, according to the In-ternet research firm, comScore.

“My friends make fun of me for it,” said Adler, a self-described “social vegan” who is integrated on more than ten so-cial media platforms including Facebook, Twitter and LinkedIn. “I probably spend the most time on Twitter but Pinterest is num-ber two.”

Adler is not alone in his em-brace for Pinterest.

Pinterest is quickly gaining a reputation as the hottest Inter-net start-up today. The concept behind the online scrapbook is simple: users “pin” various im-ages found on the web into dif-ferent categories such as “Books I’ve Read” or “Places I Want to Go.” But is also engaging. The website recently hit 10 million unique visitors faster than any other independent website in

history. And Pinterest also drives more traffic referrals than You-Tube, Reddit and LinkedIn, ac-cording to a Shareaholic study. Even Facebook’s co-founder and CEO Mark Zuckerberg report-edly owns a profile on the visual board.

“The biggest thing about Pinterest is that it is personal,” said Adler, who predicts Pinter-est’s numbers will continue to grow substantially. “I use it in two ways, to be part of the com-munity, where I can check out, say, everyone’s favorite tattoos and also as collaborative busi-ness tool to share visual ideas like figuring out logos.”

But is Pinterest for real? Behind the hype and the num-bers, questions surround the website’s long-term viability as a popular social media tool. Owen Youngman, the Knight Profes-sor of Digital Media Strategy at Northwestern’s Medill School, said that while many social me-dia websites without clear busi-ness models have emerged over time, not all of them have lasted.

“The staying power will be determined on whether it be-comes useful, develops a busi-ness model and makes it easy for me to find and be alerted to things that I really care about,” Youngman said. “The intersec-tion between what my friends

care about and what my friends care about that I care about is not yet clear to me on Pinterest.

Thus far, Pinterest appears to have what Facebook had in its early stages: a very “cool” product with a rapidly growing base of engaged users. But while Facebook eventually developed a steady revenue stream primar-ily through advertising, a central business model is less than clear for Pinterest. Jeremy Levine, a venture capitalist for Bessemer Ventures, one of the main inves-tors in Pinterest during its Series A financing, told Fast Company that “no specific ideas or proj-ects” are in the works to mon-etize the website right now.

“If you focus too early on how to make money off of some-thing like this, then you start to build features designed to cater to the paying constituents, like businesses, brands, advertisers, at the expense of building more and more great stuff for consum-ers,” Levine told Fast Company. “So until you feel super-confi-dent that you’ve got a really du-rable relationship with your con-sumers, it just makes no sense to focus on the monetization.”

Pinterest may not be fo-cused on monetization but it does have some ideas for rev-enue generation. Most notably, because Pinterest sends a large

amount of internet traffic to re-tail sites, the website is an ideal platform for affiliate marketing. Using outside software, if Pinter-est gets credit for a retail refer-ral, it generates a small amount of revenue. Multiply by that by the millions of users on the web-site and that adds up to quite a bit of pocket change. The Atlan-tic’s Alexis Madrigal went as far as to say that Pinterest is “play-ing dumb about making money” in a recent post.

Still, there is plenty to like about Pinterest. Youngman said that the online scrapbook works because “pictures are so effective about conveying information.” And uses for the website go in all directions. The Wall Street Jour-nal recently created an exclusive Pinterest page to document New York Fashion Week. PBS New-sHour is using the social me-dia platform to “have students think in-depth about what keeps them in school.” And Northwest-ern University Career Services uses the website to create vi-sual boards such as “Companies Where NU Students Intern.”

“The question is can Pinter-est write algorithms that make it more efficient for users to find things that they really care about,” Youngman said. “Other-wise it may just be a visual deli-cious that could fall apart.”

The Next Social Media Phenomenom?

Looking into Pinterest, the New Social Media Website

PHOTOS FROM PINTERESTThe online pinboard, Pin-terest, has exploded into one of the hottest start-up websites today.

Matt Wong

June 2012 | NorthwesternBusinessReview.org | 9---

Kickstar ter Brings Wisdom of Crowd to Online FundingWhen Vancouver-born en-

trepreneur and engineer Eric Migicovsky thought of the idea for a new, “smart” watch, he went the traditional route, ask-ing venture capitalists for help financing his investment.

Yet, even after multiple at-tempts, Migicovsky was unable to secure any funding for his new project—the Pebble Watch, or just Pebble. But Migicovsky didn’t give up; instead, he turned to Kickstarter, a popular crowd funding website.

Less than two hours after the project was posted on Kick-starter, Migicovsky and his part-ners at Pebble Technology raised $100,000, reaching their goal.

But the group’s fundraising did not stop at $100,000. By the end of the first night, the Pebble raised over $600,000. By the next morning, donors had pledged over $1 million to Mr. Pebble Technology’s new project. By the end of the first week, the watch became the most funded project in the history of the crowd fund-ing website.

By Thursday May 10, Mr. Migicovsky and his partners had “sold” 85,000 watches to 66,434 backers, raising more than $10 million in the process. The Peb-ble Watch was so popular that Mr. Migicovsky decided to limit pre-orders to 85,000 watches, a number that was reached more than a week before the project’s original end date on May 18.

In September, the Pebble is set to hit stores. But without Kickstarter, the largest of a num-ber of “crowdfunding” websites, turning the Pebble concept to re-ality would have been immense-ly difficult.

The Wisdom of the CrowdKickstarter’s premise is

simple. Entrepreneurs upload a brief business plan or descrip-tion of their creative project—a summary of their idea, usually accompanied by a brief video—and set a goal as to the amount of money that they hope to raise. (For example, Pebble’s Kickstarter page can be viewed here). People can then view oth-ers’ proposals and choose to pledge funding.

Unlike traditional forms of investment, individuals who

Dylan Kraslow

pledge funding on Kickstarter do not receive shares of the company’s stock, nor do they see their initial investment re-turned. However, companies on Kickstarter do offer users rewards for pledging specified amounts of money. In the case of Pebble, for example, backers who pledged $115 or more re-ceived a Jet Black Pebble watch, which will retail for $150 when it is released to the public.

Kickstarter is also based on the idea of “all or nothing funding.” Unless an entre-preneur reaches his specified funding goal, he or she receives no fund.

P r o j e c t s found on Kick-starter range from technology to film to food. While the most popular products on the web-site are music or film related projects, hardware projects, like Migicovsky’s Pebble Watch, have been the most successful.

Other notable projects that received their start on Kick-starter include the Printrbot, the “world’s first 3D printer,” and the Elevation Dock, the “best dock for your iPhone.”

To date, more than 20,000 successful projects have raised over $200 million using Kick-

starter. The 20,000 successful projects represent approxi-mately 44% of the total number of projects uploaded to the web-site.

While Kickstarter launched back in 2008 by Perry Chen, Yancey Strickler, and Charles Adler, the crowd funding website gained real polarity this year.

In February, Kickstarter had its first million dollar projects: the Elevation Dock, Double Fine

Product’s new action video game, and the Order of the Stick. The Eleva-tion Dock is a new and inno-vation iPhone manufactured by Elevation-Lab. The Order of the Stick is

comedic webcomic, satirizing role-playing games and medieval fantasy.

Kickstarter provides en-trepreneurs with so much more than an outlet to seek invest-ment. The website also provides inventors and businesspeople with a medium through which they can float ideas a test if there is a market for their new prod-uct. If members of the public (the consumers) won’t invest a few dollars to help a product reach shelves, they probably won’t purchase the product if and

when it does appear in stores.Uploading a campaign to

Kickstarter is free. However, if the campaign is successful, Kickstarter takes a 5% service charge. Amazon, the company responsible for processing the payments takes between from 3% to 5% of the final amount.

Legalizing CrowdfundingCurrently, federal and state

securities laws prohibit com-panies from offering equity to investors via crowd funding websites. That may soon change, however. Last November, the U.S. House of Representatives passed the Entrepreneur Access to Capi-tal Act by an overwhelming ma-jority. The bill has yet to pass in the Senate, however.

The Entrepreneur Access to Capital Act, which would al-low companies to offer securi-ties to investors via crowd fund-ing websites like Kickstarter or social media websites such as Facebook, would mean a lot more than fuller pockets for a few hundred or so investors. Many believe that the Act, now being pushed through the Senate by majority leader Harry Reid, would cause explosive growth in crowdfunding.

Consequentially, the nations economy would experience sub-stantial growth, as increased in-vestment spurs innovations and creates jobs.

Less than two hours after the project was posted on

Kickstarter, Pebble Watch raised $100,000.

IMAGE FROM KICKSTARTER.COM

PHOTO FROM KICKSTARTERKickstarter Founders Perry Chen, Yancey Strickler and Charles Adler have revolutionized project funding.

PHOTOS CONTRIBUTED BY BOXCO.BoxCo., established this year, rivals experienced Campus Solu-tions for Northwestern student storage. BoxCo. is a Northwest-ern Student Holdings company. BoxCo. will pick up students’ boxes from their dorms in the spring and deliver them to their new residencies in the fall.

Morgan HechtThe end of spring quar-

ter means the start of storage season at Northwestern. Ear-lier this month, Northwestern Student Holdings, a student-run company that funds busi-nesses serving the Northwest-ern and Evanston communities, launched its newest company, BoxCo. Two of the founders, juniors Nathan Katz and Alex Onsager took some time out of their schedules to answer some questions from the Northwest-ern Business Review on the structure and the goals of the company.

NBR: Why did you start BoxCo.?

Onsager: We started BoxCo. because we were dissatisfied with the current slate of storage options available on campus. We thought that NSH could both offer a better service and at a better price.

NBR: How did BoxCo. get started?

Onsager: We thought of the idea in January and developed it. Then, we pitched it to the NSH board of directors as part of the Business Idea Competi-tion, which is a competition that they hold every year to start new NSH businesses; any stu-dent can propose an idea. It was considered along with a num-ber of other business proposals and then it won out, it was ap-proved, and it was funded with the largest amount of funding that any NSH business has ever gotten, actually.

NBR: What are your goals as a company?

Onsager: Our goal is to of-fer a great storage service that Northwestern students can use and to offer entrepreneurial ex-perience to all of our members.

Katz: We have a big team too.

Onsager: There are many freshman and sophomores.

NBR: How many people are on your team?

Katz: Around 15 people.Onsager: For NSH, it is a big

group.Katz: We have people from

all different walks of life. Alex mentioned that we have a lot of freshmen and sophomores,

Q&A with Nathan Katz and Alex Onsager

Founders of BoxCo. Talk About Origins, Goals

of the three founders, one is a senior, and we are both juniors. We have also involved a lot of alumni NSH members in advi-sory roles; they will have a lot to do later in the year when we are doing operational stuff.

Onsager: It is very much an NSH effort.

NBR: According to a re-cent North by Northwestern article, the founder of Campus Solutions feels as if you cop-ied their business model. How is BoxCo. different and what can you offer that is different than Campus Solutions?

Onsager: First off, we of-fer dramatically better prices. Second, we offer a simplified service; I think that if you go to

our website that will be clear. Fi-nally, we have BoxGuard, which is a great insurance policy and it also means that you will get your total [price] at pickup, rather than months later. These are all things we personally had experienced the negative side of in storing and we thought we could do better, so these are the innovations we added to it.

Katz: Our business is de-signed to be similar to Cam-pus Solutions; we entered as a competitor to perform a stor-age function. But what we feel strongly about is the fact that we observed some of their good qualities and some of their less good qualities and we designed a business that would emulate

some of the better qualities and improve the weaker ones.

NBR: How does the busi-ness work? What is the pro-cess of registering and stor-ing?

Onsager: How the busi-ness works is that you go to our website, there you sign up, you pay a $20 reservation fee, which entitles you to unlimited boxes and packing supplies. While re-registering and reserving, you sign up for a pick up time, many of them are in reading week and finals week. Then we come pick up the stuff, it gets stored over the summer, and we will drop it back off at your new residence from late august to beginning up September.

10 | NorthwesternBusinessReview.org | June 2012