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May 2007 Presentations

May 15, 2007

Thinkronize: Helping Students Succeed

President, CEO and co-founder of Thinkronize Randy Wilhelm proved to the GCVA audience on May 15, 2007, that you CAN fund and grow a business in the Cincinnati area. Randy, who has always had a passion for helping kids learn, has turned this desire into a successful company that is currently supporting more than nine million students and 450,000 teachers in their educational quest.

Thinkronize's main product is netTrekker, a search engine designed specifically for students in the K-12 market. "We provide highly-effective technology for enhancing the education of youth," says Randy. "It all came out of envisioning a day when there was so much data on the web that a search engine was needed to filter it."

NetTrekker provides relevant search results based on both algorithmic and social (human) searches through an easy-to-use, intuitive interface. Randy describes, "Students are searching a database of resources that are appropriate for their use," which makes it easier and safer for them to search the web. Currently, 9.3 million students, through 450,000 teachers, at 18,000 schools, in 50 states, use netTrekker. The software has won 21 national awards, including the Best Educational Solution for 2007 from the software education industry. NetTrekker boasts a 90+% renewal rate with over 1.25 million searches taking place daily.

Thinkronize opened its doors in June 1999 and launched two products in 2000. They have learned and grown consistently since then, discovering what worked and what didn't, what they should focus on and what they should let go. In 2002, they landed their first top 25 school district.

During the journey, Randy says many phrases evolved as catch-sayings in the office. These phrases illustrate some of the ways Thinkronize has approached success and ensured they continue to focus on the "big picture."

Who Can't Wait to Help Us?

The first phrase is, "Who can't wait to help us?" Randy says, "When we started, we had no money, no staff, and we had to get a product out the door. We needed help." Who was there? Pat Longo, of course. "We were the fastest company to graduate HCDC," Randy laughs. "We were using boxes for dividers, we were worried about sexual harassment charges because we were sitting on top of one another!" In just 15 months, Thinkronize had outgrown their space and was in a position to look for their own offices.

The law firm Keating Muething & Klekamp was also there for Thinkronize: "They did our contracts, our corporate papers - it took us a long time to pay off the bills, but we did it." He reminisces about the advice their KMK attorney gave one day: "He said to us in a meeting, 'You guys have no idea what you're doing. You're like a bunch of kids playing in a sandbox.' He was absolutely right. But, that was probably good, because it allowed us to get things done, without worrying about what we didn't know."

Bob Coy was also incredibly helpful, as well as others at CincyTech. "They've really helped us ramp the business up," according to Randy. "Investors complain there are no good deals here, no exit strategy, business plans are terrible. Generally, they're right. On the other hand, entrepreneurs can't find money, and they're right. Without the support we've received, we would have been one of those businesses who couldn't find funding. But the difference between the investors and entrepreneurs is millimeters, not miles."

After going through the experience, he encourages investors to reach out, to ask how they can help. "Don't test the business on the present - ask where it can go."

Despite all this help, Thinkronize still had very rocky times. "On January 18, 2000, I could actually hear the bubble hissing," Randy remembers. "I was told, 'don't worry, you have a great opportunity.' We raised $1.5 million though small investors."

However, they still needed to talk to VCs. "We did 60 presentations, most on the Coasts as well as locally. Some were really bad, but some were great." How many term sheets resulted from these 60 presentations? Zero. "When we're presenting in Boston, we're hearing, 'Where are you? Cincinnati? Why? There's no talent or brains here.'" Randy was not willing to give in and move just for capital. "The reasons didn't work - the West Coast firms weren't willing to fund us because they couldn't fly to Ohio?"

Some of these presentations were to corporations. After one of these, a man approached the team. "He said, 'I believe in kids, I believe in you. Ask me for the money,'" Randy says. He's become the angel investor for the business to this day, bringing not only his money, but also his business expertise and love for kids to the equation.

Go Do Something Good For Kids

This phrase infuses the culture at Thinkronize. "We're all here because we love it," Randy claims. "Our people could make more money elsewhere, but we all have a passion for helping kids." They talk to teachers a lot and understand the industry well. "This area is poised for one of the largest transformations in US history," Randy believes. "This is one of the only areas that has not changed [that much] and it really needs to."

This is also true of their angel investor. Randy says, "He is my personal mentor, a terrific human being. He has multiple millions invested and credit for our business surviving goes to him."

Be Undeniable

"We must commit to the future - you have to go all the way." This is Randy's belief in how to run a business. "We must innovate, be the first to market, own the market, not let anyone say we're too small." The philosophy has worked - Thinkronize went from being "too small" to "highly successful" in just a handful of years.

Audience Discussion:

1. From those 60 presentations, looking at it in retrospect, why didn't you receive any term sheets?
Randy believes there were two issues: 1) them; and 2) the times. The bubble was leaking, people were fearful, education has an ugly review process. They were trying to communicate a complex model in short meetings. "We should have broken it down into smaller chunks," Randy feels. If they had gotten multiple term sheets on various segments, the entire deal would have been easier to understand.

2. What's next?
More products. They have another product halfway built and are aiming for rollout late this winter. They pare partnering with other companies in the industry, but no matter what, they will stay with their passion for kids.

3. Have any other entrepreneurs emerged from this business?
Yes, another company has started that is doing software, and some staff has gone into education to do technology at schools.

4. How patient is your investor?
"Very - most people figured we were dead a long time ago. He wants to get paid back but also wants the vision to continue."

5. How have you cracked the code selling to the educational buyer?
Randy feels the secret to success is to put hooks in that allow a bureaucrat to make a decision. "It's hard to find a decision-maker," he says. "You're usually talking to committees. The hooks allow checks on the list to protect the committee." He describes it as a relationship business - "You need to show them it's in their best interest." They've been working with Illinois for 4.5 years, "but when it goes, it'll be $1 million annually. You have to be patient." Another thing they've done is hired salespeople outside the industry, who can bring new vision to the process.

Robert Reinders: Founder of Thinkronize

Rob provided a short talk following Randy's presentation. This is a summary of his comments.

When Thinkronize started, they received no help from a lot of people, and no feedback, either. "A 'no' with 'here's why' would have been so much more helpful," Rob says. "That would have taken it to another level. If someone had spent quality time with us, that would have made the difference."

For "Thinkronites," it's not about the money; it's about enabling dreams and serving market need. "We do dream enabling," Rob believes. "There are many people who leave the P&Gs and the corporate world to be passionate and productive about what they're doing. You need passion or companies will fail. We have 50 people who all love their jobs."

Why didn't they get funding? "We tried. You can't overcome, 'You're not on the California Coast.' We were close with Liberty Partners in New York, but the market had turned. They were watching portfolios go down. VCs were looking for what would keep their purses afloat. They weren't doing new deals. We had to face that. It was not the best of times, it was really kind of tough."

"When the market shuts off, it shuts off. We were faced with dissention on how to get funding. We had not one offer. In the end analysis, the founders have to go sell it. We did, and that was part of the success."

Rob says they focused on "mission-aligned investing," looking for socially conscious companies. "Randy and I knew we could create a legacy for someone else, just as we were creating our own legacy. Our investor was handed a big chunk of shares for his commitment to be part of a team. We can make a difference - not every company can say that. We need people who want to make a difference with kids."

Regarding the future, Rob feels, "Sometimes you need to stay the course with a vision, based on market need. We did focus group research and listened to customers. The value proposition of netTrekker is dead on for three customer bases: teachers, parents and students."