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What's Happening at Venture Architects

Who we're talking to

Dennis Scholl

Dennis Scholl
Vice President/Arts and Miami Program Director
John S. and James L. Knight Foundation

Dennis Scholl has been a Venture Capitalist for the past 20 years, during which he was involved in the creation of 11 start-up companies, some of which have done well and some of which he buried in the backyard. Most recently, Dennis crossed-over from the private sector to the nonprofit sector by becoming the Vice President/Arts and Miami Program Director for the John S. and James L. Knight Foundation. He currently oversees the Knight Foundation's National Arts Program.

Dennis co-founded Betts & Scholl, a global wine project, with renowned sommelier Richard Betts. Betts & Scholl – a maker of wine in Australia, Napa Valley, Italy, and France – has received 23 scores of 90 points or better from Wine Spectator. In 2009, seven years after inception, Betts & Scholl was acquired by Castle Brands, a public company.

In addition, for over three decades, Dennis has been an avid art collector in collaboration with his wife Debra and is counted among the best known contemporary art collectors in America. Dennis' involvement in the art world has included the creation of the acquisition committees for the Guggenheim, Tate Modern and Miami Art Museum. He has also served on the boards of the Aspen Art Museum, Museum of Contemporary Art in North Miami, and Miami Art Museum, and he was the founding Chair of Locust Projects, an alternative art space in Miami.

As a former venture capitalist, how have you applied your investment experience now that you have crossed-over to the nonprofit grant-making world?
Going in, I thought that having been a venture capitalist who solicits, reviews and funds business plans would be the same as a philanthropist who solicits, reviews and funds grant proposals. Both see new ideas, both have bright young people submitting plans and proposals, both need funding, and both are filled with grand expectations. But au contraire. The venture capital world is driven by an economic outcome and the philanthropic world is driven by a social outcome. It's a fundamental difference that impacts how funds are used and means that my venture capital experience, while helpful, could not simply be transposed onto the grant-making process.

The profit motive in the venture capital process is the driver and is measurable. The social outcome in the philanthropic process is the driver and can be amorphous and difficult to ascertain. Also, the people on the receiving end of the venture capital process have interests aligned with the funder. The people involved in the philanthropic process on the grant recipient end do not necessarily have their objectives in line with the funder, which can create some complex issues.

For example, in the venture capital world, when I funded a young pharmaceutical company, one of the first things we suggested they do with the funding was strike a series of strategic alliances with other companies, so they would have boldfaced names such as Johnson & Johnson, Merck, etc. associated with them. And it worked. Great expected and unexpected things came from the association.

Thinking I could have success with this approach once again, I encouraged some of our grantees to immediately go out and strike alliances, whether for learning opportunities or operational efficiencies. Reactions included, "no, I don't want them" or "I don't need them" or "I'm afraid they will take my mailing list." So, being the fuzzy-cheeked philanthropist, I tried to force these organizations to collaborate. This lasted five seconds. Then I tried to inspire our grantees to collaborate. I put money in the middle of the table and said, here work together and share. The grantees shared the money and then went back to their respective corners and pretty much ignored each other. This didn't work either.

As a venture capitalist, I had immediate leverage. As a philanthropist, I have patience.

What was the biggest lesson you learning from launching Betts & Scholl?
For me, the big revelation about starting a wine company – where I am basically selling just grape juice – is the importance of branding. Of the ten companies that I had started before, none had serious branding efforts. We were just making widgets that fit into bigger widgets and branding wasn't essential. With Betts & Scholl, we first needed to make a great wine. But once that was done, it didn't matter unless we got people to come to it.

I also learned that we didn't have to spend a lot of money or even anything at all on marketing and public relations to have an impact, if we were creative. For example, when we wanted an ad page in a trade magazine, we could ask to trade an article or two in return for them running our ad. Although it may not have been exactly where we wanted the ad placed, it was free. Marketing and PR are ephemeral – and the biggest opportunity to be creative. People will barter.

How have you imparted this information to nonprofit organizations?
In a nonprofit organization, they believe that if they are doing good work, that is enough. But the real answer is it's not, particularly if an organization is frustrated by lack of public response. Rather than spending 99% of their time on product, I tell nonprofits to spend 70% of their time on the product and 30% creating noise, finding disciples, and creative marketing.


 

What we're advising

Planning

Plan
We couldn't resist including this recent blog post Everything I Needed to Know About Entrepreneurship, I learned from Star Wars. May the force be with you!

Planning

Operate
Start a "Take Your Developers on a Sales Call" day. Going on a sales call can be quite revealing for a developer. Sales guys may be describing a totally different product than the one the techies think they are building. And being reminded that there are real human customers is also good for geeks who don't deal with them often.

Planning

Communicate
Same Star Wars guy from above, but much earlier post. Obviously a movie junkie. This time the subject is public relations: Everything I Needed to Know about PR I learned from Office Space.

P.S. The blogger is Aaron Brazell. His bio appears in the right-hand column of the blog and does exactly what bios should do – reels you in, gives you a clear sense of the individual and what the individual has accomplished, and at least one or two points stick in your head.

 

What we're reading

Medium Raw

If you are a Bourdain-aholic like we are, then you may have already devoured Anthony Bourdain's Medium Raw. Although a bit uneven and not quite as good as his megabestseller Kitchen Confidential, Bourdain's latest behind the scenes reveal into famous kitchens and the lives of chefs is like being let in on a good secret. Bourdain's snarky remarks and keen observations about anyone and everyone who crosses his path made us laugh out loud. As one reviewer explained, this is "the kind of book you read in one sitting, then rush about annoying your co-workers by declaiming whole passages."

 

What our clients have to offer

Top Secret Society

Top Secret Society is a line of meant-to-be-seen bras. With fun names such as "Glitterati," "X-Factor," and "Hello Dolly," these bras do not deserve to be hidden. Owned by sisters Andrea and Michelle Varat, Top Secret Society's styles have been featured on the Today Show and in print publications such as Women's Wear Daily and In Touch.  Prior to starting the company in 2009, Andrea launched Scoop-NYC's wholesale division and Michelle was part of the Gap's international sourcing team.

Friends of Venture Architects will receive a 20% discount on any purchase through October 31, 2010. Just type the promotion code "Venture20" when placing your online order.

 

What our clients are accomplishing

Ecological LLC has formed a strategic alliance with Cushman & Wakefield (C&W) to provide Comprehensive Sustainability Services™ to C&W's clients.  A win for both companies, this strategic alliance will enhance C&W's sustainability offerings while providing Ecological with access to C&W's extensive platform.  Ecological delivers targeted sustainability and energy efficiency programs for individual buildings, tenants, and diversified portfolios in order to increase asset value.

Congratulations to Take Stock in Children for being chosen as one of the 49 highest rated applicants for the US Dept of Education's Investing in Innovation (i3) Grant and receiving a $5 million grant. Nearly 1,700 school districts, nonprofit education organizations and institutions of higher education applied. Established in 1995 as a non-profit organization serving Florida, Take Stock in Children offers low-income and at-risk students college scholarships, caring volunteer mentors and the opportunity to escape from the cycle of poverty. Services start in middle school, continue through high school and include the transition into college.

Xcellent news! XGraph, a next-generation advertising company that uses social network analysis for ad targeting, announced in July that it closed its first round of institutional funding totaling $3.75 million with Rho Ventures as its lead investor. XGraph's innovative technology is based on the premise that people who share similar lifestyles, values and purchasing habits with an advertiser's core customers are an optimal audience for targeted display advertising. By partnering with top tier web publishers, social media providers, and web-wide infrastructure firms, XGraph is able to use proprietary social network analysis methods to identify high-value Connected Audiences™ for advertisers that want to reach their highest quality prospects at scale.

 

What we care about

Food Bank NYC

Still on a Bourdain high, are paying further homage by profiling a nonprofit that he cares about. After some research, we discovered that Bourdain has supported the Food Bank For New York City, an orginazation recognized as the city's major hunger-relief organization working to end food poverty throughout the five boroughs. There are 3.3 million New Yorkers who experience difficulty affording food — an astounding number and one that continues to increase as the donated food supply has dropped to an all-time low and food costs have skyrocketed. To address this issue, the 27-year-old food bank procures and distributes food to a network of approximately 1,000 food assistance programs citywide, helping to provide 300,000 free meals a day for New Yorkers in need. Visit their website to make a donation or find out how you can volunteer.