Crain's Cleveland Business

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VOL. 37, NO. 35

AUGUST 29 - SEPTEMBER 4, 2016

Source Lunch

Business of Life

Brad Reynolds, Securable.io Cybersecurity firm gives clients tools to raise their cyber awareness. Page 20

CLEVELAND BUSINESS

The List

Highest-paid athletes Page 23

Geocaching is catching on in Northeast Ohio Page 19

GOVERNMENT

Corridor is grappling ground for city, state

By JAY MILLER jmiller@crain.com @millerjh

The city of Cleveland has stalled the transfer of city-owned land needed to complete the $331 million Opportunity Corridor because of wrangling between the city and the state of Ohio.

In part, the hangup is caused by a new state law that makes illegal some of the terms of an agreement in place at the beginning of project construction in 2015 over hiring set asides.

But the city also is waiting for assurances that money for environmental cleanup of future development sites and for new utilities along the three-mile boulevard that is planned to connect the end of Inter-

state 490 at East 55th Street with University Circle will be coming from the state.

Without that financial support, the city fears, the roadway is just a faster way for travelers to get from the end of the freeway to the medical centers on the city’s East Side, not the spark that creates a new neighborhood.

It’s also only the latest skirmish in a fight Cleveland and the other Ohio urban centers have been waging against state politicians for a decade over how expansive are the rights of cities to regulate what goes on within their borders — what’s called home rule.

Cleveland Mayor Frank Jackson brought the corridor up at a news conference Aug. 23. The city was announcing that it had filed a lawsuit to SEE CORRIDOR, PAGE 8

EMPLOYMENT

ERC survey projects ’17 pay raises of 3%

By DAVID PRIZINSKY Modest pay hikes are in the cards again next year for employees at regional companies and organizations, according to the results of the annual survey published by the Highland Heights-based Employers Resource Council.

The projected 2017 increases average about 3% and continue a general trend of somewhat smaller pay hikes that has been the rule since 2010, according to data from earlier surveys.

Since the start of this decade, annual raises have averaged 2.9%, compared with 3.5% in the prior decade.

Pat Perry, president of the 1,100member ERC, said employers are trying to maintain some consistent pay policies in the face of persistent chal-

lenges. These range from economic recessions, presidential election speculation and the likelihood of growing government labor law regulations that could raise the cost of doing business.

“There are a series of events that have put us in a holding pattern,” Perry said in explaining the post2010 wage increase trend. “The companies are going for what’s affordable in the context of the cost of doing business.”

Most of the increases next year will be in the form of merit raises, although companies will also use costof-living hikes and lump sum payments, according to the survey.

The ERC sounded out 145 organizations in eight counties of Northeast Ohio. Manufacturing accounted SEE SURVEY, PAGE 8

Entire contents © 2016 by Crain Communications Inc.

SPORTS BUSINESS

Bringing the belt to The Q

Northeast Ohio native Stipe Miocic admits the last few months — beginning with the UFC heavyweight title he won in Brazil — have been a little overwhelming. Soon, Miocic will defend that championship at UFC 203, an event that has produced a very strong response locally. Story on page 13 Browns refurbish Berea training facilities. Page 13 Cavs championship, by the numbers. Page 14 Classic Teleproductions is a family show. Page 15 Startup tries to make its mark with unique fantasy game. Page 16

Zuffa LLC via Getty Images

UFC 203

When: Saturday, Sept. 10 Where: Quicken Loans Arena Fights begin: 6:15 p.m.

Main event: Stipe Miocic (15-2) vs. Alistair Overeem (41-14) Tickets: $50, $75, $90, $125, $200, $300, plus $3 facility fee Flash Seats: www.theqarena.com/ tickets/ufc-premium-160910

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CRAIN’S CLEVELAND BUSINESS z AUGUST 29 - SEPTEMBER 4, 2016 z PAGE 3

Seville company has hit ground running V3, which started in 2013, expects its ’16 revenue to jump to $25M

By RACHEL ABBEY MCCAFFERTY rmccafferty@crain.com @ramccafferty

V3 Transportation has grown rapidly in its first three-and-a-half years. What began as two men with laptops and cell phones has turned into a full-fledged expedited ground transportation company with a new headquarters in Medina County for its approximately 40 office employees and the nearly 200 truck owneroperators who work with it.

The company expects to post $25 million in revenue this year, a little more than double the number from 2015, said president John Sliter.

Those first two employees were co-founders Sliter and CEO Bob Poulos, who started the company in January 2013. The two had worked together at what was then known as Panther II Transportation Inc., also an expedited ground transportation company that was in based in Medina at the time, but had gone their separate ways before reconnecting to create V3. “We felt, coming out of the recession, that there was a real void for an asset carrier with new equipment,�

Poulos said. “And that’s what we set out to do.�

Sliter and Poulos decided to put V3 in Northeast Ohio because of the access to the talent, vendors and support industry, Poulos said. And the re-

“We felt, coming out of the recession, that there was a real void for an asset carrier with new equipment. And that’s what we set out to do.� — Bob Poulos, V3 Transportation CEO (Contributed photo) gion is within 400 to 500 miles to 90% of its customers. The company serves seven industry verticals, from automotive to chemicals to retail.

Poulos refers to the ground expedite segment as the “ambulance service for freight.� The company doesn’t have planned freight but instead responds to customer needs. That could range from an automotive supplier that needs a widget right away to keep its line from shutting down or last-minute flyers that need to make it into a newspaper, Sliter said. “Everything we do is last minute, and our trucks are there as like a safety net to protect our customer’s

Are you an individual with $10 million or more seeking advice?

supply chain,� Poulos said.

Joe Perez, manager of expedited ground service for Illinois-based AIT Worldwide Logistics Inc., has been working with V3 since the company opened its doors. The logistics company uses V3 for some of its domestic trucking, particularly the ad-hoc projects that come up at a moment’s notice. Perez said he enjoys working with the company because it’s open and honest — it never over-commits, and it communicates well, he said.

In January 2016, Craig Amato, past owner and founder of Panther, joined as the company’s third partner. In mid-July, V3 moved from

Brunswick to Seville, setting up shop in a former Panther building.

V3 bought the building on what’s now known as Enterprise Parkway for $663,000 and invested about $700,000 in it, Sliter said. It gives the company plenty of space — 12,158 square feet to be exact, plus a 6,300-square-foot shop in the back. The main building currently holds 60 cubicles and nine offices, and it has room to add another 15 cubes, Sliter said.

Talent search The company has about 42 employees now in its Seville office, plus a small satellite office in Chicago and

home offices in Cleveland and Atlanta. The majority of its employees are in operations, working in a call center role, and others are in sales, recruiting and administration.

But V3 would be larger if it could find more talented people, Sliter said. “We don’t have 42 people because we want to. We wish we had 62 people right now,� he said. “We’re hiring as fast as we can.�

And those employee figures don’t even take the company’s fleet into account. Instead of owning its own trucks, V3 recruits owner-operators to work with them SEE V3, PAGE 22

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z AUGUST 29 - SEPTEMBER 4, 2016 z CRAIN’S CLEVELAND BUSINESS

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Diasome is trying to ‘fix insulin,’ then hit market

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More than 30 years ago, Dr. Blair Geho started hunting for a way to improve insulin.

Now his life’s work is being put to the test in a clinical trial that will involve up to 200 patients with type 1 diabetes.

Through Diasome Pharmaceuticals, he and his son, Robert, are working to commercialize an insulin additive designed to help diabetes patients gain more control over their blood sugar level — something they’ve struggled with since injected insulin was first used in 1922.

If the current Phase IIb trial produces strong data, the product still would have to pass a larger Phase III trial before hitting the market. But the Gehos would be one step closer to achieving a goal Blair began pursuing after reading a 1972 research paper that pointed out the limitations of insulin injections.

“Several people said, ‘If you really want to fix something, figure out how to fix insulin,’ ” he said.

What’s wrong with insulin?

In a healthy patient, the pancreas delivers insulin directly into the liver — which serves as a “glucose storage tank” for the body, said Robert Geho, CEO of the company, which is based at the Global Cardiovascular Innovation Center near the Cleveland Clinic.

When diabetes patients are injected with insulin, it helps them process sugar throughout the body, but not much of the insulin gets to the liver, he said.

The additive is meant to fix that problem. It consists of Frisbee-shaped molecules with an electromagnetic charge that gives them the ability to hold onto insulin molecules. The additive then carries the insulin molecules to the liver, where they can more effectively regulate the patient’s blood sugar, the Gehos said.

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serves as a chief translational officer at the university’s school of medicine — a role that involves helping the school turn new discoveries into products.

The more McDonald learned about the technology, the more excited he became. Other people — including investors, health care professionals and even the major insulin manufacturers — are starting to take notice, too, McDonald said.

“It really has the potential to be a lifechanging breakthrough for diabetes,” said McDonald, who noted that his firm occasionally invests in startups.

McDonald noted that Diasome has engaged in “a dialogue” with the insulin manufacturers, but Robert Geho wouldn’t go into any more detail. He did note that Diasome eventually could end up partnering with the manufacturers or being bought by one, if all goes well.

Regardless, Diasome doesn’t “aspire to be a full-scale manufacturing company,” he said, noting that it has six employees and makes its additive through contractors.

Blair Geho started working on the technology in the 1970s, as a researcher at Procter & Gamble. During the 1980s, he continued to work on it in the background through his own company, Technology Unlimited in Wooster, which made additives for hair and skin products.

He started getting more serious about the diabetes technology in the mid-1990s, when he formed a research and development company called SDG. The Cleveland Clinic owns a stake in SDG, which owns a stake in Diasome.

“We really have put a lifetime of work into this. And a lot of money,” Blair Geho said.

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To back up their point, the Gehos presented data from a few smaller trials. For instance, in one study, nine type 1 patients tested out regular insulin and insulin with the additive at different times. When the additive was included, their peak peripheral blood glucose level was nearly 40% lower, according to a study published by the Journal of Diabetes and its Complications in 2001.

They presented graphs from two other studies — one involving dogs and another unpublished study involving humans — that also showed a significant impact. They’ve conducted a total of 18 human trials, but many of them tested different versions of the drug on patients with type 1 and type 2 diabetes.

Some of the studies began long before Diasome was founded in 2004. So what took the company so long to get to this point?

For one, Diasome spent several years testing an oral version of the drug geared toward type 2 diabetes patients.

In 2012, however, the company’s board decided to pursue an injectable version designed for type 1 patients. The board also replaced the company’s previous CEO, Len Rosenberg, and promoted Robert Geho to the position.

Geho noted that there’s greater need for better type 1 diabetes treatments. He also said that it’s cheaper and simpler to commercialize an injectable insulin additive.

He added that awareness of the need for improved diabetes treatments “dramatically changed over the last five years.”

“2012 for Diasome really represented a tipping point,” he said.

Diasome has raised a total of $25 million from investors. More than $5 million came from McDonald Partners, a brokerage and investment advisory firm in Cleveland.

The firm’s CEO, Tom McDonald, met Blair Geho in 2013 while serving on two visiting committees at Case Western Reserve University. Geho

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CRAIN’S CLEVELAND BUSINESS z AUGUST 29 - SEPTEMBER 4, 2016 z PAGE 5

Jergens, Haas team up to help kids learn “Why is manufacturing important? Why is it cool? Why would you want to have a career in it? That’s what we want to address with students.”

By DAN SHINGLER dshingler@crain.com @DanShingler

Jack Schron has a built a state-ofthe art CNC machining cell at Jergens Inc.’s main plant on Cleveland’s Waterloo Road. But he doesn’t intend to use it to make the machine tool fixtures or other products that Jergens is known for.

Instead, he said, the cell is open for use by area schools, material science engineers, tooling companies and just about anyone else with a product to test or a student to teach in the ways of modern manufacturing.

“It shows kids that the manufacturing space is alive and well,” Schron said. “This is an extension of the classroom for the schools, and it’s an extension of the R&D department for companies.”

The facility, dubbed FastForward

by Jergens and its partner, California-based Haas Automation, has as its heart a new Haas vertical milling machine with a five-axis trundle.

To a trained machinist, that means it’s a machine capable of working to incredibly tight tolerances and able to maneuver and work its tools all around a stationary piece of work, cutting shapes, drilling holes and performing other metal cutting tasks all in one place.

To the rest of us, it means Jergens has a very high-tech and expensive piece of machinery available to area students — one many of them might not otherwise get their hands on until they start their careers.

“That’s brand new, state of the art and fresh out of the factory,” said Dave Tucker, president of Midwest Manufacturing Resources in Twins-

— Justin Bateman, project manager of FastForward back and replaces them with new models. That ensures that schools — and in this case, Jergens — always will have the latest equipment for training and demonstrations.

It’s no small commitment, either.

“It’s probably in the $140,000 range; that machine’s fully loaded,” Tucker said of the Jergens installation. “But it’s in investment in the future.”

On top of that, Jergens had to dedicate and prepare a section of its plant floor for the machine, provide fixtures and accessories, and set up the facility. Michigan-based Parlec Inc. provided tool-holding and microscopic measuring equipment.

Project manager Justin Bateman, left, and Jergens CEO Jack Schron at the Haas vertical milling maching at FastForward. (Dan Shingler) burg, which acts as Haas’ regional sales representative for the area.

Tucker helped arrange the loan of the machine from Haas, which he said has a program nationwide to

lend machines out to educators, in order to help build a future workforce familiar with its equipment.

The company loans out new machines for two years, then takes them

It’s built; will they come?

Several companies already have used the machine to test and demonstrate cutting tools, Schron said, and educators from Max S. Hayes High School in Cleveland and Case Western Reserve University

have been out to see it.

Dave Neylon, a CNC instructor at Max Hayes, said his school already partners with Jergens on educational initiatives, and will be working with students at the new FastForward facility.

“I will definitely be making plans to do that,” Neylon said.

Max Hayes has a similar Haas machine that it will soon begin using itself, Neylon said, so being able to go to Jergens and see the FastForward machine and work with Jergens’ people will be helpful.

Having a machine dedicated to students, where they can get some hands-on experience or even upclose demonstrations, is even better than a field trip through a working production facility, Neylon said.

“We can bring a project out there to work on, and it gets them into the surrounding of all the people working at Jergens,” he said. “Doing a field trip is one thing, when you’re walking around as a guest. But when you’re in front of a machine, working in that environment, you get a better feel for what it’s like to work in that industry. I would definitely be interested in that.”

That’s pretty much exactly what Jergens is hoping will happen, said Justin Bateman, the company’s project manager in charge of FastForward.

“Why is manufacturing important? Why is it cool? Why would you want to have a career in it? That’s what we want to address with students,” Bateman said. “So we created this space, which I think is exceptionally cool. … We want to provide an ignition point for young people who have become disassociated with manufacturing.”

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Accenture feels at home in Flats

By STAN BULLARD sbullard@crain.com @CrainRltywriter

When clients need to meet, Jim Dickey, an Accenture senior managing director who leads its Cleveland office, often hears something surprising — and encouraging.

“They say, ‘Let’s meet at your office,’ ” Dickey said as he recently conducted a tour of the consulting firm’s new office at Settlers Point, the multitenant remix of the former Sammy’s building at 1400 W. 10th St. The company’s move this summer was a jaw-dropping switch for the Cleveland office of the global provider of strategic, digital and logistic services for corporations. It went to an old building in the city’s Flats, gaining views of the Cuyahoga River Valley, and giving up the 19thfloor vistas at 200 Public Square, a corporate address in a trophy skyscraper.

Moreover, since most of the firm’s 200 workers spend the bulk of their time at client locations, Accenture reduced its footprint to 7,000 square feet from 12,000 square feet.

The firm made the new location work with a big dose of technological upgrades, multiple conference and telephone rooms of various sizes, a café-style break room and two outdoor patios — one next to a new glasstopped penthouse atop the building.

“No one has complained it is too small,” Dickey said, and the firm has found about 25% more staff makes it to the Flats office on a typical day than Public Square.

The space combines brick walls and timber supports with LED lighting.

For example, a metal sliding door remains in place at the firm’s second-floor entrance at a foyer decorated with steel panels, while workstations include contemporary moveable sit-to-stand desks.

The reception area includes a touch-enabled media wall that provides interactive computer content, notifications and news. It also allows employees to sign in and reserve private office space they may need through the day. A 10-person conference room with a view of the Nautica Waterfront District is equipped with a teleconference room — its cameras focus automatically on and follow the person speaking — and presentation and “huddle rooms” incorporate digital tools that allow several workers to collaborate and share content in real time from any current device, including an iPhone.

The office also includes an Accenture digital classroom, one of about 50 around the world that enables Accenture people from multiple locations to participate in interactive and collaborate sessions. The company provides an average of 40 hours of training annually for each of its 375,000 employees.

“Our business is people,” Dickey said. “Attracting talent is a real thing.

We also want to be part of the revival of the Cleveland Flats rather than be in standard, traditional space.”

Grooving on Lake Erie freighters gliding by on the Cuyahoga River is a small part of it, said Chris Clark, an Accenture senior manager.

“Think what this location will be like in another two years,” Clark said, ticking off construction of the Canal Basin Park nearby, completion of the last link of the Towpath Trail through the Flats and more redevelopment of the Flats and Warehouse District.

“It’s easier to park here, and we’re still connected to downtown,” Clark

Cuyahoga Falls biz brings the medical testing to you

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

With a family history of diabetes and breast cancer, Joyce Miller of Aurora wanted peace of mind that she was in good health.

So the 58-year-old marathon runner ordered a testing kit from Virtual MediClinic, a new Cuyahoga Fallsbased company that offers medical articles, supplements and at-home diagnostic testing.

Within days, she received a kit in the mail to collect her saliva. A couple of days after she dropped it in the mail to send it back to the lab, she got her results: no diabetes and her hormones were normal.

“That was a big sense of relief,” said Miller, who also purchased supplements on the site that she said have helped address menopause symptoms.

Dr. Dereck Kara, creator and owner of Virtual MediClinic, said the website is a combination of a symptom checker, a supplement site and a lab site. Virtual MediClinic first launched last year, but was revamped and went live in the spring after a few years of work putting together the more than 500 articles on the site. It offers more than 16,000 products, Kara said.

Visitors to the site can type in search terms, and they’ll get a collection of articles, blogs, videos and “more importantly,” Kara said, any

related test kits they can order.

“Knowing whether you actually have the problem or not is key, and the testing is simple,” Kara said. “And in that regard, if everybody did this … then our health care system would have much less of a burden, because now we’re letting people sort of get involved in their own health care in the way that they should — in a more preventative manner.”

While the use of direct-to-consumer at-home diagnostic kits has been on the rise, at-home testing (like pregnancy tests and glucose monitoring) has been around for decades, said Shannon Haymond, director of clinical chemistry and mass spectrometry at Ann & Robert H. Lurie Children’s Hospital of Chicago.

As the direct-to-consumer market picks up, many are wary of removing a physician from the equation.

Kara said practitioners view themselves as gatekeepers and seem to have a “relative lack of trust in the general public to manage their own health.” The mindset, he said, is likely born of a time when tests were more complicated, but there needs to be more trust now that testing has been simplified.

Haymond, a member of the Washington, D.C.-based American Association for Clinical Chemistry, said athome testing can offer patients access to information and cost transparency, which can be empowering and are “certainly positive,” but a lot of unknowns remain about who’s using the tests, what their motiva-

tions are and how they’re using the results. There are concerns about the accuracy and reliability of some tests, she said, as well as the utility of them — some marketed tests don’t have a clear applicable reason for their results.

“There have been some discussions that maybe there is a limited number of tests that are appropriate for this market — things that are pretty low risk, things that are wellvalidated (and) the utility of them is well-validated,” she said. “Maybe that’s where it should start.”

Virtual MediClinic contracts with ZRT Laboratories for the tests and patients receive their results digitally within just a few business days, Kara said.

“It’s information that is solid; it’s based in fact (from) well-known labs, and that way, it gives access to information to consumers in a timely manner, in a manner that is before it’s too late,” Kara said. “We need to be involved in our own health care.

We can’t just wait until something happens.”

Ordering the test online made sense for Miller, who has since recommended Virtual MediClinic to friends and family. Her high deductible health insurance made traditional testing too expensive. Besides, she liked getting to look at the results in her own home where she said she didn’t feel pressure.

“I think that’s the difference: We are in control of what we choose to do,” she said.

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Accenture’s headquarters at Settlers Point in the Flats has multiple conference rooms. (Stan Bullard)

Accenture’s new space is in the former Sammy’s in the Flats.

said. “We wanted to keep that connection.�

Building owner Joel Scheer and partner Welty Building Co. recently showed off the Accenture space to office brokers, for there are additional suites to rent out at the structure.

Conor Coakley, an associate in CBRE Group Inc.’s tenant rep unit, was among those who visited the space. “I like how they combined hoteling and private offices within such a small space,� Coakley said. He considers Accenture the second bigleague company to break the norm in office practices in Cleveland, fol-

lowing Skylight Financial Group, which moved to Ohio City from Tower City Center.

He thinks there will be more. “We’re seeing a lot of interest in non-downtown settings where you can put you’re a bigger name on a building versus small lettering on a monumental sign outside a big building,� Coakley said.

Coakley and others say the conversion of the former restaurant and catering firm space to Accenture was not inexpensive. However, Dickey and Scheer declined to comment on the rent or construction costs.

Six plants could shut down as GE Lighting rethinks products

By CHUCK SODER csoder@crain.com @ChuckSoder

GE Lighting aims to close six plants — including two in Ohio — because it no longer wants to make incandescent bulbs and other traditional lighting products that are falling out of favor.

Those closures, if finalized, would leave East Cleveland-based GE Lighting with a much smaller footprint in the United States — a footprint that has been shrinking for years.

The closures also would put roughly 640 people out of work, according to numbers combined from news outlets that cover the affected communities.

Thirty of those people work at a plant in Dover, which is south of Canton, according to the Times-Reporter in New Philadelphia. An additional 200 or so work in Circleville, which is south of Columbus, according to the Pickaway New Journal.

The other plants are in Mattoon, Ill., Bridgeville, Pa., and Lexington, Ky., which is home to two of them.

GE Lighting also is laying off 36 people at its Bucyrus Lamp Plant. The facility had added about 180 positions over the last seven years as the company started building more LED-related products in the city, which is west of Mansfield, according to Alicia Gauer, senior manager of communications for the company.

Some of the six plants could be

spared: Unions and employees have a 60-day period to submit ideas on how to make the facilities more competitive.

If GE Lighting goes ahead with its plans, however, the plants will be closed by the end of August 2017, Gauer stated, noting that nearly half of the employees are eligible for retirement.

All six plants have shrunk considerably over the years. Each is operating at less than 50% of capacity, according to Gauer, and in some cases the percentage is much lower, judging by the news reports.

Since 2008, GE Lighting has closed eight other plants in Northeast Ohio alone. And there’s a reason for that. “In the last decade, the lighting industry has seen a major technology pivot away from traditional lighting products including incandescent, halogen, and specialty linear fluorescent lamps. Consumer demand for traditional lighting is at an all-time low,� she said in a written statement.

That’s partly because of the rising popularity of LEDs. Plus, a federal law passed in 2007 eventually made it illegal to make or import incandescent bulbs unless they use less than 40 watts of electricity.

GE Lighting does make incandescents that meet the new efficiency standard, but it no longer wants to do so: The company plans “to cease manufacturing of traditional lighting products and subsequently close select manufacturing locations dedicated to this technology,� Gauer said in her statement.

This past February, GE Lighting

also announced that it would stop selling coiled compact fluorescent lamps in the United States.

Instead, they’ll focus on LEDs. They’re more efficient, they last longer and they can do all kinds of tricks: Light-emitting diodes are essentially computer chips, making it possible to control them via the internet or hook them up to cameras, sensors and other electronic equipment.

Those capabilities pushed General Electric to move GE Lighting’s commercial LED business into a new energy-focused business unit called Current. The new unit is based in Boston, though many of its employees work in East Cleveland. That move left GE Lighting with the traditional lighting business and the consumer LED business. It also put Current in charge of GE Lighting manufacturing plants in Colorado and North Carolina, as well as some of its facilities in Hungary.

If all six plants closed, GE Lighting would still have three U.S. manufacturing plants: One in Bucyrus, one in Logan, in southeast Ohio, and one on Ivanhoe Road in Cleveland, which also serves Current. GE Lighting also would retain U.S. distribution centers in Ravenna, Ohio, and Del Rio, Texas, Gauer wrote.

Overseas, GE Lighting has a plant in China and multiple facilities in Hungary, she added.

The closures would not impact “operations or employees� at GE Lighting’s East Cleveland headquarters, she added.

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SURVEY CONTINUED FROM PAGE 1 for 55% of the respondents. Slightly more than half the companies employed between 50 and 200 workers.

Respondents in Cuyahoga County accounted for nearly 60% of those surveyed. Five job classifications were covered, ranging from production workers to executives.

About two-thirds of the organizations projected pay increases of 3% or more. A small number of organizations (5% or less) are not expecting to increase pay next year. When those freezing pay are factored in, the average projected increases fall below 3% to a range of 2.6% to 2.8%, according to the data.

As far as executive pay is concerned, the survey indicated that top officials with non-manufacturing firms will fare the best (3.6%), followed by manufacturing executives (2.7%) and those who lead nonprofit groups (2.2%).

The survey, conducted during July and August, can be used by ERC members to assess compensation trends in setting wage and salary budgets.

Les A. Szarka, chief executive of Szarka Financial Management in North Olmsted, sees a regional economy marked by uncertainty. He cites declining productivity figures and the trend toward negative interest rates abroad as additional challenges.

“There is a lot of caution out there, and that will put pressure on compensation,” Szarka said in assessing the overall business environment in the region. Szarka said his clients provide him with a good cross-section of opinion, since they range from small businesses to executives with larger companies.

However, Szarka points out that his firm provides financial advice and services, and it tends to do well in this business environment. He said his

firm is having another record year and will do better than national and local averages when it comes to increasing salaries next year.

“We will be above 3%,” he said. The company employs 13 staff members.

A general softness in overall business conditions has been detected this year at Zaclon LLC, a 22-employee Cleveland producer of industrial chemicals. President Jim Krimmel said the company also is adjusting to the loss of one important account that he attributes to a business reorganization.

“We can overcome weak growth,” he added. “We are profitable and we are optimistic.” He said the company was continuing to add workers, slowly.

Zaclon uses profit-sharing to compensate employees. The profit-sharing checks that go out to everyone will be smaller next year, compared to the hefty 40% of pay that the company paid out this year. The profit-sharing payout percentage will be in the single digits next year, Krimmel said. Zaclon this year also implemented a biennial, 2.5% cost-of-living hike.

Other pay forecasts tend to mirror the ERC results. These forecasts and commentary were cited on the website maintained by the Society for Human Resource Management.

WorldatWork said companies are projecting an overall average increase of 3.1%. This ranges from a low of 2.9% for salaried workers covered by labor regulations to 3.1% for executives. These figures show virtually no growth from the actual raises this year. These raises reflect modest economic growth, experts point out.

“Despite positive pressures from decreased unemployment and an increase in job openings, salary budgets continue to be restrained by ongoing uncertainty in the global economy and low rates of inflation,” said WorldatWork experts.

The Conference Board in New York is projecting 3% hikes overall, similar to 2016 increases.

CORRIDOR CONTINUED FROM PAGE 1 block a new state law that prohibits state and local governments from requiring a contractor to employ a certain percentage of local residents on a construction project.

Specifically, the new state law targets Cleveland’s Fannie Lewis Law, which requires that on construction contracts let by the city of $100,000 or more at least 20% of the labor be performed by Cleveland residents.

The state had agreed to include adherence to the Fannie Lewis Law requirements in the contract let for construction on the first phase of the Opportunity Corridor, which began in 2015.

Jackson vigorously opposes the new legislation, H.B. 180. He said he argued to Gov. John Kasich that the legislation hurts the city’s fight against poverty and unemployment.

But the governor signed the bill on May 31.

Opportunity not lost The city sees the property along the new roadway as the spine of a new neighborhood of commercial and residential development. For that to happen, the mayor believes the area requires new water, utility and fiber optic lines as well as money to make the abandoned and environmentally dirty properties attractive to developers.

Money for that work is not included in the state transportation funding that is building the road. It was expected that the state and JobsOhio, the nonprofit state economic development arm, would cover most of those costs.

Because of the new law, Jackson said at the press conference, the city and the state have not yet agreed on how to continue local contracting, hiring and local

spending agreements that were a part of Phase I of the Opportunity Corridor, which is rebuilding a stretch of East 105th Street that runs north from Quebec Avenue to Chester Avenue.

As a result, the city is holding up the legislation that would deed cityowned land needed to clear the corridor to ODOT, though he shied away from blaming Kasich.

The city wants to come to an agreement on these issues before construction begins on Phase 2.

In May, ODOT announced that it had awarded a $35.3 million Phase 2 construction contract to the Great Lakes Construction Co., with work expected to begin in the fall.

“It worked in Phase 1,” Jackson said at the news conference. “Now there’s been some changes, not because the governor said he doesn’t want to do it anymore, but because somebody lobbied. And as a result of that, there’s a new law that prohibits enforcement of what he agreed to.”

Asked to comment on the situation, Emmalee Kalmbach, the governor’s press secretary, emailed this statement: “There have been healthy discussions on the best ways to address local hiring, and we look forward to working with local stakeholders to advance those goals and to move forward with a successful Opportunity Corridor project.”

ODOT press secretary Matt Bruning also responded to questions about the delays with an emailed statement.

“To date, ODOT has invested nearly $100 million in this vital project,” the email said. “We have gone above and beyond our commitments to help train and develop skilled workers from the area who can continue their careers all over the state. We have and will continue to fulfill our commitments to ensure the success of this

historic project. We sincerely hope that any issues the city has can be worked out to avoid delays and unnecessary costs to the taxpayers.”

Ongoing dispute The dispute over the Opportunity Corridor is part of a broader tug of war that has been going on between cities and the state government, where the legislature is controlled by suburban and rural legislators, for a decade. Jackson and other leaders of Ohio cities see the state continuing to encroach on cities’ right to govern themselves.

In 2006, the Ohio General Assembly passed a law that said an Ohio city cannot require its employees to be residents of that city. Cleveland, and other cities, argued that the Ohio Constitution gave cities the home rule authority to establish residency requirements. However, the Ohio Supreme Court upheld that law in 2009.

Since then, the state has passed legislation overriding efforts by cities to rein in predatory lending and to control gun use and oil and gas drilling within their borders.

Jackson also complained about actions by Kasich and the legislature to eliminate the estate taxes and the personal property tax, both of which largely benefited local communities.

Then, in February of this year, Jackson tied the governor’s decision to redirect the proceeds of the Local Government Fund for the need to put an increase in the Cleveland city income tax from 2% to 2.5% on the November ballot.

For decades, a portion of state sales taxes went to local governments. Jackson said the city received about $52 million a year when the governor reduced the fund by 25% for 2013 and another 25% for 2014, diverting that money into the state general fund.

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CRAIN’S CLEVELAND BUSINESS z AUGUST 29 - SEPTEMBER 4, 2016 z PAGE 9

TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

LIENS FILED Peter G Gordon DDS Inc. Beachwood Dental Group 23300 Chagrin Blvd., Suite G10, Beachwood Date filed: Oct. 31, 2011 Date released: May 19, 2016 Type: Employer’s withholding Amount: $11,382 Rajendra K. Mehta M.D. Inc. 6701 Rockside Road, Suite 370, Independence Date filed: July 11, 2015 Date released: May 20, 2016 Type: Employer’s withholding Amount: $18,138

Redemption Enterprises Inc. 2549 Lafayette Drive, Cleveland Date filed: June 8, 2010 Date released: May 19, 2016 Type: Employer’s withholding Amount: $23,377 Tetzlaf Construction Co. 8156 Riverview Road, Brecksville Date filed: Dec. 30, 2014 Date released: May 26, 2016 Type: Employer’s withholding Amount: $18,681 TP Fitness LLC World Gym Cleveland Heights 3640 Mayfield Road, Cleveland Heights Date filed: Feb, 19, 2016 Date released: May 20, 2016 Type: Employer’s withholding Amount: $11,903 Johnson Miller Schmitz LLP 635 W. Lakeside Ave., Suite 600, Cleveland Date filed: June 8, 2016 Type: Employer’s withholding, unemployment Amount: $384,122

Dorey Photography LLC 40 Alpha Park, Highland Heights Date filed: June 8, 2016 Type: Employer’s withholding, unemployment Amount: $8,036 Hargur Inc. Turney Deli 4525 Turney Road, Cleveland Date filed: June 8, 2016 Type: Employer’s withholding Amount: $7,564

Dance Studios of Cleveland Inc. American Ballroom Centre

failure to file complete return Amount: $6,222

5673 Ridge Road, Cleveland Date filed: July 17, 2014

Inner City Construction Co. Inc.

Date released: May 26, 2016

2114 W. 65 St., Cleveland

Type: Employer’s withholding

Date filed: Sept. 30, 2015

Amount: $11,869

Date released: May 19, 2016

Fairweather Farm Inc.

Type: Employer’s withholding, unemployment, corporate income

P.O. Box 23669, Chagrin Falls

Amount: $7,079

Date filed: Dec. 11, 2015

Marathon Freeway Inc. 15504 Waterloo Road, Cleveland Date filed: June 8, 2016 Type: Employer’s withholding Amount: $6,192

Date released: May 20, 2016

Mobil Martin Inc.

Type: Employer’s withholding

1279 W. 73 St., Cleveland

Amount: $29,080

Date filed: Dec. 30, 2013

Hicks Tavern Inc. 11919 Miles Ave., Cleveland

Type: Employer’s withholding, corporate income

Date filed: Feb. 1, 2008

Amount: $316,760

Date released: May 20, 2016

LIENS RELEASED

Date released: May 26, 2016

Bajan Enterprises LLC

Type: Employer’s withholding, unemployment

Mobil Martin Inc.

Amount: $13,078

Date filed: July 17, 2014

Date released: May 26, 2016

Hicks Tavern Inc.

Type: Employer’s withholding

Type: Employer’s withholding

11919 Miles Ave., Cleveland

Amount: $108,642

Amount: $10,583

Date filed: Jan. 24, 2008

15700 Benhoff Drive, Maple Heights

1279 W. 73 St., Cleveland Date released: May 19, 2016

Date filed: July 11, 2015

Date released: May 26, 2016 Type: Employer’s withholding,

PRESENTED BY

ARCHER AWARDS

THANK YOU On August 9, 2016, Crain’s Cleveland Business, in partnership with Howard and O’Brien Executive Search, held its 6th annual Archer Awards, which celebrates the region’s human resources champions. We want to extend a special thank you to all of our sponsors, as well as everyone who was involved to make the event a continued success.

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z AUGUST 29 - SEPTEMBER 4, 2016 z CRAIN’S CLEVELAND BUSINESS

Opinion

From the Publisher / Editor

We’re putting out the welcome mat for NEO’s ‘expats’

Editorial

Get out the vote Everything is contentious this presidential election season, from the candidates themselves all the way down to how votes are cast. The controversy over the mechanics of voting was highlighted by a federal court decision last Tuesday, Aug. 23, that found Ohio was within its rights to eliminate a provision called the “Golden Week” that made registration and early voting easier.

It’s the latest of several cases nationwide in which state governments — primarily Republican-led state governments — have sought to implement stricter laws aimed at reducing incidents of voter fraud.

The decision by the Sixth Circuit Court of Appeals upheld an Ohio law passed in 2014 that closed off the “Golden Week,” a period before Election Day when voters could register to vote and cast a ballot on the same day. In May, federal Judge Michael Watson ruled that eliminating the Golden Week would “disproportionately burden African-Americans,” but a panel of the Sixth Circuit Court in a 2-1 decision reversed that decision.

Writing for the majority last week, Judge David McKeague called Ohio “a national leader when it comes to early voting opportunities.” He noted that the state “allows early in-person voting for 29 days before Election Day. This is really quite generous. The law is facially neutral; it offers early voting to everyone…. Yet, plaintiffs complain that allowance of 29 days of early voting does not suffice under federal law. They insist that Ohio’s prior accommodation — 35 days of early voting — established a federal floor that Ohio may add to but never subtract from. This is an astonishing proposition.”

The ruling came about seven weeks before Ohio’s deadline to register to vote, which is on Oct. 11. Plaintiffs still could push the full circuit court, rather than just the three-judge panel, to consider the case.

We’re skeptical of the movement nationwide to enact stricter laws to combat voter fraud, since numerous studies have found that in-person voter fraud is essentially nonexistent. But in this case, the circuit court panel ruling seems reasonable and does not represent a serious setback to voting rights more broadly.

Ohio is, indeed, better than most states when it comes to making voter registration and voting itself easy, with nearly a month of early voting. The Golden Week provision was undoubtedly helpful for some voters, but eliminating it is nothing like the voting rights attacks taking place in other states, most notably North Carolina. In addition, several observers noted that the circuit court panel’s ruling in the Ohio case is narrow; Slate, for instance, said it’s “unlikely to have ramifications” beyond the state.

In Ohio, the focus now should be on ensuring that the November election is run as efficiently as possible. Partisans on both sides should work diligently through the registration deadline to encourage citizens to sign up to vote. The political system is better when more people are engaged and take part in the elections.

Nationally, we hope the attention to the Ohio case encourages other states to be more expansive in their approach to voting rights, and to stop their phony war on voter fraud.

Bloomberg last week pointed out that News21, a nonpartisan investigative-journalism education project, studied cases from 2012 to 2016 in Texas, Georgia, Arizona, Kansas and Ohio. It found hundreds of allegations of fraud but few prosecutions, and only 38 convictions in the five states.

In-person voter fraud does happen, but it’s hardly the problem Republicans portray it to be. Much more damaging is low voter participation in elections. Rhetoric that exaggerates the role of voter fraud in elections must stop.

PUBLISHER AND EDITOR: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

MANAGING EDITOR: Scott Suttell (ssuttell@crain.com) SECTIONS EDITOR: Timothy Magaw (tmagaw@crain.com)

Homecoming evokes so many memories – from high school dances and college football games to alumni reunions and visiting with friends.

It reconnects us with our roots and reminds us of the importance of home. After all, there’s no place like it.

Crain’s Cleveland Business hopes to arouse those feelings in those whose roots are in Northeast Ohio.

Crain’s wants to engage this untapped resource to keep the momentum going beyond the magical summer of 2016. During our Aug. 16 post-Republican National Convention event at Cleveland Public Auditorium, we announced we will be producing “Cleveland Homecoming” in fall 2017.

So what does that mean?

We plan to bring back “expatriates” — people who were born, raised, went to school or worked at some point in their lives in Cleveland or Northeast Ohio — to explore opportunities to invest, engage and reshape our reElizabeth gion. We will bring together some of the best McIntyre and brightest who live in Northeast Ohio today and those who call our region home but whose pursuits over the years led them elsewhere.

Over the course of several days, the sons and daughters of Northeast Ohio will meet with key local executives, civic leaders, investors and entrepreneurs to hear stories of how Cleveland is transforming itself, as well as the challenges the region still faces.

We are looking to kindle more than just memories with these people. We’re hoping to inspire those “expats” with roots in Northeast Ohio to take an active role in ensuring the momentum from 2016 continues.

Anyone with a connection to Northeast Ohio has felt pride surging through their veins this summer. It started with the Cleveland Cavaliers’ comeback championship win and ended weeks later with the media acclaim for how well Cleveland prepared for and handled a national political convention.

Cleveland is experiencing a renaissance, especially in its downtown. Public Square has been reimagined. More people are calling the center city home as office buildings are converted into apartments. More importantly, we’ve created an infrastructure of community partnership that came together to ensure the city was successfully prepared to host the Republican National Convention.

Now, we are looking to build upon the success of our sister publication Crain’s Detroit Business, which launched Detroit Homecoming in fall 2014. That event was the brainchild of retired Fortune publisher Jim Hayes, who reached out to Crain’s Detroit to partner on the effort. Keep in mind that while we share a lot in common with our industrial Midwest neighbor Detroit, we are dealing with different circumstances. Detroit in 2014 was coming out of bankruptcy. Cleveland in 2016 is already on the upswing.

The successes that arose from the first two Detroit Homecomings are impressive. About $260 million of pending or direct investment has been made by “expats” who chose to reinvest in and reconnect with their hometown. Some even decided to move back. They brought with them brain power, investments, charitable dollars and more.

Coming in the fall in 2017, we want to engage Northeast Ohio “expats” to reconnect with their hometown. And we’re asking for your help. If you know of highly successful people who are in some way rooted in Northeast Ohio, but who now live elsewhere, please send along their names and information to clehomecoming@crain.com. And keep an eye on clevelandhomecoming.com for updates.

WRITE US: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing letters@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

SOUND OFF: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

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Web Talk Re: The state of the United States The Aug. 22 column by Crain’s reporter Dan Shingler, “He’s old, angry and ready to talk politely,” is very well said — and not just because I happen to agree. I think a great deal of the negatives you cite arise from fear, which, in turn generates anger. The opposite of fear is not courage, but confidence, and it is precisely that confidence which has been so badly damaged by major national and international phenomena: 9/11 and the ongoing radical and blasphemous Islamic terrorism; the ’08 economic debacle that impoverished thousands while enriching many others; the horrific reality that has resulted in the legitimate need for Black Lives Matter, with its inevitable further division of Black/White, Us vs.

Them attitudes and rhetoric. We are truly blessed to live in a nation that has built itself on the notions of justice, equality and opportunity. And for most of us, whether we originate from an impoverished area of our own country or from much less than elite regions of another continent, when we have done our individual part, America has delivered on her promise. We can beat this thing that is despoiling our interpersonal, national and international life. However, the first step will have to be to do just what you have done here — stand up and say, clearly, that we are better than this — and act accordingly. — Frank Bruno Thank you, Dan. Finally, a read that depicts reality and lost values. It is sad to see so many of your colleagues write with their head in the sand! — Joseph Bertino Good read and, at 59 years old and a son of a son of a sailor, I feel most of what you portray. Here comes the “but.” Most of your focus is on interpersonal relations. What about national and international relations, lack of respect for authority (cop hating), media manipulation and the rise of a socialist thought process? The future looks challenging for my granddaughter, to say the least. I think you went too light on politics, liberalism and racism. Especially that they are all three tied together now after eight years of Obama-ism.

Our first black president has fomented race-hate, politics of envy and false entitlement. African-Americans are in worse shape than in the MLK days. In every metric possible such as unemployment, welfare, lack of education, single moms, fatherless homes, drugs, imprisonment, and violence, minorities are in worse shape. I’m sure these weighty areas weren’t your targets, but millennial self-absorption and impatience, and crappy social media posting, don’t compare to the impoliteness of liberalism and the politics of envy.

Safety nets and caring for the truly disadvantaged are the key, not massive government welfare/health care, and not redistributing wealth, and not bathroom gender laws. — Brian Mc Great, Brian, turn the topic to the politics of hate, then blame the POTUS. This is just another example about which Dan was writing. — Robert E. Chalfant

Personal View

Smart policies allow freight rail to drive Ohio economy

By IAN JEFFERIES While the GOP has left Cleveland, the party’s talk of economic growth will echo across the state from now until November. As the conversation continues, candidates and voters alike should be careful not to overlook a critical issue for Ohio and the country as a whole: preserving smart freight rail policies that have greatly benefitted our economy.

In Ohio, Class I freight railroads like CSX and Norfolk Southern and many smaller short line railroads operate across 5,000 miles of track to ensure the state maintains its role as a critical transportation hub for goods moving through the Midwest.

From chemicals used for drinking water purification to farm products sourced here destined for all corners of the country, freight rail in Ohio moves a diverse range of cargo. The 286 million tons carried in the state in 2012 was the 10th-highest total in the U.S. Railroads recognize this vital role the Buckeye State plays in our national freight network, and they have invested hundreds of millions of dollars in recent years to ensure the state’s rail infrastructure can handle the heavy load. In 2014 alone, CSX spent $174 million. This spending is helping drive the state’s economy and provide jobs for more than 7,600 Ohioans.

CSX also is looking to the future of the region’s freight shipping needs, devoting $575 million to the National Gateway, a major public-private infrastructure project that will allow railroads to add another stack of cargo on top of what railroads already carry, thereby improving efficiency between the Mid-Atlantic and Midwest.

Ohio operations are a key piece of the industry’s overall national impact, which generated $274 billion in economic activity in 2014, as well as 1.5 million jobs, $89 million in wages and $33 billion in tax revenue. It is clear why Gov. John Kasich once said freight rail “can spur commerce and economic growth.”

But the industry has not always been able to play such a critical economic role. Prior to 1980 — understandably a long time ago to many elected officials and their staff, and thus easier to perhaps flippantly disregard — railroads faced burdensome regulations that brought them to the brink of bankruptcy and nationalization. Partial deregulation efforts in 1980 allowed railroads to act like other private businesses, deciding how they compete with one another, manage the various pieces of their network, price their services and meet market demand. It cut unnecessary red tape and allowed railroads to invest more than $600 billion toward rail infrastructure improvements over the past 30 years.

Smart public policies are also saving taxpayers money. Unlike publicly funded transportation networks like our nation’s highways that are facing an enormous backlog of repairs, freight rail infrastructure is all privately funded.

The regulatory overhaul in 1980 has had massive impacts on the economy both in Ohio and across the country, but with a new administration and new members of Congress taking over in Washington and at the end of the year, there is no guarantee that these smart policies will endure.

As Ohio’s transportation planners have made clear, the state’s rail infrastructure is in excellent condition. Leaders on both sides of the aisle should do everything they can to preserve the policy environment that is making it possible.

Unlike publicly funded transportation networks like our nation’s highways, freight rail infrastructure is all privately funded.

Ian Jefferies is senior vice president for government affairs at the Association of American Railroads.

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z AUGUST 29 - SEPTEMBER 4, 2016 z CRAIN’S CLEVELAND BUSINESS

The ACE Report AHOLA. CRAIN’S. EMPLOYMENT Crain’s Cleveland Business has partnered with The Ahola Corp., a payroll and human capital management firm in Brecksville, and local economist Jack Kleinhenz to provide monthly data — and clarity — about a key factor in business decisionmaking: the size of Northeast Ohio’s workforce.

Seasonally adjusted employment numbers, Northeast Ohio MARCH: 1,168,421 APRIL: 1,170,593 MAY: 1,175,612 JUNE: 1,174,474 JULY: 1,178,449 1,155,000

1,160,000

1,165,000

1,170,000

1,175,000

July jobs growth continues region’s slow, steady path

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Employment was up in Northeast Ohio in July, with an increase in private payrolls of 3,974 jobs, according to data in the latest Ahola Crain’s Employment (ACE) Report.

That 1.03% jump is the fifth increase in the last six months. Since January, the number of people employed in the private sector in the seven counties of the Cleveland metropolitan area has grown by 12,014, to 1,178,449. The only decline was in June, when employment dropped by 1,138 to 1,174,474 jobs.

Jack Kleinhenz, the Cleveland Heights economist who created the ACE model, noted that U.S. Bureau of Labor Statistics reports also indicated that, in July, there are more people joining the workforce and that average hourly earnings and average weekly hours increased as well.

“Consequently, there are more people employed, working longer hours and earning larger pay,” Kleinhenz said.

Kleinhenz said that second-quarter U.S. economic growth was well below expectations, rising at an annualized rate of 1.2%, nearly half the gain anticipated by consensus forecasts. He said growth slowed primarily because of an ongoing slump in business investment and slowdowns globally, especially in the energy sector.

Separately, in a report on the economy of the Cleveland metropolitan area released last Thursday, Aug. 25, the Federal Reserve Bank of Cleveland said employment in the metropolitan area grew by 0.5% for the year ending September 2015, lower than employment growth in the state (1.2%) or the country (2.0%).

The report, by economist Joel Elvery, noted that in the 12 months ended September 2015, three sectors added more than 2,000 jobs: education and health services (2,531 jobs); trade, transportation and utilities (2,446); and hospitality (2,364). Two sectors had significant job losses over that 12-month period: professional and business services (2,265) and manufacturing (600).

Elvery attributed the weak employment growth in the Cleveland region relative to the state and country to “sustained population loss.

“We’ve had three quarters of relatively weak growth (in the Cleveland Fed’s district.) We’re still expecting things to be better in the coming quarter.”

— Mark Schweitzer, Federal Reserve Bank of Cleveland senior vice president However, population loss slowed greatly in 2013 and 2014. Hopefully, this headwind will fade.”

Looking ahead, another Cleveland Fed economist, senior vice president Mark Schweitzer, said the regional economic outlook is for steady, if modest, growth.

“We’ve had three quarters of relatively weak growth” in the Cleveland Fed’s district, Schweitzer said at a regional economic outlook session on Aug. 18 at the Cleveland Fed. “We’re still expecting things to be better in the coming quarter.”

The Cleveland Fed’s district includes all of Ohio, eastern Kentucky and parts of western Pennsylvania and northern West Virginia.

— Jay Miller

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SPORTS BUSINESS

When breaking bones means big business Stipe Miocic, a Northeast Ohio native, won the UFC heavyweight belt in May. His first title defense takes place this September. (Josh Hedges/Zuffa LLC via Getty Images)

Fans’ response is ‘incredible’ for UFC 203 at The Q

By KEVIN KLEPS kkleps@crain.com @KevinKleps

Cleveland Cavaliers CEO Len Komoroski says the organization has been trying to bring an Ultimate Fighting Championship event to Quicken Loans Arena “for years.”

It took a special set of circumstances for the city to land its first UFC event — beginning with a hometown champion, Stipe Miocic.

The Eastlake North High School graduate won the heavyweight belt in May, setting up his first title defense in September — when The Q

happened to have a brief lull in its busy schedule.

“You have to have a little bit of luck in a sense with our schedule and making sure the arena is available,” UFC chief operating officer Ike Lawerence Epstein said. “The stars have to sort of align. This just worked out absolutely perfect.”

That seems to be happening a lot for the UFC, a mixed martial arts promotion that recently was purchased by WME | IMG for $4 billion.

In this case, it’s UFC 203, a 10fight card Sept. 10 that is headlined

by Miocic’s bout against Alistair Overeem. Tickets — priced at $50, $75, $90, $125, $200 and $300 — sold

well from the start, and as of Aug. 25, a very limited amount of seats remained.

“The demand has been incredible,” said Komoroski, also the CEO of The Q. “The enthusiasm, excitement and anticipation are through the roof.”

Miocic isn’t as popular in MMA circles as the likes of Conor McGregor or Ronda Rousey, but in Northeast Ohio, it’s a much different story.

Since a first-round knockout of Fabricio Werdum on May 14 in Brazil, he’s brought the championship belt to The Q during a Cavs playoff game, hit a batting practice home run at Progressive Field, led

the Cavs’ parade and been featured at minor league baseball games hosted by the Akron RubberDucks and Lake County Captains.

“It’s been crazy,” said Miocic, who also married his wife, Ryan, in June.

“It’s a little bit overwhelming, but it’s a good problem to have.”

The 6-foot-4 former baseball player and wrestler at Cleveland State said he has “no idea” how many friends and family members will be at The Q on Sept. 10.

He is certain of this much: “It will be a lot of people.”

‘Creating stars’ UFC 203 will be the organization’s

fifth event in Ohio, and first in the state since UFC 96 was held in Columbus in March 2009.

The showcase is coming to Cleveland at a unique time — a little more than three weeks after its eye-opening sale closed.

The previous owners, casino industry veterans Frank and Lorenzo Fertitta, purchased the organization for $2 million in 2001. At the time, New Jersey was the only state that regulated MMA. Now, the UFC is sanctioned in every state, reaches 1.1 billion TV households per year and produced a record $600 million in revenue last year.

“That happened with us going from state capital to state capital, SEE UFC, PAGE 18

Browns’ Berea renovations done with players in mind

By KEVIN KLEPS kkleps@crain.com @KevinKleps

During the last few football seasons, when Cleveland Browns chief revenue officer Brent Stehlik wanted to hold a meeting, his options were limited.

“The conference space here was rough,” Stehlik said of the team’s newly renovated training facility in Berea. “I have a big staff, so to get

them all in one room, the only place was the team meeting room downstairs. The only time I can use that is on Tuesdays, when the players are off. So you had to schedule everything around that.”

That’s no longer an issue for Stehlik and other team department heads following the third significant renovation to the Browns’ headquarters since 2009. The previous renovation, a $5 million project in 2013, brought the organization’s business and football

sides together under one roof.

The latest project — a $15 million renovation that is being funded by the city of Berea and guarantees that the team will stay in the facility through at least 2028 — has plenty of perks for the business side.

There’s the new board room, which is a key piece of the new 2,500-square-foot atrium on the second floor, along with a 4,600-squarefoot health and wellness center for SEE BROWNS, PAGE 15

Browns players can now swing by an equipment counter to pick up their gear. (Kevin Kleps)

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SPORTS BUSINESS

A response fit for the champs It took the Cleveland Cavaliers 64 days to win the 16 games that are necessary to be an NBA champion. | The run included a historical comeback (from a 3-1 deficit in the NBA Finals against the Golden State Warriors), the most important 3-pointer in franchise history (Kyrie Irving’s new spin on “The Shot”), the most scintillating rejection you’ll ever see (“The Block” by LeBron James) and a second consecutive domination of the Eastern Conference. | The response since — from the parade that drew more than a million fans to the league’s top merchandise sales — has been incredible, even by crazed Cleveland sports standards. | And, not surprisingly, the Cavs’ business numbers, especially on the digital side, were remarkable throughout the 2015-16 season. — Kevin Kleps

Social followers

CAVS.COM: The Playoffs

From April 14, the day after the regular season, to June 26, a week after Game 7 of the Finals, the team’s website posted the following numbers: Page views: 17,742,298 Visits: 6,507,577 Unique visitors: 4,222,989 Page views per visit: 2.73 Minutes spent per visit: 7.3 Video streams: 3,419,261

The Cavs passed the 10 million mark in combined followers on Facebook, Instagram, Twitter, Snapchat and Weibo, a Chinese social media platform, during the regular season. As of Aug. 25, they were closing in on a combined 12 million followers on Facebook, Instagram and Twitter.

Platform

CAVS.COM: 2015-16

NBA rank

Facebook

7.0

6

Instagram

3.3

2

1.47

8

Twitter

During a one-year span beginning July 1, 2015, and culminating on June 30, 2016, the Cavs had the NBA’s highest-ranking desktop and mobile websites, finishing in the top three in the league in all of the following measurements: Page views: 51,158,07 Visits: 18,766,848 Unique visitors: 10,373,655 Page views per visit: 2.7 Minutes spent per visit: 6.3 Video streams: 8,941,348

Followers (in millions)

TV ratings: By the numbers 350,000: Estimated number of people in the Cleveland market that watched each Cavs regularseason game in 2015-16.

9.31: The average regular-season rating for a Cavs game on Fox Sports Ohio, a record for the network.

LeBron James raises the Larry O’Brien championship trophy. (Beck Diefenbach/AFP/Getty Images)

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Renovation highl ights

BROWNS

The Browns added 20 lockers to their dressing room. (Kevin Kleps)

Since January, the Browns added 25,000 square feet to their Berea headquarters, and they renovated 60,000 square feet of existing space.

Atrium: The new 2,500-square-foot area has a boardroom that fits 30 people.

Locker room: Increased to 4,500 square feet, with 20 permanent lockers added to bring the total above 90.

Meeting rooms: Three individual position rooms were added.

Personnel areas: More than 4,000 square feet was added to the work areas used by coaches and the front office.

Players’ lounge: New 1,600-square-foot space has work stations, pingpong and pool tables, a barber station, and a lounge area that has a large TV and a gaming station.

Training room: Doubled in size, to 3,500 square feet. That doesn’t include a new 5,000-square-foot natatorium.

Weight room: Was redesigned and includes iPads on which the players sign in as they arrive.

Wellness center: This 4,600-square-foot workout room can be used by team employees. — Kevin Kleps

ing yet another organizational shakeup. The bulk of the work started in January, after Sashi Brown was promoted to run the football side and Hue Jackson was named the team’s fifth head coach since 2010.

The work was finished in July, prior to the kickoff of training camp.

“They worked fast,” Jenkins said of the construction manager, The Albert M. Higley Co., and architect, Vocon.

“We were able to do some demo-type work, knock down some walls for the addition, in advance throughout the fall (of 2015). But they hit the ground running really fast.”

Jodi van der Wiel, a Vocon director and senior project designer, said the condensed timeline produced “an intense roller coaster.”

She added that “it was a very, very

The training area has new physician offices, an X-ray room and a phlebotomy room (where the NFL administers its drug tests).

Players in that area can enter a door that leads to the enhanced locker room. That seems simple enough, but it wasn’t prior to 2016, Jenkins said.

“Before, players who were in the training room and getting medical attention would be in towels and they had to walk across a hallway (to get to the locker room),” the team’s CFO said.

It’s all part of the improved flow — a description that was mentioned often during a recent tour — in Berea, the team’s home since 1992.

It’s also a sign of how the organization has grown off the field since Jimmy Haslam purchased the team during the 2012 season.

CONTINUED FROM PAGE 13

members of the front office.

But the bulk of the work on a project that added more than 25,000 square feet and renovated another 60,000 square feet was done with the players in mind.

On the afternoon before the Browns’ preseason home opener, tight end E.J. Bibbs sat at a station in the corner of the 1,600-square-foot players’ lounge as a barber gave him a trim.

On the opposite end, past the work stations with computers, and the pingpong and pool tables, another player reclined in one of the massage chairs, which sit in front of a large TV equipped with a gaming station.

“I’ve talked to Joe Thomas, Paul Kruger, those guys,” said David Jenkins, the Browns’ chief financial officer. “They’ve got a couple little tweaks — ‘Hey, a couple more toilets would be nice’ — which will happen when you have 90 guys during training camp. But they all feel like it’s a place that’s theirs.”

Jenkins — who, at 12 years, is likely the executive with the longest tenure in the organization — added that another player told him it was a good sign that “guys want to stick around after practice.”

‘An intense roller coaster’ Jenkins, who is in charge of the bottom line, is proud that the project finished “on time, on budget,” dur-

intensive design process. It continued through construction. It was crucial to remain nimble.”

The primary focus the entire time, van der Wiel said, was the players.

The size and functionality of six player areas — the locker room, meeting rooms, training room, weight room, equipment room and cafeteria — were improved.

The crown jewel, however, is the training area, with which Joe Sheehan, the team’s head athletic trainer since 2009, said he couldn’t be more pleased.

The space doubled in size, to 3,500 square feet, and that doesn’t include a 5,000-square-foot natatorium — complete with a two-lane lap pool, a pair of hot and cold pools, and a therapy pool that has an underwater treadmill.

At the time, the organization had 165 employees, Jenkins said. Today, the Browns employ 225 — a number that includes coaches and scouts.

“The expansion of the organization, the investment in people, is significant,” Jenkins said. “It’s marketing, it’s content production, it’s a very fan experience-focused investment, plus a football investment. Investments in facilities, stadiums and people.”

The organization is well aware the football side has been a constant work in progress, but it believes everything else is in place.

“The business people are together.

The football people are together, and all in proximity (believe it or not, they weren’t before),” Jenkins said. “It’s open and collaborative. Even though it’s just a building, that stuff is important.”

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Classic pairing produces sustained results

By KEVIN KLEPS kkleps@crain.com @KevinKleps

Classic Teleproductions has told a lot of stories in 36 years.

There have been award-winning documentaries, slickly produced political programs, live studio shows, high school football games of the week and so much more.

The Twinsburg-based video production and distribution company has won so many Emmys — 79 in all — that at one point, Debra Bacon, the company’s president and coowner, told the employees to take them home because she was tired of dusting them.

But it’s the people — their current and former employees, and their lengthy list of freelancers and business partners — that Debra and her husband, Mike, the company’s vice president and general manager, say are the best part about their jobs.

“It’s hard, but what we’ve really gotten good at is finding people and treating them well,” said Mike Bacon, who started the company before he graduated from John Carroll University.

Early on, they ran the business out of their house in Sagamore Hills. Any money the company made was invested back into the business, as the couple lived off the full-time salaries Mike made at his various stops in the industry. By the time their second child was born in 1994, Debra had a simple message for her husband about using a floor of their home for work: “This isn’t going to work.”

They moved into their current headquarters, which has since ex-

Mike and Debra Bacon own Classic Teleproductions. (Contributed photo) panded to 15,000 square feet, that year. It was then that Mike, who had been Cuyahoga Community College’s director of telecommunications, made the family business his full-time job.

Three years later, they built their first production truck. They haven’t stopped moving since.

Now, 19 years later, Classic Teleproductions seems to be everywhere.

The company produces high school football games of the week in North Carolina; Columbus Crew and FC Cincinnati soccer matches; and works with such universities as Akron, Cincinnati, Marshall, Towson and West Virginia. Last February, the Bacons spent a week in California for Super Bowl 50, where they produced two daily shows for the Carolina Panthers.

In the last three years, the company has more than doubled its revenue. A big reason for the growth, Classic said, is via increased work in the corporate and nonprofit sectors. (Its clients in those areas include the city of Solon, Cleveland Clinic, John Carroll, Ohio

Lottery, Pro Football Hall of Fame, Tri-C and United Way.) “It’s bigger than I would have ever imagined,” Mike said. “My line used to be, ‘We collect people, not equipment.’

Now I’m looking at it as it’s grown and I’m like, ‘Oh my gosh, there’s millions of dollars of equipment.’ ” That includes four production trucks (two of which have to be stored elsewhere because of all the equipment), five editing suites, a digital audio studio and one virtual studio.

Some of the shows — mostly notably the Classic-owned High School Sports Insider, which airs weekly during the school year on the Time Warner Cable SportsChannel — are produced in-house. But the majority are done on the road, where Classic takes one or more of its trucks.

Those, Mike said, set Classic apart from a lot of the competition because the vehicles are set up to produce a live broadcast with multiple cameras and audio on the spot.

The long list of road shows includes

the Cavs’ championship parade, SportsTime Ohio remotes, college games and the Ohio High School Athletic Association football playoffs.

A recent weekend for Classic included broadcasting a Cleveland Orchestra performance at Public Square on Friday night, followed by a Saturday trip to Cincinnati for a soccer match and a flag football game featuring former Ohio State standouts in Granville on Sunday.

“It’s a lifestyle,” Mike said. “If you don’t consider it fun, you’re not going to last long in this.”

Classic has 11 employees — four of whom are the Bacons and their two children, Connie and Nick.

Connie Stevenot, 27, is in charge of Classic’s graphics. Nick Bacon, a 22-year-old recent John Carroll graduate, works in production.

As for the parents, “Mike is the big-idea guy,” Debra said. “I’m the day-to-day (leader), the one who gets the details done. That’s how this works really well. You gotta have someone who is the big-picture person and you gotta have someone who sweats the details.”

And there’s a lot over which to fret.

Classic employs more than 300 freelancers in a given year. When it takes a show on the road, the company does its best to hire locals, and it brings a “core” group of employees with it.

Bill Futterer met Mike Bacon when the current owner of PSE-3 & Futterer Partners was appointed by the NFL to manage the Browns’ expansion franchise until it was sold to Al Lerner. Futterer has been working with Classic in various forms since 1998, when Classic produced a Browns gala one year before the franchise’s first game back.

Futterer’s company, based in Raleigh, is part of a three-way agreement with Classic and Time Warner Cable in which Classic produces a weekly high school football game of the week in North Carolina.

“It’s like anything — if you’re in Raleigh and you deal with a company or you’re in Cleveland and you deal with a company, you tend to think they’re a local company and do mostly local work,” Futterer said. “But Classic is a national company with national credibility. And quality assurance that is good as any production firm you can find. They’re outstanding.”

They’re also always thinking about what’s next — the next day, the next season, the next big thing in broadcasting and, yes, the next leaders of the company.

Debra, 53, says her 58-year-old husband, who seems as tireless as he is talkative, will “never retire.” Asked if she would like to at some point, she emphatically says yes, but then backtracks.

“Well, that’s untrue,” she said.

“Mike and I, we both started in this industry independently, and it is a love of what you do. It’s a lot of work, and nobody would do this if you didn’t really like it.”

Mike isn’t sure what his “exit strategy” will be, whether it’s his daughter and son taking over the business or if it will entail handing the company off in another manner. But that’s probably a long way off, and he will leave it up to Connie and Nick.

One of Mike’s favorite sayings is “there are no do-overs” in the production business.

Still, he’s pretty happy with the circuitous route his family has taken.

“It beats working for a living,” he said.

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Micro Fantasy startup seeks a home run

By KEVIN KLEPS kkleps@crain.com @KevinKleps

Joel Crites’ big business idea occurred when he took his then-16year-old son to a Cleveland Indians game two years ago.

Koby Crites was bored and wanted to leave early. Desperate, his dad brought in a pinch-hitter, so to speak.

“I said, ‘Let’s play a game,’ ” Joel said. “You predict what happens next, and so will I. Whoever gets it right, gets a point.’ ” The elder Crites won 9-7. “More importantly, I felt like I struck gold because I actually had a good time at a game with my son,” he said.

On that September day, Micro Fantasy was born.

The startup has developed software that allows users to predict which plays will happen in a baseball, basketball or football game.

Outcomes that have a low probability, such as a triple in baseball, are worth more points than those that are much more common (a single or groundout, for example).

Micro Fantasy hasn’t made a dime yet. Crites is running the games at baseball parks and sports bars free of charge, with the hope that once it’s proven that the game works and users enjoy it, sponsorships and revenue will come.

The company — which Crites, an accounting department manager, runs in his free time — landed a $25,000 grant from the Innovation Fund. It’s also gaining steam in minor league and independent base-

ball, which are the levels, and sport, at which Crites believes the potential is highest.

“It’s hard enough for serious fans, but simple enough for non-sports fans,” said Crites, a North Canton Hoover High School graduate with a pair of master’s degrees from Kent State. “We’ve had people win our games, and halfway through they’re asking us, ‘What’s a flyout?’ ”

How it works Micro Fantasy’s technology is webbased, but the company has free apps for Android and iPhone users.

Users competing in a baseball contest, which lasts three innings, choose one of 10 options prior to an at-bat, and each result generates points for players who have the correct selections. Standings are kept, and the winners receive a small prize (a $10 MLB.com gift card, for example).

There are no entry fees, which allows younger kids to play and eliminates other legal concerns. (“The original demographic was my children,” Crites said.)

The game is also free because the revenue model is based on a venue and team attracting a sponsor for inpark Micro Fantasy contests, or an organization paying for the company’s services based on the contest generating customers.

“It can be a fan engagement and promotional tool to attract the attention of fans,” Crites said. “You can keep them in their seat longer because they have an engaging act.”

During its contests, Micro Fantasy collects “a lot of unique data on fan behavior,” which teams, as the company gains more users, could then

Micro Fantasy has apps for iPhone and Android. (Contributed photo) purchase from Crites.

“We got to the point where it was running and working,” Crites said.

“Everybody seems to love it. Now the question is how to distribute it on a business basis.”

Baseball teams show interest Micro Fantasy’s first football contest went live last November. Crites received permission from several owners of sports bars, including select Buffalo Wild Wings and Winking Lizard locations, and two Jerzee’s Sports Grilles, to hold games at their locations.

By January, seven to nine sports bars were running contests during NFL games. As the games were going on, Crites had a friend running the contests by inputting the result of each play from her home in Sagamore Hills.

“It’s not unlike trivia,” Crites said.

“It becomes a draw for a sports bar.”

Still, the biggest opportunity, Crites believes, is in baseball.

The Akron RubberDucks, a Double-A affiliate of the Indians, ran a three-game Micro Fantasy pilot at the end of May. The RubberDucks allowed Crites and his team (which basically consists of his family and friends) to distribute fliers promoting the company throughout the ballpark.

In mid-July, Micro Fantasy got its big break, when the Lake County Captains, the Tribe’s full-season Class A affiliate, allowed the startup to hold in-park contests. That weekend, the average user played for 30 minutes, “proving minor league baseball is the right market for our product,” Crites said.

The Captains then agreed to run Micro Fantasy contests at Classic Park throughout the remainder of the 2016 season.

Neil Stein, the club’s general manager, said the Captains get a lot of requests from local companies that want to use them as a testing ground for their products.

“There’s no money involved in the short term because he’s trying to get it off the ground, so we don’t mind being a guinea pig, if you will,” Stein said.

The Captains’ GM said it’s “way too early” to know if Micro Fantasy will return to Classic Park in 2017, because he’s not certain if it’s a product the team can sell to sponsors.

But he believes Micro Fantasy has potential. The company’s future will depend “on the team and market, and what their fan base is,” Stein said.

Crites has since secured deals with

the Lake Erie Crushers, an independent pro team based in Avon, and National Pro Fastpitch, a women’s professional softball league based in Denver. The latter allowed Micro Fantasy to run contests during its championship series in Alabama from Aug. 19-23. Micro Fantasy contests were also held during the Eastern League All-Star Game in Akron on July 13.

A key for Micro Fantasy, Crites said, is finding partnerships that will allow the company to use API feeds, which power the real-time results for sporting events. Doing so would eliminate the need for Crites or one of his interns — who is paid $20 or $30 to input the result of each play of a Captains game, for example — to be at every ballpark in which a Micro Fantasy contest is held.

The Crushers gave Crites permission to use their API feed from Pointstreak, a Canadian company that provides real-time stats software.

“Once we have that automation built and proven, I can then effectively market the product to the 405 other baseball teams nationwide that Poinstreak serves, including independent leagues and summer baseball leagues,” Crites said.

And he’s doing all this with a fulltime job and four kids between the ages of 8 and 18. His wife, Shannon, is “the hero holding down the fort” at their home in Brecksville so Crites can pursue his dream.

It’s one that started because his oldest son didn’t want to stay at a Tribe game.

“I’m trying to deliver that fun experience to others now,” Crites said.

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z AUGUST 29 - SEPTEMBER 4, 2016 z CRAIN’S CLEVELAND BUSINESS

SPORTS BUSINESS

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and meeting with legislators and convincing them that regulation was the right thing to do,” Epstein said.

Aside from the Fertitta brothers, the UFC executive team — led by president Dana White, who, according to ESPN, signed a new five-year deal that will net him 9% of the UFC’s profits — remains in place, Epstein said. (The Fertitta brothers retain a minority stake in the business.)

Epstein believes that the new ownership will only add to the organization’s star power. WME | IMG has a portfolio of more than 800 events, and it represents such celebrities as Ben Affleck, Matt Damon, Oprah Winfrey, Dwayne “The Rock” Johnson, Justin Timberlake, Drake and Rihanna.

“We’ve created new stars over the years,” Epstein said. “The list is lengthy, and we’re very proud of the stars we’ve created. But having the resources and legacy of WME | IMG, that’s what their legacy is — creating stars.”

Also significant, Epstein said, is the new owners’ global presence.

The UFC — whose 42 live events per year are very popular among the 1849 demographic coveted by advertisers — is a household name in the United States.

The next step: Becoming a “mainstream” sport elsewhere.

“The focus here is to grow the fan base,” Epstein said of the U.S. “Globally, the opportunity is greater, frankly.”

Coveted draw The UFC’s largest source of revenue comes from pay-per-view buys. Its biggest events have generated more than a million pay-perview purchases — at $60 a pop for HD. The organization also rakes in millions at the gate (UFC 200 brought in nearly $11 million), and UFC 203 will be no different.

“They do really well. Let’s put it that way,” Komoroski said.

Epstein said the UFC typically writes “a nice check” to rent the arena and use its staff, and because of licensing issues stemming from selling alcohol and sharing revenues, “the arena usually keeps all food and beverage” profits. Merchandise sales, the UFC COO said, are typically split.

“One of the things that’s given us good standing in negotiations with arenas around the world, our events

are 4½ hours, so you have fans there for long period of time,” Epstein said.

“Our fans typically get there early, too, so you have a lot of people who are there a long time, eating and drinking. We tend to be an event people want to come to their facility.”

That was the case at The Q. Komoroski said Hallie Yavitch, the Cavs’ senior director of events, had the UFC “on her daily list” of events that the organization wanted to lure to The Q. “We would hope that this would be the start of a longstanding partnership, and hopefully be a regular occurrence on the calendar,” Komoroski said.

Pays to be the champ Fighter compensation — long a sticking point of sorts for the UFC — has improved of late.

UFC 202 headliners McGregor and Nate Diaz were paid salaries of $3 million and $2 million, respectively, for their Aug. 20 slugfest. Six fighters reportedly made at least $500,000 for participating in UFC 200 on July 9.

Miocic’s manager, Greg Kalikas, said the fighter hired a sports attorney to negotiate his UFC 203 contract with the new owners. Miocic didn’t divulge specifics, but told Crain’s his big fight at The Q would be the largest payday of his career.

“As the heavyweight champ, he’s not doing bad,” Kalikas said.

The manager said the UFC champs’ salaries often are supplemented by pay-per-view bonuses.

Anderson Silva, a last-minute replacement for Jon Jones at UFC 200, reportedly was paid $3 per pay-perview buy, which added a few million to his $600,000 salary for his bout against Daniel Cormier.

“For the most part, the champion will get pay-per-view points,” Kalikas said. “Eventually, I think it will get to the point where the high-end fighters get paid as much as the top athletes in football, basketball and baseball.”

Miocic — still a part-time firefighter and paramedic for the Oakwood Village and Valley View fire departments — doesn’t seem concerned about any of that, however.

“I’m just happy to be able to do something I love to do — to be able to pay for my house, a car and provide for my wife and dogs,” he said.

The business he’s most concerned about involves the championship he won in May, and ensuring that he gives the UFC a reason to return to Cleveland.

“We’re planning to keep the belt here a long time,” Miocic said.

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CRAIN’S CLEVELAND BUSINESS z AUGUST 29 - SEPTEMBER 4, 2016 z PAGE 19

Business of Life

As this Geocaching.com screenshot shows, there are well over a thousand caches hidden throughout Northeast Ohio. (Contributed photo)

Gotta cache ’em all!

Before Pokémon Go there was geocaching — the world’s biggest treasure hunt

By CHUCK SODER csoder@crain.com @ChuckSoder

Right now, there is a little hidden container within walking distance of your home or your office.

Dozens if not hundreds of people have already found it and signed the paper log inside. You, however, have no idea that it exists.

Unless, of course, you’re already into geocaching, a hobby often described as the world’s biggest treasure hunt.

Granted, it’s not nearly as big as Pokémon Go — which turned the idea of using a GPS to hunt for virtual creatures into an international phenomenon. But there are plenty of people who would rather hunt for something they can actually hold.

Worldwide, there are more than 10 million registered geocachers searching for 2.7 million hidden “caches,” up from 1.9 million in 2013, according to Seattle-based Groundspeak, which created Geocaching.com and the Geocaching app.

Well over a thousand of those caches are in Northeast Ohio. You can find them in downtown Cleveland (check the Society for Savings building), in parks (try the Cleveland Cultural Gardens) and in hard-toreach places (like the breakwall near the Ashtabula River).

Wait. So who would put caches on a breakwall in Lake Erie?

That would be Casey Lilac. Known by the username “CrazyKC,” the Ashtabula resident has hidden 337 caches over the past five years. He’s found about 2,500 of them.

“That’s how I plan my vacations,” he said with a laugh.

Lilac isn’t looking for anything valuable. Most caches contain just a few random trinkets or mementos, in addition to the paper log. And he’s not just in it for the challenge of finding a cleverly hidden cache. Like

Geocaching fans have left their mark on East Cleveland Township Cemetery, which contains a few caches.

This cache, located near the Society for Savings building in downtown Cleveland, has a paper log signed by people who previously found it.

(Contributed photos) many geocachers, Lilac says the hobby takes him to places he’d otherwise never go. Plus, he likes getting to know other geocachers — online and in person.

Lilac spoke to Crain’s in July while eating dinner with other members of the Western Reserve Geocachers at Best Friends restaurant near Geneva.

Nearly 30 people attended.

“It’s almost like a family,” he said.

George Markusic runs another group on the west side — W.E.S.T. (which stands for West Every Second Thursday). He enjoys caching for the same reasons Lilac does. For instance, it was while searching for a cache that the North Olmsted resident discovered scenic David Fortier Park in Olmsted Falls.

“I have lived here my entire life and found it amazing that I was coming across places that I didn’t even know existed,” he said.

In urban areas, caches often draw people to historical monuments and other points of interest. Several people said they enjoy caching at historic cemeteries. There’s even a headstone for “G.O. Cache” in East

Special caches Mystery Cache: Often involves solving a puzzle Multi-Cache: Contains a clue that leads to another cache EarthCache: Typically involves answering a question based on the area’s geology

Cleveland Township Cemetery.

Greg Madachik has hidden several caches in downtown Cleveland and in the Flats. One is on Perk Plaza, just across from his office at Oswald Cos. He’s head of information technology at the Clevelandbased insurance brokerage.

Terminology

In an urban area? Try to be inconspicuous so as not to draw funny looks. Or maybe go caching on a weekend.

In a cemetery? Be respectful.

People may be grieving.

Geocachers sign a paper log and a digital log at Geocaching.com. Here are some terms they use: TFTC: Thanks for the cache DNF: Did not find TNLC: Took nothing, left nothing Muggle: Onlookers who make it hard to search for a cache Trackable: A numbered item designed to be moved from cache to cache and tracked online

But Madachik prefers caching in parks, mainly because there are fewer bystanders around. And by bystanders we mean “muggles” — a geocaching term for non-geocachers.

“You feel like, if somebody sees you, they’re going to report you for strange behavior,” he said with a laugh, noting that urban geocachers should try to be inconspicuous.

Park systems often set up GeoTours designed to guide geocachers

from one place to another, as do organizations that promote tourism.

Geocaching does attract people into the Cleveland Metroparks, said naturalist Jake Kudrna. For instance, so far this year, about 60 people have found one of the caches near Squires Castle in North Chagrin Reservation, Kudrna said.

Not bad for what he described as “an underground hobby.”

“There are a lot of people who do it,” he said.

Tips from geocachers

Greg Madachik of Lakewood found this cache 30 feet above ground in a pine tree while visiting Buffalo.

Heading deep into the woods?

Make sure someone knows where you’re going. And mark your parking spot on your GPS.

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z AUGUST 29 - SEPTEMBER 4, 2016 z CRAIN’S CLEVELAND BUSINESS

BUSINESS OF LIFE

Source Lunch Brad Reynolds was lucky to find a mentor early in his career.

At age 19, Reynolds was named chief technology officer at an internet service provider called Internet Access Group. The company’s founder, Stephen Abbey, would become his mentor and business partner. He and Abbey went on to start and sell two other local tech companies: Expedient and Mongoose Metrics. But if Reynolds had never met Abbey? “I would be questioning whether I’d be where I’m at right now,” he said. Now they’re starting a cybersecurity company called Securable.io.

The company gives clients a security score — and several tools to help them raise that score. It pays special attention to security risks caused by employees. For instance, Securable.io can tell if someone’s email password has been hacked or if a sales person has downloaded the company’s customer database, said Reynolds, the CEO. His advice for aspiring entrepreneurs: “Sit in a room with somebody who’s done it day in and day out. … Pick the people who’ve done it before and attach your cart to them,” he said. — Chuck Soder

What’s one lesson you’ve learned about starting companies?

I used to think I was right until proven wrong, but now I think I’m wrong until proven right, because I’ve been wrong so many times. I think I know what customers what, I build something, then I find out I’m totally wrong. Even though you’re going to push hard and be confident, you’re going to be wrong most of the time. We’re all idiots. There’s not one person who has a magic lamp.

It creates a lot of stress. You don’t get those hours and days back. So you’re making these tradeoffs, maybe not even consciously. You just can’t reclaim that time. There’s some adage in the investment banking community in New York. “You won’t know your kids at all, but you’ll know your grandkids very well.” It’s certainly not that in my case, but there is a tinge of those types of things. Do you want to make those tradeoffs?

You mentioned that it’s easier to raise capital and hire tech talent in Silicon Valley. But you’re still here.

I’m here for the quality of life. I’ve lived in the Valley, and the quality of life is horrible. It’s all tech, all day, 90 hours a day. You never see your kids — and I didn’t have kids when I was there, so it was great. Your whole life is to build some product, some company as fast as you can, putting rocket fuel in a jury rigged rocket and trying to get to the moon, and it blows up almost all the time, which is fine when you’re 22 because it can blow up a few times. But when you have family, you want to be more stable. I’d have to say Cleveland crushes most cities in terms of quality of life and family. What’s a traffic jam? Five minutes extra to get into work?

But you have kids now, and you’re starting a new company.

I’m conscious of it. But it’s a worry.

For sure, a worry.

Among entrepreneurs, I bet there are more unhappy family lives than I hear about.

Now that you don’t desperately need venture capital, maybe you could operate on a slower timeline.

You have the option of doing that.

If you take somebody else’s money, that’s a lot of pressure.

You learned to program on a Tandy computer. So many people have told me they got into tech because they had some early computer that came with instructions on programming. Is there a similar entry point for kids today?

It’s right here (holds up iPhone).

The wonderful thing now is you have Google. So you can learn things without having to flip through a stupid Tandy manual or go to the library. … And the barrier to entry is a lot lower. Those Tandy’s at that time were, like,

Brad Reynolds TECHNOLOGY

$2,000. You had to have your parents’ permission to do anything. And their checkbook.

FIVE THINGS:

Is there one hobby that’s nearest and dearest to your heart?

Surfing Lake Erie. Any time there’s a swell on, I’m surfing Lake Erie. All the way from Presque Isle to probably Lorain.

There’s all kinds of different little surf points and weird places you can grab some waves. If the swell is coming, you make sure the schedule’s clear. It can be a four-hour window when it’s good. … You can legitimately surf 8-foot, 10-foot waves in Lake Erie.

Reynolds earned a diploma from Mentor High School in 1996.

But isn’t surfing Lake Erie a little bit dangerous?

You’ve got this thing that floats, which is good. Probably the biggest risk is knocking yourself out. You can get hit with your board. I actually have a scar on my head from when my fin split my head open.

What’s one thing that few people know about you?

Never graduated from college. So it’s funny. We got the Weatherhead award for the No. 1 (fastest growing) company in Northeast Ohio at Mongoose. And I’m a nongraduate from Case. They wanted me to come talk. And I’m like, “Do you really want to use me as an example?” It was a huge risk at the time. You don’t realize it because you’re just a dumb kid.

“Oh, this internet stuff, it’s going to take off.” I got lucky that it did.

HIGHEST DEGREE

NOT ENOUGH TIME He used to enjoy golf, skiing and rock climbing — before he had kids.

WHY HE LIVES IN BRATENAHL The lake, the central location and the tranquility.

ON WORKING VIRTUALLY He says it’s hard to build a culture without a physical office. “I hate it.”

MAGIC WAND If he could change one thing about Cleveland, he’d create more good schools.

LUNCH SPOT Shoreby Club 40 Shoreby Drive Bratenahl www.shorebyclub.com 216-851-2582

The meal Walleye, green beans; filet sliders, fries; soft drinks

The vibe The lakeside mansion that houses this private club was built in 1890 as the summer home of Samuel Mather. The building itself feels formal and grandiose, but the atmosphere by the pool is more casual. The restaurant serves “eclectic cuisine that changes seasonally,” according to the Shoreby Club website.

The bill

$34.50, plus tip

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CRAIN’S CLEVELAND BUSINESS z AUGUST 29 - SEPTEMBER 4, 2016 z PAGE 21

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z AUGUST 29 - SEPTEMBER 4, 2016 z CRAIN’S CLEVELAND BUSINESS

V3 CONTINUED FROM PAGE 3 exclusively. Sliter said it’s important to make the truck drivers feel like a member of the team, instead of just a truck number. Poulos said the company has about 195 drivers currently, as some of the vehicles in its fleet have more than one owneroperator.

The company has about 150 trucks in its fleet, more than double the number it started with at the beginning of the year, Sliter said. He expects that to increase to 200 by the end of the year. And Poulos said the company wants to have a fleet of 500 by the end of 2018.

About 60% of those are the straight trucks, some of which can carry up to 20,000 pounds, Sliter said. The fleet also includes the larger tractor-trailers and the smaller Sprinter vans, and all three types of vehicles have places for the drivers to sleep.

Up to speed The company’s name reflects its mission. The V stands for velocity and the “3” is for its focus on three groups: the customers, the drivers and the employees, Sliter said.

Sliter said V3 wants to create a fun, relaxed environment for employees where they’re empowered to make decisions. Paul Ratcliff, chief operating officer, said they want employees to feel like they’re part of the company, offering flextime when they need it, looking to them first when jobs open up and keeping it easy and fun.

The new building has arcade games, showers, a full kitchen, a weight-lifting area and a picnic area with a grill.

And, right now, it has fire trucks and other emergency vehicles in its shop, as it offered to house some vehicles after the Seville-Guilford Fire and EMS’ roof caved in.

Seville Mayor Carol Carter highlighted the company’s efforts to help the fire department and said V3 already has been good to work with.

She said she loves it any time the city can bring new businesses in and

noted that V3 hopes to purchase more land to expand in the future.

Ratcliff said the company’s growth plan would see it outgrowing the current building in the next three to four years and building an additional building nearby.

While much of this expected growth will be organic, Poulos said the company is also targeting one to two acquisitions to close at the start of 2017. The company has “big aspirations” in transportation, he said, along with a “tremendous amount of momentum.” Overall, V3’s team is looking to make it a company with $150 million in annual revenue.

And the company is confident that demand in its industry will be high for the next five to six years.

Some upcoming government regulations requiring electronic data logs could take some of the competition off the roads — V3 is already compliant — and there’s a shrinking pool of drivers. In addition, there’s more demand for just-intime deliveries.

“So there’s more need for speed in the supply chain,” Poulos said.

JERGENS CONTINUED FROM PAGE 5

Making it work For Jergens, the entire project and its goals are good business, says Schron, who has as a wider goal of rebuilding the area’s manufacturing capacity generally. More machinists, more machine shops and more machining work being done locally all add up to both more sales to supplying companies, like Jergens, as well as a boost for the region’s economy, according to Schron, a member of Cuyahoga County Council.

That’s also why Jergens will use the FastForward facility to help other area manufacturers, especially customers and vendors like specialty metals makers and distributors, or companies making the cutting tools used in CNC machines.

“If you’re a customer who wants to test an exotic metal, we’ll work with you. If you want to test your cutting tools, we’ll help with the test,” Schron said.

Jergens also will work with the local “makers community,” Schron said. That community includes engineering students and startups working on new products and inventions.

Student-produced items at Jergens’ FastForward facility. (Dan Shingler)

“We want to provide an ignition point for young people who have become disassociated with manufacturing.”

— Justin Bateman, project manager of FastForward

Often, he said, they need to take 3Dprinted products to the next stage by machining them in steel or other metals. FastForward will help them do that.

Eventually, Schron predicts the facility will expand, probably with its own 3D printers, along with other equipment.

But, for now, it’s focusing on drawing in users and visitors to its new facility “You’ll be working with the latest and greatest technology. It’s some of the best in the world,” Bateman said.

20160829-NEWS--23-NAT-CCI-CL_--

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CRAIN’S CLEVELAND BUSINESS z AUGUST 29 - SEPTEMBER 4, 2016 z PAGE 23

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