Crain's Cleveland Business

VOL. 38, NO. 33

AUGUST 14 - 20, 2017

Source Lunch

Akron Welty Building Co. is becoming a huge player in region. Page 24

Robert Paponetti, who leads The Literacy Cooperative Page 27

CLEVELAND BUSINESS

The List Ohio’s largest public companies Page 22

ENTERTAINMENT

Rocksino races to front of regional gambling pack

By JAY MILLER jmiller@crain.com @JayMiller

The highest-volume gambling hall in Ohio, with revenue in 2016 of $225.1 million, is getting into the business of pumping gas in the $2.25-a-gallon range.

In October, the Hard Rock Rocksino will open the RockStop Gas & Wash in its parking lot along Northfield Road in the village of Northfield in northern Summit County.

The RockStop will never be a major contributor to the bottom line of

the Rocksino. But it’s part of a program of amenities that Rocksino management is using to set itself apart from the competition — the Jack Cleveland Casino in downtown Cleveland and the Jack Thistledown Racino in North Randall. That thinking is one reason Casino Player magazine readers picked the Hard Rock Rocksino as the best overall gaming resort in Ohio in 2016.

Not that Jack Entertainment LLC, the gaming arm of Cleveland Cavaliers owner Dan Gilbert’s business realm, is standing still.

“The business is healthier than it’s ever been,” said Mark Tricano, Jack’s senior vice president for Northeast Ohio operations. The company recently completed a $70 million upgrade of its Jack Thistle-

down Racino in North Randall, and it’s getting ready to introduce an electronic gaming concept at the downtown casino, designed to attract younger bettors.

SEE CASINOS, PAGE 25

The Jack Cleveland Casino’s revenue dropped more than $9 million in 2016, to $203,594,737. (David Kordalski)

FINANCE

Strong commercial lending means opportunity for banks

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

Commercial lending remains relatively strong, and it has bankers looking for more opportunities in the Northeast Ohio market.

While the commercial lending

business nationwide has tapered off some since late 2016 and the presidential election that spurred demand by a sector anticipating a business-friendly climate and economic growth under President Donald Trump, banks are seeing steady demand here.

And the opportunity to serve the apparent demand around Greater

Entire contents © 2017 by Crain Communications Inc.

Cleveland for commercial loans — bank activity and overall demand for which can be among the various indicators of an economy — has influenced several local banks’ push toward the city itself, where there’s a greater density of businesses to serve.

Many are hiring new commercial bankers and opening loan produc-

tion offices. That includes Sandusky’s Civista Bank, which opened a loan production office in Westlake this spring. The bank also opened an office in Mayfield Heights in 2015, so the new office completes Civista’s goal of having a presence on both the east and west sides of Cleveland.

The bank, with $1.5 billion in as-

sets, has seen year-over-year loan growth through the first half of 2017 of around 7%.

“For us, right now there seems to be a little more opportunity than what was expected,” said chairman and CEO James Miller. “I do think there’s a lot of opportunity. We’re seeing a lot of positives right now.”

SEE BANKING, PAGE 23

Industry outlook: Technology Can Northeast Ohio sustain a growing number of coding camps? Page 13

<<

Virtual reality could be key tool. Page 16 Q&A with Brett Lindsey, president and CEO of Everstream Page 19

CONTENT

SPONSORED BY

NEWS AND TRENDS FROM NORTHEAST OHIO’S TECHNOLOGY SECTOR

TECH MATTERS OHTec, RITE committed to building Northeast Ohio’s tech community OHTec strengthens industry connectivity

RITE bridging gap between talent supply and demand

O

T

HTec was founded as the Northeast Ohio Software Association in 1998, with the goal of organizing events and helping industry players succeed. In subsequent years, the tech-focused economic development group’s influence spread.

It established its signature Tech Week and expanded its presence, serving as an advocate for IT companies throughout the region on issues such as workforce development, business development, continuing education and collaboration.

With nearly two decades of network-building under its belt, OHTec is concentrating on its role as a convener among tech companies of all sizes. As part of the Greater Cleveland Partnership and COSE (Council of Smaller Enterprises), OHTec historically has focused on smaller companies. Executive director Dean Brainard said he Brainard is working to integrate more middle market and larger companies to create more collaborations and increase opportunities in the region.

“Every company is now a tech company,” said Brainard, whose organization currently has about 650 members representing all facets of IT. “We want the entire ecosystem involved.”

OHTec’s flagship CIO symposiums (the next of which is Sept. 7) serve as just one vehicle for more widespread engagement around IT. The group also has rolled out intimate technology peer group meetings. These roundtables enable C-suite leaders and IT employees to discuss critical topics such as product management, IT cybersecurity and bank lending for software companies.

A strong and integrated tech community is the

CALENDAR OF

EVENTS

linchpin to a robust regional economy overall.

“Technology has changed and will continue to change everything,” said Paul Chaffee, a member of the OHTec board of advisers and president of Software Answers, a Brecksvillebased software developer that has been involved with OHTec since it was founded.

“We learn from each other, and bringing technology people together and making this a more tech-friendly area helps both the tech community and businesses,” he said.

Brainard envisions OHTec working more closely with some of the mature tech users, such as American Greetings, Progressive and Sherwin-Williams, to facilitate that cohesion among the tech community.

OHTec is augmenting its board to reflect those efforts, including the recent addition Kavlick of Jeff Kavlick, president and CEO of Hudson-based software development firm Moreland Connect. He hopes to help raise the industry’s visibility, so that Northeast Ohio is regarded nationwide as a hub of IT activity and leadership.

“We have a lot of talent. The dry powder is here,” Kavlick said. “If OHTec can align the thought leaders, influencers and motivators, we can really light the fuse.”

As such, OHTec is forging deeper ties with constituent groups such as RITE, a regional IT talent development organization, to address the IT talent shortage.

“We meet about once a week,” Brainard said.

“The collaborations with our workforce and talent development partners are critical.”

he talent crunch is an issue that vexes the IT industry regionally and nationwide. Jobs in IT are abundant, but companies cannot find qualified workers to fill these positions.

There are anywhere from between three and 10 IT job ads for every college IT graduate. In 2016 alone, some 21,000 IT-related job ads were posted online within nine counties in the Cleveland, Akron, Canton and Wayne County MSAs. Meanwhile, the number of IT graduates has remained stagnant over the last five years in Northeast Ohio, according to Shanahan Resources, which has been consulting with RITE on IT workforce issues.

RITE is analyzing the job posting and labor market data to determine how to grow the bandwidth of a highly skilled industry-responsive DeOreo workforce. The organization is reaching out to engage more partner employers, schools and other stakeholders to collaborate on workforce development strategies, said RITE director Courtney DeOreo.

“We want to look at all that data and turn it into actionable information that will guide our decisions,” she said. “We can’t do it without industry participation. Employers must come together, identify their needs and voice them to the education community.”

RITE’s members originally assembled in

2009 as part of the Ohio Skills Bank initiative aimed at eliminating the IT skills gap. With inkind support from Lorain County Community College, RITE and its partners are fulfilling their mission of preparing, attracting and matching IT talent in Northeast Ohio. Those programs include high school coding camps, career fairs, skills-based recruiting initiatives and community engagement for industry professionals.

Additional workforce development solutions include: n n n n n n

employers relaxing degree requirements to cast a wider net for skilled candidates; building innovative training programs to address mid-level career needs; higher education institutions customizing degreed programs based on employer needs; more alternative career pathway development; recruiting more women and people of color; and more K-12 outreach.

Bill Blausey, senior vice president and CIO at Eaton Corp., said more employer engagement in elementary, middle and high schools will help shape the next generation’s career paths.

“We are a large organization with a vested IT interest. We have an obligation to students,” said Blausey, RITE board chairman. “There’s so much variety. It’s really exciting. You can be a nitty-gritty software developer or a systems analyst or engineer. There are so many levers to pull.”

For more coverage on Northeast Ohio’s tech industry, read the Tech Industry Outlook in this issue of Crain’s Cleveland Business.

AUG. 15

SEPT. 13

SEPT. 14-15

Startup Scaleup 2017 — 8 a.m. to 4 p.m., Gordon Square Arts District. This third annual community event invites local small business owners and entrepreneurs to a day of networking with investors, speakers and some of the industry’s brightest entrepreneurial minds. Info: jumpstartinc.org/events/ startup-scaleup-2017/

BioOhio: Harnessing Big Data — 8:30 a.m. to 5 p.m., Conference Center at OCLC, 6600 Kilgour Place, Dublin. This Ohio bioscience industry group event will focus on big data and its impact on health care. Topics include data-driven drug recovery, predictive analytics and collaborations.

Info: bioohio.com/events/bigdata/

Industry 2017: The Product Conference — Cleveland Public Auditorium, 500 Lakeside Ave., Cleveland. People who build, launch and scale products from around the world will convene at the Midwest’s largest product management summit.

Info: healthtechcorridor.com/event/industry2017-product-conference/

A PRODUCT OF

CRAIN CONTENT STUDIO C l eve l a n d

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PA G E 3

‘Smaller’ gifts can go long way for Clinic

By LYDIA COUTRÉ lcoutre@crain.com @LydiaCoutre

For an institution accustomed to securing multimillion-dollar donations, Cleveland Clinic’s latest fundraising effort has some relatively small targets: projects up to $10,000.

But each of the projects supported by a new crowdfunding initiative will have real impact on patients and the community, said Bridget Andrews, the Clinic’s senior director of development operations.

In June, the Clinic quietly launched its own crowdfunding platform, The Power of Every One, which highlights caregivers’ ideas in need of funding that will support projects from basic science research to public health initiatives to clinical care programs.

So far, with nearly 100 donors giving a total of more than $17,000, two of the three projects included in this first round have already reached their goals. One hundred percent of the proceeds go to the projects.

“We really thought that this was an opportunity for us to engage members of the community who were interested in making smaller gifts to the organization, but collectively, they can have a larger impact on a project,” Andrews said.

Crowdfunding, which solicits donations for as much or as little as one

“We really thought that this was an opportunity for us to engage members of the community who were interested in making smaller gifts to the organization, but collectively, they can have a larger impact on a project.”

— Bridget Andrews, the Clinic’s senior director of development operations

can, has been around for several years — particularly among entrepreneurs and academics — but is “still a fairly new concept” for hospital systems, Andrews said.

“I think that many hospitals focus on major gift fundraising and are now looking into more creative ways to engage the younger demographic, the Generation Y and Generation Xers who are more comfortable giving online and who want to see a direct impact of their gift immediately,” she said.

University Hospitals took a stab at crowdfunding last year, but raised minimal funding for a UH researcher-developed rehydration device that served as the centerpiece of that campaign. When Crain’s reported on the effort, the device’s developer said that about $50,000 raised would enable the start of clinical trials. A UH spokesperson said last week the health system’s clinical research center isn’t currently pursuing crowdfunding for other research projects.

Marketing tool Huneo, a Cleveland-based biomedical data analytics company, launched a Kickstarter campaign last year for its SnoreTrack App and SnoreCoach Device, which track snoring and sleeping position. They work together to coach the user into correcting his or her sleeping position by offering a gentle buzz to the wearer to change positions when snoring.

Matt Ryder, who works in business development for Huneo, said he sees “comparatively less” health and wellness products using crowdfunding platforms relative to other products.

Most of Huneo’s competition in raising its roughly $200,000 was for attention overall on the Kickstarter platform.

“Now that technology exists to create low-cost, high-quality devices in a mobile fashion, it’s going to open (crowdfunding) up a lot more for health and wellness companies,” Ryder said. “You can compare it to the use of wearable technologies and devices that track personal data. I think

that a lot more of those will use certain types of crowdfunding platforms.”

For Huneo, the Kickstarter campaign served as more of a marketing tool than true crowdfunding, Ryder said. Most of the funding needed for development and production of the products was invested by principles before the campaign began. The campaign itself helped get the product in front of a broad audience that Huneo might not have otherwise reached, with backers in 29 countries.

All of the backers who donated to Huneo received both preproduction units and the final product, which they’ve been ramping up manufacturing on in the past month, Ryder said.

Andrews also noted the important awareness that crowdfunding can bring to the projects raising money.

“While many of these projects are important and could be funded through various sources, one of the benefits to the crowdfunding platform is that it does raise the visibility for various projects that the community may not know exist,” she said.

Spreading the word The Clinic’s Philanthropy Institute is lining up new projects for the fall, with a goal of maintaining three to five 30- to 60-day campaigns every quarter. Andrews said she wants to keep the campaigns attainable, and so to start, they’re looking for projects that are $10,000 and below.

This quarter, at $2,070, one project to sponsor healthy food initiatives for the Spanish-speaking community in Cleveland is fully funded. Also at goal is a $10,000 project to support the ongoing work of the Vision First Program, which provides eye examinations and, if necessary, eyeglasses and follow-up care to every 4- to 6-year-old in the Cleveland Metropolitan School District. The project also received a matching gift of $10,000. The combined funds will go toward purchasing a new customized van for the work, according to the campaign.

The third project, which is raising money for the Taussig Cancer Center Wig Boutique, is a little over halfway to its $10,000 goal to help provide free wigs, bandanas and other accessories for cancer patients.

Sharrie Coburn, cosmetologist wig specialist at the Clinic who’s leading the effort for the project, said she is pretty confident they’ll also reach the goal for the campaign, which is live until Aug. 20 at cometogether.clevelandclinic.org.

Caregivers lead each of the campaigns, reaching out to their networks and sharing the projects on social media. The Clinic also shares the projects on its intranet and doctors have helped spread the campaign through word of mouth and social media.

“Everybody has a family or loved one that is touched by cancer,” Coburn said. “People would always like to help to give back to patients.”

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PA G E 4

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Former Linsalata trio sees ‘opportunity’ in own firm

By JEREMY NOBILE jnobile@crain.com @JeremyNobile

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With activity surging in the private equity sector, some veterans from Cleveland’s Linsalata Capital Partners see fertile ground to launch a new firm of their own.

But what’s different between Watervale Equity Partners — the new firm co-founded by Mike Faremouth, Jim Guddy and Eric Bacon — and Linsalata, one of Northeast Ohio’s oldest private equity firms, will be a focus on a lower end of the middle market, which is just outside the traditional focus of Linsalata and similar funds of their scope.

“What brought all of us together in the new firm was the opportunity that we are focusing on the company size,” Guddy said. “We’re increasingly seeing that part of the market with an incredible amount of opportunity for private equity. It’s all about the opportunity.”

The group formed Watervale in late July. It’s an amicable split from Linsalata, the office out of which they’re all working for the time being as each sees through pieces of their current portfolio.

At Watervale — a name inspired by a historic region of northwest Michigan that the co-founders have backpacked through or visited — the focus will be on control investments in companies with around $6 million in EBITDA (earnings before interest, tax, depreciation and amortization).

Manufacturers and distributors in the industrials and consumers sector will be their main targets. And there are a lot of companies in that size

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range to “get excited about” that aren’t on the radar screens of as many other firms, Guddy said.

Anything in North America could be a possible investment opportunity, Guddy said. The co-founders see additional opportunities in Canada and Ontario specifically. But being in Cleveland, they naturally have their eyes on companies in their local market.

“We’re seeing a lot of companies that fit our size range locally, and obviously manufacturing, industrial and distribution fits very well with Northeast Ohio,” Guddy said. “We think there will be lots of opportunities to invest locally.”

Their Midwest expertise should resonate with the kinds of businesses they’re looking to partner with, too.

“We are all definitely Midwest guys,” Faremouth said. “We believe that appeals to the owners and operators of smaller businesses. We think we’ve got the personality that fits well with them, and when you invest in these lower-middle-market companies, it really is all about the partner. Being Midwestern is really part of the culture.”

Of course, the Watervale group isn’t alone in the end of the market they’re looking for, even if it’s not a crowded space.

Investors’ interest in private equity

Cities continue to fight with state over tax collections

By JAY MILLER

Is your health insurance program the wrong fit?

Faremouth

is lingering at record levels, which has made fundraising easier, but it also is creating even more competition for the best investments as the sector builds up, and Bacon others are seeing opportunity in the lower end of the market. That buildup has even led to more investors looking for deals in Northeast Ohio, whether they’re other firms starting up or established funds building out a local presence here.

One of those other firms seeing opportunity includes the group of Align Capital Partners, which features a trio of former Riverside Co. principals who spun out from the global private equity firm last spring with a similar focus as Watervale.

That group, based in Cleveland and Dallas, is targeting smaller companies in the manufacturing sector with cash flow under $10 million. Align closed its first fund last year at $325 million, 30% higher than their target goal, and has already made a couple investments.

Watervale is just beginning its fundraising process, so it’s too early to determine how large the fund might be. But the group is bullish on its outlook.

“There is certainly still competition.

Even local firms have been successful in that part of the market,” Guddy said.

“It’s a different part of the market and a different lender community. It’s a segment of the market people haven’t paid as much attention to because the numbers are smaller. It’s really all about the opportunity.”

The idea is to make it easier for businesses to pay their municipal net profits taxes. Cities, though, see it as one more assault on their independence and worry they will have a harder time managing their money.

The budget proposal passed by the Ohio General Assembly and signed by Gov. John Kasich at the end of June gives businesses the option to file their local taxes with the state on a single form, instead of with each of the municipalities in which they operated.

The measure does not affect personal muny taxes, which are the lion’s share of local income taxes.

(Only roughly $600 million of the total $4.7 billion in municipal income taxes collected is paid by businesses.)

But cities and their supporters see a slippery slope.

State tax commissioner Joe Testa said the move, paying business taxes through the existing Ohio Business Gateway, would save money for companies — especially those that did business in more than one community, such as a construction contractor or a retailer with a chain of stores.

Instead of multiple tax forms, they could file a single form, write a single

check, and the state would take care of divvying up the taxes.

The plan is supported by many business groups, such as the Associated General Contractors of Ohio, the Ohio Manufacturers Association and the Ohio Society of Certified Public Accountants.

“Ohio is one of a handful of states that taxes both individuals and businesses at the local level, and the only state in which each municipal corporation makes its own rules and regulations,” Robert Brundrett, the OMA’s director of public policy services, told the Senate Finance Committee in June.

“The administrative cost in time and money puts Ohio at a disadvantage compared to its peer states and diverts Ohio manufacturers’ resources from productive activity,” he said.

Cities aren’t impressed by the advantages to businesses. Instead, they see one more recent example of their authority and resources slipping away — like when the Ohio General Assembly took the power to regulate hydraulic fracturing, or fracking, away from cities and when the governor decided to cut the size of their Local Government Fund payments in half, wreaking budgetary havoc in the recession.

And worse, the cities will have to pay the state 0.5% of their tax receipts

to the state to administer the tax collection.

“Do you know how little trust, or mistrust I should say, there is between local government elected officials and my colleagues in Columbus?” said state Sen. Kenny Yuko, a Richmond Heights Democrat who opposed the measure. “These guys (city mayors) are frustrated.”

Chagrin Falls state Sen. Matt Dolan, a Republican, agrees with his colleague across the aisle.

“There has been a complete erosion over the last six years as it relates to state funding in a partnership with local government,” he said. “My attitude is, it’s all our money, whether it flows through the state or to the local government.”

Kent Scarrett, executive director of the Ohio Municipal League, said, “This is more state interference in our cities’ and villages’ lifeblood — revenue from the municipal income tax.

There is significant potential for more lost revenue to municipalities.”

Jennifer Pae, Lakewood finance director, said the state has not been timely with other tax payments that flow to the city, sometimes delaying tax payments into the next quarter.

“It’s a cash flow issue,” Pae said.

“Tinkering with these has significant impact on cash flows for communities.”

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PA G E 5

Community colleges embrace state plan

By RACHEL ABBEY McCAFFERTY rmccafferty@crain.com @ramccafferty

A small entry in Ohio’s fiscal year 2018-2019 operating budget will mean a big change for the state’s community colleges, as they soon will be able to offer certain four-year degrees.

The colleges say this will allow them to offer students affordable, convenient degrees in fields where there’s clear demand. The colleges will be allowed to offer what are called “applied bachelor’s degrees” — degrees focused specifically on particular career fields and with an emphasis on hands-on learning, instead of more general bachelor’s degrees. But the state still is determining the process for approving such programs.

Letting community colleges offer some kind of bachelor’s degree isn’t unheard of, as many states already do. In Ohio, House Bill 49, signed into law by Gov. John Kasich at the end of June, gives the state’s chancellor of higher education the ability to allow community colleges, state community colleges — which don’t have local levies — and technical colleges to offer applied bachelor’s degrees.

Jeff Robinson, director of communications for the Ohio Department of Higher Education, said the applied bachelor’s degrees would be good options for students who already had earned applied associates degrees, because those degrees are too specific to translate well to more general bachelor’s degree programs. He said

cuses on micro electromechanical systems.

“This legislation is a game-changer for Ohio,” the college’s president, Marcia J. Ballinger, said in a news release.

“Ohio has set a target to have 65 percent of its workforce with an industry-recognized credential or degree by 2025. Institutions of higher education need to do all we can to reach this goal, including pursuing new models. LCCC is ready to step up and this program hits the mark. Employers are engaged in the process and working with us to design and deliv“Ohio has set a target to have er the program.”

LCCC already 65 percent of its workforce with has gone through an industry-recognized credential the work of planfor this deor degree by 2025. Institutions of ning gree.

Ballinger higher education need to do all we said the facility and employers can to reach this goal, including are already in place, and the colpursuing new models.” lege has been with — Lorain Community College president Marcia J. Ballinger working those employer grams can’t already be offered by partners on what they’d want to see in a state or private colleges or universi- bachelor’s degree. It even announced a ties. (The bill gives the chancellor lee- “3+1” tuition structure, where students way to approve programs with a would pay the traditional tuition for “unique approach” that don’t meet their first three years and slightly more their fourth year for equipment and all the other criteria.)

The Northeast Ohio college per- technology fees. The news release stathaps most ready when a process is ed that students would be able to comfinalized is Lorain County Commu- plete a degree under this structure for nity College, which in June an- less than $15,000.

The goal is to have the curriculum nounced plans to offer an applied bachelor’s degree in microelectronic and other development work in place manufacturing, building off its exist- so the college can get started right ing associate degree program in away when the processes are ready, mechatronics technology, which fo- Ballinger said. the department had begun hosting internal meetings to create the process of reviewing the applications for applied bachelor’s degrees, but there is no official timeline just yet.

The bill noted the chancellor will be able to approve programs that can provide data showing “specific workforce need” and evidence demonstrating sustainable demand. They must have partnerships with industry, so students can receive workbased training and get jobs after graduation. Also, the proposed pro-

Making sure the programs aren’t duplicative was important. Bruce Johnson, president of the Inter-University Council of Ohio, which represents the state’s public, four-year universities, said the council and community colleges have been working to get such a resolution passed for about four years. He would prefer to see as the first choice the 2+2 model, where students spend two years at a community college before transferring to a four-year school, but the council didn’t want to stand in the way if there was student need that wasn’t being met.

Karen Miller, provost and executive vice president at Cuyahoga Community College, said the college is excited to look for opportunities for applied bachelor’s degrees, but that it will be a challenge to find programs that don’t compete with universities nearby. Tri-C partners with a lot of universities and colleges in the region, and it doesn’t want to harm those relationships, she said.

While the state budget didn’t mention anything about distance from an existing program, Robinson said it will be a factor taken into consideration for approval of programs. A specific distance has not yet been determined.

Miller said that if Tri-C can find a “void,” offering a four-year degree would be an attractive option, as it would be convenient and affordable for its students.

Creating an affordable path to in-demand jobs is part of Stark State College’s core philosophy, said President Para Jones, and applied bache-

lor’s degrees will support that. It’s not about making students take more classes, she said, but about responding to workforce needs. Two programs that will be at the top of Stark State’s list for the addition of a bachelor’s degree will be occupational therapy assistant and dental hygiene. Employers in those fields have been putting more of a focus on bachelor’s degrees.

Right now, she said many students in the college’s long-standing occupational therapy assistant program who want to earn their bachelor’s degrees have to go to the University of Findlay, almost 150 miles away.

“There is a need,” Jones said.

Lakeland Community College sees a similar need for bachelor’s degrees being driven by employers in fields like respiratory therapy and paralegal studies, said Laura Barnard, executive vice president and provost. A comprehensive review for possible programs has already begun at Lakeland Community College, though it’s just in the beginning stages. Barnard said the college is excited for the opportunity to offer four-year degrees.

“It opens a lot of doors for people,” she said.

CORRECTION J An Aug. 7, Page 44 article incorrectly identified the builder of homes near Lownsdale Avenue in Akron’s Wallhaven neighborhood. The homes were constructed by the Kemppel family, longtime Akron builders who are still active in housing construction in Northeast Ohio.

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members. It's a sort of choose-yourown adventure experience that drew an â&#x20AC;&#x153;incredible amountâ&#x20AC;? of first-time ticket buyers, said Jeremy Paul, artistic director for Theater Ninjas, which is now in its 11th year creating work. â&#x20AC;&#x153;Clearly, there is something about this kind of an experience that is related to but different from a traditional theater experience that is really resonating with a larger group of people,â&#x20AC;? Paul said.

Finding new ways to engage the audience, while staying true to the mission and identity of an organization, is increasingly critical for each to remain a relevant, valuable asset in the community.

The demand for more participatory arts programming is a shift in climate rather than weather, said GahlMills, who kept that in mind as CAC accepted applications for programming in Public Square this summer.

A $50,000 grant from National En-

dowment for the Arts and funding from Group Plan Commission supported nine new projects for Arts & Culture in the Square, which brought free programs to Public Square throughout the summer.

Gahl-Mills was looking to liven up the square with a mix of traditional and experimental work to engage people.

For instance, Common Threads, by Brandon Trewella, is an upcoming large-scale art installation taking place on the Gund Foundation Green from Aug. 19-21. Participants are invited to use colored string to create patterned designs between wooden pegs, with the finished installation being a geometric ring of color and pattern.

And in several events throughout the summer, Lake Erie Ink, a nonprofit providing creative expression opportunities to youth in the greater Cleveland area, offered a story building program where visitors could create poems, sentences or ideas from large cubes with a

Giving Guide This special supplement is used as a tool for readers to become more actively involved within our regionâ&#x20AC;&#x2122;s nonprofit community.

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Upon entering the Theater Ninjas headquarters, everyone attending the companyâ&#x20AC;&#x2122;s original production of â&#x20AC;&#x153;Donâ&#x20AC;&#x2122;t Wander Offâ&#x20AC;? receives badges, designating them into various groups.

Guests of the Cleveland theater company are ushered down a hallway, where a woman in a blue jumpsuit and safety goggles dots their hands with a damp cotton ball, narrating each dab: â&#x20AC;&#x153;And boop. Boop boop boop boop.â&#x20AC;?

Before theyâ&#x20AC;&#x2122;ve sat down, the audience members know this much: The Theater Ninjas production will be no ordinary show.

Arts organizations in the region have noticed a demand for more interactive, engaging art programming and productions. And with technology, creativity and new twists on national ideas, theyâ&#x20AC;&#x2122;re responding. â&#x20AC;&#x153;There are more people than ever participating in the arts, but theyâ&#x20AC;&#x2122;re not necessarily participating in more traditional ways of sitting and watching an expert do a thing,â&#x20AC;? said Karen Gahl-Mills, CEO and executive director of Cuyahoga Arts & Culture, the public funder of arts and culture activities in the area.

For the next two hours at the Theater Ninjas show, the audience debates, votes, solves puzzles and more, with each decision, each puzzle turning the narrative down a different possible path. The cotton ball dabs later determine which audience members were sickened in an outbreak on the spaceship in which theyâ&#x20AC;&#x2122;ve all become de facto crew

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Siblings Justice Washington, left, 8, and Julian Washington, 7, of Cleveland Heights, read the words off blocks they just rolled during a pop-up engagement on Public Square put on by Lake Erie Ink. The group welcomed passers-by to use the large dice to create poems or stories. (Tim Harrison for Crain’s)

word on each side. For those playing in Public Square, it’s fun, creative and a chance to interact with others, said Amy Rosenbluth, executive director and co-founder of Lake Erie Ink. “A lot of the time that youth are spending, and adults also I might add, when they’re doing things on their own now to relax, it’s isolated,” she said. “What this does is it kind of opens up a conversation.”

Traditional art forms also are looking to experiment with interactive work. GroundWorks DanceTheater has incorporated an event into its an-

nual fundraiser, where local community leaders or “celebrities” join with the company’s dancers and perform at the annual gala.

With its 10th such performance coming next year, It Takes Two works to bring out creative expression “in a way that they didn’t know was every possible,” said Beth Rutkowski, general manager for GroundWorks.

The same approach engages elementary students and senior citizens when dancers work in the community, she said.

The growing interest in this kind of engagement is driven in part by the popular-

ity of similar television shows that pair celebrities with professional dancers, she said, as well as the internet age.

“In generations now, people are able to curate their own experiences in any realm possible,” Rutkowski said. “And so people can find ways for themselves to be creative.”

Paul, of Theater Ninjas, agreed that a “more customizable world,” along with the rise of gaming culture, has helped push people to seek out more interactive artwork. The idea that game mechanics — or giving the user the power of choice — can be used to

help tell meaningful stories is starting to penetrate the mainstream on a larger scale, he said.

“Don’t Wander Off” takes choice to the extreme by letting audience decisions change the narrative of the production. But choice, Paul notes, is in nearly every art form, from the decision to turn a page in a book to a visitor in a museum choosing where to stand and where to look.

The Cleveland Museum of Art has in recent years drastically added to the ways in which its visitors can engage with the art.

It has created a suite of experiences, collectively called ARTLENS (formerly known as Gallery One), to allow visitors to look closer, dive deeper and engage with the museum in a way that can also take away the intimidation for those who think an art museum is not for them.

“We’re not competing with other museums; we’re competing with people that are at home watching Netflix,” said Jane Alexander, the museum’s chief information officer. “We want to make this relative, relevant to anyone who comes in here.”

This iteration of the art museum’s work with technology is touchscreen-free and instead uses motion-detecting technology in four main components: an app; a 40-foot interactive wall displaying the onview collection; a space where movement and art creation allow visitors to connect to the collection; and ARTLENS Exhibition, an immersive experience in which visitors engage with the art and activate interactive games.

These 16 games include Express Yourself, in which facial-recognition technology reads how visitors react to the art, and Gaze Tracker, which uses eye-tracking technology to show a visi-

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tor where they first look when viewing a piece, and help them understand how an artist’s choices influence this.

While all of the technology is fun, Alexander said the goal is to offer a new entry point into the existing collection. Someone being impressed by the technology isn’t really a compliment, Alexander said, but someone who begins to recognize, appreciate and engage with the collection of art the museum has — that’s the success.

“I really believe in using innovation when it makes sense to enhance the experience,” she said. “And I think that museums and cultural institutions, if they’re not thinking that way (or) if someone says ‘We just are against it,’ or ‘We don’t believe in it,’ I think they’re being shortsighted.”

Others agree that bringing people in with interactive, participatory programming is vital for arts museums.

“I think it’s crucial for a lot of these organizations if they want to survive,” Paul said.

Of course, some things have always been and will always be left to the experts. Paul jokes that he doesn’t want to go to the Cleveland Orchestra and turn pages for the musicians or tell them which key to play in. At the same time, he and others want their presence acknowledged in some way, or feel that it has some sort of effect.

But any such efforts to engage must not stray too far off of mission, GahlMills said. And each organization will have to find their own way in as they ask themselves what they do best, who they are and how or whether they’ll adapt.

“People still love to go watch the experts do their thing, but there’s also — and we see it in lots of different venues here in Cleveland — a real desire to make and to do and to have an experience,” Gahl-Mills said.

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CRAIN’S CLEVELAND BUSINESS

A U G U S T 14 - 2 0 , 2 017 |

Apartment project forces out AdultMart

By STAN BULLARD

North Coast Surgical Associates

sbullard@crain.com @CrainRltywriter

Truly physician-led.

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;HHD RHNK := MH=:R MH KNG BG HNK ;>LM BLLN>L' Contact Nicole Mastrangelo • nmastrangelo@crain.com • 216-771-5158

Displaced by Cleveland's apartment development boom, a downtown denizen for decades departed in early August. AdultMart, a sex-oriented toy, clothing and pornography store, has shut down at the Bloch Building in the Warehouse District.

Construction workers already have stripped the storefront to bare walls as the 1870-vintage building that has been home to AdultMart, 1275 W. Ninth St., for almost 20 years is converted to lofts in a $2.9 million project.

Prior to setting up shop on West Ninth, the store was displaced twice on West Sixth Street in redevelopment projects, including Grand Arcade condominiums and the Johnson Court office building. Specifically, it was once in storefronts now occupied by, respectively, Hannabi Sushi and Bar Louie.

AdultMart and its predecessor incarnations had been in the area west of Public Square for more than 40 years.

Rhondee Kamins, CEO of AdultMart's owner, Cleveland-based Private Entertainment, wrote in an email that her company’s parting with the current landlord was amicable. The lease was expiring and the two did not come to terms, Kamins said. Moreover, Kamins said, the location suffered from a lack of parking because of its evolution as a busy area that is home to apartments, offices, restaurants and neighborhood services.

“It is always sad to close a location, even when relocating, but especially in this instance because of the history,” she wrote.

The central city store will be reopened by this year’s holiday shop-

ping season at a MidTown Cleveland location that Kamins did not identify.

The 35-store chain with locations in five states also has multiple locations throughout the region.

Dan DiCillo, CEO of Solon-based Streak Investments and head of an investor group, S-I Cleveland Development Partners I, that is transforming the Bloch Building to the Lofts of West 9, said in an Aug. 10 phone interview, “I know they’ve been an institution in Cleveland. We simply decided to go in a different retail direction as we install a boutique apartment with 12 units on the upper floors.”

Installing a new entrance with a larger lobby and elevators to serve the building will reduce the amount of retail space available, DiCillo said. In the end, the storefronts will be reduced to one 900-square-foot spot at 1273 W. Ninth and a larger space of about 2,500 square feet at 1275 W. Ninth, although both can be combined.

DiCillo declined to list types of users he hopes to land for the storefronts and an office suite. He said he hopes to house businesses that will enhance the neighborhood and suit a boutique apartment building.

He hopes to secure city building permits for the remainder of the project soon. Although not expected to open until late this year, DiCillo said prospective tenants already are reserving suites. He would not say how many are taken so far.

AdultMart itself also is undergoing changes. The company plans in the near future to convert some of its locations to a new sexual wellness and lifestyle boutique brand called Room 801. The company also plans to add at least five new locations in 2018.

“It’s a very exciting time for my company and its investors,” Kamins wrote.

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CRAIN’S CLEVELAND BUSINESS

Opinion Personal View

Google’s rapid response was in nick of time

By THOM FLADUNG

Editorial

The long game $188.4 million. Or $142.2 million.

We’re not so cavalier about money as to say there’s no difference in those two figures; $46.2 million really is a lot of dough.

But it’s best not to get too hung up on the numbers produced by Tourism Economics (they had $188.4 million) and the Center for Economic Development at Cleveland State University (theirs was $142.2 million) in studies estimating the economic impact to Cleveland from hosting the 2016 Republican National Convention.

Economic impact studies are notoriously subjective, and the assumptions built into them can produce significant variances in results. Regardless of which number is more accurate, they’re both below the $200 million in spending that the Cleveland 2016 Host Committee, the local entity created to put on the convention that ran from July 18-21 last year, projected before the event took place.

Does that mean the convention was a bust, or even a mild disappointment? Hardly.

There were some special circumstances that might have dampened spending during the convention — primarily the concerns about violence in what had been a contentious runup nationwide to the summer of 2016, and the unexpected nomination of the controversial (then and still) Donald Trump, which led to some large corporations scaling back or eliminating their convention-related spending from prior years. Also worth noting: Philadelphia, which hosted the Democratic National Convention a week after Cleveland’s event, saw an estimated economic impact of about $231 million, below projections that ranged from $250 million to $350 million. So this might have been a politics-in-2016 thing, rather than a Cleveland thing.

We’re more interested in a different number: 75 That’s the average number of convention planners who are contacting Destination Cleveland, the regional convention and visitors bureau, each month in 2017 to ask if the city wants to compete for their business. In July 2014, Destination Cleveland says, the average was 43. The positive attention Cleveland re-

ceived from hosting a smooth political convention, and the positive experience that influential people had when they were here for it, almost certainly is a big part of that increase.

The real test of the convention’s effectiveness for Cleveland is how well the city plays the long game.

The Cleveland State study — the one that produced the lower economic impact number — had some anecdotal data that indicated Cleveland turned the heads of convention attendees during their time here. Researchers on the streets surveyed visitors and found significant improvements in their impressions of the city by the end of the convention compared with the beginning. That suggests the path to securing their business in the future, whether it’s for conventions or fun weekend visits, is getting easier.

A bevy of new downtown hotels and restaurants, upgraded public amenities (including the convention center and the renovated Public Square) and major infrastructure investments ranging from roads to fiber-optic cable should put Cleveland in a prime position to land more conventions going forward.

Dave Johnson, director of public relations and communications for the Huntington Convention Center of Cleveland and Global Center for Health Innovation complex, both of which played key roles during the GOP event, told Crain’s politics reporter Jay Miller that the RNC has “given us tremendous credibility in the industry that we can host a large-scale event. The validation has been very important for our sales team that is selling Cleveland as a convention destination.”

If that happens, and booked conventions rise, we’ll judge the 2016 RNC in a very different light, away from the somewhat dimmed glow of short-term economic disappointment.

“What desired effect we are hoping for long term, we don’t know, because there is a look-back period of three years to five years,” said David Gilbert, president and CEO of the host committee, as well as the leader of Destination Cleveland.

We’ll be checking in then and hope the reality matches the expectations.

Publisher and Editor: Elizabeth McIntyre (emcintyre@crain.com)

CLEVELAND BUSINESS

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Scott Suttell (ssuttell@crain.com)

Sections Editor:

Timothy Magaw (tmagaw@crain.com)

Contact Crain’s:

216-522-1383

Any business leader who’s been caught in a hailstorm of criticism after an internal matter went viral must have had a surge of schadenfreude watching the Google diversity memo controversy. Google leadership was immersed in a crisis over an internal memo in large part because, well, people could Google it.

Beyond that briefly satisfying guilty pleasure at the misfortune of others, what can be learned from this example of crisis and reputation management?

A recap: On Friday, Aug. 4, a 10-page memo from a Google software engineer leapt from internal Google communications vehicles to going viral online, apparently reported first by Motherboard. The memo questioned Google diversity campaigns and, most explosively, argued that any gender gap at Google could in part be attributed to biological differences — positing that women on average are more open to feelings and are more neurotic; men care more about things than feelings and have a higher drive for status. By Saturday evening, an email to employees from Google’s vice president of diversity, criticizing the memo, was online. On Sunday, Google’s CEO weighed in with an email to employees — that also leaked quickly. On Monday, news broke of the firing of software engineer James Damore.

As Business Insider reported, Google is faring well on social media, with positive mentions of its actions.

In Fortune, Adam Galinsky wrote of the classic “right vs. right dilemma,” with the employee’s right of free speech clashing with the right to protect people from speech that creates a hostile work environment. “Whatever action Google took,” Galinsky wrote, “needed to be fast, clear and thoughtfully articulated.”

Google met that test — and others. See if you’d be up for these challenges.

J Act quickly. Google’s leaders didn’t have the luxury of pondering a response. Social media and today’s speed of communications require action.

J Remember your most important audience — your own employees. Within hours of the crisis going public, Google's vice president of diversity, integrity and governance, Danielle Brown, emailed Google employees. “We are unequivocal in our belief that diversity and inclusion are critical to our success as a company,” Brown wrote. Of the memo, she said, “I found that it advanced incorrect assumptions about gender.”

J Crises never happen at convenient times. Brown started at Google just a few weeks ago. CEO Sundar Pichai was out of the country on work — and about to start a family vacation. You can’t prepare for every specific crisis. But you can have a crisis management plan for how you’ll respond to any crisis. Google’s responsiveness indicates someone was planning.

J Don’t deny the obvious. Damore has supporters — inside and outside the company. He raised what sound like valid issues of concern.

CEO Pichai addressed that in his communication to employees on Sunday: “…much of what was in that memo is fair to debate, regardless of whether a vast majority of Googlers disagree with it. However, portions of the memo violate our Code of Conduct and cross the line by advancing harmful gender stereotypes in our workplace. ” J Assume your crisis has long legs. Assess and keep planning. On Monday, Damore filed a complaint with the National Labor Relations Board. Wired reported that Damore performed an offensive skit while a Harvard student and on his LinkedIn profile deleted a degree he claimed but which he had not earned. This is all far from over.

J Keep matching your words with action. CEO Pichai canceled his vacation, planned to return from overseas and hold a Google town hall meeting on Thursday. Bet that was an interesting meeting.

Fladung is a vice president at Hennes Communications.

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.

CRAIN’S CLEVELAND BUSINESS

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PA G E 11

Personal View

Historic investment aims to bring opportunity, prosperity

By RAY LEACH and KIP CLARKE

There’s no question that Cleveland has been on the upswing in recent years, with our booming culinary and cultural scenes, downtown residency reaching new heights, and even our beloved sports teams enjoying success. But not everyone has benefited from the current boom, and that needs to change. The public, private and nonprofit sectors need to do more to bring economic opportunity to everyone, including those in our city’s most underserved neighborhoods. Our corporate community in particular has a unique

opportunity — and, we feel, an obligation — to lead by example.

That’s one reason why on July 31 JumpStart Inc. and KeyBank took a dramatic step forward to deepen our partnership. KeyBank has been JumpStart’s most significant single corporate partner in the 13-year history of the organization in terms of funding, board leadership and community engagement. Our partnership has helped to create more than 11,000 new jobs, and had $1.5 billion in economic impact in Ohio in 2016 alone — $150 million of which was created by minority entrepreneurs.

Seeing the proven impact we can

have when we work together led the KeyBank Foundation to make the largest gift in its history, by a wide margin — $24 million over four years to JumpStart. The funds will support programs in Ohio and upstate New York, including the cities of Buffalo, Rochester, Syracuse and Albany. It will enable JumpStart to expand the support and structure it provides to individuals, entrepreneurs and small business owners, create thousands of jobs, and prepare students for careers in the growing technology, service and manufacturing industries.

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CRAIN’S CLEVELAND BUSINESS

Web Talk Re: Nexus pipeline’s future Whatever happens with the proposed Nexus Gas Transmission pipeline, members of CoRN (Coalition to Reroute Nexus) worked for free for three years protecting landowner rights. They were relentless and have never given up. We've learned that no one is safe from corporate theft of private property endorsed by both parties through political corruption. — wolfmanwon

Re: Wages and the workforce I generally like (Minneapolis Fed chief and Akron native) Neel Kashkari and his views on the economy, but his comments on simply raising wages to combat skilled worker shortages are just stupid, simplistic and naive. We are in a globally competitive economy, and simply offering a higher wage to attract more employees can often result in a company being in an uncompetitive position with its rivals. Driving more jobs elsewhere doesn't do the American worker any good in the long run. ... There is a real disconnect between the training potential workers receive in this country, both at a young age and later in life for a new occupation, versus what the marketplace needs. Efforts are underway to correct the imbalance, but it will take years to right the ship. — Todd Courtney

Re: MetroHealth’s new nonprofit I commend MetroHealth for this action. It is essential to MetroHealth and the neighborhood to work together to benefit EVERYONE in the community, rather just operate in an ivory tower.

— Edward Hom

INVESTMENT CONTINUED FROM PAGE 11

In Cleveland in particular, the KeyBank Foundation grant will help us take giant steps forward in addressing one of our city’s most pressing and critical needs — workforce development.

While the nonprofit and public sectors have brought much attention to workforce development over the past few years, we believe the time is ripe for the corporate community to step in and step up. Organizations that are creating jobs must commit to aligning them to current and future workers. We urgently need to close the gap between companies who have jobs to fill, and people in our neighborhoods who are eager to work and want those jobs but face barriers — barriers not only to getting the jobs, but to getting to them, as transportation often is a significant hurdle.

As just one example of what we can do because of our expanded partnership, we are now equipped to help more than 1,000 underserved, noncollege-bound Cleveland Metropolitan School District high school students prepare for jobs at growing companies through workforce training and internships. Our goal is to match 700 skilled workers to opportunities at companies, and to provide 250 paid internships for students to receive on-

the-job training. And at Key, we’re starting a program to “hire local” and are increasing our commitment to buy local, all for the purpose of providing more economic opportunity to underserved populations and communities.

Another component of our expanded partnership is the creation of the KeyBank Center for Technology, Innovation and Inclusive Growth to serve individuals across Ohio. The center will increase dramatically the participation of minorities in the tech economy, scaling or expanding existing training programs, such as for coding, to serve more than 1,000 people. It will also prepare and connect more than 800 individuals to jobs at more than 500 companies.

There will continue to be a lot of buzz about technology companies. That said, tech is not, nor should it be, our only focus. JumpStart is now taking the same powerful combination of financial and intellectual capital it uses to help startups to a more diverse spectrum of entrepreneurs and small business owners.

We will conduct intensive outreach to connect with more than 1,200 entrepreneurs in Cleveland neighborhoods, hosting workshops and holding oneon-one “office hours” to help them take their businesses to the next level, whether from microenterprise to startup, or startup to scaleup. Ninety percent of new jobs in the U.S. are created by

small, high-growth-potential companies and, whether technology-focused or not, are the engine of any local economy. Ultimately, we expect the entrepreneurs in our neighborhoods to create more than 600 jobs, generate $25 million in revenues, and borrow or raise $10 million in capital.

There has been a lot of talk lately about the increasing number of entrepreneurs who are leaving Silicon Valley to return to their Midwestern roots.

Whether fleeing factors like the high cost of living and long commute times common to coastal cities, or simply returning to be closer to the people and places they love, we welcome entrepreneurs that are coming home or coming here for the first time. Cleveland has a robust and growing entrepreneurial community (in fact, we were recently ranked as one of the 50 most entrepreneur-friendly cities in the world), but there’s always room for more. And now, our approach has never been more inclusive.

We are doubling down to leverage the power of entrepreneurship to help previously disconnected populations rise.

We ask our friends in the public, private and nonprofit sectors to join in this effort to create jobs and economic opportunity in every corner of our city.

Leach is CEO of JumpStart, and Clarke is Cleveland market president for KeyBank.

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INDUSTRY OUTLOOK: TECHNOLOGY

A boot-camp bubble?

Some question whether Northeast Ohio can sustain a growing number of coding camps

By BETH THOMAS HERTZ clbfreelancer@crain.com

Programs promising to turn anyone into a skilled computer programmer in only a matter of months have become a booming business in Northeast Ohio, though some experts question whether the region might be nearing a bootcamp bubble.

Six boot camps, for example, are now available here, including one at Case Western Reserve University that launched in April, and a seventh entrant, Blue Ocean Coding, is set to welcome its first group of students in September. Nationally, the number of coding bootcamp graduates has grown 10 fold since the first programs launched five years ago, and coding camps as a whole have grown into a

$260 million industry, according to a recent Course Report study.

That said, nationally the industry has started to contract, prompting some to question whether Northeast Ohio can sustain such a high number of programs. In July, Dev Bootcamp, one of the earliest such programs with programs in six cities but not Cleveland, announced it would close in December. Likewise, The Iron Yard, which operated in 15 cities, announced it would close when its summer programs end.

Furthermore, the U.S. Bureau of Labor Statistics forecasts that jobs for computer programmers will decline by 8% from 2014 to 2024, at least in part due to the ease with which many of these jobs can be outsourced to countries where wages are lower.

SEE BUBBLE, PAGE 14

Illustration by mangsaab via iStock

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Tech Elevator, which boasts outposts in Cleveland and Columbus, reports its program has a 90% job placement rate among its graduates. (Contributed photograph)

BUBBLE

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Leaders at several local boot camps have differing opinions about whether the Cleveland market has enough demand from students and employers to sustain so many programs.

At The Software Guild in Akron, Eric Wise, one of the founders and now chief academic officer, is proud to state that 87% of its graduates are employed in the industry within 180 days of graduation. That said, Wise believes the Northeast Ohio market is saturated with such programs and predicts the number of camps will recede.

“I will bet you any money that in the next two or three years, half of them will close,” he said. “Unfortunately the barrier to entry to open one of these is really low, so a lot of people are trying to jump on the money train.”

Wise’s 12-week program, which usually has 16 to 20 students at a time, is offered three times a year at its location on Main Street. Opened in June of 2013, The Software Guild charges $13,750 for the program.

With about one-third of students coming from out of the area, some also pay for nearby housing that is affiliated with the program.

The Software Guild was acquired in 2015 by The Learning House in Louisville, which led to new locations in Minneapolis and Louisville, and online offerings.

At Tech Elevator in Cleveland, however, Anthony Hughes, CEO and one of the founders, is more optimistic, so much so that the company is opening a Cincinnati location this fall. It welcomed its first group of students in Cleveland in September of 2015, and has a location in Columbus.

“We are actually quite bullish on the opportunities ahead, in terms of the jobs that are there, and the jobs that are needing to be filled,” he said.

Students in Tech Elevator’s 14week program choose to learn either Java or .NET, which Hughes said are the most in-demand languages in the region. The program costs $14,000 and has a 90% job placement rate

The Software Guild’s 12-week program is offered three times a year at its Main Street location in Akron. (Contributed photograph)

within 180 days of graduating in Cleveland, a number that skews even higher in Columbus, he said.

“These are all technology jobs,” Hughes said. “No one is learning skills here and then going on to be an administrative assistant.”

He sees the large number of camps as evidence that there is a mismatch between demand and the supply of computer science graduates coming out of the area’s colleges.

“We're not particularly concerned about the number of the alternatives in the market, just because of the position that we have taken, which is, we are not going to be the biggest, we may not have the highest volume of output, but we will have the highest quality. That really gives us a very strong, competitive position,” Hughes said.

Traditional schools respond At Case Western Reserve University, Brian Amkraut, executive director of the Laura and Alvin Siegal Lifelong Learning Program, who oversees the new boot camp there, believes there are enough jobs to warrant having so many players in the field. All of the current programs combined are only producing several hundred graduates a year, while the open jobs reach

into the thousands, he said.

The Case program is a part-time, evening-and-weekend program that takes 24 weeks to complete. The first cohort started in April with 32 students, and a second one began in July with 50. The cost is a little lower than some of its competitors — $9,500 — which Amkraut said helps put it in a good position in the market, along with being associated with Case’s strong brand.

Amkraut said the federal employment projections may not match the job demand he sees in his work because many programming jobs may be classified as something else in the data.

“I think we are seeing variation of the marketplace,” he said. “You’ll have jobs where the skillset may still be there with a little bit of tweaking, like data analytics, which is going to have some of the web development component, but obviously a different skillset as well.”

Cuyahoga Community College launched its 16-week boot camp, Cleveland Codes, in March of 2016 as a response to feedback from employers, talent development groups and other experts in the area, said Monique Wilson, executive director for the Information Technology Center of Excellence at the college.

“We were being told that the re-

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INDUSTRY OUTLOOK: TECHNOLOGY

Local tech startup steps on the gas “Our greatest challenge is finding the right people to add to our team fast enough. We’re very much a puppy growing into its paws.”

By TIMOTHY MAGAW tmagaw@crain.com @timmagaw

gion’s higher education system was not producing enough skilled people, and some companies had to turn away business because they didn’t have enough trained software developers,” she said.

“We also recognized that many people in the community that we serve couldn’t afford the boot camps that existed at that time,” she said.

Tri-C’s program, which just began its fourth cohort, costs $8,500, although up to 90% of students are able to get enough workforce scholarships and other aid so as to not have any out-of-pocket expenses, she said.

“We also filled a unique void by being intentional about recruiting women and minorities,” she said.

“We felt it was really key that we approach this from a spirit of inclusive excellence to make sure that the boot camp was open and engaging to all the populations that we serve.”

She said she does believe that Tri-C’s approach — taking existing assets in the community and leveraging them into an affordable model — stands a good chance of succeeding in the competitive market.

“It’s very difficult if you are starting from scratch to be able to offer high-quality instruction at a price that is affordable to students, but we are not doing that,” she said.

Being a longtime institution in the community helps as well, she said.

“We didn’t just come up yesterday in somebody’s garage,” Wilson said.

“We are going to be around and we are going to provide support, and many of the companies have had long-term relationships with us through the advisory board and hiring our previous graduates. That provides a certain level of comfort for companies to partner with us.”

All Tri-C camp graduates complete 12-week paid internship after the boot camp currently, but Wilson predicts that will look different in the future. She expects to move more toward apprenticeship programs that let students split their time between learning and working, perhaps for as long as two years.

“That would let us meet the employers’ needs of reducing turnover and help the students and entry-level professionals understand the culture of their company, and make sure it’s a good cultural fit as well as a good technical fit,” she said.

Sarah Grant always loved the open road but was never too high on staying in hotels, so the idea of purchasing an RV had obvious appeal “If you can’t travel the world, you should at least have a good grasp of the lower 48,” said Grant, whose family typically travels each year by car from their home in Fostoria, Ohio, to Texas.

However, the prospect of a piece of equipment costing $50,000 or more sitting in her driveway for 10 or 11 months a year wasn’t ideal. That was until RVShare, a local startup, helped turned her apartment-on-wheels — a 2010 Fleetwood Quest, to be exact — into a revenue generator for her family. So far this vacation season, “The Quest,” as the family calls it, only sits in their driveway for two or three-day stretches at a time and the earned revenue more than covers the debt service on their RV. Akron-based RVShare is an AirBnB-like platform that allows RV owners to rent out their vehicles when they aren’t using them. For making the connection and providing some of the back-end work — insurance, most importantly — RVShare takes a cut of the rental fee, which usually starts at about 15%.

“Our mission statement is not on our website because it wouldn’t make sense to the front-end consumer,” said RVShare co-founder and CEO Joel Clark. “We create entrepreneurs. We fell in love early on with helping the middle-American family.”

Admittedly, Clark said, the RV rental business seems like an odd niche, but there was clearly a market need. For one, people had been pedaling RV rentals on Craigslist for years, lacking access to much of the back-end technology that he believes makes RVShare so valuable. Also, many RV dealerships or mom-andpop shops who rent vehicles only do so during certain times of the year.

The impetus for the company was RVShare co-founder Mark Jenney, who had bought an RV to travel the country as part of his honeymoon.

Afterward, he realized he had no use for the vehicle and longed for a way to make money off the investment.

Enter Clark, who offered to build a rudimentary template. It immediately started getting hits.

“The average RV sits unused for 50 weeks a year,” Clark said. “When insurance companies rate the risk, they’re rating the risk on only two usage weeks per year. That’s crazy. You’ve got 10 million families for 50 weeks a year that pretty much have a money pit in the driveway they don’t have time to use.

It’s almost a second mortgage.”

And so far, the business model seems to be working. Without providing exact figures, Clark said the 4-year-old startup remains self-funded and “fully profitable.” Also, at this point last year, RVShare had about 12 employees, but today its workforce hovers around 40 people. Right now, more than 30,000 RVs are listed for rent on the company’s website. According to the company, the average RV owner earns more than $10,000 per year through the service. Some reported earning $30,000. Listings also are free.

“Our greatest challenge is finding the right people to add to our team fast enough,” Clark said. “We’re very

— Joel Clark, RVShare co-founder and CEO

much a puppy growing into its paws.”

The so-called “sharing economy” is hardly a novel concept — just look at the success of companies like Lyft, Uber and AirBnB. The idea behind it being sharing underused assets or services, usually for a fee, on a peerto-peer basis.

However, the model, especially for a startup, does present its challenges, Clark said. For one, Clark said RVShare’s first two years were spent

trying to develop the marketplace.

“Building a platform doesn’t necessarily mean users would immediately flock to it,” he said.

“Marketplaces are a simple idea, but they also present some very unique problems,” Clark said. “Starting a marketplace from scratch is a chickenand-egg problem. You’re responsible for one side of the equation or the other. Neither side wants to be first side to the party. We ended up cracking that egg and built this product, and then went out and found people trying to do this but didn’t have a platform.”

RVShare does have its competitors, though Clark said RVShare’s differentiator is that it’s the only market-

place with both liability and comp insurance backed by a rated carrier.

Others, he said, self-insure damage and collision. RVShare has an exclusive arrangement with MBA Insurance, which specializes in the RV space.

The sharing economy, meanwhile, is becoming an increasingly larger piece of the overall economy. According to a survey from the Pew Research Center, 72% of American adults have used at least one of 11 different shared and on-demand services mentioned in the survey.

Also, about one in five Americans have used four or more of these services, and 7% have used six or more.

Moreover, according to a recent report from the Federal Reserve Bank of Kansas City, current economic data might not yet fully grasp the impact peer-to-peer services, particularly ride-sharing apps, are having on the overall economy.

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Virtual reality is potentially vital engagement tool

By DOUGLAS J. GUTH clbfreelancer@crain.com

The new wave of virtual reality (VR) is here, allowing users to visit distant planetscapes, pilot a fighter jet, or clock a quarterback’s point of view as he surveys an opposing defense.

Not everyone believes the hype, but the business world sees a potential in virtual reality technology that goes far beyond gaming or entertainment. VR’s high degree of realism and efficiency has local firms excited about developing fully immersive experiences that market products and solve real-world challenges.

While household names such as Apple and Netflix are creating VR experiences to reach wide audiences, Cleveland companies are experimenting with what they deem a robust customer engagement tool. Video production firm Goldfarb Weber Creative Media is building curated VR projects for its corporate clients. A pilot effort for Lubrizol Corp. took users on a theme park ride through the chemical manufacturer’s newest formulations, projecting a brand message far stronger than any simple video could provide.

“There was an Oculus Rift (headset) and motion controllers that let you see your hands and interact with the world,” said Kyle Stanley, Goldfarb Weber’s art director and senior editor. “It was really amazing, especially when so many people haven’t tried VR beyond Google Cardboard.”

Riding the leading edge of VR innovation locally is critical when condensing client information into bitesized, entertaining videos able to elicit emotion from a viewer, said the firm’s president and creative director, Ron Goldfarb.

“Any tool that can help clients tell their story in a more robust way makes

sense to us,” Goldfarb said. “Our interest is in the immersive part of VR, because it lets you move the needle on your storytelling capability.”

The dream of VR has gone through numerous incarnations over the decades, beginning 78 years ago with the View-Master, which displayed stereoscopic images in glorious 3D. Twenty-first century advances in computing power, along with the ubiquity of smartphones and the gaming industry’s push for high-end graphics and faster real-time rendering, has reignited VR hype and hopes.

Cleveland may not be as active as the coasts in terms of its utilization of VR or lesser-known augmented reality (AR) — which superimposes digital images on a user’s view of the real world — but the city hasn’t been shy about dipping its toes into the virtual water. For example, Case Western Reserve University is using Microsoft’s HoloLens platform to teach anatomy to medical students. And in April, North Coast VR and AR experts shared their vision for the field at the Cleveland International Film Festival.

Reynaldo Zabala, who spoke at the CIFF event, is the managing partner and founder of RazorEdge, a B2B e-commerce company. He’s also a co-founder of CLEVR, a nonprofit advocating for creation of VR/AR content as a means of improving Cleveland’s socioeconomic status. A research team at his company is focusing on VR and AR applications related to the HoloLens, Samsung’s Gear VR and the Oculus Rift, bought

by Facebook in 2014 for $2 billion.

“This is the prototype phase,” Zabala said. “Most people haven’t touched this stuff yet.”

Businesses are just starting to embrace VR as a cost-effective engineering and design tool, he said. Theoretically, Boeing could put an engineer into a virtual room to fully assemble an airplane

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Goldfarb Weber produced a simulation for Lubrizol that took users on a ride through a new chemical formulation. (Contributed photographs)

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FOUR COURSE SPECIALS part. Safety education is another application of the nascent technology.

“We have heavy construction and building materials industry clients who would see benefit in mixed reality safety training where employees can be tested on their reactions within a virtual real world scenario,” Zabala said. “Reduction in safety incidents is an immediate return on investment.”

Think Media Studios, producer of sleek promos for the Cleveland Cavaliers, Playhouse Square, Progressive Insurance and The J.M. Smucker Co., began working with VR camera rigs five years ago. Last summer, the studio partnered with Tourism Ohio on a simulated sightseeing trip throughout the Buckeye State, with Cedar Point and Columbus’ Short North neighborhood among the stops.

“The visual experience of VR is much better than it used to be,” said Think Media owner Brian Glazen.

“It’s much smoother, the production process is easier and you’re saving money.”

Despite feverish press coverage, about two-thirds of the U.S. population remains unaware of virtual reality’s capabilities, according to a survey by research firm Horizon Media.

Quality VR headsets are expensive — a single HTC Vive headset runs for $800 — and all run off equally pricey external computers or game consoles.

However, Zabala and other Cleveland-based tech heads expect the

forthcoming price competitions for VR-ready graphical processing chips to drive down headset costs.

“If I can get you into a headset, you’re pretty much sold right there,” said Matt Mazur of MAZVR, a producer of virtual reality media for desktop and mobile. “The hardest part is convincing customers to try it out.”

Chris Hatala, event director of Games Done Legit, a video game events company, said ongoing education will remove many of the impediments facing VR, particularly as the technologies drop in price and improve their current-generation processing limitations.

Hatala envisions a headset-clad sewer district official mapping out a pipeline, or an architect extending a skyscraper’s skeleton via the motion of their hands.

“Businesses are afraid to invest in brand-new technology they’re not sure will be around in five years,” Hatala said. “To sell this, you have to have metrics on why VR is a solid investment.”

Goldfarb Weber’s Goldfarb believes virtual storytelling experiences can proliferate rather than vanish, though it’s gaming that will likely provide the yardstick for future success.

“Gamers will pave the way as businesses try and figure out their place,” he said. “I’m glad we have a project under our belt. We just have to see how the industry shakes out.”

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INDUSTRY OUTLOOK: TECHNOLOGY Adviser: John Znidarsic

Lessons abound as Tesla speeds toward streaming â&#x20AC;&#x153;And the sign says youâ&#x20AC;&#x2122;ve got to have a membership card to get inside.â&#x20AC;?

Twenty-seven years ago, the metal band Tesla covered the song â&#x20AC;&#x153;Signsâ&#x20AC;? for its MTV Unplugged album, Five Man Acoustical Jam. This title was a (relatively uncreative) spin on the Five Man Electrical Band, the Canadians who initially penned the lyrics to the albumâ&#x20AC;&#x2122;s fifth track. Fast forward to 2017, and this mildly obscure hair band may have been oddly prophetic. Another Tesla â&#x20AC;&#x201D; this time Iâ&#x20AC;&#x2122;m referring to Tesla Motors Inc., the technology company led by a One Man Electrical Brand, Elon Musk â&#x20AC;&#x201D; may soon be delivering the same message to competitors like Apple, Amazon and Spotify.

Look out music providers, objects in your mirror may be closer than they appear. Tesla could be speeding into the streaming business.

In late June, Tesla revealed its intent to develop its own proprietary music-streaming service. This unnamed product would come bundled in all Tesla vehicles according to the report from Recode. On the surface, this wonâ&#x20AC;&#x2122;t impact most Americans. After all, Tesla fell short of its sales goal â&#x20AC;&#x201D; delivering at least 80,000 vehicles â&#x20AC;&#x201D; by the end of 2016. They passed 100,000 cars sold this January.

At first blush, some pundits questioned the investment necessary to design and launch a proprietary music-streaming service for a couple hundred thousand vehicles. Itâ&#x20AC;&#x2122;s hard not to raise an eyebrow when Spotify claimed at least 50 million paying subscribers while Amazon reported

Znidarsic is a senior writer at Adcom, an advertising agency in Cleveland.

27 million. But, if thereâ&#x20AC;&#x2122;s one thing Musk has proved time and time again, itâ&#x20AC;&#x2122;s that he isnâ&#x20AC;&#x2122;t afraid of the long play. And new members of the Tesla family may be easier to obtain in the next few years.

On July 5, Volvo announced that all new cars launched from 2019 onward will be partially or completely battery-powered. In that same story, The Guardian reports that Volvo, â&#x20AC;&#x153;has yet to build a single fully electric car.â&#x20AC;? The companyâ&#x20AC;&#x2122;s self-imposed deadline is a mere 24 months away.

France followed suit by announcing that it planned to ban all new petrol and diesel cars by 2040. By the end of July, the United Kingdom became the latest European country to announce a similar move, likewise targeting 2040 as the year its gas-car ban will go into effect.

With this rising global demand for electric vehicles, Tesla appears to have a head start in the electric car arms race. That may be exactly why the streaming business is music to Muskâ&#x20AC;&#x2122;s ears.

Pandora seems to be caught between the net and baseline â&#x20AC;&#x201D; a place tennis players refer to as â&#x20AC;&#x153;No Manâ&#x20AC;&#x2122;s Land.â&#x20AC;? They burst onto the streaming scene with an ad-supported listening model. Then, to chase Spotify, Pan-

JOHN FERGUSON/ADCOM

dora introduced Premium, itâ&#x20AC;&#x2122;s $10-a-month, me-too service, to lukewarm reviews. After a management shakeup, Pandora is reportedly back to the drawing board to figure out how to make the ad-supported

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model work.

Spotify is clearly the streaming leader. But its financial health is directly correlated to its ability to negotiate better music royalty rates. Unlike Apple or Amazon, there are no

other business units that can subsidize these premiums.

Which leads us back to Tesla. If the fledgling auto maker can accelerate its manufacturing to meet this growing demand, its affluent customer base will grow exponentially. The combination of locking its streaming competition out of its vehicles in favor of its proprietary service and growing its base of rabid fans could land a deadly body blow to Apple, Amazon, Pandora and Spotify.

In a recent Business Insider interview, a Tesla spokesperson said, â&#x20AC;&#x153;Our goal is to simply achieve maximum happiness for our customers.â&#x20AC;?

On the surface, this may sound like a squishy platitude from a seasoned PR veteran. But I believe that remark was delivered in earnest. I believe it because since it burst onto the scene in 2003, Tesla has proven that it isnâ&#x20AC;&#x2122;t just a car company. It is a technology company. And often, technology companies forget the real purpose of technological advancement: to make our lives more enjoyable.

Technology should make the complex simple. It should help connect us with people more effectively. It should give us new ways to share ideas and express creativity. Ultimately, the role of technology is to help us reach a different level of happiness. Perhaps, a level that we didnâ&#x20AC;&#x2122;t couldnâ&#x20AC;&#x2122;t collectively conceive five years prior.

When it comes to technological advancement, Tesla is clearly in the driverâ&#x20AC;&#x2122;s seat. The lesson for other technology companies is that Tesla got there by thinking outside of its car.

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CRAIN’S CLEVELAND BUSINESS

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PA G E 19

INDUSTRY OUTLOOK: TECHNOLOGY

Q&A: Brett Lindsey

President and CEO, Everstream Brett Lindsey said business has been a whirlwind since he spun Everstream from OneCommunity nearly two years ago. The Cleveland-based broadband company launched with 40 employees and a Northeast Ohio footprint. Today, it employs 115 people and calls itself a “super-regional” fiber-based network service provider with operations also covering the entire state of Michigan and portions of Wisconsin, Indiana and Illinois. Some of that growth has been organic as the company expands its client base and invests heavily in building out the network.

According to Lindsey, Everstream’s capital budget for Ohio and Michigan is close to $15 million each. The burgeoning business services firm also acquired two Michigan companies since its rollout in an effort to increase the density of its existing fiber routes. — Judy Stringer Telecommunications is one of the three sectors most targeted by cyber attacks. What are some of the greatest security risks in an evolving telecom industry?

Every day, obviously, people are trying to get in and get access to people’s networks. I think people tend to view it as all about stealing credit card numbers or information. Sometimes it is literally just trying to figure out how they can get in and piggyback on your service, utilize your bandwidth without you knowing it, so they don’t have to procure their own. Because we are providing what some people refer to as “dumb pipes” — the plumbing between multiple locations — the end customer is responsible for protecting their data through their own firewalls and means that they use on their end. We don’t store or keep any of our customers’ data. We are really just providing them a pass-through mechanism between their locations. The primary responsi-

bility for that protection really resides with that end customer.

So, is there a role for telecom business when it comes to cybersecurity?

There is a role. A number of larger telecom carriers are providing more of a managed service, in which they are doing a managed firewall and managed security. I think you will see a lot of the bigger companies continue to bring those as added services. The challenge is that I am not sure telecom carriers, in general, have the appropriate staff to be the one managing what people think of when they think of cyber attacks — threats to customer data or financial data. That really still ends up being an IT organizational or functional issue. There are specific security partners, folks like Juniper Networks, who is a large vendor to us, who also provides end-user security equipment. So what we

“Whether you are using wireless services to collect sensor data like environmental sensor data — lights, bridges and roads — or in people’s personal lives with things like Google Home and Alexa and your refrigerators and clothes dryers, everything is being wired to communicate data out on a regular basis.”

personal lives with things like Google Home and Alexa and your refrigerators and clothes dryers, everything is being wired to communicate data out on a regular basis. The connectivity of those devices into the public network becomes key, and I think the investment that will be required in the public network to support that growth is going to be exponential over the next five to 10 years.

have witnessed is partner relationships between the telecom carriers and the equipment manufacturers working together to make sure customer networks are not at risk.

You have predicted that it will be a very hot year for M&A in the telecom market. What will drive that activity?

The biggest driver is the fact that fiber is required to deliver services to all those things that are the hottest in telecom right now. If you wanted to look at what is driving that — beyond the continued expansion into 5G, which requires fiber — it is the growth in data center space. As IT organizations determine that it makes little sense to invest their own capital in a data center, they are outsourcing to data center partners.

At the same time, there are large enterprise customers that are going to move production-type services to local data centers because of the latency requirements and how that service has to run at high capacity and high availability, which is not really suited for a traditional cloud environment. I think we will see our enterprise customers with a hybrid of both a cloud-based solution and a primary or even primary and secondary data center location, which require fiber connectivity.

That’s why I think you have seen over the last 18-24 months fiber-based providers being acquired by larger organizations.

Can you talk about some of the behind-the-scenes connectivity work being done right now to prepare for the coming of 5G technology?

5G does not work without fiber. The large wireless carriers are all looking at procuring their own fiber networks. In most cases, they are looking for what is referred to as dark fiber. Essentially what that means is, instead of me putting equipment on the network and providing a managed service from point A to point B, they will be buying fiber so they can deploy whichever electronics they want on there and add to it. As their business continues to grow and the consumption of data continues to grow at the current triple-digit pace, they can upgrade the electronics without having to spend additional or recurring charges with us. So it’s really an Opex versus Capex question for the carriers right now. But their belief is that 5G will drive so much bandwidth demand that they are interested in owning

those physical assets now in a way that historically they were not.

Gartner predicts there will be more than 20 billion “things” on the Internet of Things (IoT) by 2020. What are some of the significant impacts this will have on networks and businesses that depend on those networks?

There are two things that are critical for IoT. One is connectivity. A good portion of the IoT will be tied to wireless connectivity, and with the advent of 5G, I think you will see that grow exponentially. Beyond that, you have to be able to get that data from whatever you are taking it from — from whatever sensor is generating that data — and get it to some form of a repository, which in most cases ends up being a switch or a data center location. For us, what we end up spending our time on is not only connecting cell towers to switching centers for the different carriers, but also making sure our network is connected to all the different data centers where that information is housed.

Whether you are using wireless services to collect sensor data like environmental sensor data — lights, bridges and roads — or in people’s

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CRAIN’S CLEVELAND BUSINESS

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A U G U S T 14 - 2 0 , 2 017

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PA G E 21

INDUSTRY OUTLOOK: TECHNOLOGY

NineSigma to run Opioid Technology Challenge

By SCOTT SUTTELL ssuttell@crain.com @ssuttell

The state of Ohio is turning to a Beachwood company to manage a challenge aimed at addressing the opioid crisis.

The Ohio Third Frontier Commission on Tuesday, Aug. 8, announced it has awarded $8 million to NineSigma Inc. to manage the Ohio Opioid Technology Challenge. The commission said in a news release that the challenge “will focus on getting and advancing new ideas

through competition, to find innovative solutions to address prevention, treatment and overdose response.”

David Goodman, director of the Ohio Development Services Agency and chair of the Third Frontier Commission, said in a statement that Ohio’s opioid crisis “is touching everyone, and we all need to be part of the solution. Taking ideas and advancing technology is one more way to ensure we leave no stone unturned in the fight against addiction.”

NineSigma helps companies and other clients with technical problems find partners that can solve them. It has managed similar competitions for fed-

Most of the $8 million in funding “will go to monetary prizes to support organizations, chosen through the challenge, that will develop and advance new technologies to address the crisis,” according to the news release.

Bloomberg News photo

eral agencies, including NASA and the Department of Homeland Security.

Most of the $8 million in funding “will go to monetary prizes to support organizations, chosen through the challenge, that will develop and advance new technologies to address the crisis,” according to the news release.

In addition to the challenge, the state has launched what it calls the Ohio Opioid Abuse, Prevention and Treatment Technology Initiative.

That effort is designed to “accelerate the development of existing, proven ideas that need an extra push to get them to market faster,” the state says.

Park Place Technologies buys British company

By CHUCK SODER csoder@crain.com @ChuckSoder

Park Place Technologies just closed the biggest acquisition in company history.

The Mayfield Heights-based data center maintenance company has acquired NCE Group Ltd., a British

company with more than 280 employees, according to a news release announcing the deal.

The deal immediately increased Park Place’s total headcount by nearly 50%. The company had about 590 employees worldwide prior to the deal.

Park Place has been on a buying spree lately. The company has acquired a total of six data center maintenance companies over the past 12

months, though NCE is easily the largest.

For instance, just last week Park Place announced that it had acquired Philadelphia-based Allen Myland Inc. And in late July it acquired the Asia assets of Delaware-based Performance Data.

Many of Place Place’s acquisitions have been designed to help the company expand internationally, includ-

ing NCE. The company is based in Wiltshire, England, and “has serviced customers across the U.S. and the U.K.,” according to the news release.

The two companies plan “to immediately begin integrating operations, channel partners, customers and employees,” the release stated.

“As NCE integrates with Park Place, customers can expect to benefit from greater efficiencies and cost-effective

services,” the release stated. “NCE’s additional data center hardware expertise will also expand Park Place’s ability to provide for its customers.”

NCE CEO Andrew Genever has been named vice president of depot operations at Park Place.

He said NCE customers “will benefit from greater access to engineering capabilities, faster response times and a better service experience.”

Neuros Medical raises $20 million to fund clinical trial

By CHUCK SODER csoder@crain.com @ChuckSoder

Neuros Medical has raised $20 million that should allow the nerve stimulation company to finish a clinical trial involving 130 patients who suffer from post-amputation pain.

The deal was led by U.S. Venture Partners of Menlo Park, Calif. The Willoughby-based company also received capital from Boston Scientific, Aperture Venture Partners of New York, Osage University Partners of Philadelphia and JumpStart Inc. of Cleveland, according to a news release announcing the deal.

The company’s Altius system is designed to treat chronic pain by zapping damaged nerves with quick bursts of electricity.

Patients enrolled in two smaller trials involving a total of 15 patients responded well to the treatment and in many cases stopped using pain medication.

The larger pivotal trial is already well underway: The company announced in January 2015 that it had enrolled its first patient. By April 2016, it had completed an interim analysis on the first 20 patients. An independent committee analyzed how they responded to the treatment and recommended that the study be continued.

Alan Kaganov of U.S. Venture Partners will serve as chairman of Neuros Medical’s board of directors.

The company also added three other new board members: Casey Tansey of U.S. Venture Partners, Tony Natale of Aperture Venture Partners and Bill Harrington of Osage University Partners.

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CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

THE LIST LIST THE

THE LIST

Ranked by

by Market Market Cap Ranked Cap

Ranke

Largest Public Companies - Ohio THIS YEAR COMPANY

1

Procter & Gamble Co./PG One Procter & Gamble Plaza, Cincinnati 45202 (513) 983-1100/www.pg.com

2

MARKET CAP 7-31-2017 BUSINESS (MILLIONS) CATEGORY

ar es P

TOP EXECUTIVE

HIS YEAR CO PA Y

29

$232,282.5

Manufacturer

David S. Taylor chairman, president, CEO

Eaton/ETN 1000 Eaton Blvd., Beachwood 44122 (440) 523-5000/www.eaton.com

$35,001.2

Manufacturer

Craig Arnold chairman, CEO

3

American Electric Power Co./AEP 1 Riverside Plaza, Columbus 43215 (614) 716-1000/www.aep.com

$34,694.4

Utility

Nicholas K. Akins chairman, president, CEO

31

4

Sherwin-Williams Co./SHW 101 W. Prospect Ave., Cleveland 44115 (216) 566-2000/www.sherwin.com

$31,504.4

Manufacturer

John G. Morikis president, CEO, chairman

32

5

Marathon Petroleum Corp./MPC 539 S. Main St., Findlay 45840 (419) 422-2121/www.marathonpetroleum.com

$28,330.9

Energy

Gary R. Heminger chairman, CEO

6

Progressive Corp./PGR 6300 Wilson Mills Road, Mayfield Village 44143 (440) 461-5000/www.progressive.com

$27,382.5

Insurance

Susan Patricia Griffith president, CEO

7

Welltower Inc./HCN 4500 Dorr St., Toledo 43615 (419) 247-2800/http://welltower.com

$27,072.0

Real estate investment trust

Thomas J. DeRosa CEO

8

Cardinal Health Inc./CAH 7000 Cardinal Place, Dublin 43017 (614) 757-5000/www.cardinalhealth.com

$24,404.9

Health care

George S. Barrett chairman, CEO

9

Parker Hannifin Corp./PH 6035 Parkland Blvd., Mayfield Heights 44124 (216) 896-3000/www.parker.com

$22,105.8

Manufacturer

Thomas L. Williams chairman, CEO

10

The Kroger Co./KR 1014 Vine St., Cincinnati 45202 (513) 762-4000/www.thekrogerco.com

$22,002.9

Retail

W. Rodney McMullen chairman, CEO

11

Fifth Third Bancorp/FITB 38 Fountain Square Plaza, Cincinnati 45263 (800) 972-3030/www.53.com

$19,727.9

Financial services

Greg D. Carmichael president, CEO

12

KeyCorp/KEY 127 Public Square, Cleveland 44114 (216) 689-6300/www.key.com

$19,713.0

Financial services

Beth E. Mooney chairman, CEO

13

Mettler-Toledo International Inc./MTD 1900 Polaris Parkway, Columbus 43240 (614) 438-4511/www.mt.com

$14,709.8

Manufacturer

Olivier A. Filliol president, CEO

14

TransDigm Group Inc./TDG 1301 E. 9th St., Suite 3000, Cleveland 44114 (216) 706-2939/www.transdigm.com

$14,678.0

15

Huntington Bancshares Inc./HBAN 41 S. High St., Columbus 43287 (614) 480-8300/www.huntington.com

$14,442.7

16

Cintas Corp./CTAS 6800 Cintas Blvd., Cincinnati 45262 (513) 459-1200/www.cintas-corp.com

$14,218.0

17

FirstEnergy Corp./FE 76 S. Main St., Akron 44308 (800) 736-3402/www.firstenergycorp.com

$14,177.8

18

The J.M. Smucker Co./SJM One Strawberry Lane, Orrville 44667 (330) 682-3000/jmsmucker.com

$13,828.3

19

MPLX LP/MPLX 200 E. Hardin St., Findlay 45840 (419) 672-6500/www.mplx.com

$13,622.3

20

L Brands Inc./LB Three Limited Parkway, Columbus 43232 (614) 415-7000/www.lb.com

$13,306.7

21

Cincinnati Financial Corp./CINF 6200 S. Gilmore Road, Fairfield 45014 (513) 870-2000/www.cinfin.com

$12,542.6

22

Vantiv Inc./VNTV 8500 Governors Hill Drive Symmes Township 45249 (513) 900-5250/www.vantiv.com

$10,327.1

23

American Financial Group Inc./AFG 301 E. Fourth St., Cincinnati 45202 (513) 369-5000/www.afginc.com

24

Manufacturer

W. Nicholas Howley chairman, CEO

Financial services

Stephen D. Steinour chairman, president, CEO

Uniforms; Business services

Scott D. Farmer CEO, chairman

Utility

Charles E. Jones Jr. president, CEO

Manufacturer

Energy

Retail

Insurance

y

Mark T. Smucker president, CEO Gary R. Heminger chairman, CEO Leslie H. Wexner chairman, CEO Steven J. Johnston president, CEO

30

RP

lic Com anies Ohio

arke Ca

ARKE CAP 1 1 BUSI ESS IO S) CA EGORY

( I

OP E ECU I E

In erna ional Inc./RP Pearl oad, Medina / .rpminc.com

,

.

Manufacturer

Fores Ci y Real y r s Inc./FCE.A Public Square, Suite , Cleveland / .forestcity.net

,

.

eal estate

,

.

Manufacturer

Christopher . Mapes chairman, president, CE

,

.

Manufacturer

im Hagedorn chairman, CE

inancial services

Marc . Stefanski chairman, president, CE

incoln Elec ric Hol in s Inc./ ECO St. Clair ve., Euclid / .lincolnelectric.com Sco s iracle Gro Co./S G Scottsla n oad, Marysville / .scottsmiraclegro.com

rank C. Sullivan chairman, CE David . a ue president, CE

33

FS Financial Cor ./ FS Broad ay ve., Cleveland / .thirdfederal.com

,

.

34

era a a Cor ./ DC Innovation Drive, Dayton / .teradata.com

,

.

echnology

35

Ce ar Fair P/FU ne Cedar Point Drive, Sandusky / .cedarfair.com

,

.

musement parks

Matthe CE

36

Owens Illinois Inc./OI ne Michael ens Way, Perrysburg / .o i.com

,

.

Manufacturer

ndres ope CE

37

Wen y s Co./WE ne Dave homas Blvd., Dublin / .about endys.com

,

.

estaurants

38

DDR Cor ./DDR Enterprise Park ay, Beach ood / .ddr.com

,

.

eal estate investment trust

David . ukes president, CE

39

he imken Co./ KR Mount Pleasant St. N.W., North Canton / .timken.com

,

.

Manufacturer

ichard G. yle president, CE

40

Dana Inc./DA echnology Drive, Maumee / .dana.com

,

.

Manufacturer

ames amsickas president, CE

,

.

Manufacturer

David . Ciesinski president, CE

41

ancas er Colony Cor ./ A C Polaris Park ay, Suite , Westerville / .lancastercolony.com

ictor und president, CE . uimet

odd . Penegor president, CE

42

Wor hin on In s ries/WOR ld Wilson Bridge oad, Columbus / . orthingtonindustries.com

,

.

Manufacturer

ohn P. McConnell chairman, CE

43

Cheme Cor ./CHE E. ifth St., Suite , Cincinnati / .chemed.com

,

.

Health care repair and maintenance

evin . McNamara president, CE

44

PolyOne Cor ./PO Walker oad, von ake / .polyone.com

,

.

Manufacturer

obert M. Patterson chairman, president, CE

45

Grei Inc./GEF Winter oad, Dela are / .greif.com

,

.

Manufacturer

Peter G. Watson president, CE

46

Cli s a ral Reso rces Inc./C F Public Square, Suite , Cleveland / .cliffsnaturalresources.com

,

.

Mining and natural resources

ourenco Goncalves chairman, president, CE

47

Con er ys Cor ./C G E. ourth St., Cincinnati / .convergys.com

,

.

Customer management services

ndrea . yers president, CE

A

,

.

Distributor

Neil . Schrimsher president, CE

o s Inc./BIG Phillipi oad, Columbus / .biglots.com

,

.

50

Coo er ire R er Co./C B ima ve., indlay / .coopertire.com

,

.

Manufacturer

Brad Hughes president, CE

48 49

Bi

lie In s rial echnolo ies Inc./AI pplied Pla a , Cleveland / .applied.com

etail

David . Campisi president, CE

Financial services

Charles Drucker president, CEO

$8,886.4

Insurance

Carl H. Lindner III S. Craig Lindner co-CEOs, co-presidents

51

AK S eel Hol in Cor ./AKS Centre Pointe Drive, West Chester / .aksteel.com

,

.

Manufacturer

oger . Ne port CE

Goodyear Tire & Rubber Co./GT 200 Innovation Way, Akron 44316 (330) 796-2121/www.goodyear.com

$7,933.1

Manufacturer

Richard J. Kramer chairman, CEO, president

52

Die ol i or /DBD Mayfair oad, North Canton / .dieboldnixdorf.com

,

.

Manufacturer

ndreas W. Mattes president, CE

25

Owens Corning/OC One Owens Corning Parkway, Toledo 43659 (419) 248-8000/www.owenscorning.com

$7,455.5

Manufacturer

Michael H. Thaman chairman, CEO

53

Firs Financial Bancor ./FFBC E. ifth St., Suite , Cincinnati / .bankatfirst.com

,

.

inancial services

Claude E. Davis CE

26

Nordson Corp./NDSN 28601 Clemens Road, Westlake 44145 (440) 892-1580/www.nordson.com

$7,319.7

Manufacturer

Michael F. Hilton president, CEO

54

Ins alle B il in Pro c s Inc./IBP S. High St., Suite , Columbus /installedbuildingproducts.com

,

.

Home product installation

effrey W. Ed ards president, CE , chairman

27

Macy's Inc./M 7 W. Seventh St., Cincinnati 45202 (513) 579-7000/www.macysinc.com

$7,232.0

Retail

Jeff Gennette president, CEO

55

Washin on Prime Gro Inc. (1)/WPG E. Broad St., Columbus /http:// ashingtonprime.com

,

.

eal estate investment trust

ouis G. Conforti CE

28

Steris plc/STE 5960 Heisley Road, Mentor 44060 (440) 354-2600/www.steris.com

$6,959.1

Manufacturer

Walter Rosebrough Jr. president, CEO

56

E.W. Scri s Co./SSP Walnut St., Cincinnati / .scripps.com

,

.

Media

dam Symson president, CE

RESEARCHED BY CHUCK SODER

Want the Excel version of this list Ă&#x2018; and every other Crain's list? Become a Data Member: CrainsCleveland.com/data Numerical data provided by S&P Global Market Intelligence, Marketintelligence.spglobal.com. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. Have a correction, a suggestion or a question? Contact Chuck Soder: csoder@crain.com (1) Formerly known as WP Glimcher Inc.

CRAIN’S CLEVELAND BUSINESS

BANKING CONTINUED FROM PAGE 1

That’s a slightly different pulse from what The Federal Reserve Bank of Cleveland seemed to get from bankers throughout the wider Fourth Fed District, which is composed of Ohio, western Pennsylvania, eastern Kentucky and the northern panhandle of West Virginia.

In the Fed’s July Beige Book report for the Fourth District, the consensus among bankers throughout the district was that lending has been below expectations they had at the start of the year.

Despite a fairly strong economy overall, those expectations, experts say, were at least partly influenced by an expectedly more favorable business climate supported by, among other things, a GOP agenda for reform of health care, the tax code and banking regulations.

Activity can widely vary among the pockets of markets around the country. But there’s still a sense that Northeast Ohio is seeing plenty of stable commercial lending activity.

And some numbers back that up.

According to data from the Cleveland Fed, year-over-year growth for total loans for banks actually headquartered in Northeast Ohio, which includes the bevy of community banks here like Civista, was at 11.1% for this past quarter and 12.3% and 12.8% for the prior two quarters, respectively. Those numbers do reflect some acquisitions, though.

Year-over-year growth for that group of Northeast Ohio-based banks in aggregate with acquisitions from the past eight quarters removed stood at 4.9% in this past quarter and 4.8% and 4.7% for the two quarters trailing it.

Meanwhile, year-over-year growth in total loans for all U.S. banks (with any acquisitive growth included) stood at 3.9% in this past quarter and 5.2% and 7.1% for the two quarters

prior, according to the Fed. There is certainly a lot of nuance to those numbers. Lending activity could be influenced by companies taking out loans to lock in interest rates in expectation of the Fed further raising rates this year.

Yet, with any impacts of mergers or acquisitions included, the Northeast Ohio market is, indeed, seeing stronger activity than the rest of the country, while purely organic growth in the market here is both steady and comparable to what’s been seen across the country overall.

Drawn to Cleveland Indeed, lending throughout the Midwest has remained “healthy,” said Fred Cummings, a president at Elizabeth Park Capital Management, a bank-focused hedge fund in Pepper Pike.

But the big difference has been among banks of different sizes.

Smaller and midsize banks are seeing growth around 10%. Bigger players, like KeyBank, Huntington Bank and PNC Bank, which lend across wider footprints versus the smaller banks focusing more specifically on Northeast Ohio, are seeing slower growth around 2% through the second quarter.

“Some of that you can attribute to size: It’s easier to grow faster when you’re smaller,” Cummings said. “But some of it is in the business mix.

Smaller banks tend to have more exposure to commercial real estate, which has been growing pretty well.”

Larger banks also tend to offer clients access to capital markets, allowing different avenues for raising capital in cheaper ways than commercial loans, like by issuing bonds.

Yet, the prospects in Greater Cleveland are still drawing banks to an already fragmented market.

For smaller banks, their eyes are set on lower-middle-market companies, for which they can make loans their larger counterparts are less like-

1.50

ly to find profitable, like those around $5 million or less. FirstMerit might have serviced some of those, but that bank is gone. And big players like Key, Huntington and PNC are simply less likely to chase those as actively as larger loans four times the size.

That lower end of the market is where Geauga Savings Bank, with $346 million in assets, sees opportunity. The bank moved its headquarters from Newbury to Beachwood at the end of June specifically to be closer to the business sector here.

“Coming here is a combination of being in a huge market and serving a niche (with lower-middle-market businesses) that has always been underserved, but probably even more so today,” said Geauga executive vice

“I do think there’s a lot of opportunity.

We’re seeing a lot of positives right now.”

— James Miller, CEO,

Civista Bank

present Dell Duncan, who joined the bank to recreate the commercial business that thrived at other banks he previously founded and sold — Commerce Exchange Bank and Ohio Commerce Bank.

Smaller banks aren’t the only ones feeling pulled to Cleveland lately.

Large banks are ratcheting up the competition in an already fragmented market here as well.

San Francisco-based Bank of the West, with $83 billion in assets, opened a commercial loan production office in downtown Cleveland in June. Of course, being rather large, the bank is looking for larger loans than banks like Geauga or Civista could handle.

Bank of the West belongs to holding company BancWest Corp., which is a subsidiary of BNP Paribas USA Inc., the U.S. intermediate holding

company for BNP Paribas, which also holds First Hawaiian Bank of Honolulu. It has combined total U.S. assets of $103 billion. BNP Paribas has a presence in 74 countries.

Mark Glasky, executive vice president and head of commercial banking coverage for Bank of the West, told Crain’s at the time the bank’s international capabilities and capital markets services could be a market differentiator here.

It’s a message similar to what Allison Dukes, commercial and business banking executive for SunTrust Bank, said influenced the Atlanta-based bank of $207 billion in assets to open commercial loan offices in Cleveland and Cincinnati this month.

The diversity of industries and middle-market businesses were a big draw to Northeast Ohio in particular, she said. And getting Jim Geuther, a Cleveland banking veteran whose resume includes Chase JPMorgan Bank, FirstMerit and Key, was a coup for launching an office here.

“The Ohio banking space is crowded, but it’s a very attractive state,” Dukes said. “And we think we have a differentiated platform that will be very successful.”

Other large banks offer those services as well. But it’s telling that despite the bevy of competition, plenty of bankers are viewing Northeast Ohio very opportunistically.

And while some loan demand seems predicated on what Trump might accomplish in creating a more business-friendly world — and that agenda has seen virtually no progress this far into the presidency — the commercial lending business should remain strong.

“We think people will remain optimistic even though not a lot has been accomplished (by the Trump administration),” Cummings said. “The economic fundamentals are good, and you continue to have a low interest rate. So despite Trump getting nothing done, the economy seems like it’s on solid footing.”

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Strongsville gaming biz has deal with Vegas corporation Scientific Games Corp. of Las Vegas has become the first company to license one of Deck of Dice’s hybrid card-and-dice games.

The publicly traded company has bought the right to use one of the Strongsville company’s digital games in casinos around the world.

What kind of game? The kind where players can roll a royal flush.

Deck of Dice makes dice games that work like card games: With nine dice, players can roll straights, flushes and full houses, as if they were playing poker.

Deck of Dice CEO Tom Donelan told Crain’s that “it’s not a small deal,” but he said he couldn’t get into specifics.

Scientific Games plans to use the game on an upcoming product called the PRIZM GameTable — a table covered in a giant touchscreen display designed to turn digital gaming into a more social experience.

In a news release announcing the deal, Gabriel Baron of Scientific Games said the game is “a great fit for our go-to-market series for PRIZM.” “Fresh yet familiar, the game mechanic gives us an opportunity to appeal to the widest cross-section of players,” said Baron, general managers for Electronic Table Systems.

Deck of Dice has two employees in Greater Cleveland and two in the San Francisco area, Donelan said, noting that it also has worked with a total of 12 interns from the Cleveland Institute of Art and Case Western Reserve University. — Chuck Soder

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CRAIN’S CLEVELAND BUSINESS

AKRON

Welty is building quite a name in region

By DAN SHINGLER dshingler@crain.com @DanShingler

When you see a crane on the horizon in Northeast Ohio these days, you often can use it to find Akron’s Welty Building Co. at work somewhere below.

From stadiums and hospitals to urban residential developments, Welty seems to have a guiding hand in many of the region’s big projects of late, especially around Akron and Canton.

The work has caused the Fairlawn-based builder to expand its ranks to around 200 employees.

“That’s a number that’s probably doubled in the last three years,” said Welty CEO Don Taylor.

It’s little wonder, since Welty’s on a high-profile tear.

There’s the $700 million Pro Football Hall of Fame Village in Canton, a project backed by California-based developer Stuart Lichter. Welty just finished the new Tom Benson Hall of Fame Stadium, literally hours before the kickoff of the Dallas Cowboys-Arizona Cardinals game on Aug. 3.

“The game was on Thursday (at 8 p.m.) At 12:34 a.m. on Thursday, we got the certificate of occupancy. My wife said: ‘I don’t know what you were so stressed about. You had 17 hours and 26 minutes to spare,’ ” Taylor now jokes. (The situation didn't seem all that amusing at the time.)

Then there’s Akron Children’s Hospital, where Welty is building an $84 million, 230,000-square-foot addition to the Considine Professional Building. It got that job after its contract to build the hospital’s Kay Jewelers Pavilion, a 370,000-square-foot, seven-story tower completed in 2015 at a cost of about $180 million.

Also in Akron, and again with Lichter, Welty has been the major builder on the redevelopment of much of Goodyear’s former properties near

After hiring Welty Building Co. to construct the Kay Jewelers Pavilion, pictured, Akron Children’s Hospital chose the firm to build an $84 million addition to the Considine Professional Building. (Contributed photo)

downtown Akron. It's a development plan that encompasses between 400 and 500 acres and includes not only Goodyear’s new headquarters that opened in 2013, but a major hotel, event venues and 110 apartments that Lichter developed in the former Goodyear Hall on East Market Street for his East End development. They're all rented, too, he said.

Next up, according to Lichter, Welty will be busy renovating 1.5 million square feet on the other side of Market Street, where the developer plans to spend about $95 million turning Goodyear’s former headquarters into office space and more apartments.

“Across the street was planned for offices, but now it will be some resi-

dential, too, about 90 to 100 residential units,” Lichter said, adding that he's reacting to higher-than-expected demand for housing in and around downTaylor town Akron.

On all three projects, those who hired Welty said the company not only exceeded their expectations, but often met grueling time schedules and brought projects in under cost.

The Hall of Fame stadium, for example, had a tight and inflexible 10-month construction window.

At Akron Children’s, the Kay Pavilion came in more than $60 million under budget, and the cost of the Considine addition has been decreased by $16 million, from an expected $100 million.

Welty also has learned from some of its clients, including Akron Children’s, which was using LEAN management techniques that it passed on to its builder when it first hired it, says Linda Gentile, the hospital’s vice president of construction and support services.

Rather than go out looking for a builder that would bid at the lowest cost, Akron Children’s specifically wanted to work with Welty because the company was willing to embrace

the hospital’s LEAN philosophies, Gentile said.

“We knew we had this large project, and we knew we wanted to change our processes both internal and externally — and we knew we needed a partner who would embrace that. So we reached out to Welty,” Gentile said.

Lichter also likes Welty’s management and its use of LEAN and other organizational techniques, especially on extremely time-sensitive projects.

“Yes, because it’s working. People don’t focus on it, but the stadium that we opened last Thursday? The amount of time we did it in? They, and us, almost pulled off a miracle,” Lichter said.

So it’s a dream world for Taylor, right? He’s got a shovel in the ground in front of just about every news camera hauled out to a grand opening and clients with nine-figure budgets hunt him down to hire him.

Yes, and no, he said. Taylor said that while he loves the big projects, the clients and most of the exposure that comes with them, he worries that other potential customers will get the wrong impression. Welty is not just a big-project construction firm, he insisted.

“We are busy, but I wouldn’t say were busier than we’ve been in the past. It’s just the stuff we’re working on is more visible to the community,” Taylor said. “But that’s a killer because our bread and butter is the smaller projects, maybe $5 million to $10 million.”

He might get a break, at least on the visibility side. It’s not as if projects with the profile of the Hall of Fame Stadium come along every day, after all.

But with Lichter already working on another 1.5 million square feet — and seemingly not done yet — it seems likely that Welty is going to continue to be involved in some of the area’s bigger projects.

Solar grant brightens portfolio of Akron firm

By JUDY STRINGER clbfreelancer@crain.com

The only thing certain in today’s energy market is uncertainty. With a new president at the helm of a new administration, there are more questions than answers when it comes to future energy policies.

For Echogen Power Systems, pursing applications across a diverse set of energy production techniques is one way to hedge the uncertainty.

“We recognize that it is probably best not to put all our eggs in one basket, as far as renewables or one type of renewable or even fossil fuels,” said Eric Maxeiner, Echogen’s business development engineer.

“Now it is more important than ever to show we can be applicable to the full range of energy technologies.”

Just last month, Echogen announced that it had landed a $1 million grant from the U.S. Department of Energy to tack its heat-to-power engine onto a novel solar energy system designed to capture and amplify heat coming from the sun. The Akron-based business, meanwhile, has completed a conceptual design of a cleaner, more efficient coal-fired power plant using its EPS engine un-

der a $1.3 million DOE grant, is building marine-specific substations with General Electric and is fast approaching its first commercial sales.

Echogen’s most mature offering, the EPS100, recovers waste heat generated by gas turbines and converts it into the electricity used to power the compressors that thrust natural gas through delivery pipelines.

Co-founder and CEO Philip Brennan said the 7.3- to 9.5-megawatt EPS100 engines are designed for medium-size (20-50 megawatt) gas turbines. German conglomerate Siemens licensed EPS100 for use in the gas and oil markets and is currently testing the technology.

“We describe ourselves as early revenue,” Brennan said. For the past five years, Echogen has received revenue from licensing partners, but he said those dollars are not yet “meaningful.”

“We expect a number of direct sales for us coming at the end of next year and heavy revenue in 2019,” he said.

Engine sales also would mean a boon for employment. Brennan said that each engine sale would likely result in the 17-person company adding five to seven team members.

“We would need another 50 people for 10 engine sales, mostly mechanical and electrical engineers,” he

said. “These are big pieces of capital equipment.”

Brennan founded Echogen Power Systems in 2007 with Michael Gurin.

The duo originally licensed a NASA technology, the “Champagne” carbon dioxide absorption heat pump.

Over the years, the company developed the heat pump into a wasteheat-to-power (WHP) system that uses supercritical carbon dioxide as the working fluid.

“Instead of boiling water to create steam, you are heating up our pressurized fumes to create a more efficient, a more compact way to produce power from a singular heat source,” Brennan said.

One of the greatest potential markets for WHP generation is the industrial sector, according to Maxeiner.

Energy intensive industrial processes — at refineries, steel mills, glass furnaces and cement kilns, for instance — account for more than 30% of the energy used in the country. And, about one third of that energy is released as hot exhaust gases that could be harnessed by a heat engine to generate electricity rather than be released into the environment.

Echogen’s industrial-size heat engines will cost between $20,000 and $25,000 apiece, depending on the ap-

plication. Using the generated electricity onsite would reduce or eliminate energy expenses, and plant owners could sell spare electricity back to the grid as an added revenue stream. With the cost savings and potential for additional revenue, Echogen estimates most facilities would recoup their investment in three to six years.

Returns would be on the longer side of that estimate in states like Ohio, where electricity rates are lower, Maxeiner said, “but in other parts of the country or even other parts of the world, where the cost of electricity is relatively high and they can sell it for much higher revenue, that makes a big difference with the payback.”

Into the light While industrial WHP is Echogen’s most promising market, Brennan said the benefit of its technology is that it is “heat source agnostic.”

“It does not really matter where the waste heat source comes from,” Maxeiner added. “There is lot of places we could go. Our technology would work with burning fossil fuels just as well as it would work recovering waste heat.”

And solar heat is no different.

While most conventional solar technologies involve photovoltaic cells

that convert sunlight into electricity, Echogen’s newest project — part of the DOE’s SunShot Initiative programs — relies on the sun’s radiant heat as the power source. The system will utilize a chemical process to store solar energy collected during the day. The Echogen engine will then convert the stored energy into electricity that can be generated at all hours — even at night.

Brennan said the solar project is in the very early stages but still is “very exciting.” Photovoltaic power generators tend to be small in scale, typically in the dozens to hundreds of megawatts. Optimizing radiant heat, on the other hand, has the potential to yield large-scale utility plants — the kind that could displace the use of fossil fuels in places where utility costs are high and water is at a premium, like on the West Coast and in the Mojave Desert, he said.

Plus, the grant gives the downtown Akron company a chance to shine some light on its novel approach to energy generation.

“We look at it as we are continuing to diversify the applications of our technology while still validating the same basic premise, the same basic technology, that can be used for a host of applications,” Maxeiner said.

CRAIN’S CLEVELAND BUSINESS

CASINOS

CONTINUED FROM PAGE 1

Northeast Ohio casino revenue The growth of gaming activity in Northeast Ohio over the last three years has been at the Hard Rock Rocksino in Northfield, while the numbers for Jack's two Northeast Ohio venues are down from 2014.

2017 revenue 2014 revenue 2015 revenue 2016 revenue (First 6 months) Jack Cleveland $220,395,202 $212,718,391 $203,594,737 $99,518,397

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PA G E 2 5

instead of gamblers hunched over a green felt table, players gather stadium-seating style, each in front of an electronic betting terminal.

Masurekar believes that kind of high-tech play will attract millennials, who tend to want to be more social and connected. Players can’t be on their smartphones, standing around a roulette wheel, he said.

“That’s a great move by Jack,” he said.

“The racinos aren’t allowed to do that. Stadium seating is the future for the gaming industry.”

Hanging over the future of gaming in Northeast Ohio is the original promise that a downtown Cleveland casino would be housed in a new building along the Cuyahoga River.

When the four casinos were first approved, the Ohio Department of Taxation estimated that they would generate gross revenue of $1.95 billion for their first full year of operation.

However, before the first casino opened, the Ohio General Assembly passed a bill allowing slot machines at Ohio’s seven horse-racing tracks, creating the racinos.

So instead of one casino in Northeast Ohio capturing what might have been $500 million in annual revenue (based roughly on that $1.95 billion estimate), the casino has been settling for less than half that amount, since the gambling take is divided three ways.

“At this point, further expansion of gaming in Northeast Ohio, I don’t see as a prudent investment,” Tricano said.

The downtown casino, then called the Horseshoe Casino Cleveland, was the first casino gaming venue in Northeast Ohio when it opened in May 2012. $119,912,312 $107,740,670 $113,536,833 $58,176,826 Jack Thistledown Being first, and being a full-service gaming operation with table games Hard Rock Rocksino $163,829,184 $190,598,642 $225,119,596 $120,229,887 such as poker, blackjack, roulette and $504,136,698 $511,057,703 $542,251,166 $277,925,110 Northeast Ohio combined craps in addition to slot machines, it Source: The Center for Gaming Research at the University of Las Vegas got the lion’s share of attention.

The racinos came later. What was And a gas station is one way to keep then the Horseshoe Thistledown Racino opened in April 2013. The Rock- gamblers coming back to the Rocksino.

The RockStop Gas & Wash will sino opened in December 2013. They by law only could offer video lottery never be a big moneymaker for the Rocksino. But it does characterize the terminals, similar to slot machines.

Since they came on the scene, the strategy that has helped the Rocksino three gaming houses have corralled a best the competition.

It’s one of many unique benefits significant piece of the regional entertainment dollars. In 2016, the the Rocksino can offer its guests, said three had combined revenues from Rocksino president Mark Birtha. gaming of $542.3 million, according Those benefits are channeled to data compiled by the Center for through the racino’s Rock Star reGaming Research at the University of wards program, the Hard Rock brand Nevada-Las Vegas (UNLV). In sec- of loyalty program, designed to keep ond place behind the Rocksino is the guests coming back. Players’ clubs, Jack Casino Cleveland, bringing in as these rewards programs are also $203.6 million, and then the Jack called, are a mainstay of casino marThistledown, at $113.5 million. The keting everywhere.

“The players’ clubs are important becompanies report gaming revenue to the state of Ohio, but as private com- cause people like to get freebies,” said panies, they do not disclose total rev- Alan Silver, an Ohio University assistant professor of restaurant, hotel and tourenue or profitability.

Observers credit the Rocksino’s ism and a casino industry consultant. push to the No. 1 spot partly to its “You’re trying to keep them returning, The Hard Rock Rocksino offers a rewards programs that is designed to so (the venue) is going to keep guests coming back. (Contributed photo) easy-to-reach suburban give them more and location. In addition, “The retail, more rewards to keep since it can’t compete dining and them coming back.” with the downtown caFREE WEBINAR • SEPTEMBER 7 • NOON - 1 PM By joining a loyalty sino’s broader array of entertainment program, guests get a gambling options, the package that credit card-like card $268 million casino building adjacent to the we do resonates that tracks their gambling, earning points or Northfield Park race with people in rewards based on the track grandstand has Leverage local resources to help your manufacturing business amount they gamble, nongaming amenities this region.” win or lose. The points that the other venues are turned into can’t match, notably — Mark Birtha, “comps,” or complifive restaurants and the Rocksino president mentary gifts that can be turned into 1,800-seat Hard Rock Live theater.

“Downtown (gaming) locations meals or free play, or they can be have not really succeeded, while sub- saved up for things like free hotel urban locations have been a big hit” in stays or trips to Las Vegas.

“We build a lot of amenities that local markets across the country, said Jay Masurekar, the Cleveland-based nobody else has,” Birtha said. “The head of gaming and travel services for retail, dining and entertainment investment banking at KeyBanc Capi- package that we do resonates with tal Markets. “Anecdotally, I know peo- people in this region.”

So the Rocksino can offer preferenple on the West Side who skip downtown and go to the Hard Rock Rocksino, tial seating, or for the real high rollers, and that’s mainly because of the ame- complimentary tickets, to concerts nities they have and the kind of experi- headlining stars such as comedian Tim Allen and singers Donnie and ence they provide.”

In addition, the casino building Marie Osmond and Smokey Robinadjacent to the Northfield Park race son in the coming weeks, that the othtrack grandstand is the only one of er venues can’t match.

Birtha wouldn’t be specific, but it’s the three housed in a building that was designed from the ground up to likely that the racino will comp guests a free car wash on the way home and be a gambling hall.

“The Hard Rock looks like a casino,” maybe a free fill-up at the RockStop, said Rob Heiman, assistant professor of depending on how much time they hospitality and food service manage- spend on the slot machines.

Not that the Jack operations conment, who runs a program for casino FEATURED SPEAKER: sider themselves playing catchup. management at Kent State University.

First, it has some natural advantagMasurekar believes that the ThisEthan Karp tledown racino gaming floor, tucked es. Tricano said one plus for the downunder the aging race track grand- town casino is that it is in walking disPresident and CEO, stand, pales in comparison to its tance of the venues of the three major competitor just 7.5 miles away, de- professional sports teams, so it can atMAGNET spite the substantial initial invest- tract fans before and after games.

“Downtown has always been a ment and renovation investment by destination gaming facility,” Tricano Jack Entertainment.

“The building is not suitable for said. “We see a dynamic of what I would call a retail-oriented player gaming,” he said.

The downtown casino is housed in because they come down for a game. the Higbee Building, built in 1931 as a You see differences in behaviors.”

Tricano was not more specific, but department store. Unlike more typical casinos that have a single, expansive Silver said table games are getting more gaming floor and a field of free park- millennials than the racinos, which aping, the Jack Downtown is spread over peal to an older demographic.

And to keep the attention of millenfour floors and patrons who drive in WEBINARS must park in a multi-story parking ga- nials, the Jack casino is exploring the rage linked to the second floor of the next generation of table games, a conHigbee Building. As a result, it lacks cept Tricano called “Synergy.” He dethe glamor of a grand entrance typical scribes it as a way to put on traditional REGISTER TODAY: CRAINSCLEVELAND.COM/WEBINARS games like blackjack or roulette. But of a Las Vegas casino.

RESOURCES FOR GROWTH:

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CRAIN’S CLEVELAND BUSINESS

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PA G E 2 7

Robert Paponetti

Executive director, The Literacy Cooperative Robert Paponetti has been helping people get jobs, or advance in their jobs, for much of his own career. ¶ A graduate of Cleveland State University, the Mayfield Heights native spent 15 years as a consultant developing training programs for employers. In 2003, he became Cuyahoga County’s director of workforce development. ¶ He moved from there to Cuyahoga Community College as vice president of workforce and economic development. ¶ He became the Literacy Cooperative’s first executive director in 2007. Its mission is to promote and develop learning programs. A study it produced in 2011 found that improving the basic education skills of the 127,000 adults in Cuyahoga County with less than a high school diploma and the 270,000 adults without any education beyond high school graduation could raise income levels in the county by $2.9 billion. — Jay Miller

Five things Favorite hobby Reading

Favorite movie “A Few Good Men”

What are you reading now?

For pleasure, “Boys in the Boat” by Daniel James Brown; for work, “Thirty Million Words: Building a Child’s Brain,” by Dana Suskind, and “Step Out on Nothing: How Faith and Family Helped Me Conquer Life’s Challenges,” by Byron Pitts.

Favorite spots in Cleveland The old Arcade in downtown Cleveland and Edgewater Park

Favorite restaurants Mihn Ahn, a Vietnamese restaurant on Detroit Avenue, and Aldo’s, an Italian restaurant on Memphis Avenue

Lunch spot Elements Bistro 2300 Euclid Avenue, Cleveland

The meal One had salmon cakes with rice and grilled asparagus. The other had summer vegetable enchiladadas with grilled zucchini, summer squash, peppers and onion.

The vibe Though it’s in the Parker Hannifin Administration Center at Cleveland State University, Elements is hardly institutional. Floor-to-ceiling windows, a patio and a decorator’s palette of reds, yellows and browns make for a lively room.

The bill $ 29.08 with tip

I hear from employers that they can’t find people qualified to take jobs they are trying to fill. Yet there are still thousands of people unemployed. From where you sit, why are these jobs going unfilled?

I hear the same thing you do, employers saying, “We can’t find people.”

That’s because, typically, the jobs that can’t be filled are going to require some kind of training or education that the unemployed don’t have.

If a lack of education or training is such a barrier to job and pay advancement, why aren’t more people taking advantage of the training opportunities out there?

There is this whole stigma about low literacy. It’s a hard thing for us to tackle. If you’re literate, you take it for granted. But if you’re low literate, you hate it.

I saw a report that came out a couple years ago that said there are 36 million American adults who are considered low literate, and two-thirds of them have a job, though they may be part-time or in low-paying jobs.

So it’s also an issue for low-skilled employees who need additional training to move up?

So there are a lot of people working who have low literacy skills and they’re not really going to move up at their company. So how do we help them move up? When we talk to businesses about this, they often say, “Well, we have a tuition reimbursement program, what else do you want us to do.”

But we find that the person who is low literate may not want to seek tuition reimbursement because they may not want the employer to know their literacy is low.

At one GED class, someone said to me, “My friends and family think I’m crazy for being here.” I asked why, and he said it was because if his employer didn’t know he didn’t have a GED before, than they’d know for sure now.

So how are you getting people to get the education and training they need?

At the Literacy Cooperative, we’re only four people, so right now we’re working with groups like Seeds of Literacy (which provides basic education and GED preparation to

adults in the Cleveland) and Towards Employment (which works with job seekers who may lack a GED or a technical credential or have other challenges to making their way into the workforce) to get textualized literacy curricula for people seeking jobs in health care, manufacturing, hospitality, construction and information technology.

What we do is identify who our partners might be in those industries, what resources do they have, and then we work with foundations to raise money to fill in the gaps.

What is a contextualized literacy curriculum?

Contextualization adds in terminology and problems around the job they want. So you might learn how to convert decimals to fractions better when at the same time you’re learning to read a ruler.

In a typical literacy program, students come and go. We would see them for a few days and then we wouldn’t see them for a week, so gains were hard. We found that people who started taking classes were being taught algebra the way they didn’t learn it the first time. So they are asking, “Why do I need to know this?”

Research shows that if we can make literacy relevant to what the person wants to study, to fit the job they want to do, we find that they stay longer in the program, and so they make gains faster than if it is not connected or relevant.

At Tri-C, we did a pilot and found that people made gains double (with conceptualized learning) than in standard classes.

So connecting with employers is something we want to do, maybe help an employer offer a literacy class to their employees. But it’s hard. The last thing you want to do is call it a literacy program.

What else are you doing to raise awareness about the literacy problem?

There’s one event that we did last year that we’re doing again on Sept.

7 at the City Club of Cleveland with a group of employers. It’s the Cleveland Corporate Spelling Bee. It’s to raise awareness of the issue of literacy, and it’s a small fundraiser for us.

Teams from 24 businesses and organizations competed last year.

The Baker Hostetler law firm ended up winning.

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