business problems compared with a startup, which typically hasn’t been around long enough to know where its comfort zone starts and ends.
“Large organizations have to be able to execute on a known business model that they’ve established,” says Enos. “That’s why you find many situations where a large organization taps a startup to say, ‘You’re more agile. You can react and pivot faster. You can build something that will support me but also feeds a larger market and ensures the longevity of what you’ve created.’”
A prime example of this is ZyTax, which Zeise created after learning from a customer that some states no longer allowed oil companies to use paper forms for filing excise tax reports.
ZyQuest developed a way to submit the information electronically, then teamed up with the customer to form a business around it. In 2001, ZyTax was sold to FuelQuest, a Houston energy company.
Zeise says oil giant Mobil was working on its own way to submit tax information electronically, but ended up licensing the ZyTax software. He says ZyTax, ostensibly the underdog, won in part because it looked at the needs of the entire industry, rather than those of one company.
“To have everyone in the industry get involved, it creates a central solution that they all take advantage of,” he says.
Yet the model isn’t practical for every problem, says Zeise. Every oil company must report excise taxes, and it’s not an area where one organization is likely to have a competitive advantage over another. He says the foundry will aim to address similar types of challenges that don’t involve trade secrets, because a spinoff’s success shouldn’t come at the expense of its progenitor.
Zeise says members of the foundry “want to focus on building a startup ecosystem here in Northeastern Wisconsin.” Accomplishing that will require members to not only help foster successful companies, but ensure they don’t leave.
Aver Informatics, which makes healthcare payment analytics software, moved from Green Bay to Columbus, OH, last year. Though the move cost the company and some of its investors hundreds of thousands in penalties and “clawbacks” related to state tax credits, Aver appears to be thriving in its new home.
Zeise says he was “disappointed” with the company’s decision to leave, which cost Wisconsin jobs and tax revenue. But, he adds, “For Aver, that was a really good move.” The circumstances surrounding the departure were “a little unique,” he says, and spinoffs created by foundry members “better have a dang good reason why they’re leaving the state.”
Enos says startups the group will help found won’t have to sign anything binding regarding relocation.
“A company staying for the long term is certainly desirable but by no means would we mandate or craft any agreements requiring that,” she says.
