Brendan Freeman:
Welcome to the First Business Bank podcast. I'm Brendan Freeman, President of Private Wealth for First Business Bank, and I'll be your host for today's episode. I have the honor and the privilege to visit with Tim Keane today. Tim's a successful business leader, successful entrepreneur, and a board member of our parent company First Business Bank Financial Services. Normally, at this point in the podcast, I turn it over our guests to introduce themselves, but I'll make it a little easier on Tim and tell our audience a little bit about Tim. He's been a successful high school teacher, a marketing manager at GE Healthcare, a partner in a marketing business, founder of retail Target Marketing Systems or TMS, which is now a part of FIS. He's still started Golden Angels Investors, as well as a company, the data analytics company called Keane Consultants. He's invested in a few different publishing companies, including one in Dublin Ireland, and is a limited partner in three venture capital funds.
Brendan Freeman:
He was the co-founder of a podcast, How Did You Do That? Which showcases successful entrepreneurs and writes a blog called Startups and Angels, which is featured on his website, timkeane.org. He's also a photographer, a pilot, and among other things, he plays several versions of the bagpipes, and he also, interesting enough, holds dual citizenship in the United States and in Ireland. Today, in addition to manage Golden Angels Investors and Keane Consultants, he's a director of three privately held companies, [promemphis 00:01:49] pharmaceuticals, transport, and [Merilina Outdoors 00:01:52]. And as I said, he serves on the board of directors of our parent company, First Business Financial Services. So Tim, that's quite a list. Tell me, what did I miss there?
Tim Keane:
Well, actually the only thing you missed there was that for 15 years in the middle of all of that, I was also the director of the Kohler Center for Entrepreneurship at Marquette and taught in the MBA program, which was really a great experience.
Brendan Freeman:
Well, I am sorry to miss that as a Marquette alum, but you certainly made a contribution and I'm sure had a lot of influence on successful business leaders and entrepreneurs that are out there. So, that can't be forgotten, thanks for mentioning that. Why don't we jump in? I want to cover a variety of different topics today, including entrepreneurship, which is so important, get some of your unique perspectives on different things that entrepreneurs and members of our audience might have interest in, as well as just talk a little bit about the net chapter for you in your life. But why don't we go way back and talk a little bit about, early on in your career, who were the most influential people in your life, Tim?
Tim Keane:
Well, that's a long list, I suppose. When I first got out of school, I guess, I met a guy named Jean Medford, so I was teaching high school and and we had our first child, Megan, who's 42 now, I think. And I needed to do something other than teach high school. So I went back to Marquette to the job placement center, this was two years after I graduated, I think, and found a guy named Jean Medford who had a one man band PR company and they needed a writer, and I wound up writing medical systems, public relations material for General Electric and Jean was instrumental in making that a success.
Tim Keane:
I started to work there as a contractor and met a guy named Leon Jansen, and I got hired at General Electric and then Leon wound up being the mentor and back office coach that made it possible for me not to get fired in the first 30 days. So, Leon was a really important person in my life at that time. I also met a guy named Tom Faber, Tom's a world famous photographer. And Faber Studios did all our work at General Electric, and he and I traveled over the place doing that. And I had learned a lot about photography from him, oh my goodness, in the '70s.
Brendan Freeman:
Really. As you think about Jean and Leon and Tom, what were some of the key things that they taught you and that you still hang on to today from those early days?
Tim Keane:
Oh God. I suppose when you think about navigating in large companies, and of course, as it turns out I've not been a large company guy for the most part. But when I was a General Electric, Leon was essential in helping me understand how the system worked, how the interactions were. It's sometimes hard for me to see past what seems like the rational thing to be talking about, but in large corporations, you have to be able to navigate the environment pretty well. And think about what it is you're trying to get done and what the ultimate goals are. And, I suppose the other thing is I can remember him taking a piece of paper and saying, "Okay, so this is how a financial statement works," because at this time my degree was in journalism and he said, "We have revenue and then there's cost." I still have that piece of paper someplace. And I think that was my first time really thinking hard about what a financial statement look like.
Brendan Freeman:
And so his introduction to that, you've leaned on that memory a lot of times as an entrepreneur since those days, right?
Tim Keane:
Well, I mean, I always tell people that I can teach you to fly an airplane in about 30 seconds. We get up 200 feet off the runway landing and I say, okay, it's yours. And people figure it out pretty quick. A lot of finance stuff, a lot of entrepreneurship stuff is the same thing. I mean, you have to have a lot of sympathy for an entrepreneur who's trying to learn to land that airplane for the first time, for the most part. And being able to learn when you want to, when it's important to, is really a great characteristic. If you can see to you don't know and try to figure it out, you're going to, most people have a pretty successful outcome, I think.
Brendan Freeman:
So to have that foresight of, hey, maybe there's a gap here, I don't understand this, but I'm going to go learn about it because that's going to help me. That kind of thing?
Tim Keane:
Well, yeah, sure. So without getting into the weeds too much, many entrepreneurs who I like know exactly what their business is about, whether it's the bus company in Kansas that makes the safety system for kids, riding buses, or preventive pharmaceuticals where you're talking about saving lives or any of a number of other things. They know what their business is. For young entrepreneurs starting out the first time they often are under experienced on the capital formation side. Baseball isn't the scoreboard baseball it's baseball. But without a scoreboard it isn't much of a game. And you have to know how capital formation works, you have to think about how the people that manage the capital think about it, and you have to be able to incorporate that into your process. I can go on and on. But I think that's essentially the big opportunity with many entrepreneurs early on, I think.
Brendan Freeman:
I love that comparison to baseball and trying to understand early on, as an entrepreneur, what capital formation looks like. And I would imagine, as I know a bit about you, Tim, and thinking about to all the different companies and entrepreneurs that you've worked with, and I'm sure the guidance you've provided to them, understanding how capital formation plays a role in mentoring them probably is pretty satisfying for you and pretty valuable to them, I would guess.
Tim Keane:
Oh, I suppose. Yeah.
Brendan Freeman:
So let's talk about this concept of entrepreneurship. How do you define an entrepreneur?
Tim Keane:
Well, I mean, the classic definition, is an entrepreneur who grows a business on somebody else's resources. I mean, that's controlling resources you don't own. But really, if you think about the world today and you pick an idea, most ideas are pretty well covered, pretty many things that we all get taken care of pretty well.
Brendan Freeman:
Sure.
Tim Keane:
So finding an opportunity that's really an opportunity, and again, this depends on lot on what your own personal definition of a successful opportunity is, and that's really important as it relates to this whole topic, is not so easy. And oftentimes the most successful people are people that know something about something because of something that they've been doing. I had a student at Marquette, no, it was an intern at Golden Angels 10 years ago named Rob Pakalski, who went to work for Elon Musk at SpaceX doing purchasing. And today he's got a business called Datum, which is this very clever sort of factoring and reverse factoring supply chain business for industrial manufacturing. And it fills a unique niche that is a new way of thinking about how that process comes together.
Brendan Freeman:
And so how did he get to grow to thinking of the concept of that business and building that out?
Tim Keane:
Well, because that's what he was doing at SpaceX, is purchasing and managing vendor relationships and payments and supply chain. And of course, in the world today, supply chain's a big issue, but what you don't read about so much, which is really the bigger issue is paying for the supply chain. I know a company in, I think, California who's inventory levels are sort of a student business. Their inventory levels used to be about $10 million at any given time with four or five turns a year, and now there are $50 million in inventory because they ordered up, because they were worried that they wouldn't have the stuff to sell. And there's $40 million tied up in inventory that used to be cash, and so trying to figure out how to finance a supply chain is not a small problem. So that's the problem that he's solving in particular.
Brendan Freeman:
Right. So he probably never would've set out to say this is going to be my business, but once he got involved, he said, "Oh, there might be an opportunity, and maybe I could leverage this in a different way." And I'm imagining that's how a lot of businesses get started, and that's how-
Tim Keane:
Yeah, of course it is.
Brendan Freeman:
Yeah. I'm curious, Tim, you've worked around entrepreneurs, you've been an entrepreneur, at what point in your life did you realize, hey, I'm an entrepreneur. I mean, you started off as a high school teacher and you're going along, and working as a writer at one point. When did you realize that you were an entrepreneur and do you still consider yourself an entrepreneur?
Tim Keane:
Well, there are two things, one is, I'm not a very good corporate citizen. I understand, and I'm not sure that's a good quality, it's just a fact, I'm not very good with just do this because I said so. And at least when I was growing up, there was a lot of that, I thought. And I've always been a bit of a risk taker sometimes to my detriment, I think. But that also is just a fact, I mean, I wrote a check yesterday for a company that I probably won't see a return on for a decade. And I'm willing to do that, it's worked for me, it makes some people crazy.
Brendan Freeman:
Sure.
Tim Keane:
And I sure understand that, and it can be very painful when you're sure that the sure thing that you've written this check for goes belly up. And the only answer to that, that I'm aware of is diversification. You have to have a lot of small investments to make something rational. The people I've been associated with who do the opposite, who put all their money in one or two things knowing that it's going to work are often disappointed. And you can't often predict where the breakout opportunity is going to be.
Brendan Freeman:
Right. Well, that's a concept that a lot of our Private Wealth clients understand as well, a lot of diversification, we talk about that all the time. I would imagine, through taking those risks and writing those checks and, perhaps, having some of those, as you say, go belly up, there's been some real key learnings along the way for our audience. Is that anything that comes to of mind? Like, you oftentimes learn more when things don't go well, compared to when they do go well. Anything that comes to mind that you might want to share?
Tim Keane:
Well, I mean, I think there are a couple things. We believe 100%, we mean in Golden Angels, not just me. And I think it's important to note that Golden Angels, a hundred and some investors, and we all look at things together. It's amazing how much expertise there is around that group. And when we look at something, the first thing we're always interested in is who's this person? What do they know? Why do they know it? How do we figure that out? Because as we've gotten bigger and bigger, we're investing more and more in people who we haven't ever met before, it's not people we have a relationship with. And the quality of the leadership, which is a squishy thing, but really important, is often the main factor involved in success, is the fact that the leader is the leader. Now, if you're really good, you probably aren't trying to lead something that is obviously not going to work. But it's inarguable that great leadership makes a great difference. Look at Kevin Conroy, Exact Sciences in Madison, Wisconsin. I mean that company which is not public is largely due to Kevin's leadership ability.
Brendan Freeman:
So in thinking about great leaders and getting inside, perhaps, your mind as well as those at Golden Angels, as you're trying differentiate one company, one investment from another, when you see a successful leader, what are the characteristics or a successful entrepreneur that you're looking for? And maybe the opposite of that Tim is, when you see something that is a red flag and you can tell it's not going to work from a leadership perspective, what does that look like? But help us understand how you make those decisions and what you're looking for in leaders?
Tim Keane:
Well, I mean, in the broadest sense, you're looking for people that are smart, that have some experience at what it is that they want to do. Oftentimes we see opportunities from people who saw an opportunity, but didn't really have anything to do with it themselves. Those are often worrying because you realize that they probably don't know very much more about this topic than you do. But the counterpoint is people that have deep experience in their field, they're really smart they seem to be good with people. The taking advice thing is a tricky quality, I like people that seem to be able to take advice, but also seem to be able to have a filter to make sure that the advice that they're taking is good, which is not always an easy topic.
Tim Keane:
I get asked to occasionally talk to entrepreneurs about something and I find myself more often than not saying, I don't know anything about this. So you should take this with a grain of salt. And who understand how a business's capital is used for growth and how capital gets returned. I mean, if you're building a business that's going to do 10 or $15 million in revenue and a million dollars in EBIT, that's a nice business. And if you can make that work on a reasonable amount of capital, especially, if your cash flow positive, you get some debt, of course, that's great. But taking $10 million of investment, if you could find somebody to do that, and then pushing yourself up against a billion dollar exit that you can't achieve, that's a problem. And early on, we see mostly pretty rational capital formation request, I want to raise a million dollars and I think I can do this, that, and the other thing, and I'll get to this milestone and then we'll do some more. As opposed to, I have this idea, I want to raise 10 million today and get going.
Tim Keane:
So entrepreneurs that understand that, or have the ability to figure out where to get the advice to do that. And frankly, where the advice is coming from is something that we agree with and think about, and like, I mean, I think that's all pretty important.
Brendan Freeman:
Okay. That helps a lot. So it sounds to me like your process weeds this down, and there is probably a certain smell test where you say, hey, this isn't realistic, or you've seen this scenario before and it looks like something that could be successful and reasonable, right?
Tim Keane:
Well, I mean, I'm not smart enough ever to tell anybody that's a bad idea. I mean, I tend to say this will work for us because we don't see that we can use the capital in the way that we do to do what we do. In other words, if we invest a million, we model for a 10 times return. So if I can't see that model working, that doesn't mean it's a bad business, it means that you have to form capital in a different way, or that I'm wrong.
Tim Keane:
We passed on a guy who I saw the newspaper yesterday, because I didn't see how this was going to grow. Well, he raised $28 million last week. Sometimes the other thing that happens is we passed on a grocery thing, oh God, 10 years ago, and in fairness to us, it wasn't a very good idea. But what we didn't realize is that as the entrepreneur got into the business and had contact with his customers and the customers said, "Well, no, this isn't any good, but if it were this, it'd be great." And he pivoted and did that, it's a billion dollar company to it.
Brendan Freeman:
Wow.
Tim Keane:
And again, we made the wrong on the person, we should have bet on that guy, because he was a lot more learning agile than we realized when we were talking to him.
Brendan Freeman:
Sure.
Tim Keane:
He may not have realized it either, however.
Brendan Freeman:
Well, sometimes I would imagine timing and luck play a little bit of a role too.
Tim Keane:
Oh my God. Yeah. We got asked to practice in accelerator program in Chicago 10 years ago that we thought was really a charitable donation. We put $40,000 in it and we got a check last year for $650,000 or something like that, because they invested in a company that went like a rocket. And we had absolutely nothing to do with that, that was just standing on the corner when the bus came by.
Brendan Freeman:
Sure. Another reason to diversify, right?
Tim Keane:
Yeah, absolutely.
Brendan Freeman:
I'm going to take us in a slightly different direction and I'm going to throw out a few key concepts and just want to get your feedback on a few things. And so first thing is this concept, and this is beneficial to our audience and maybe the entrepreneurs, business leaders that might be listening in today. When you think about challenge as a word, and give me some insight from your perspective of when you were up against a big challenge and what you found help drive you to success? So start with that one.
Tim Keane:
Well, don't give up, don't snatch defeat from the jaws of victory, things take longer and cost more. And if the fundamentals haven't changed and the competition hasn't changed and the market hasn't changed, then all you're dealing with oftentimes is an over enthusiastic estimate, which you can live with, I think.
Brendan Freeman:
I love that. Another concept, success. How do you define success? What kind of accomplishments for you personally for Keane bring you joy?
Tim Keane:
Well, that's two to different questions, I think.
Brendan Freeman:
Okay, well, let's start with, how do you define success?
Tim Keane:
Well, I think that depends on who, in the words of Bill Clinton, who you is. I mean, understanding what you're trying to accomplish, and then rationally following that along makes some sense, I guess, that's the success. Learning is always ongoing, it's a process. Success is a process, I guess. I assume it is not. We all know people who have crashed and burned and not recovered, and those are tragedies. I don't think that you ever really get there. And I don't think for me, at least, it hasn't been about cash flow for a long time. And you realize that after a while and say, "Well, okay, so why is it that I'm sitting here doing this every day?" And certainly not to put more cash in the bank.
Brendan Freeman:
So to that point, what brings you joy, from investment, in an entrepreneur or a business perspective, what brings you joy?
Tim Keane:
Well, so I guess the long answer to that is I've always liked a challenge. When I was a General Electric and Midwest Express Airlines was still in business, and I used to go to New York, this is in the early '80s. I would not-
Brendan Freeman:
[crosstalk 00:22:43] of cookies.
Tim Keane:
Yeah. Which I would throw up every time, I would not get on an airplane, I would get sick. So I decided that the way to fix that was to learn to fly. So I started taking flying lessons and then when we had got the company, I bought an airplane, it was fairly large. And I had a great friend who was a co-pilot and we flew that thing for years, I never got sick on an airplane again. So I guess, success was taking out a challenge. I'm currently learning the Irish uilleann pipes, which are, to me, at least the hardest instrument I have ever tackled in my life. I've been playing them now for about two years and they still sound like a French ambulance. I have a photography thing I'm getting serious about, again, where I'm trying to do professional portrait work primarily, and then some landscape stuff. That thing behind me is one of my...
Brendan Freeman:
Beautiful.
Tim Keane:
Of course, most important of all is Mary and I have 50 years coming up here in September and we have three kids and eight grandchildren, and they're absolutely spectacular. And and they're all in Milwaukee, so we get to see them all the time.
Brendan Freeman:
Oh, congratulations.
Tim Keane:
[crosstalk 00:24:00] success than that.
Brendan Freeman:
50 years is an incredible milestone, congratulations to you and Mary on that. And your kids and grandkids are fortunate to have a great role model in you. Talk about recharging your batteries, you obviously, have been in this list of accomplishments and these things that you're involved in for our listeners goes really long, it's obvious. When you need to recharge and, maybe, take your mind to a different spot, do you have any techniques or tricks or things that you do to get your head right, to get yourself right? Is music one of those things or what do you do?
Tim Keane:
Oh, I suppose it is. Mary and I, a real fortune, we travel in the wintertime, we were just in Colorado Springs yesterday or the day before, we're going to New Mexico in a week or two, I'm going to St. Louis next weekend for actually an Irish music workshop. And then we'll go home to County Mayo at least once or twice a year, and we haven't been in three years. But that's the longest we haven't been in a long, long time. I never not knew that my family was there. A lot of Irish Americans will say, "Well, I think we were from here." But my grandmother died in Mayo, and so, we've been going there forever and that's always a great time. I mean, my Irish relatives who may wind up watching this, don't really care what I do, that's not the point. It's just, you're there and it's a great place.
Brendan Freeman:
They love being with you and you love being with them. And-
Tim Keane:
Well, at least half of that is true.
Brendan Freeman:
Well, you're always interesting, Tim, I love it. One more concept, how about giving back? Obviously, you're helping generations of entrepreneurs, you talked about how important family is to you, your kids and your grandkids. But tell me about your view on giving back and how important is that to you at this point in your life?
Tim Keane:
Well, that's an interesting topic, Brendan. I went to Marquette 20 years ago to do, that's what I thought I was doing. I was teaching a couple of MBA courses for 15 years. I think I had 1,000 or 1,500 students, and I still hear from them all the time. And I learned, whenever I meet students who were in my classes in that first couple of years I always apologized for how bad, I'm sure, that it was. Because I learn by doing, which is great, unless you're the student in the first class. And today, in the consulting company, most of the people I work with are young people, and you can see them evolve, I guess, and to the extent that I have something to do with that, it's pretty cool.
Tim Keane:
On the broader topic, it's one of those interesting things. So I'm leaving the bank board here in a month, and I'm trying to figure out what else to be doing. I mean, the photography business is okay, and music is really just for me. I mean, I never play in public. And trying to find something that's meaningful where I can make a difference is harder than you think. Yeah, it's tricky. I'm still looking, I'm open to suggestions. You get asked to serve on boards, which really doesn't have a lot to do with being helpful, not for profit. So I would look for something, there's a guy named Bill Krueger who I really admire, who left Mason Wells a long time ago to start a thing in Milwaukee called Jobs Works, and it's an amazingly cool idea. So I don't know yet,
Brendan Freeman:
Sounds to me like a little bit of your DNA is that you never really know, you keep on looking for that next challenge and you're always open to new ideas and that's just how you're wired. For what it's worth, I've heard you play music and it was for me too, I enjoyed it. So, I appreciate where you're coming from with, maybe, your most recent venture in the French ambulance comparison, but I've heard you play other instruments and you sound great. So the last concept before I get to the next step, just we're touching a little bit on board involvement, any advice? I mean, you've certainly been a very valuable member of our board for many years, and mentioned in your list of different things you're involved in and the businesses that you help to guide, any advice or insight that you would pass on to potential board members in our audience?
Tim Keane:
Well, sure. I mean, so you think about First Business Banks, public company, chairman's a guy named Jerry Kilcoyne and it's an amazingly good experience. And I say that, because I think that there are many situations in boards that I've been on over the years where really it's sort of shut up and vote, just nod your head and smile. And if you're in a situation where it's clear that people don't want you to speak up, then you're probably wasting your time. And at First Business, it's exactly the opposite. I mean, the board is very involved and Jerry is constantly pressing for what do you think and why do you think it, and it really makes the ex the experience for the bank better, I think, because it's clear when we're done with a meeting that everybody has said what they think, and there's been a frank and open exchange of views, and that's always important. I think venturing into an area I know nothing about.
Tim Keane:
But I think what happened at General Electric, if you've read the book, is that the board sat on their hands for years. And I suppose that I understand how exactly how that happens, but I think that at least I couldn't do that.
Brendan Freeman:
Sure. Well, I can see, you're looking at an opportunity where you can make a difference and make an impact and be able to speak up, and on behalf of our shareholders, and our board, and our employees, and senior leaders at the First Business Bank, we want to thank you for all the insights over the years, all the perspective that you shared. Maybe we didn't always love it, but you certainly made us better, and so we're grateful for that. And so thank you, and your insights is valuable for those that are considering this. Last question for you, Tim, as you think about next step coming off of the board, you mentioned a few things of other challenges you want to get involved in, what are you most excited about as you think about your version of retirement, I guess?
Tim Keane:
Well, so more time for Mary and I, we're both lucky to be in reasonably good health and spend a lot of time together, and that's great. We're in Arizona in the winter, which gives us more opportunity to be together, because I'm sitting in our house right now. More time with the grandchildren, we have a house on the lake in Wisconsin so that they like to come over, and I pick one of them up from school every Tuesday. And then, way down the list, if this photography thing starts to turn into anything, that'll be fun. It's a fun thing, I just launched the new website here last week actually.
Brendan Freeman:
I saw it. It looks great.
Tim Keane:
Yeah. So you should buy something.
Brendan Freeman:
Okay. Well, I know I'll have to. You heard it here, first for those listening, you heard it here first. Well, Tim, thank you. I want to thank you as our guest and participating in our discussion today. I want to thank our audience for listening, I hope you found it valuable, I know I did. Tim is incredibly insightful individual and I always walk away from these conversations learning something. And so thank you, Tim, thank you to our audience. I would encourage our audience, if you're looking for more resources like this conversation, like other podcasts, if you're a leader, if you're an entrepreneur, as we discussed today, if you're an investor, there's a lot of different resources at firstbusiness.bank. I invite you to experience the advantage with First Business Bank. If there's anything that we can help you with, please reach out to us.