Geonetric and NewBoCo
The team that makes Cedar Rapids entrepreneurial ecosystem an enviable juggernaut
Unlike the perfectly manicured slide decks from the global consulting firms that espouse business strategy, entrepreneurship is frequently raw, unfiltered, gritty and opaque. This is one such story whose origination at the University of Iowa in the late 1990s was followed by a remarkably meaningful trajectory for the founders, employees and, in this rare case, entrepreneurs across Iowa.
Let’s head back east to Cedar Rapids.
On-ramps to the Information Superhighway
Vice President Al Gore coined the term “Information Superhighway” to refer to the rapid expansion of the Internet’s use from academia into business and personal use. Although colleges had been using the rudimentary Internet for nearly twenty-five years, the Internet was still a hobbyist “civilian’s” activity.
A student at the University of Iowa in late 1997, Eric Engelmann had worked as a developer and built the first version of the website for its admissions department. He wanted to do more of that type of work commercially and found employment in the nearby city of Cedar Rapids, a mere 30-minute drive but a place he hadn’t yet visited.
His new employer was Inlet, now dissolved, whose primary business was bringing database-driven websites for businesses to the Internet. The prospect of creating new websites daily, using the latest technology driven by a Microsoft Access back-end was exciting and Eric was hooked. He helped create the first website for CRST, the trucking giant in Cedar Rapids. He also soon experienced his first business transition when McLeod Communications acquired Inlet.
A culture of 40ish people wearing anything, playing the video game Half-Life after work, and working casually was suddenly thrust into a uniform (black shirts & khakis), a plastic badge and hierarchy. The twenty-four-year-old was in culture shock and knew something had to change. Luckily, change was in his and Andy Forbes’ (a colleague) hands when they left to take a chance upon themselves. Eric incorporated Geonetric, Inc in 1999.
Early Days
Geonetric was young and Eric’s dad was the first investor in the company, providing the duo with a $10K loan which paid for their two computers, first month’s rent and two telephones. Like others carving out their niches through hard work and skill, they began general web development and began the daily hustle.
Time passes quickly in such hustle, and they were hired in 2001 to build a prototype system for a health system with three hospitals. As they worked on this project and hired additional staff to help move the project forward, they began to realize a handful of needs. One of those, a common one for all growing companies, was capital. Unaware of the resources available from the State of Iowa, they researched and were introduced to the term ‘angel investors’, the seemingly distant rich individuals who invested in entrepreneurial dreams.
Another need identified was for business acumen embodied in an MBA. They came across a software engineering student with interest and recent experience developing an EMR (electronic medical record). He came on as a student intern at Geonetric before joining the company full-time upon graduation. No one knew it yet, but the company had just cemented its future CEO succession plan.
They were in a ‘default-alive’ state where revenue from services keeps a company alive when they attended an angel investor event in Des Moines. They had nearly $1MM in annual revenue and knew that to move from ‘default-alive’ to ‘growing’ required growth capital. They were asked about their ‘recurring revenue’ metric, a phrase that stood for predictable revenue, independent of constant sales, and which helped predict long-term growth for the company. Angels wanted them to be less “coin-operated” and more “viable business”.
The two-hour drive home was a perfect place for formulating strategy through questions like “what do we do that could be made recurring?”, “are we able to change contract structures?”, “how would customers react?” and more. They deployed the magic strategy software - a spreadsheet and modeled this wishful thinking borne out of a collision with a foreign idea. Ben Dillon, the recent MBA from University of Iowa in the passenger seat wielded the spreadsheet to reach a new business model as they exited I380.
They worked with their customers to shift to this new model that allowed for multi-year commitments that converted variable revenue to predictable, recurring mode, allowed the company to plan and grow the team, and attract investor funds. They found, accepted, and deployed nearly $250K in angel funds to profitability.
From Generalists to Specialists
The company’s roots in creating websites for a diverse array of businesses remained profitable and they counted Alliant Energy, HRB advertising, Aegon (later TransAmerica) and more as customers with significant revenue. Each customer exposed the young company to customer needs in a diverse set of industries. The company was profitable but something nagged at the young MBA. In his first four or so years, Ben noticed annual revenue concentration of 40% of above in one large customer. A different customer each year which indicated that they were constantly selling to keep the engine running.
Through this diverse exposure they realized a market and potential when working with a healthcare system in Montana. Having solved the problem in Montana, they duplicated their success with Quad-cities-based Genesis Health. Over time, the focus began to shift from the diverse business customers to a singular focus on the healthcare industry with their flagship software, VitalSite CMS.
VitalSite is a content management system tailored for health systems. It combined flexible content authoring, layouts, publishing, management, hosting and much more. It incorporated the newly introduced privacy laws (HIPAA) and transaction auditing (PCI DSS) to remain competitive with other systems from much larger providers.
Becoming Scalable
Each new customer of the VitalSite CMS received a version of the software customized for their use. This approach to ‘copy and customize’ software was near impossible to scale as innovations made on behalf of one customer had to be copied into other customers’ systems for their use. The concept of Software as a Service (SaaS) was entering the vernacular just as this time and Geonetric was primed for adoption.
Geonetric underwent the usual gyrations and pain of business growth. They built a patient portal on behalf of a customer, grossing seven figure revenue from the contract only to see the customer shift to the industry behemoth, Epic Systems’ MyChart, at the eleventh hour.
The team also learned from expending a person-year’s resources developing a nearly 200-page specifications document for a new feature for VitalSite. These specifications would have taken nearly 5-years to produce, an untenable proposition from the beginning.
Concurrently, however, the Agile product development philosophy was finding favor in the computer software industry. The Geonetric team encountered Pete Behrens, an Agile Development Coach and Expert and began seeing a way out of their old methods. Richard Lawrence, upon a recommendation by Mike Cohn, soon became their transformation sage.
Geonetric not only learned the processes, philosophy, systems, and culture, it absorbed it fully into the company. Over time, the company had become hierarchical, an organizational tree with vice presidents, directors, etc. with nearly 5 layers of roles and responsibilities. 2013, however, saw the company shift to the Agile mindset, flattening the teams. Answering the question, “What if you took it all the way”, self-driven, autonomous teams replaced the traditional manager-driven company. The 10-ish year-old company decalcified itself and innovation burst open.
Transitions
Those who know Eric personally know that he is a teacher, colleague, innovator and community-builder. Had Geonetric only been Eric’s story, a series of events, including losing a 7-figure customer, could have derailed the company. So could’ve the inevitable routine that seeps in after passionately building something for nearly a decade. The graphic below from one of Eric’s blogs then allows us a peek into his mind
The transition from hierarchy and waterfall-development to Agile had energized the company. Although his founding partner, Andy Forbes had left the company a long time ago, Ben Dillon was reveling in his role as chief strategy officer (what a car ride from Des Moines that must’ve been a decade before!). Linda Barnes, who had joined the company in 2006 from Alliant Energy, just as Geonetric transitioned that work out, was versed in all company operations as its COO. And as Eric laid out beautifully in that blog, he was ready to apply his energies to a new project brewing larger than himself, his company, his city, and possibly the region. This image from his blog clearly distills his thinking from that period.
Linda Barnes assumed the CEO role as Eric transitioned to Board Chairman. She continued in that role through 2023 until accepting the role of interim CEO of Orchestra Iowa. Ben Dillon, who had been at the company since its search for MBA talent nearly 23 years prior was ready and became the company’s CEO in August 2023.
The New Bohemian Collaborative (NewBoCo)
The city of Cedar Rapids was ravaged by floods in 2008 when the Cedar River crested 31 feet, submerging nearly ten square miles of the city. Recovery was painful, remarkable and innovative, deploying funds not just to rebuild but build anew. New venues, residences, offices, and parks were built and the Czech and Slovak museum moved and restored. The New Bohemian neighborhood was being reinvigorated to accelerate innovation in dining, entertainment, and much more.
Surrounded by a community he had nurtured, Eric launched the New Bohemian Collaborative non-profit in December 2013. It was built using the very company-building principles he and his team had adopted at Geonetric.
I had the honor of serving on NewBoCo’s board for a year in 2017 where I had the opportunity to observe the numerous impacts on the statewide entrepreneurial ecosystem in three short years. It wasn’t just a non-profit with big ideas and dreams. In its three short years of existence, NewBoCo had launched and funded a series of initiatives including an accelerator (Iowa Startup Accelerator), a technology/programming school for adults, a statewide training program for teachers to be able to teach Computer Science, Agile workshops and training for area companies, leadership role in the annual EntreFEST event, Corridor angels (an angel investor network), Vault coworking, and soon the ISA Ventures fund.
NewBoCo continually attracted passionate people who continued to infect the ecosystem with a long-term vision of growth, first introduced to Iowa by Brad Feld in his seminal book, Startup Communities at the Thinc Iowa conference in 2012. These individuals make outsized impact on the statewide entrepreneurial ecosystem and are leading across multiple domains, a testament to the fertile environment for innovation and entrepreneurship at NewBoCo.
The Future
Though unwritten, the present-day offers clues to the future. Geonetric, the company incorporated by Eric in 1999, now continues under Ben’s leadership. Chris Hartman, who joined the company in 2009, serves as the CFO as the company continues to grow and deliver digital marketing to healthcare companies. The company of nearly seventy has grown from its dedicated workspace and building in NewBo neighborhood to a nationally distributed hybrid workforce. The original Geonetric building is now sold and its various entities rediscovering new places, ways, and rhythms of work.
The Iowa Startup Accelerator, paused during the pandemic has recently resurrected itself anew to help grow Iowa companies. Mikayla moved from ISA Ventures to lead the Ag Startup Engine accelerator and is deeply embedded in ag innovation. David Tominsky now leads Novy, a venture studio launched just a few years ago. Bill Daly, previously of Shuttleworth and Ingersoll law firm, recently transitioned to Fredrikson and Byron law firm where he continues to lend expertise to companies in various stages of maturity. Jill Wilkins, now NewBoCo’s Executive Director, leads the organization as it adapts and works to fill gaps in the Iowa startup ecosystem. There are far too many additional individuals to list here but their impacts continue, sometimes in silence, away from the public eye.
Even as the state and national politics shift the very landscape in which healthcare systems work and various providers redefine their strategies and existence, Ben and team are focused on Geonetric’s ability to understand health systems and meaningfully impact through technology and people. Even as non-profit funding evaporates from federal programs, NewBoCo’s team - and the many people who’ve been a part of its story - remain deeply engaged individually and through their various associations to influence and advocate for the youngest companies individually within the legislature as well as public events such as EntreFEST.
I am a proud member of the Iowa Writers Collaborative, journalists, poets, authors, and artists supported by a passionate community of readers.
Thanks for sharing this history!