A Publication of WTVP

A Peoria native, Steve Zika returned to his hometown several years ago after a 16-year career at Advanced Micro Devices, where he most recently served as director of product management and chief of staff to the president and COO. In 2009, Zika left the corporate world to immerse himself in a number of entrepreneurial ventures, helping to launch two startups and cofounding KidKnits, a 501(c)(3) nonprofit at which he serves as executive director. Along with his father, Ken Zika, former corporate controller at Caterpillar, he cofounded Attollo, an investment firm that helps social entrepreneurs create large-scale impact.

Having spent time in Silicon Valley and Austin, Texas, Zika has experienced firsthand the startup culture that is now beginning to blossom in Peoria. An advisor to numerous startups, including NEXMachine and OneFire, he is a director of Startup Peoria, advisory board member of the Means Center for Entrepreneurial Studies at Illinois State University, and board member of Cornerstone Academy for Performing Arts. Zika recently spoke with iBi about his remarkable journey, the amazing story of KidKnits, the state of entrepreneurship in Peoria, and much more.

Let’s start with your background and early career… Did you grow up in Peoria?
I grew up in Peoria and went to schools in Dunlap. My dad worked for Cat. When I was an eighth-grader, he was transferred to Tokyo, so my family moved overseas. I graduated from high school in Tokyo and studied engineering at Stanford—that was my entry back into the United States.

I joined Advanced Micro Devices (AMD), the semiconductor company, straight out of school… so I was in Silicon Valley working on state-of-the-art R&D in the mid ‘90s. Then we moved to Austin. Three years later, AMD moved its technology development to Taiwan, and I moved into product development. Eventually, I worked for a year as chief of staff to the company president. That year was like on-the-job MBA training—I really put together an understanding of how the technology and product sides of the company came together with the business side. I ended up in the product line… and had a few jobs in the business units. That was a 16-year career. Over time, my beliefs about what I was supposed to be doing in the world were changing… I felt like I was supposed to use my skills for other things. So I left.

I was perfectly happy there at AMD in the short term, but I wasn’t happy with the long-term picture. In our culture, we’re supposed to chase this sort of [career] progression. As I saw that playing out in front of me, it just wasn’t what I wanted.

When I first left AMD, it was without another job. We didn’t have an immediate plan to move back to Peoria either. I participated in two startup companies in Austin; both of the startups I joined as a cofounder were someone else’s idea. I was a corporate guy for 16 years… but I understood marketing and finance, I understood bringing products to market, I understood sales and talking to customers. They wanted someone who brought business credibility, management, oversight and strategy to help them execute their entrepreneurial ideas.

And what were these two startups?
The first was Social Smack, an online social network built around product reviews. The idea was to appeal to a youthful demographic and get them doing very short product reviews. Whereas Yelp had lengthy reviews, the vision was Twitter-sort of length… Yelp was very focused on places—restaurants, etc. Our vision was… Did you see a good movie? Did you buy a new watch? Do you have new running shoes? Product brands—it matched my interest.

Online Persona, in contrast, was service-based… an online marketing consulting company. In Austin, that was a really hot market at the time. Again, it wasn’t the space I came from; my business partner had expertise in that space, but he didn’t have expertise in running a business or managing clients. The YMCA of Central Texas became one of our first clients… How we could help the YMCA further its mission became one of the cornerstones of that organization. We had lots of for-profit, paying clients, as well as a nice portfolio of nonprofit clients and other organizations that were doing good in the community.

Are these companies still around?
Online Persona is still active; Social Smack is not. With Social Smack, we had just started trying for our Series A funding—that was the first time I ever met with VCs [venture capitalists]. It was a real learning experience. I had never talked to a VC in 16 years at AMD… Our meetings were with Dell, Lenovo and HP—the computer companies and our motherboard partners. Anyway, I ended up leaving Social Smack while we were starting to raise Series A. The ultimate fate of the company was that they never raised a Series A—they burned through all the cash they had raised in their angel round and closed.

A lot of startups have that experience. You can look at the marketplace today and see companies doing something similar and conclude that it was not a bad business idea. But it is a matter of execution: who gets the money to have a runway long enough to get some sort of critical mass.

After I departed, Social Smack continued chasing Series A. But just like the nonprofit executive director who has to spend 80 percent of his time trying to do development… you can fall into the same problem if you’re an entrepreneur. It’s great to raise a $3 million Series A, but if you spend 80 percent of your time trying to raise money and not executing the core of your business, you can drown yourself.

So these startups laid the groundwork for your continued involvement in entrepreneurial ventures?
I think that’s fair to say. The other thing that happened… was this thing that is now KidKnits. My wife and I had met a woman named Immaculée Ilibagiza—she was a survivor of the 1994 genocide in Rwanda. She wrote a book called Left To Tell… and it’s one of the most incredible books I’ve ever read. My mom and dad saw her speak in Peoria and bought my wife, Kristin, the book for Christmas one year. She read it in one night, and the next morning, she ordered a case and started handing it out to people… We ended up passing out more than 500 copies over the course of a year or so.

We wanted her to come to Austin and formed a nonprofit for the purpose of facilitating her visit. We ended up meeting a woman [Diana Wiley] who had a vision of providing sustainable jobs to widows in Rwanda. She had hired 10 women and started them on a bakery, baking bread to sell to local people and tourists who came through. One day, we were in her office and she had a ball of yarn on her desk. My wife asked about it, and Diana said it was like a side project… “There’s sheep in Rwanda, and they don’t really use the fleece for much. I learned how to spin yarn and taught these women how to spin yarn.”

Our daughter, Ellie, had learned how to knit at a Girl Scouts meeting, and Kristin asked if we could take a ball home to her. Several months later, we were on a family road trip and Ellie says—she was knitting in the car—“Hey, remember that ball of yarn from Rwanda? What if we bought yarn from those ladies? Would that help them?”

Her two sisters were sleeping, and we were driving across Utah—we had nothing but time. So we started talking, and came up with the idea: What if you “productized” a craft kit? Because kids love craft kits! And then… “What would you call it, Ellie?” And she says, “I don’t know… KidKnits?” The name and the whole basic idea of the company came from the seed planted on that trip. When we got home, we called up Diana and said, “Could we buy that yarn?”

Over time, she realized this had more potential than the bakery, so all of the women she had hired went to spinning yarn full-time. They started hiring more women, and today they have 36 women who spin yarn. At first, we bought every ball of yarn they could make. Eventually, they were able to make enough to support other customers. We wanted to continue to buy more yarn, so we started looking for other partners—that’s how we found the group in Chile. So we also buy yarn from these women in Chile and distribute it in these craft kits.

The women in Rwanda work full-time. The women in Chile—it’s a completely different arrangement. Many of them are laboring in the field, working in agriculture… so more often, they don’t work full-time spinning yarn; it’s a second job, and it’s flexible. Several of them have a family member at home with special needs. They can’t leave home to get a job, so the fact that they can get some wool brought into their home, and they can spin yarn and get paid for whatever they produce is a huge benefit. They work when they have time to work. Right now, as we go into our spring, they go into their fall. It’s harvest season—they’re able to get work in the fields right now. When it’s wintertime, that’s when they really focus on spinning yarn for us.

Is KidKnits a nonprofit or a for-profit company?
KidKnits is a nonprofit that functions in a self-sustainable way. We pay for all of the yarn and the other components included in the craft kits, so those are our major costs. But we don’t give the yarn or kits away. We sell them, and through that model, we’re able to sustain the mission of KidKnits.

Tell me more about the KidKnits mission and impact.
We say that we have two missions: one is to support the livelihood of these women in Rwanda and Chile; the other is to educate youth about world poverty. We really felt like there was a strong empowerment message: “You can make a difference in the world.” That’s one of the core beliefs of KidKnits.

So if we sell a ball of yarn or a kit to you, an adult, one of our two missions is accomplished. But when we sell a ball of yarn or a kit to a young person, both of our missions are met.

When we can bring KidKnits into a school, that’s a great situation—because we need about 50 individuals to buy kits to equate to one school. Another positive aspect of a school partner is that fifth-graders become sixth-graders, and then next year, there are new fifth-graders. We’re in our third year; several of our first school partners are now in their third year, and we added a lot more schools in our second year that are now in their second year.

In one of the education modules, we talk about the “dignity of work.” I always begin that session by saying… “If you were in extreme poverty, what’s the best thing I could give you?” Almost always, the first answer is money. I say money would help, but there’s something better. Food is often second, shelter third. It’s generally not the gut reaction of fifth-graders to say a job, but eventually they will. And we dwell on this for a second. If I just give you food, that may get you through the day or the week… but eventually, you’re going to run out of food. Same thing with money. But if I give you a job and a skill, that could last the rest of your life. That’s the argument of KidKnits.

The other thing that happens is we now have 50 kids who’ve discovered a new hobby. They understand why buying yarn from us is different than buying yarn from Walmart; they understand they’re empowered to do good through this craft. They have had the experience of changing a life on the other side of the world. Typically, well over half of the kids will reorder yarn from us and say, “I made a hat—I want to make more hats.” The average order is two or more extra balls of yarn per student. That’s a big impact for the women in Rwanda and Chile.

So we have a global impact, but then we also have a powerful local impact. Once those hats are knitted, the kids often donate them somewhere in town. They’ve donated hats to South Side Mission, Friendship House, Children’s Hospital… KidKnits then integrates, within one project, local philanthropy, education and global citizenship.

How did your past experience help you get KidKnits off the ground?
This is a recurring theme I tell people sometimes: What you have to do to run a business is largely independent from the size of the business. With KidKnits, we have to think about product costs, pricing, distribution channels, marketing, messaging, sales… I managed a $3 billion-a-year P&L at AMD—but I did the same things every day that I do now with KidKnits. It’s like, somehow, those extra zeroes… I don’t want to make it seem like they don’t matter, but in terms of how you think about the business, all those things are the same.

I used to joke about managing the supply chain of KidKnits—sheep and women spinning yarn in Rwanda or Chile—and managing the supply chain at AMD, microprocessors being developed in a billion-dollar fab. But they’re both the same. That’s a big thing, I think, as I advise entrepreneurs: don’t get scared off by the big numbers. Your team may be 10 people or 100 people or 1,000 people, but how you think about managing people, how you think about marketing—it’s all the same.

What is Ellie’s involvement today?
She’s 13 now. Her involvement is really interesting… It is a family project. Last spring break, all three of our daughters and Kristin and I went to Chile and met the women who were spinning yarn. Ellie and I have been to Rwanda together, so she really understands the impact KidKnits is having around the world. She has an opportunity to talk to kids in classrooms around central Illinois about KidKnits—she has done that quite a bit.

That’s a lot for a 13-year-old!
Yeah! She’s seen the impact. She answered questions for a Rotary group, she’s spoken at school assemblies, that kind of thing. She knows something really special has been created through her idea. But she’s also a swimmer, she likes to read and hang out with her friends, she manages the KidKnits Instagram account, she likes to do the things 13-year-olds like to do. So we’re really careful not to force this burden on her. But we often tell her, “You have an opportunity many kids your age don’t have. You can choose to let mom and dad run with it… and it will always be true that you were the founder. However, if you embrace KidKnits and stay involved, there are all kinds of opportunities for you.”

It’s a balance. We don’t want to shove her into the family business… but it is true that she has an unbelievable opportunity to meet people, to go places, to do things, and change lives. Every school we go to, at least in central Illinois, asks, “Is there any chance Ellie can come talk to our kids?” And usually she does.

What’s in the future for KidKnits?
Yesterday, I spent two hours at Sterling Middle School working with kids, teaching them how to knit and teaching them about poverty in the world. There’s very little I do in a given day or week or month that’s more enjoyable. That sounds like salesmanship, but I’ve seen the impact; it’s real. When you do something that can impact lives in Chile and Rwanda and the lives of youth here in the United States, you just want to do it more. So our vision is to continue to grow KidKnits. We’re currently pursuing some fairly aggressive partnership opportunities.

We’ve started a partnership with a group out of Washington, DC called Youth Service America. One of their programs is called Global Youth Service Day (GYSD). If an organization is thinking about creating a local program for GYSD, YSA recommends a number of organizations on its website, and KidKnits is listed right alongside larger organizations like the Red Cross and Habitat for Humanity. They’ve also featured a story written by Ellie on their homepage.

Sometimes school budgets are tight; sometimes the time available in the school day is an obstacle. A KidKnits program will typically take five or six hours to complete… that’s a chunk of time, and we understand that. Partnering with a solid afterschool program like Girl Scouts addresses the school-day time constraint and also provides quality experiences for their members. So we’re looking at possible partnerships to open up this channel.

A good friend of mine from college left the banking world recently. He lives in Glasgow, Scotland, and he’s going to start talking to schools in the U.K. about implementing KidKnits over there. So we’re looking at European expansion, and we’re looking at new channels in the U.S. And then, of course, we hope to continue to grow organically through the school channel.

So after founding KidKnits in Austin, what led you back to Peoria?
We came back for a variety of reasons. I grew up here, my wife grew up near here, and being close to my parents was a big driver. My dad had retired from Caterpillar and started a class at Bradley on corporate social responsibility. He and I were spending a fair amount of time talking and bouncing ideas off each other on this whole idea of social entrepreneurship, the idea of business for good. It was about the same time I left AMD and was thinking, “How do we really create some scale and leverage this idea?”

Another key factor was the cost of living in Peoria. I don’t make what I used to make anymore—that was an intentional choice by me, my wife and our family. We chose to change our income profile, but do projects that are more meaningful for us. The cost of living in Peoria became a big part of that equation. It’s actually an asset for how we in Peoria can promote ourselves as an entrepreneurial community. However much money you raise, if you’re trying to bootstrap something, your runway is twice as long in Peoria as it is in Austin, and maybe three or four times as long as it is in Silicon Valley. That matters.

How did you end up working with your father on Attollo?
Attollo is less than a year old. We’ve only been focused on it for a few months, but the idea of working together in the general category of social entrepreneurship is something we had been talking about for several years.

I can take my own KidKnits story as an inspiration for Attollo. I had the ability to go do KidKnits—and not only not get paid, but put money into it… So where are all the brilliant young people who have a great idea—and the time, energy and willingness to go do it—but need some money for inventory? Or they need some money to live on for a while, or they just need some capital? We really became motivated that people with a brilliant idea to change the world should have the ability to execute it. At the center of Attollo has always been the idea of providing access to capital. We have only invested in one company so far [NEXMachine], but we’re currently talking with three others. We’re happy with the pipeline.

Even some of the companies we’ve decided not to invest in… I’ve spent hours and hours with them. The attitude we’ve taken is that if we can help you solve a capital problem, that’s great. Even if we can’t, we can help you think about your business, we can help you think about strategy and operations. There are some guys in town I’ve been meeting with once or twice a week for a month or so. We may end up giving them some capital, but even if we don’t, we’re pretty invested in their success. They’ve got an ambitious project to make a big impact, and we want to help them.

We started realizing that we really wanted to facilitate the social entrepreneur. In a place like Austin, the conversation about social entrepreneurship doesn’t need to be stimulated—it exists. It also exists at a lot of universities. But in a community like Peoria, there’s an education process of telling people that you can run a business and do good at the same time—and then showing them examples of it being done.

Are your paid for your consulting work?
So far, most of our consulting and mentoring has been for free, under the justification of due diligence on the investment side. When we make an investment, we hope to make a return. That’s the for-profit side of Attollo. We will make good investments that help entrepreneurs be successful, but if they’re for-profit and make money, we share in that success. There are other opportunities where Attollo could act as a paid consultant or advisor. I suspect that’s a model in the future: where young entrepreneurs need some business experience and I would take a more active role in mentoring or even management of a company, even if Attollo has not invested in it.

So what is the story behind NEXMachine?
Dan Kauppi is the founder. This would be a situation like the two companies in Austin: it was his business idea, it’s his business, it’s his brand… but he had never done a startup before. I started helping him with crafting a strategy, raising money… all the basic things you need to do as an entrepreneur. It was long after we began working together that I mentioned Attollo and the investment possibility.

Dan has a very interesting business model that has to do with selling software in the cloud. He’s partnered with Salesforce, the most innovative CRM [customer relationship management] software company in the world, whose model requires that they don’t develop all the solutions for their verticals—that their partners do it. So he is addressing a very large vertical, which is the Caterpillar dealer network. It’s an interesting model, because if you can solve the problem in a compelling way for one of them, there’s a lot of opportunity for growth. Cat is putting more expectations on its dealer network to be more transparent with data-sharing back and forth—it’s sort of a “Big Data” initiative, and Salesforce can help enable that. The model of NEXMachine is not to sell software to Caterpillar, but to be aligned with Caterpillar, to understand its corporate strategy. It’s a good strategic move.

Dan is also interested in how Salesforce can uplift the community. He and I are working together on a couple things, both of which are still in their infancy. One is that you can train young people to use Salesforce—not to do heavy coding or development, but there are simple customizations you can teach young people to do and give them a marketable skill. The other side is that Salesforce gives 10 free licenses to every nonprofit. A lot of nonprofits sign up for the licenses, but don’t really know how to optimize it to use it well.

The Dream Center has a partnership with Thirty-Thirty Coffee called City Brew, in which the Dream Center is using their roasting equipment, but labeling and marketing coffee beans for sale to benefit their program. Dan and one of his developers are working with a small group of middle- and high-schoolers on how to use Salesforce and do some basic customizations such that in the future, the Dream Center can use Salesforce for its volunteer management, a solution largely developed by their middle and high schoolers.

Right now, there are two nonprofits in town for which NEXMachine is developing Salesforce applications to better leverage those licenses: the Dream Center and KidKnits. This is the social mission of NEXMachine, which is why Attollo is interested in helping fund the company. We think it can really help the community.

Any final thoughts on entrepreneurship in general?
Over the last 10 to 20 years in our nation’s economy, all the job creation is coming from small and medium-sized businesses. The big companies are flat. Some are growing, but as a whole, they are not creating jobs.

Job creation comes from entrepreneurs. The way forward has to do with entrepreneurship—it’s the direction I’m personally taking my career. Having left AMD, I don’t ever expect to have just one job anymore; I expect to have a portfolio of projects in which I’m involved. One could argue that doesn’t create success in any one area, but I think if we smartly leverage our time, we can actually have a big impact and help multiple things be successful.

In some sense, it’s just diversification. The single thing with the highest correlation to your future financial condition is your job, but nobody thinks about diversifying that asset. This concept of diversification of our time, of our employment, is a little controversial. It’s not for everybody, but “Investing 101” says that if you have $20,000 to invest, you don’t put it into one stock—you diversify it across multiple mutual funds. Yet it’s perfectly expected that I have just one job, which requires the majority of my time.

Here in Peoria… when Caterpillar goes up, Peoria tends to go up—you can’t avoid that. But if we want to diversify, we can change this city through entrepreneurship far more easily than we can convince some other Fortune 50 company to move here. If we want to diversify outside of Caterpillar, we have to do it through entrepreneurship; we have to do it by creating this ecosystem and culture.

Our community has money, and we have people with good ideas. Every community, to be successful, needs to bring people together and facilitate that conversation. If we keep bringing people together, then we can accelerate the rate at which we can start making a difference. iBi