published Apr 5th 2017, 5:00 am, by Mya Frazier

(Bloomberg) —
For two days, the crowd sits in darkness in plush theater seats, watching the church stage. There are smoke machines and LED screens, harnessed climbers scaling a scaffold “mountain” and raising their arms in symbolic victory over the startup world’s arduous climb. There’s talk of destiny-defining “exits.” Of Jesus and his disciples: “The most successful startup in history!” Of the parable of the talents, in which two servants are lauded by their master for turning a profit with money he staked them: “The first recorded instance of venture capital and investment banking in history!” Of ancient business elites: “A church is the oldest marketplace in the history of the world.” Of the promised land of angel investing, where divinely inspired entrepreneurs dwell: “Because God creates things, too!” Mark Burnett, the producer of The Apprentice and Shark Tank, shows up to remind everyone that “the Bible is full of merchants and people doing work.”

At last, near the end of Unpolished 2015, a faith and entrepreneurship conference hosted by Crossroads, an evangelical church in Cincinnati, the marquee event begins: the final round of a pitch contest. Organizers have selected three prospective company founders out of more than 100 entrants, each of whom submitted a minute-long video pitch deck. One of the finalists, Lyden Foust, a 25-year-old ethnographer, presents his entry on the LED screens flanking the church stage. With his chiseled jawline, tightly trimmed beard, and three-button henley, he looks like an L.L. Bean model, save perhaps for his rectangular glasses. In a voice-over, he describes his vision to divide the world’s cities by “vibe,” calling his idea “Google Maps wearing a mood ring.” The cityscape of Nashville rolls past, overlaid in swaths of color: blue for blue-collar neighborhoods, brown for yuppie ones, green for hipster, purple for commercial, teal for family, yellow for artsy.

Every successful pitch deck, like every successful religion, includes an origin story, and Foust’s is no different. He recounts booking a place in Nashville through Airbnb Inc., only to find the house situated between a strip club and a manufacturing plant. While retrieving something from his car, he turned to see a man pointing a gun at his face. “I just handed him my wallet,” Foust says. The robbery led to an epiphany: Why not mine social data to tell people what a neighborhood is really like?
The idea isn’t entirely new: An app that launched in 2014 with a similar aim (albeit a different crowd-sourcing methodology), SketchFactor, foundered after being widely criticized for appearing to help white people avoid black neighborhoods. But at this point, Foust’s product is pure concept. He has no employees to build it, only a name, Spatial. The other finalists pitch a family-run app-development company and a board-game-rental app; then the judging is turned over to the audience of 1,200 aspiring entrepreneurs. Foust’s idea prevails, and Brian Tome, Crossroads’ senior pastor, hands him an oversize check for $3,000. Soon after, Foust will begin the next stage of the church’s path to entrepreneurial success, applying for a spot in a member-funded, Bible-based accelerator program, beginning in a few months, that’s designed to train startups in how to raise money and grow.

Finally, the house lights come up. At the end of the aisles, attendants await, holding pails overflowing with packets of apple seeds. “God’s placed a seed in you. And he wants to see it come to fruitfulness,” Tome says to the crowd, his spiked and styled dirty-blond hair and untucked plaid shirt lending him the air of an aging film star. Bowing his head, he prays, asking God to lead everyone to “the right seed that will bring forth the right fruit at the right time in every business.”

It’s a remarkable altar call: Those who feel inspired are to take these seeds from the attendants and go forth, claiming their spiritual destinies … as entrepreneurs. At the edge of the waist-high stage, people mingle, hugging and holding hands. Others bow their head or kneel under the outstretched hands of strangers to receive prayer. Foust joins them, walking down the aisle and asking for blessings and prayers at the start of his entrepreneurship journey.

Named the fastest-growing church in America in 2015, Crossroads has been described by the Cincinnati Business Courier as both an entrepreneurial church and a church for entrepreneurs. Indeed, it was originally a startup—or more accurately an unofficial spinoff from Procter & Gamble Co., the $65 billion conglomerate based downtown, a few freeway exits south of the main church. In 1990, Brian Wells, a brand manager for Clearasil, started a singles Bible study with a P&G power couple, Vivienne Lee Bechtold, then a brand manager in beauty care, and Jim Bechtold, a marketing executive. The group, which met at the Bechtolds’ home, quickly grew to more than 100 people. Eventually the singles started marrying and having children, and Jim Bechtold asked Wells one morning, while the two carpooled to work, whether it made sense to start a church.

Over the next few months, a core of 11 people, some of whom had helped build billion-dollar consumer brands, reimagined church as one might expect P&G executives to do. (The company more or less invented brand management, and it’s been a prime breeding ground for business talent—Microsoft ex-CEO Steve Ballmer, Intuit’s Scott Cook, HP’s Meg Whitman, and GE’s Jeffrey Immelt, among many others, are all P&G alumni.) They gathered demographic data on Cincinnatians’ churchgoing habits, with a focus on the city’s affluent east side, which includes the P&G enclave suburbs of Hyde Park and Oakley. They scoured secular popular music and TV comedies for tips on how to keep churchgoers’ attention. They settled on a target demographic, 25- to 35-year-old males, figuring that if they could get the guy, they would get his wife. They wrote brand positioning statements—a church for friends who don’t like church; a church for people who’ve given up on church. Finally they built a slide deck featuring a mix of data and Scripture and began raising money from friends, family, and business connections.

In the spring of 1996, Tome led Crossroads’ first official service, speaking before more than 450 people at a rented auditorium in a local junior high school. Five years later, its rolls swelling, the church purchased a vacant big-box store, using the homes of some senior leaders as collateral. Crossroads spent millions converting the space into a 3,500-seat auditorium with two balcony tiers and enough stage lights to rival a Broadway theater. Today, the church has nine locations in the greater Cincinnati area (with another opening soon), some 30,000 congregants, an annual operating budget of $33 million, and a staff of 274 people, many with ties to P&G.

Among the employees is a 75-person “experience team,” the equivalent of an in-house advertising agency, whose branding efforts encompass direct-marketing campaigns, in-church clicker surveys, and customized stage sets aligned with sermon themes. The church also has a labs division—essentially a two-person market-research team led by a corporate brand ethnographer. Its eight satellite churches operate almost as franchises, all of them mirroring the main branch’s tailored signage and other brand imagery. Congregants all watch the same sermons, which are telecast from the main church to the satellites with a brief delay. Crossroads is even in the mergers-and-acquisitions game, having lately acquired (its officials prefer the term “adopted”) a church in Lexington, Ky., with 2,500 members and four locations.

In recent years, Crossroads’ version of the prosperity gospel has begun to borrow from Silicon Valley’s. The church included the pitch contest at Unpolished 2015, its inaugural entrepreneurship conference, and that same year some of its members created a for-profit angel-investment wing, Ocean Capital, and the nonprofit Ocean Accelerator Inc., whose mandate is to “increase God’s presence in the marketplace.” Ocean Capital’s first fund, of $230,000, was seeded entirely by six Crossroads members.

Ocean Accelerator got an early boost from Crossroads’ annual Beans & Rice Week, when congregants forgo regular meals in favor of beans and rice, then donate the savings to the church. Traditionally, the money goes mainly to fighting the city’s homelessness and heroin epidemics, but in 2015 the church put $120,000 toward the accelerator, a significant share of the program’s operating expenses. Selected entrepreneurs would embark on five-month residencies, and each startup would receive $25,000 from Ocean Capital. (The amount rose to $35,000 in 2016 and $50,000 in 2017.) Also included were free office space and access to dozens of spiritual and business mentors from the church’s membership rolls, a who’s who of Cincinnati’s—and America’s—corporate elite.
One rainy morning in February 2016, Foust and founders from eight other startups, some of them fellow Crossroads members, are gathered before a whiteboard for a talk called “Developing Intellectual Capital.” The speaker is Todd Henry, a longtime Crossroads member and motivational guru who promotes himself as an “arms dealer of the creative revolution.”

Ocean Accelerator is across the street from the Crossroads headquarters, in a converted car dealership owned by the church. Among the participants in the accelerator’s second cohort are an app offering restaurant discounts, a social network for sports fans, a recruiting tool matching employees with companies according to cultural fit, a site connecting college athletes with high school students for personal training, and an online auction site for churches to sell used goods. Only one of the nine startups is solely headed by a woman, who’s from London. For a few weeks now, each team has been attending daily spiritual seminars and weekly Bible studies, working from long tables in an open-air room. They’re all preparing for Demo Day, a couple of months hence, when they’ll stand on the Crossroads stage and give five-minute pitches to an audience of venture capitalists and angel investors.

With Foust at Ocean is Will Kiessling, a 35-year-old developer who left a job writing software for jet-engine tests at General Electric Co. to become a partner at Spatial (since formally renamed Spatial Labs). The two met years earlier at events in the city’s startup scene but only really got to talking after bumping into each other at church one Sunday. “Not only did we have this commonality of startups,” Foust says, “but we both loved Jesus.”

Henry, dressed in a crisp white oxford and bluejeans, begins his talk by asking how entrepreneurs might turn thoughts into value. He cites Warren Buffett, who reportedly spends four to five hours a day reading, as someone who wrests profits from the market by analyzing what’s going on in the world. We have this ability, Henry says, “to co-create new things, to partner with God in transforming creation.” He points out that pattern recognition is crucial for a successful startup, as is understanding what he terms the law of the harvest: “Many of us, especially as entrepreneurs, we live in perpetual harvest mode, constantly trying to reap gain, and some of that is because our investors are telling us, ‘We want to see a return,’ ” he says. “The problem is when you are living in perpetual harvest mode, you aren’t taking the time to go back and plant seeds and cultivate seeds.” He calls on the entrepreneurs to see God as the source of wisdom and Jesus as a brilliant thinker with a “deep systematic understanding of life,” skilled in the practice of pattern recognition.

This message resonates with Foust’s original concept for Spatial, which was, in essence, to identify social media and crime-data patterns to help people “navigate like a local” in unknown cities. But as the accelerator unfolds over the next three months, he runs into technical and ethical problems with that goal. Early iterations of the service compile a “heat map” of different areas in cities, using crime data on specific neighborhoods in addition to social data.

The approach has clear racial implications; not only are the sweeps of color reminiscent of decades of redlining in black neighborhoods, the data might have integrated biases prevalent on social media into Spatial’s mapping platform. After a few months, Foust and Kiessling drop crime data completely. “People were talking about not going to a certain part of a city because it looked like there was a lot of crime there. It made me realize that’s not what I wanted people to do,” Foust says.

More than the Bible, he credits Jane Jacobs’s classic book The Death and Life of Great American Cities for the insight. Invoking Jacobs, he cites three questions that best indicate neighborhood safety: “Are there lights on the streets? Are there eyes on the streets? And does the community know each other? None of those things are in crime data. It wasn’t solving the problem.”

Instead, Foust concludes that people want something much simpler: quick and decisive answers about where to go. “They couldn’t care less about, ‘Is this an artsy area?’ It was less about experience and more about ‘Can you just get me to the right place, right now?’ ”
As the product takes shape and Foust prepares to move from the concept phase to fundraising, a more explicitly spiritual question begins to nag at him: “How do you raise money like Jesus?” Foust has attended Crossroads for five years, but his evangelical faith began when he was a child growing up in a devout household on a tree farm in Paris, a town in northeast Ohio. He’s heard from other entrepreneurs how brutal fundraising can be. You’re going to have to sell your soul, they warn. You’re going to have to lie.

To forestall this, he starts a reading group with five other founders. The book they choose is secular: Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist, by Brad Feld and Jason Mendelson. For five weeks, every Friday afternoon, the participants meet, discussing term sheets and the ins and outs of investor control over startups. The book demystifies the process for the group, but it doesn’t help with the concern about integrity. After a few sessions, Foust decides that Jesus’ first words in the New Testament, from Mark 1:15, best address his fears: “The time has come,” Jesus says. “The kingdom of God has come near. Repent and believe the good news!”

In the verse, Jesus has just been baptized, and he’s emerging from the desert to begin his ministry. Describing the passage later, Foust invokes the Greek translation, interpreting “time” not as chronos, chronological time, but as kairos, the “right or opportune moment.” The word for “repent,” he continues, means “to turn away from” or “to change one’s mind.” The etymology leads him to a decidedly contemporary exegesis of the verse. “The kingdom of God was Jesus’ startup,” he says. “A new future he was selling to people. And that’s the same thing I’m saying as a startup founder—a moment of time has come, and there’s a new future for us.”

Buoyed by this insight, Foust arrives in April to present at Demo Day. Following an early morning group prayer, he strides onto the stage at Crossroads in front of an audience of more than 1,000 people. He’s wearing jeans and a tight-fitting gray T-shirt emblazoned with the Spatial logo—the company name in a sans-serif typeface, with the letters’ midsection blanked out by a horizontal bar—to pitch to 30 potential investors.

The LED screen behind him displays ominous, looping swirls of dark blue ocean waves behind the Ocean logo. The origin story he tells is familiar, but he explains how Spatial’s model has evolved, describing its patent-pending algorithm, Luminate, which he says will create a layer of social data around cities, or a “third dimension of maps.” Among its possible markets, he says, are travel booking companies, who might pay for click-thrus to vacation rentals and other services. He suggests that Spatial could increase booking rates on sites such as Airbnb and FlipKey, which he claims fail to turn 95 percent of their visitors into customers. “Think of the millions they are leaving on the table,” he says.

In recent weeks, as Spatial has begun promoting its solution, Foust tells the audience, 10 companies have started using its data. These clients are mostly early-stage startups, including PoshPacker in Washington, D.C., a hotel-booking site that targets people who want a “hip and high-end-like travel experience.” Foust displays screen shots of maps from PoshPacker’s site: Areas popular with the LGBT community are highlighted in puffs of purple. Orange puffs represent foodie zones. Foust says PoshPacker has doubled its conversion rate since deploying the Luminate algorithm (though the company will later go out of business). “The day of static maps is over,” he concludes.

The others go through their pitches, and afterward everyone gathers in another cavernous auditorium to drink craft beer with the investors. By design, no startup talks terms on Demo Day, says Scott Weiss, a retired corporate chief executive officer who serves as Ocean Accelerator’s volunteer CEO and chairman. “Our core approach is developing the capability and training them to raise money,” he says. But, Weiss adds, “If you are a Christian and you want to produce in your faith, Ocean teaches you how to raise money in a Christian way and that there’s got to be an ethical standard to doing that. … We teach them to pick your investors with care and to be very careful, because you are going to be married a very long time.”

For Crossroads, embracing the gospel of Silicon Valley isn’t solely about money; it’s also about bringing the next generation into the church. Ocean Accelerator offers a way to reckon with two converging trends: growing anxiety about jobs and a decline in church attendance among young people. “Up until the millennial generation, there was inherent faith in large corporations, social enterprises, and governments to drive employment,” Weiss says. “But this millennial group has come along and said, ‘No, no. It’s actually my responsibility to create jobs.’ ”

In his sermons, Tome, the senior pastor, frequently mentions job growth and lionizes entrepreneurs. “A business endeavor is close to the heart of God and every bit as important as anything else on God’s green earth,” he recently preached. Sitting in the church lobby a few weeks later, he describes entrepreneurship as an ancient practice with Biblical roots. Jesus constantly used business metaphors in his parables, he says, and founded the “first multinational corporate entity.”

The emphasis appears to be working: According to a survey Crossroads conducted in the fall, 43 percent of adults who’d joined the church in the previous two years were age 18 to 35. And the accelerator’s startup classes are showing some early financial promise. Fifteen of the 19 startups that have gone through Ocean in its first two years have survived, raising a combined $6 million and creating 66 jobs.

In keeping with their goals of appealing to younger generations and tapping into the widest possible market, Weiss and the other officials are working to diversify their roster of startup founders. At the close of 2016, Ocean announced its next seven companies. Two of the startups are led by women, and four are international—one of these, Owl Labs, which is building a prosthetic hand that incorporates machine learning, is headed by three entrepreneurs from Sudan.

These founders may soon have a larger investment pool from which to draw. Ocean Capital is planning this summer to raise $1.6 million for a new fund, its third. With the money, it will seed three more accelerator classes, keeping the program running until at least 2020. Crossroads is also increasing its commitment; having donated nearly a quarter of a million dollars to Ocean Accelerator for the program’s first two years, the church plans to give an additional $420,000 in 2017. (The money will also help cover the next Unpolished conference, which the accelerator is taking over.) Secular organizations are getting in on the action, too: The foundation of PNC Financial Services Group is donating to the accelerator, and Fifth Third Bancorp is the lead sponsor of Unpolished 2017.

In the months after participating in Ocean, Foust and Kiessling gain admittance to another accelerator, a highly competitive secular one, TechStars Mobility, in Detroit. The experience is much different: For one, they sleep on bunk beds in a house shared by founders from 12 other startups. For another, Foust later recalls, “God never came up.”

The pace is breakneck: The first month, called Mentor Madness, requires the pair to talk with 150 different people about Spatial. The second month consists of dozens of sales presentations. By the time Foust takes the stage for TechStars’ Demo Day, following the third month’s arduous vetting process, Spatial’s business model has shifted yet again, to target the automobile navigation market.

The work he and Kiessling have put in—fueled by the $120,000 stake they received for winning entry to the accelerator—pays off in a more polished product and presentation. The robbery anecdote remains, but the colored swaths are gone; instead, hexagons appear in response to a driver’s commands. A request for family-friendly educational events, for example, produces teal hexagons and info on a museum show. A request for a bar with sunset views prompts a digital assistant to suggest a steakhouse on the 72nd floor of a skyscraper downtown: “Would you like me to route you there?” she asks.

Then comes the big reveal: the Ford Motor Co. logo, filling an entire slide. Foust announces a partnership with the automotive giant, and the auditorium erupts in cheers. The news comes as Spatial is preparing to kick off its first fundraising round. Originally the plan is to raise $500,000, but the deal with Ford’s Smart Mobility subsidiary helps Foust’s company meet that target almost immediately, and more people want in.

A few weeks on, in late September, I meet with Kiessling in a tiny conference room at Ocean, where Spatial is renting space temporarily. As we talk, he points to a clear-glass dry-erase board where financial scenarios have been hashed out. “We raised more money and got more people to agree to give us money than we thought we could get,” Kiessling says. “Now it’s kind of like, we have to go back.” To let more people in, Spatial will have to dilute the equity percentages Foust originally offered, without giving up too much of his own equity—and control—in the process. “How do you negotiate that, and do that in kind of a biblical way?” Kiessling asks.

Foust is away in Detroit, renegotiating the terms. He recounts later that things went smoothly: “Everyone unanimously said yes, because from an investor standpoint it was less risky.” At other points in the process, he says, “investors offered us a lot of money, and they were in it for the money and not for our vision, and we had to turn down some money. We retained our vision, and we didn’t sell our soul and didn’t have to lie to raise money.”

By the end of October, Spatial has attracted more investment—$1.8 million, including $190,000 from Ocean Capital—than any other Ocean Accelerator startup. Foust and Kiessling reopen the round one more time for two investors eager to get in on the ground floor, bringing the total raised to $2.1 million. A few months later, Spatial opens an office in Cincinnati’s Over-the-Rhine neighborhood, where many of the city’s startups are located, and hires three more employees. The company also has an office in Detroit; while there, Foust and Kiessling sleep on the same bunk beds they did over the summer. And Foust is flying regularly to Palo Alto, establishing a footprint for the company and meeting potential clients there.

He won’t say what deals might be in the works, but the immediate goal isn’t to build Spatial into the next unicorn or make a lucrative exit. “I feel like now, even more so than before, I’m having to submit to God’s will, because it’s getting bigger and bigger. You think when you raise a bunch of money, you’d become more confident, but that’s not the case. It gets harder,” he says. “Now we have a bunch of people who believe in us and work for us, and we have to make sure they are taken care of as well.”

—With reporting supported by the McGraw Center for Business Journalism at the CUNY Graduate School of Journalism

To contact the author of this story: Mya Frazier in New York at mya@myafrazier.comTo contact the editor responsible for this story: Jeremy Keehn at jkeehn3@bloomberg.net
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