Startup Offspring

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We’ve been focusing a lot on exits recently. Some folks have asked “why celebrate”? So many are $30-$50mm exits, who cares? $30-$50mm exits = VCs dying = ecosystem dying… or so goes the logic.

Let me tell the story of Redknee. Redknee creates billing software for telecos. Started in the late 90s by 4 mid-20s, Waterloo grads who had worked at Telus & Nortel – Lucas Skoczkowski, Vishal Kothari, Dan Macdonald, and Rubens Rahim. Without taking any VC money, they IPO’d in 2007, raised something like $30-40mm out of the IPO, and now have a market cap of about $70mm. I.e. modest success, not great success.

Here is the list of who is where now from the early days at Redknee:

Shailesh Lakhani – was director of operations, now VP at Sequoia India
Shyam Sheth – product manager, then product manager at Google, now co-founder of Fixmo
Tony Mak – was a sales engineer, moved on to VC side at OATV, now founder of Everpic (SF-based startup)
Kristin McClement – was product management, now heads up product and super early employee at Payfone (hot New York startup)
Bohdan Zabawskyj – was CTO, now CTO of a hot Toronto startup that I think I can’t name yet, and also advisor & investor to several other startups
Jeff Zakrezewski – was a dev team lead, then was managing partner at 5-Mobile (acquired by Zynga), now Chief Architect Zynga Toronto
Brian Glick – was a product manager, early guy and now lead product manager at YouTube
Dalia Asterbadi – was marketing, now founder of RealSociable
Jason Tham, Jason Yuen, Sean Kirby – product & development, now founding team at Nulogy
Karthik Ramakrishnan – was a product manager & sales engineer, now heads up product at BluTrumpet and at HatchLabs/IAC/Xtreme

So let’s tally that up – 1 modestly successful startup equals roughly 6 new companies founded and 2 new startup investors and some other people in influential places. I am forgetting people as well.

Success begats success. Probably more than money begats success. And that is why we need to celebrate even the modest victories.

Comments

14 responses to “Startup Offspring”

September 2, 2011

Mike Jarema

This is almost like startup geneaolgy, a facet of the startup world thats tough to see without knowing the players involved, scraping through “About Us” pages, etc.

Regardless, thanks for the cool insight!

Reply
September 3, 2011

William Mougayar

What you have described is one excellent example of what is not happening enough here in Canada. It’s a given that when companies are successful, they generate people that go off and start other companies.

But why don’t we have a lot of these people coming out of RIM. Certainly with its footprint and size, it should have generated 100 other companies. For several reasons, it hasn’t.

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1. September 3, 2011
  
  davidcrow
  
  There are a few examples of Canadian company #fairchildren:
  
  * Workbrain
  * Janna Systems
  * Docspace
  * RedKnee
  
  I wrote about this in 2008 http://davidcrow.ca/article/6935/where-are-the-rim-alumni
  
  Reply
  1. September 3, 2011
    
    William Mougayar
    
    That’s great. We should have more.
    
    Reply
    1. September 3, 2011
      
      davidcrow
      
      Agreed. We need more examples.
      
      Very few companies have a growth through attrition attitude, i.e., build a culture such that the only reason you want to leave is because it’s time to go start something.
      
      Not sure about:
      
      * Descartes
      * Pixstream Waterloo has created stronger ecosystem of companies.
      
      Reply
      1. September 3, 2011
        
        Martin Dufort
        
        Don’t forget Poly9 from Quebec city bought by Apple recently also.
      2. September 3, 2011
        
        William Mougayar
        
        Yes. And the big one that totally missed that boat and didn’t nurture the culture of entrepreneurship propagation is RIM.
        Contrast to Terry Mathews’ companies in Ottawa,- many are offsprings of others.
September 3, 2011

Mark MacLeod

This is so critical to our long term success. Look at the Paypal mafia and all the Google and Facebook alumni and the impact they have in the Valley. We need more big tech companies here.

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1. September 3, 2011
  
  davidcrow
  
  We need more successes so we can create the Softies, Xooglers, Paypal Mafia, etc.
  
  There were the Dellionaires and ex-Trilogians in Austin (@fnthawar and I are exTrilogy). The Trilogy Alumni mailing list is still the busiest and best mailing list I’ve been on even though I stopped working there in 1999.
  
  Reply
September 3, 2011

Vfox

Thanks for this. StartUpNorth is continually echoing the growth patterns of the DMZ, a relatively new incubator on the block and is becoming a regular read for us. Invaluable.

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1. September 9, 2011
  
  Will
  
  While DMZ is great for what it is right now. There still much work to be done to really put DMZ on the map – I think forging partnerships with seed funds would be one of them.
  
  Reply
September 3, 2011

Daniel Haran

I co-founded a startup even though none of those I worked for were great successes; a couple other employees also began companies. Of course, we prefer when it’s a success that’s copied.

That said, we already know that children of entrepreneurs are more likely to start a business, so it seems plausible that seeing an entrepreneur is enough to inspire. Maybe just demystifying what actually goes on and providing a social network of people who think starting a company is a logical, sane thing to do. Mainstream social pressure is to just “get a job”.

One simple thing startups should be encouraged to do is to hire people that are thinking of eventually starting their own companies. Not only can it result in more companies in the future, these also tend to be great early employees.

As for VCs, I wish they would encourage early exits and kill more zombies to liberate the potential of teams.

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1. September 5, 2011
  
  davidcrow
  
  The Zombieconomy that is enabled not by the VCs, but by the life support system that many provinces and the federal government provide. There are a lot of innovation programs that keep zombie startups alive, i.e., those without a business model other than gathering SR&ED tax credits and a small number of government agencies as customers.
  
  Reply
September 10, 2011

Michael Pierson

Yes. Modest success and even failures will grow the ecosystem

Reply