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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.

Dan Morel

twitter: @dpmorel, email dan dot morel at gmail Dan is CTO and co-founder of Peek (www.peek.ly). Previously, he ran around the Caribbean (from Haiti to Trinidad) launching new businesses & products for Digicel - living in Kingston, Jamaica. Before that was a very early employee at Redknee, headed product development on their path to IPO. I'm a hacker and generalist business guy with my roots from University of Waterloo, Computer Science. linkedin: http://www.linkedin.com/in/danmorel

http://mikejarema.com/ 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!
http://engag.io/ 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.
http://davidcrow.ca/ 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
http://startupcfo.ca/ 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.
http://davidcrow.ca/ 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.
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.
http://engag.io/ William Mougayar

That’s great. We should have more.
http://davidcrow.ca/ 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.
http://twitter.com/mdufort Martin Dufort

Don’t forget Poly9 from Quebec city bought by Apple recently also.
http://twitter.com/danielharan 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.
http://engag.io/ 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.
http://davidcrow.ca/ 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.
http://www.quantifire.net/blog 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.
Michael Pierson

Yes. Modest success and even failures will grow the ecosystem

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