Should We Drink the Local Kool-Aid?

Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.comThis post was originally published in December 15, 2011 on MarkEvansTech.com.

CC-BY-NC Some rights reserved by Eric Constantineau - www.ericconstantineau.com
AttributionNoncommercial Some rights reserved by Eric Constantineau – www.ericconstantineau.com

In the post I wrote earlier this week about the demise of Thoora, there was a comment suggesting that “Toronto failed Thoora” due to a lack of community support to make it a “winning formula”.

It was a puzzling comment because it suggests a community has an obligation to support a startup so it can thrive. This strikes me as an absurd idea because startups should succeed or fail on their own merits, and the ability to attract an audience near and close.

Sure, it’s good to drink the local flavour of “Kool-Aid” but only if a startup is offering a product or service that meets a need or interest. There are lots of local startups, including some that pitch me directly, that don’t resonate because nothing something interests me or the product/service doesn’t resonate enough to warrant further exploration.

It doesn’t mean I’m not supporting the local community; it just means a startup has a service that didn’t pass the sniff test.

At the same time, I do think Toronto’s startup community is extremely supportive. There’s no lack of enthusiasm, energy and a willingness to share ideas, feedback, resources, real estate and time to provide startups with a boost.

This has been a fact of life for the past five years, even before we started to see a flurry of startups appear on the scene. There has always been a strong, support community that has pulled together in different ways. A great example is tonight’s HoHoTo party, which has become a major fund-raising machine due to tremendous support from the community.

The bottom line is if a startup needs to rely on the community to make it, it also suggests what it’s offering can’t survive  without artificial support.

For startups, the market has to be bigger than its own backyard. It needs people to support it or not based on what’s being sold as opposed to a sense of duty or obligation.

Editor’s note: This is a cross post from Mark Evans Tech written by Mark Evans of ME Consulting. Follow him on Twitter @markevans or MarkEvansTech.comThis post was originally published in December 15, 2011 on MarkEvansTech.com.

  • Anon

    You’re right, Mark. Start ups have to succeed on their own merit. It’s nice to be able to tap into local support for advice, but a business has to get sustainable traction and work rapidly toward revenues exceeding costs.

    Now, local capital availability, and the extent to which Canadian capital providers have the resources and creativity to support a number of large opportunity businesses across a variety of sectors, that’s a different argument. You could make the case, IMO, that we’re lacking the insight, risk friendliness, and aggressiveness of Stateside capital providers. I’m sure there are those who will disagree with that suggestion.

  • http://davidcrow.ca/ davidcrow

    Capital is one of the requirements during early formation. No doubt. 

    But we’ve seen a large number of founders that think it is their right to get funded to explore an idea. Much of the early stage capital in Canada has been conservative because we don’t have entrepreneurs with the track records of successful exits in many US locations. 

    I have heard a lot from entrepreneurs that think investors should give them startup or seed capital because they went to a good university or that they worked at a startup. And that coupled with the “value of the idea” is enough. They haven’t put in any sweat equity, they haven’t asked their friends and family, they don’t have any traction, etc.  So yes local growth capital is extremely tight, it is not absent. 

    The basics of “a business [with] sustainable traction and wor[ing] rapidly toward revenues exceeding costs” is often lost on many entrepreneurs in this ecosystem.

  • http://startupcfo.ca/ Mark MacLeod

    Community does not equal charity. And startups operate in a Darwinian environment. So, I agree with you. I do believe strongly in community but that does not mean we should do unnatural things or that we have an obligation to use something because it’s local. 

    I do, where ever possible only use Canadian technology, but I only use great products. We won’t succeed if we need charity from our peers.

  • http://twitter.com/jmacritchie John MacRitchie

    I agree with Mark’s points.

    But are we seeing enough local customers outside our “community” willing to try out a new supplier who might give them a competitive edge? Too often I hear from companies that have found their important first customers far from home before they are able to convince local customers. 

    Sure, the new business has to solve a real problem. But we need customers don’t need to wait for someone else (their competitors) to prove it 10x first. (Government procurement can even play a role in this.) 

    There is plenty of evidence that investment by Canadian businesses in technology lags that of their US counterparts. Usually the low investment in technology is used to explain lags in productivity (yawn). 

    But it can also explain why it can be hard to find the first customers in Canada. 

    This may not have been the case for Thoora. But, who knows? Maybe more customer engagement here might have led to faster changes in their model that would have led to something viable. 

    Or killed it faster. 

    Either works for me.

  • Lance Douglas

    Good
    article, and valid comments; thank you.

    I
    believe that the start-up that is community focused/based, must also do its
    part to integrate further into the community than a run-of-the-mill tech
    company hoping the locals will support near-random local.

    For
    example, our team learned early on that a community-focused company must be
    driven by much more that profit and sustainability, it must also be a major
    proponent of access, accountability, enrichment, resilience for that same
    community.

    The
    challenge start-ups run into when failing to understand that is precisely in
    line with the OP’s thoughts on “artificial support” and “bigger
    than its own backyard”. You “can” be a community focused start-up
    that has a primary focus of its own backyard, but that means that your main
    focus has to not only be something your community wants, but also specifically
    be involved in developing the cultures of use and understanding.

    Too
    often we see start-ups “expect” some sort of inherent critical-mass
    of support (financial and fanatical) from their local circles, without any feedback-loop,
    direct-investment, or inherent enrichment between the start-up and their
    magical “artificial support” that is expected to propel the start-up
    to the world stage.

    In
    other words, if your expect your own backyard to be your primary market, focus
    on it like it is the new world; else, focus on the larger region and be
    thankful of each and every customer that your local market provides (local
    communities love to rally behind (inter)national companies that don’t
    guilt-trip or whine about any lack of local support). Invest in your community
    first, and the payback is there. But never expect it or you’ll achieve failure
    quick quickly.

  • Lance Douglas

    Sorry, no idea what happened to that post’s linebreaks after the first word of each paragraph… please edit it if you can.