You are supposed to break the rules

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Great entrepreneurs truly do not care about the rules.

If you haven’t noticed, there are a lot of rules.

Some come and go with the times, others never seem to go away:

  • You are supposed to dress a certain way
  • Finance your company this way
  • You pitch deck should look like THIS
  • You, in your industry, with your product, it’s not the way it’s done

And there are the big rules, the regulations:

Great companies are built by breaking rules. We call them ‘norms’ but they are rigid and they feel real until someone destroys our idea about ‘how it’s done’.

  • Marc Benioff decided to sell software as a service when everyone believed they had to install software on premise
  • Steve Jobs built expensive but beautiful machines when every other hardware company believed they had to be cheap.

and so many more.

And it’s happening, there are more great stories of breaking the rules and the amazing companies that result:

  • Figure1 is breaking the rules in Healthcare
  • Wattpad has done away with not only publishers, but with most of the old creative process

Who else comes to mind?

Sometimes a pure rethinking of technology can completely rewrite the rulebook. Bitcoin is readily looked at as an alternative to fiat currency, something that was unthinkable before a purely electronic currency was conceived.

Breaking the rules goes by many different names like ‘disruption’ and ‘innovation’ but they all start with someone rethinking an old way of doing business. When we look back on what they’ve accomplished we often like to call these rule breakers ‘clever’, ‘brilliant’ or ‘strategic’. The truth is that they didn’t get ahead by adding complexity, or navigating what existed. Most of the time they were able to get ahead by pushing aside the rules and focusing on the opportunity.

The rules almost always come to mind later.

As the world becomes more and more ‘wired’ I believe that startups will run in to regulatory hurdles more and more often. Like uber, AirBnB, Lyft and others, the rules sometimes represent a massive opportunity to create efficiencies in a place everyone else thought was off limits.

There are little rules, and there a big rules. No matter which stage a company is at, it’s the rule breakers who get noticed, they are the ones who crack a market open and feed off the the plump center.

One Post to Rule Them All

One Ring to Rule Them All

Hard to believe that it has been 21 months since I wrote Don’t Panic: A Hitchhiker’s Guide to the Toronto Startup Ecosystem. There are parts of this post that are a little dated but it generally holds up as a meaningful introduction to the Toronto/Waterloo startup scene. The goal is to provide a curated list, it will not be comprehensive. 

If I’ve missed anything, add a comment or ping me directly @davidcrow and I’ll make updates on the fly.

People & Companies

There are so many people and companies, it is hard to know what is important to whom. I will do a separate posting with the companies and founders that I’ve been following. The challenge is that this is a long, long list and there are a lot of amazing companies in Toronto.

Angel Investors

Institutional Investors

There are a lot institutional investors that are active in Toronto. Entrepreneurs need to do a little diligence on their investors. You should be trying to figure out what type of companies do they typically invest in? How big is their fund? How much is unallocated? Who else have they invested in?

Foreign Institutional Investors

Banking/Financial Services

Accounting/Tax/SR&ED/Bookkeeping/Reporting

Legal Firms & Lawyers

Journalists

I think the biggest piece of advice is that generally the “we’re a startup and we launched” it just a shitty pitch to any journalist. You need to spend some time building a better message understanding who these journalists are, why their audience might possibly care about your story. This is a list of journalists that write about emerging technology companies. But you should also seek out journalists in your vertical or segment, this might might include moms, marketers or anything.

Recruiters

Office Space

We all need office space. I have spent hours looking at listings on Craigslist, Kijiji and other sources. I

Maker Space

Maker spaces are very different than flexible lease office space.

Educational Programs

Application Development Shops

Design Shops

PR & Marcomm Agencies

These are the Toronto-based PR Agencies that I’ve worked with or seen their work first hand. I probably need to add a section for other international PR firms particularly NYC , SF and the UK. This can be a very expensive and very difficult for founders that have not found product/market fit.

Coworking/Flexible Lease Office Space/Accelubators

We can call it what you want. Incubators, accelerators, cyclotrons. It doesn’t matter. The activities range from education to local economic development to flexible leasing to coworking. They are a necessary part of the ecosystem. But it feels like at times rather than starting a “real company”, that many have decided that the path of rent some real estate and attract others with a few programatic offerings is a better business model (at least there is a defined market with a key pain that can be monetized). Let’s call it what is is, it is office space with benefits or office space ++ (office space # for you Microsoft peeps). The benefits range from flexible leases to access to advisors to educational programs to investment capital. Do your research. Focus on the outputs, i.e., the companies that have graduated from each.

Events

There are a limited number of Canadian events that matter. There are the big events. They are big, they are busy, and not a lot of business happens at the event. But you can be guaranteed that most of the major players above will attend and you can reduce the number of trips to connect with people. You should be going to events that your potential customers attend. I am pretty sure unless you are an investor, service provider looking to service the startup industry that you shouldn’t be focused on these events. They are interesting social opportunities to connect with these groups in a concentrated fashion. You should also be actively looking for those same opportunities in SF, NYC, Boston, UK and around the globe.

If you’re going to travel and you want to stay in Canada there are 3 events where you can bump into most startups, founders and investors including some from outside Canada. These events are worth traveling for, but you need to have significant motivation/reason, like you are speaking or you have arranged a meeting with a specific individual.

The rest of the conferences are regional in nature but they should be considered mandatory if you are looking to connect in one shot. These events include most of the local ecosystems, i.e., Montreal, Ottawa, Alberta, Waterloo, etc.

There are smaller local events that happen more regularly. But I am not an expert at these events anymore. I recommend just subscribing to StartupDigest for a great weekly calendar email (you can also check out our Events page). Where are people finding really great opportunities to connect?

Former MaRS CFO saw problems in 2010

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The following is a guest post from Mark McQueen, originally written on Wellington Financial’s blog


Thanks to the fine folks here at StartupNorth, there has been a vibrant online discussion over several days regarding the “problems” with the Ontario government’s MaRS program. As of this morning, there have been over 300 contributions from a variety of players in the ecosystem, all prompted by the observations of Dan Debow, a highly successful local entrepreneur (Workbrain and Rypple).

Before we get to the painful stuff, it must be said that there are many dedicated people within the MaRS organization and on the MaRS Board (such as Lawrence Bloomberg, Dr. John Evans and Richard Ivey) who are sincerely trying to help make the world a better place. The fact that some talented and hard-working former VCs have joined the staff in recent years speaks to the maturation of the organization and the shrinking number of real VC jobs available in Canada; but I have always believed that MaRS’ provincial benefactors (starting with former Premier Dalton McGuinty) saw the operation as a very helpful monument to their interest in innovation, first and foremost (see representative prior post “Brutal venture capital stats for H1 2007 part 3” Sept. 12-07).

The kinds of complaints you hear about MaRS are largely the same, and generally foreign to the buzz around Waterloo’s Communitech. That shouldn’t be the case.

14 years ago, I would trek down to Waterloo every few months and visit with the team there, back when it occupied a small space beside a Sunoco station. This was long before the Tannery project came together, and people like Paul Weber, Jane Jantzi, Greg Barratt and Judy Geraghty worked cheek by jowl in a couple thousand square feet. At its roots, Communitech was about helping entrepreneurs develop their business plans, find a customer, meet some mentors, and hopefully raise some Angel funding before charging off into the wild blue yonder. That’s why its early Board and network of supporters was made up of people like John Whitney, Tom Beynon, Jim Balsillie and Michael Stork. Folks who were integral to the K-W start-up ecosystem in some way or another.

Even today, the Communitech Board is dominated by entrepreneurs and connectors, such as Desire2Learn’s John Baker, Ali Asaria (CEO, Tulip Retail), Dave Caputo (CEO, Sandvine), Joseph Fung (Co-founder and CEO of TribeHR) and Carol Leaman (CEO, Axonify), among others. There are no spots reserved for Big Pharma or Mega Bank. Not that Canadian bank CEOs are not by definition successful in business; it’s just that the personal network they bring to the table aren’t the local innovation entrepreneurs. Which means you as a Board member have no ability to personally gauge whether or not your “incubator” is effectively serving its denizens or would-be clients. I’m sure the governance is second to none, but…

That’s a minor example of why Communitech has always worked in my view, and MaRS doesn’t — at least not based upon the financial resources deployed in each case. In 2012, I gave a speech to the Canadian Business Magazine Leadership Forum, and practically begged our governments to create a Communitech-like incubator in Toronto. I suppose that reflected my resignation that while MaRS was many things, it wasn’t succeeding — ten years later — at what the innovation ecosystem sees as its core mandate. Rather than try and turn the oiltanker around, you do what innovators do: start with a clean sheet of paper.

That’s why Salesforce.com exists — because someone saw what SAP couldn’t do.

Which brings us back to the StartUpNorth chat on Facebook. The first comment that caught my eye was from an entrepreneur named Bob Seeman from Clera Inc. This is what he had to say:

Our company was a tenant of MaRS, and the facilities were terrible by basic lab standards and hilariously overpriced. We are globally regarded as world authorities on a rarefied part of neuroscience that my father discovered and for which he was nominated for the Nobel prize. Despite this, MaRS proclaims to have the ability to offer taxpayer-funded advice from bureaucrats to companies like ours. That is comical. Even 99.9+% of neuro-pharmacologists around the world will admit to not understanding my father’s groundbreaking work in dopamine receptors and its effects on the brain. The idea that bureaucrats can offer us advice is absurd.

There are two sad realities here. First, that even the Ontario government can’t find marshal the talent to support ground-breaking work in science. Second, that even if you do chin up to the Bay Street real estate lease rates that MaRS demands, the labs are substandard. Perhaps Mr. Seeman’s situation would have been too much of a specialized challenge for even Communitech to have be useful to, but let’s hear from Charles Plant, a former CFO of MaRS:

I have spent over thirty years in the tech startup community including 4 years working at MaRS, ending as CFO in 2010, 2011. I have a great deal of respect for the people who work at MaRS as they are trying to do what they think is right and I have hesitated to speak out as I don’t want to offend many friends who are still there. These comments though are things I said when I was at MaRS and have continued to say since.

As with all organizations, MaRS does some things well and could improve how they do other things. The problem with MaRS is in its design. There is no customer feedback loop.

Companies get feedback through revenue from customers who do or don’t buy their products. MaRS gets funding from the government to give services away for free so customers don’t give feedback in terms of payment. Real estate development companies get feedback from lessors and from lenders who deny funding unless customers agree to lease. MaRs though, gets tenants and funding through the government so once again there is no feedback loop.

The problem with MaRS is exacerbated by the fact that there are absolutely no tech entrepreneurs on its board of directors and very few if any in senior management. Thus its leaders are not deeply connected into the tech community and they can’t get direct feedback that way.

Communitech is successful because it has a membership of tech companies, a board populated with tech entrepreneurs, and a senior management team with tech startup experience. While it gets lots of funding from the government it gets its feedback from members and thus know what needs it must meet in order to keep them as members.

MaRS needs a better feedback loop with its customers than a few surveys every year and a few blogs like this. It needs tech entrepreneurs on the board, on the senior management team and a membership that can give it feedback where the current feedback loop is missing. Maybe through a membership it could address the transparency and performance concerns that many in the community have expressed in this blog and elsewhere.

That says it all, and confirms what many have been saying for years. Good people, wrong model.

Let’s sell the fancy real estate and start over.