Five-tool Players

I loved Moneyball (the movie).  I also especially love sports analogies as they relate to technology and startups.  While well-blogged about (Fred WilsonDave McClureDharmesh Shah), I believe these analogies are representative of what it takes to create and build a successful startup.  While the premise of the book is to evaluate players based on data and metrics, I couldn’t help but tie back to the old school style of scouting in baseball to the current process we’re going through in selecting our cohort.

According to Wikipedia, in baseball, a five-tool player is one who excels at (1) hitting for average, (2) hitting for power, (3) baserunning skills and speed, (4) throwing ability, and (5) fielding abilities.  I believe the same can be said for entrepreneurs.

Sweetest Swing in Baseball

Hitting for Average : Selling to Customers

In Moneyball, Billy Beane and his sidekick focus their team (the Oakland A’s) on one thing – getting on base – because getting on base equates to scoring runs, which equates to wins.  In the startup world, scoring runs is the equivalent of getting cash, and this cash comes from customers.

Every entrepreneur needs to sell to customers.  They need to generate revenue aka cash.  It doesn’t matter if its enterprise customers, direct to consumer, professional services, white labeling, etc.  Ultimately, if the startup is successful, they will sell to customers (which could also mean acquiring users).  Effective hitters know where to hit the ball – pulling the ball, going opposite field, hitting gaps.  Effective entrepreneurs know the gaps in the market amongst their competition and capitalize.

Hitting for Power : Selling to Investors

Chicks dig the longball.  So how do you generate a huge amount of cash for your startup in one shot?  You sell to investors.  Entrepreneurs should also be able to successfully pitch VCs, angels, and other shareholders.  This gives their companies cash in normally larger amounts than when selling to customers.  It takes a special person to be able to raise from VCs.  It takes a lot of time, energy, and follow-through.

A note on specialists here.  In baseball, there are power hitters that specialize in hitting homeruns.  Traditionally, these are the most popular and most sought after players because they have a halo effect around them.  They fill seats, sell jerseys and advertising.  They are the top billers and they usually can do no wrong (unless they cheat).  In startups, this is also true because some franchises (VCs) want their own cleanup hitters at the top for the same halo effect.

Baserunning Skills & Speed : Hustle, Agility, and Speed

Running the bases in baseball is critical.  If you can’t run the bases effectively, you’ll hinder your ability to score runs.

In startups, it’s critical to have that hustle and agility.  This is all about opportunity maximization once the ball is in play.  This means stretching a single into a double (crosssell / upsell, bigger contracts), stealing when possible (customers from your competition), and generally reading your competition in real-time (intuition and nuances of selling to both customers and investors).

Throwing Ability : Teamwork

This relates to the internal aspects of a startup.  Can you lead and work within a team?  Can you hit the cutoff man e.g. delegate when is the right time to do so?.  This is about being affective with players on your own team to maximize the position you play.  The most effective early stage startups I’ve come across have a good team rapport and play to each others’ strengths.  Especially early when there is generally chaos, playing the position you’re best at (product, sales, marketing, customer services, QA, IT, etc.) and knowing your limits is critical.

Fielding Abilities : GTD

Every entrepreneur can get things done, and similarly every baseball player can catch a flyball or field a grounder.  But the gold glove entrepreneurs are the ones that excel at cranking things out and simply getting things done across a broad range of domains.  JFDI (thanks @msuster)!  To borrow an American football analogy, this is the blocking and tackling that is the unglamorous and often overlooked aspect of entrepreneurialism.

Intangibles

There are definitely other things that make a successful baseball player and entrepreneur – experience, drive, fire, luck, durability, clutch ability, personal circumstances.  Most things have to align for someone to be in the big leagues in baseball and technology.

Scouting

Over the last year as a VC, I’ve seen a lot of entrepreneurs with different combinations of these tools.  Some were very effective at selling to customers, but just could not raise a round from VCs.  Their pitches were too technical, they got into the weeds too much.  They needed more sizzle.  They were great at selling to customers, hitting their singles and doubles.  But when it came to closing a round, they only had warning track power and process became that much more drawn out and painful.

On the flipside, there were companies where the only thing the CEO could do effectively was raise VC money.  This left their companies with a lot of cash in the bank and a high valuation.  Now they need to execute and build a product that would attract and acquire customers.  Stay off the roids and start bunting if you need.

We are currently scouting players for our franchise.  Are you a five-tool entrepreneur?  If so, APPLY and come see us at Sprouter today.  We’d love to help you develop into an MVP.

Founders & Funders An Update

I think Jevon and Jonas and Karthik are getting sick of running events with me. Before StartupEmpire back in 2008, I ended up in the Emergency Room at Toronto General for another look at my ticker. This week I ended up in the Emergency Room at Toronto General as we are planning Founders & Funders. I’m ok, I was both times but it does complicate the event planning and invitation process.

“Gentlemen, we can rebuild him. We have the technology. We have the capability to make the world’s first bionic man. Steve Austin will be that man. Better than he was before. Better…stronger…faster.” Wikipedia

So if you feel like you only got your invitation very recently, i.e., today. It’s my fault, I am sorry, I have been out of commission. It’s a reminder that you should do a startup before you need a body replacement.

Founders & Funders

Here is the update on Founders & Funders. It has been almost 2 years since we ran the last Founders & Funders (thanks for noticing William ;-). We are 7 days from the event and we have 35 remaining spots. Unlike past events, we are over inviting and over selling the event, i.e., first come first served. So if you got an invite but were waiting that might be a bad plan…

How to get an invitation?

“Fortune favors the connected entrepreneur.” @jcal7 #trueuniversity via @hnshah

We’re looking for “interesting” founders. Often this means people that we’ve met at other events, as Founders & Funders are relatively small social gatherings. That doesn’t mean it is just our friends, as I’ve been often accused. But it is entrepreneurs that we’ve met, that are building interesting companies, that have interesting traction. Get someone that we think is awesome to refer you. It’s a social hack (just like me).

Connect with other founders

Daniel Debow

We have also decided to include a brief fireside chat with Daniel Debow at this dinner. We rarely do this sort of thing at a Founders and Funders but 2011 was such a great year we thought it would be fun to look back on the ups and downs of Rypple through the years and how they got to their eventual exit, some of which was written about in Forbes this week.

What’s the point?

Jonas, Jevon and I are founders. We are not an event company. We are not a media company. We have been trying to write content on StartupNorth that is relevant to us as founders. Whether we are raising money, connecting with other where we live, finding talent, or growing a business. We generally charge very close to the cost of the ticket, i.e., there are some slight over head costs but we are not collecting salaries or generating revenues. This is an unfortunate hobby. But I know there are world-class founders and companies across Canada and while there are government supported organizations and purported lobby groups, we are just a bunch of founders trying to do the things that we find useful in building our companies.

Founders & Funders is a social event. It is designed to connect with the people writing cheques and making investments on a social level. To talk about startups and technologies and business models without the constraints of a pitch. Will there be pitches, definitely (How do you know when an entrepreneur is dead? They stop pitching). The goal is to have a highly edited dinner party with “interesting founders” and get them out of their usual pitch oriented conversation with VCs.

Whether this works or not is questionable, but it does bring together founders and funders in a social context.

When a Massive Opportunity Knocks!

Editors Note: This is a guest post by Chris Arsenault (LinkedIn@chrisarsenault) a tech entrepreneur turned venture capitalist. Chris is the Co-Chair of the Canadian Innovation Exchange (CIX), a board member at the Canadian Venture Capital Association (CVCA), a Supporter of the C100, among other things. Follow Chris at chrisarsenault.wordpress.com or on Twitter @chrisarsenault.

CC-BY-20 Some rights reserved by antmoose
Attribution Some rights reserved by antmoose

The last few weeks have certainly proven to be extremely promising for Canadian Tech Entrepreneurs. Almost $80M of equity financing has recently been secured from some of the top investors in the world to help build our next generation of massive tech companies. It’s even more exciting when you realize that these funds are going to three especially young, dynamic and opportunistic companies, all of which are in our backyard!

Beyond the Rack

Beyond the RackYona Shtern, Robert Gold and the team over at Montreal-based Beyond the Rack (“BTR”) lead the way with a whooping $37M financing round that should propel the company to new heights yet unseen on the Canadian eCommerce front. BTR has quickly established itself as an eCommerce leader by showing the market that Canadian companies really do know what a “hockey stick” revenue growth chart looks like. The teams’ ability to build such a big company in such a short time frame has earned them our utmost respect. We initially met the team and reviewed their business plan in late 2008; by 2011, they were already ranked as one of the fastest-growing online retailers in the entire world. Yona was also wise in choosing his investors, be it industry specific angels or great VCs such as Panorama Capital, iNovia Capital, Rho Canada, Tandem Expansion, BDC Venture Capital, Highland Capital Partners, EDC and Montreal Start Up. If you aren’t a Beyond the Rack member, don’t wait – register now, and you’ll be impressed!

Shopify

Shopify - LogoJust down the road from Montreal is another world class eCommerce team. Ottawa-based Shopify recently closed a $15M second round of financing. Tobias Lutke, Cody Fauser, Daniel Weinand & Harley Finkelstein have developed an industry leading eCommerce platform that is already being used by thousands of leading online retailers around the world. The team, their vision and commitment to execution all combine to make Shopify one of Canada’s tech leaders in an extremely high growth global market. Unfortunately, we missed the boat on the opportunity to work with them, but our friends over at Bessemer Ventures, Firstmark Capital, Felicis Ventures and Georgian Partners were more than happy to come aboard. I’m expecting to see Shopify rise above the tide over the coming years and establish itself as a global leader in its space.

Fixmo

FixmoThe most recent team to announce a substantial equity-financing round is Toronto-based Fixmo. Led by its founders Rick Segal, Shyam Sheth and Joyce Janczyn, Fixmo just announced a $23M round. This investment round included both existing investors (iNovia Capital, Panorama Capital, Rho Canada and Extreme Venture Partners) and an impressive syndicate of new lead investors: Silicon Valley-based Kleiner Perkins Caufield & Byers, Washington-based Paladin Capital Group and Hong Kong-based Horizons Ventures. While the company’s core vision has not changed over the last two years, the product development road map has evolved at a rapid pace. Within an extremely short time frame, Fixmo launched a series of Government and Enterprise products, acquired two companies (Conceivium Business Solutions and Chocolate Chunk Apps), established a series of key partnerships and practically jumped ahead of every other Mobile Risk Management solution provider in the market. Obviously, the founders didn’t do it alone, but the sheer fact that Rick was successful in attracting some of the best talent out there (Bruce Gilley, Jonas Gyllensvaan, Tyler Lessard, Lee Cocking, John Yuen and others) speaks to the long term execution ability and potential of Fixmo.

Ambition coupled with Execution

The average tech financing round in Canada is under $4M. Therefore, the aforementioned three companies basically raised as much cash as 20 average Canadian tech startups combined. Obviously, I get nervous when I see a company (portfolio or not) raise such a large chunk of cash. Why? It’s not because I like the small size of the average Canadian financing rounds. Rather, it’s because I think that too much money for a young business can be as bad as or worse than not having enough. $15M-$40M rounds for Canadian tech companies are amongst the largest we have seen this side of the border in over 10 years. That being said, I do also think that Canadian Tech Entrepreneurs are now entering a phase of Ambition coupled with Execution. We have lived through too many years of “lack of ambition”, quickly followed by “lack of execution”, not to mention the much lamented “lack of capital”. However, we are now seeing deals done where massive amounts of ambition and execution converge, and capital is becoming available to build large tech companies right here in our own backyard. With more companies able to raise the amount of funding they truly need to generate hundreds of millions of dollars of revenue, not only we will stop selling our companies short, they won’t need to move down south. Hopefully other investors will note the phenomenon, and future startups won’t have as much trouble raising the capital both from Canada and into Canada. And that’s good for all of us.

At iNovia, when a massive opportunity knocks, we answer! I’m expecting to be sharing a lot more stories about successful Canadian entrepreneurs, and how they’ve built hugely successful companies here as they compete globally for resources, capital and market share. There isn’t much stopping the entrepreneurs driving Canada’s next generation of large tech companies, and for the likes of Beyond the Rack, Shopify, Fixmo and many others, this is just the beginning.

Congratulations to all the teams mentioned in taking important steps on their paths to success!

Below some article worth reading with regards the above companies:

Editors Note: This is a guest post by Chris Arsenault (LinkedIn@chrisarsenault) a tech entrepreneur turned venture capitalist. Chris is the Co-Chair of the Canadian Innovation Exchange (CIX), a board member at the Canadian Venture Capital Association (CVCA), a Supporter of the C100, among other things. Follow Chris at chrisarsenault.wordpress.com or on Twitter @chrisarsenault.