Year: 2008

  • Identi.ca – Open Source Microblogging

    You know everything you hate about twitter? Downtime, walled garden, some very poor design in places, etc.

     Well a solution launched today that seems to be technically superior in every way, but is going to be facing a tough battle ahead to attract users and get them talking.

    Identi.ca is a new open source project to build a better twitter. The actual open source project is called Laconi.ca, and it has been created by Evan Prodromou in Montreal who also founded Certifi.ca and Wikitravel (one of my favorite websites).

    When you first see this project it is easy to write it off as a mere attempt to knock twitter off it’s throne, but I don’t see it that way. By releaseing Laconi.ca as an open-source project, Evan is betting (I think) on building out the sort of long-tail of microblogging. Charlottetown based SportsTwit is an example of niche microblogging that I think has a real chance of catching on (and should consider switching to the Laconi.ca platform).

    The introduction of Laconi.ca brings microblogging from being a closed and proprietary world in to a more mass market tool in the same way that blogging is no longer just Blogger, but is instead a medium.

    By using open standards like FOAF and others, different sites running Laconi.ca can talk to eachother and federate data. That means that if you are on a niche site, say startupnorth-tweets.com, you can interact with people on Identi.ca, and they have full access to your profile and other information. This is one of the core weaknesses of Twitter, its inability to federate out some of the load.

    Good luck Evan, I have a feeling this is the start of something great, and a change that had to happen.

    You can find me here: http://identi.ca/jevon

  • Dan McGrady: 7 Reasons Why My Social Music Site Never Took Off

    Dan McGrady has been on a roll with some great posts lately, and “7 Reasons Why My Social Music Site Never Took Off” really grabbed my attention yesterday.

    Dan started Contrastream last summer. I liked the site a lot, as I think music discovery is a huge problem that is being approached in the wrong way by the major music sites/stores. The site was well put together and full of potential, but it just didn’t take off.

    This is where, I believe, Dan is making the shift from being someone who cobbled together a website to being an entrepreneur. Instead of hiding the fact that Contrastream didn’t really take off, Dan is making a clean break, reflecting on what he learned and what he did wrong, and he is hitting the ground running with his next startup: IntegrateSales

    Dan’s reasons his site never took off? Read his blog for his full analysis

    • Design Perfection
    • Underestimated the ?Cold Start? problem
    • Market Size vs Business Model
    • Bad launch
    • Competition
    • Motivation
    • Co-founder
    • Derivative Idea
  • The Who, What, Where, When & Why of Y-Combinator. An Interview with Michael Parkatti & Michael Marrone

    Jevon and Jonas recently offered me the opportunity to interview two teams of Canadians currently attending Y Combinator for Startup North.

    Y Combinator is a seed-stage funding firm that combines money, advice and connections with a 3 month program that operates in Cambridge & Mountain View. It has been responsible for a number of high profile successes and captured the attention of many investors and entrepreneurs with its innovative funding & advisory model.

    Taking a small break to play W-Five correspondent (in my weak Lloyd Robertson impression) I asked Mike Marrone and Michael Parkatti to answer some questions about their Y Combinator experience. The interview is about their experience of joining Y Combinator and their soon to launch startup WildStabMedia (which they are not able to discuss in detail yet). Mike and Michael are also writing a column on the Globe and Mail detailing their experience.

    Mike&MikeYCombinator

    1) What was your previous startup experience before deciding to apply to YCombinator?

    Parkatti: Mike and I met while working at Cambrian House in Calgary. I left a comfortable career specifically because I wanted to find out what it was like to be involved with a startup. CH was the right kind of place to get that first startup experience with, because of the energy and passion everyone brought to work with them everyday. It felt like I was constantly meeting people who felt the same way I did about what constitutes a normal ‘career’ path. As great as that experience was, however, working at a startup can only show you what starting a company can be like… it doesn’t necessarily show you how to start one of your own. After leaving, we wanted to start something, but really had no idea where to start or how to raise funding. Eventually, we both had to get regular jobs and bide some time. After half a year of doing that, we applied to YC.

    Marrone: Working at CH was awesome. It completely rejuvenated me about working in the tech industry. Before accepting employment with CH, which was my first startup, I was seriously contemplating switching professions. The experience at CH was a real eye-opener, where I got to work on exciting projects in an exciting atmosphere and met a ton of great people. Afterwards I couldn’t see ever going back to a regular job.

    2) Tell us about the interview process for Y Combinator? What was it like, how was the competition and what about your interview & background do you feel gave you guys your chance to join the Y Combinator class over other applicants?

    Parkatti: You apply to YC using a simple web form, answering each question succinctly. We’d spent a lot of time brainstorming new business ideas, and actually kept a long document of them all. In my opinion, coming up with good ideas generally begets coming up with better ideas. We were thinking of YC as kind of a long-shot… working normal jobs were wearing on us, and we both knew we had to do something entrepreneurial or something was going to give.
    Finding out that we got the interview was one of the biggest thrills, because that’s the major bottleneck in the process to get into yc. They flew around 5 dozen teams to Silicon Valley and interviewed all of them in 3 days. Each team gets 10 minutes. We prepared for the interview a lot, and knew that the pitch was going to be compelling enough, as long as we were able to communicate it properly.

    Basically, they just need to a) hear that you’ve got an innovative idea, and b) have confidence that you can actually build it. Mike and I had both put built and launched compelling side projects in the months prior to the YC applications, which I think let them know that we were capable of both.

    Marrone: Basically went into the YC interview with the mindset that we were about to get a chance to get feedback from some of the people I respected the most. Anything on top of that was icing on the cake. I wasn’t worried about getting in or not. When they offered us investment we didn’t even have to think it over, the answer was obvious.

    3) Beyond the limited funding Y Combinator provides there is a strong social & learning component of the program. Can you tell us so far what that has been like?

    Parkatti: Y Combinator usually provides $5000 + $5000 per founder. The money affords time to work on the product… but the actual value in YC is the network of people you’re around and have access to every day. Our peer founders are all extremely intelligent people and give us fantastic insights at every turn.

    You don’t learn about how to build your product — with only three months to make something that people want, there isn’t any time for that. What you learn is how to build a company. It’s a process that’s fairly ambiguous to outsiders, and gaining the confidence to know that it’s possible is a huge deal.

    Marrone: So far the biggest thing we have gained is the extreme focus on defining our product. The chance to talk to PG and crew pays off in minutes what you couldn’t get elsewhere in hours. Literally talking to them for a few minutes, and listening to them speak at the dinners completely focuses you on getting your product out the door.

    4) Soon you will be graduating from Y Combinator and presenting your startup to the world, is your goal to raise funds & stay in the Valley?

    Parkatti: It’s hard to say what our next move is. Basically, whatever we need to do to make our startup a success, we’ll do. I’m sure we’ll raise funding at some point… but right now we’re concentrated almost exclusively on making a good product. Our goal is to create a successful company, and without a good product that’s literally impossible.

    Marrone: My goal is to do whatever is needed to keep moving forward. If that means we want funding at some point then so be it, but that remains to be seen.

    5) I know you can’t discuss your actual project – but can you discuss a bit how you selected the area, triaged your ideas and focused on one that you felt had legs? So many people have ideas but have a hard time assessing if they are ‘worth much’ – you guys have gone right to the ‘execute on the idea’ phase, any big changes you’ve made once you started?

    Parkatti: Coming up with good ideas is a bit of an art more than a science. First, you need to understand the Internet space and what sorts of things can get enough traction. That’s understanding your market. Second, you need to know your technical ability well enough to know what’s possible to build — that’s knowing your capability. Third, you need to know that your idea can actually make money at some point.

    And our idea has already changed quite a bit as we’ve built it. I think if an entrepreneur’s idea doesn’t change much from planning to implementation, that’s more of a bad sign than a good one. On the internet, building a simple product with an easily understood value proposition is key. You need to distill a product into its basic elements, and strip out all of the unnecessary details.

    6) Having worked in Canada in the startup & technology worlds – what’s the perception of doing startups in Canada among the other Y Combinator applicants and program leaders? Any thoughts of your own on the good & bad points of doing Internet startups in Canada from your perspectives?

    Parkatti: To be honest, the Canadian startup community seems to be almost entirely unknown here. There’s obviously smart Canadian entrepreneurs … but I think it’s harder to break into that ‘inner circle’ in Canada to gain credibility. In the States they understand that it’s the entrepreneurs that provide the lifeblood of the community with innovation. Without entrepreneurs, that ecosystem simply doesn’t exist.

    In Canada, I feel like the interpretation is different. Someone here mentioned the other day that you should never feel like investors are giving you the permission to start your business…. only you have that power. In Canada, it feels like you do need someone else’s permission. That’s not to say that Canadian startups can’t be successful, because they obviously can be … it’s just that the environment is different.

    7) One thing Y Combinator is known for is the speed & focus they create by constraining resources & dropping you into an environment that is 24/7 living & breathing your startup dreams. How has that pace & focus been for you guys?

    Parkatti: It’s been perfect for us. We execute quickly, so being able to concentrate on our product for 10 weeks affords us time to really perfect it. We’ve both built products in our spare time before, and most of the time you just feel exhausted. Right now, it feels invigorating being able to obsess about it and get it right.

    Marrone: You don’t realize how few days you have until you actually count them. After that you don’t really feel the pace of working all day because you are just focused on getting what you need done before your time runs out before Demo Day.

    8) Final Question – Any advice for other aspiring entrepreneurs in Canada who are thinking about Y Combinator or starting their own startup?

    Parkatti: Start building something — preferably something you’d like to use yourself. Learn how to code. If you don’t know how to code, find friends who can. The more ideas you have and the more ideas that you make into reality, the better you’ll be at both processes.

    YC is great for getting credibility — because you’ve already been pre-filtered by extremely intelligent people. But we were planning on making our product anyways, and that’s the mindset you should have. You’ll find that when you have no connections, or experience, or capital, the one thing that gives you any credibility at all is results. If you have a product with traction, you have printed your own golden ticket. And you don’t need anyone’s permission to do that except your own.

    Thanks to Mike & Michael for taking the time to do this interview. We’ll be following up with them after Y Combinator Demo Day.

    Next up from will be an interview with with Christopher Golda & Michael Montano two Canadian entrepreneurs who are also attending Y Combinator this semester.

    Austin Hill is the CEO of Akoha and a guest contributor to Startup North.

  • Y Combinator, three weeks in.

    “When it comes down to it, we really just want to launch as soon as possible ? the absolute best way to learn about the efficacy of your product is to have people actually use it.”

    Michael Parkatti and Mike Marrone checking in from Cambridge, Massachusetts where they are participating in the 2008 summer session of Y Combinator. Read the entire Y Combinator journal. We previously wrote about the guys here, and we will have an interview with them coming soon.

  • Hostopia acquired for $124M

    Hostopia (TSX: H) has entered into an agreement to be acquired by Deluxe Corporation (NYSE: DLX) for $124M. Hostopia, with operations in Toronto ON, Miramichi NB, and Ft. Lauderdale FL is in the business of providing private label web, email, and application hosting. Customers include ISPs, telcos, cablecos, and domain registrars. Hostopia had received venture funding from Telus Ventures.

    Hat tip to Chris Pyper, Cofounder and Developer of MyWebVine.

  • 17 Mistakes Start-ups Make

    John Osher discussed What Not To Do: 17 most common mistakes start-ups make and how to avoid them in Entrepreneur Magazine. Each of the mistakes are a topic on their own, for example, I?ve trying to provide examples of high level market and financial analysis. Mistakes 1-8 focus on the market and financial requirements of a startup. Mistakes 9-10 focus on hiring and corporate management. Mistake 11 is about product design and technology. Mistakes 12-17 are about focus and vision. It is a very interesting read for building an appropriate mind-set for entrepreneurs.

    1. Failing to spend enough time researching the business idea to see if it’s viable. "This is really the most important mistake of all. They say 9 [out] of 10 entrepreneurs fail because they’re undercapitalized or have the wrong people. I say 9 [out] of 10 people fail because their original concept is not viable. They want to be in business so much that they often don’t do the work they need to do ahead of time, so everything they do is doomed. They can be very talented, do everything else right, and fail because they have ideas that are flawed."
    2. Miscalculating market size, timing, ease of entry and potential market share. "Most new entrepreneurs get very excited over an idea and don’t look for the truth about how many people will want to buy it. They put together financial projections as part of a presentation to pump up their investors. They say, ‘The market size is 50 million people that could use this product, and if I could only sell to 2 percent of them, I’d be selling a million pieces.’ But 2 percent of a market is a lot. Most products sell way less than 1 percent."
    3. Underestimating financial requirements and timing. "They set their financial requirements based on Mistake 1, and they go ahead and make a commitment to this much office space and this many computers, and hire a vice president of sales, and so on. Before they know it, based on sales projections that were wrong to start with, they have created costs that require those projections to be met. So they run out of money."
    4. Overprojecting sales volume and timing. "They have already miscalculated the size of the market. Now they overproject their portion of it. They often say ‘There are 200 million homes, and I need to sell [to] x number of them.’ When you break it down, though, a much smaller number of those are really sales prospects. That makes it impossible to make their sales projections."
    5. Making cost projections that are too low. "Their cost projections are always too low. Part of the reason is that they project much higher sales. There are also unknown reasons that always come out that usually make costs higher than planned. So on top of everything, their margins are now lower."
    6. Hiring too many people and spending too much on offices and facilities. "Now you have lower sales, higher costs and too much overhead. These are the things that you see every day in companies that fail. And they all grow out of that first mistake: failing to research the size and viability of the opportunity."
    7. Lacking a contingency plan for a shortfall in expectations. "Even if you’re realistic in your estimates to start, there are things that happen when you start a new business. Your sales ideas may be no good; bank rates may go up; there may be a shipping strike. These aren’t the result of poor planning, but they happen. More often than not, entrepreneurs just feel that something will come along when they need it. They don’t have contingency plans for it not working out at the size and time they want."
    8. Bringing in unnecessary partners. "There are certain partners you need. For instance, you often need money, so you’re going to need money partners. But too many times, the guy with the idea takes on all his friends as partners. Many people don’t provide strategic advantages and don’t warrant ownership. But they’re all going to get 25 percent of the company. It’s totally unnecessary, and it’s a mistake. Before people are made partners, they have to earn it."
    9. Hiring for convenience rather than skill requirements. "In my first business or two, I hired relatives. It was easy to do, but in many cases, they were the wrong people [for the job]. And it’s hard to fire people, especially if they’re relatives or friends. More time needs to be spent handpicking people based on skill requirements. You really need super-skilled people who can wear more than one hat. It just bogs you down when you hire people who can’t do the job."
    10. Neglecting to manage the entire company as a whole. "You see this happen all the time. They’ll spend half their time doing something that represents 5 percent of their business. You have to have a view of your whole company. But too often, the person running it loses that view. They get involved in a part, and they don’t manage the whole. Whether I do this product or that product, whether I hire somebody, [I consider] how they [will] fit long term and short term in the big picture. Constantly try to see your big picture."
    11. Accepting that it’s "not possible" too easily rather than finding a way. "I had an engineer who was a very good engineer, but with every toy we developed, he would say, ‘You can’t do it that way.’ I had to be careful not to accept this too easily. I had to look further. If you’re an entrepreneur, you’re going to break new ground. A lot of people are going to say it’s not possible. You can’t accept that too easily. A good entrepreneur is going to find a way."
    12. Focusing too much on sales volume and company size rather than profit. "Too much of your management is often based on volume and size. So many entrepreneurs want to say ‘I have a company that’s this big, with this many people, this many square feet of space, and this much sales.’ It’s too much [emphasis] on how fast and big you can build a business rather than how much profit it can make. Bankers and investors don’t like this. Entrepreneurs are so into creating and building, but they also have to learn to become good [businesspeople]."
    13. Seeking confirmation of your actions rather than seeking the truth. "This often happens: You want to do something, so you talk about it with people who work for you. You talk to [your] family and friends. But you’re only looking for confirmation; you’re not looking for the truth. You’re looking for somebody to tell you you’re right. But the truth always comes out. So we [test] our products, and we listen to what [the testers] say. We give much more value to the truth than to people saying what we’re doing is great."
    14. Lacking simplicity in your vision. "Many entrepreneurs go in too many directions at once and do not execute anything well. Rather than focusing on doing everything right to sell to their biggest markets, they divide the attention of their people and their time, trying to do too many things at [one time]. Then their main product isn’t done properly because they’re doing so many different things. They have an idea and say they’re going to sell it to Wal-Mart. Then they say they’re going to sell to [the] Home Shopping Network. And then the gift market looks good. And so on."
    15. Lacking clarity of your long-term aim and business purpose. "You should have an idea of what your long-term aim is. It doesn’t mean that won’t change, but when you aim an arrow, you have to be aiming at a target. This [concept will] often come up when people a
      sk ‘How do I pick a product?’ The answer depends on what you’re trying to do. If you’re trying to [create] a billion-dollar company with this product, it may not have a chance. But if you’re trying to make a $5 million company, it can work. Or if you’re trying to create a company [in which] family members can be employed, it can work. Clarity of your business purpose is very important [but] is often not really part of the thought process."
    16. Lacking focus and identity. "This was written from the viewpoint of building the company as a valuable entity. The company itself is also a product. Too many companies try to go after too many targets at once and end up with a potpourri rather than a focused business entity with an identity. When you try to make a business, it’s very important to maintain a focus and an identity. Don’t let it become a potpourri, or it loses its power. For instance, you say, ‘We’re already selling to Kmart, so we might as well make a toy because Kmart buys toys.’ If you do that, the company becomes weaker. A company needs to be focused on what it is. Then its power builds from that."
    17. Lacking an exit strategy. "Have an exit plan, and create your business to satisfy that plan. For instance, I am thinking I might run my new business for two years and then get out of it. I think it’s an opportunity to make a tremendous amount of money for two years, but I’m not sure [whether] it’s proprietary enough to stop the competition from getting in. So I’m in with an exit strategy of doing it for two years and then winding down. I won’t commit to long-term leases, and after the first year, we’ll start watching the marketplace very closely and start watching inventories.
  • Zoomii – Book Browsing

    Chris Thiessen just launched Zoomii, a new site for browsing best selling books available on Amazon. Chris has been building Zoomii for 16 months and he did it all with his own two hands. Quite a long haul working alone, so he must be feeling great to put it out there and get some feedback. Here is Chris on what inspired Zoomii and how he got it done:

    “Because I love bookstores. Spending afternoons wandering the shelves. Happening across great books I didn’t even know existed. But it’s an experience I never found online. Online bookstores are wonderful. They’ve got amazing prices, huge selections, and they’re open all the time. If you know exactly what you want, they’re perfect. But somehow I kept coming back to the bookstore just to browse. Zoomii is my attempt to bring online as much of the real bookstore experience as possible.”

    Will a new map like interface be enough to draw visitors who will then click through and make purchases on Amazon? That is the bet. No doubt, nice businesses can be built leveraging affiliate programs like Amazon Associates. Check out Zoomii and let us know in the comments if you came across any books worth buying while browsing the shelves.

  • It's not you, it's me!

    We are working away on a few new things, I have been wrangling some new co-authors and have been generally thinking about the direction of StartupNorth. It feels a lot like what Heri has been thinking about lately.

    I’ll be back in action soon, swear.

    In the meantime, get your butt back to work. That software isn’t going to write itself, and those pitch decks are terrible, just so you know.