StartupNorth

Year: 2010

  • Dayforce secures an additional $10million

    VentureBeat is reporting that Dayforce has secured an additional $10million in financing, bringing their total pool of raise capital to $20million.

    This isn’t a major surprise for anyone who has been watching David Ossip over the last 3 years. After selling Workbrain for $227million in 2007, David only seemed to get more ambitious. Perhaps the acquisition left him with just enough of a taste to want more, or perhaps he felt like he didn’t get the job done with Workbrain. Either way, after sitting around waiting for his non-compete to expire, he got back in the game with Dayforce. So here we are.

    David is the entrepreneur’s entrepreneur, and I am happy to see that he is able to get the resource together to build Dayforce in Canada. His desire to contribute back to the startup community has set him apart in recent years. We have previously published a profile of Workbrain spinoff companies. This also represents a significant additional step for Bridgescale Partners, and represents their first deal in Canada since their merger with Edgestone in May. Edgestone was one of the original investors in Workbrain up until it went public in 2003.

    We will add more details as we get them.

  • The Entrepreneur’s Guide to Customer Development

    The Entrepreneur's Guide to Customer DevelopmentI was reading Eric Reis’ Lessons Learned blog yesterday and he talked about The Entrepreneur’s Guide to Customer Development. I begrudgingly read Steve Blank‘s Four Steps to the Epiphany, which is a must read for any entrepreneur (begrudgingly read because it is not the easiest reading). It is a great book, but it’s tough reading.

    “And Steve is the first to admit that it’s a “turgid” read, without a great deal of narrative flow. It’s part workbook, part war story compendium, part theoretical treatise, and part manifesto. It’s trying to do way too many things at once. On the plus side, that means it’s a great deal. On the minus side, that has made it a wee bit hard to understand.” Eric Reis

    I bought a copy yesterday based on Eric’s recommendation. It is a phenomenal resource for learning Customer Development. Patrick and Brant have done a great job writing an understanable how-to guide for using Customer Development and Agile Development in a Lean Startup. The book includes a shout out to our friends Dan Martell at Flowtown and Sean Ellis at 12in6.  

    The book incorporates the wisdom and experience of real world practitioners of Customer Development in the 5 years since the inital publication of The Four Steps. For the first time a lot of entrepreneurs will hopefully begin to understand a technology adoption lifecycle and the marketing of products/services. I wrote a chapter in Cost-Justifying Usability back in 2005 where I had first encountered Steve’s Customer Development Methodology from his course notes in 2004 at Stanford (yeah, I know that’s crazy). In the chapter, titled “Valuing Usability for Startups”, I argued that getting out talking to customers and testing your hypotheses were key to success. However, I proposed using the Bell/Mason Diagnostic for evaluating the stage of corporate development in order to calculate Return-on-Investment of usability. In hindsight, I probably should have instructed entrepreneurs and usability professionals to look at processes like Customer Development to search for a “repeatable and scalable business model”.

    The Entrepreneur’s Guide to Customer Development is a short mandatory introduction to using customer and agile development to search for a  repeatable and scalable business model.

    Discount for StartupNorth Readers

    A few quick emails to Patrick today, and he offered to provide StartupNorth readers a 25% discount on any version of the book. First ten StartupNorth readers to go to CustDev.com can use the discount code.

    Discount code: STARTUPNORTH (limited to the first 10 users)

    Good luck!

  • Getting Traction

    Photo by Bierlos http://www.flickr.com/photos/bierlos/4591931914/
    Photo by Bierlos

    Traction trumps everything for angel investors. Traction is the proxy by which you can determine how well a startup is doing. It demonstrates that the team is able to execute together. That the product has a market with real customers.

    “Traction is real customers. If you charge for your product, it’s real paying customers. If your product is free, it’s a real user base. In other words, traction is a signal that your team can produce real results in a real market.” – Gabriel Weinberg

    Traction means a lot of different things. Is traction revenue? Maybe. Is traction number of uniques? Depends. Is traction conversion rate? Sometimes. Traction differs at different points in a company’s lifecycle, but it designed to show that there is a demand for the product/service you are building. And it’s not always revenue. There are different milestones for startups at different stages of development. The goal is to get to product/market fit quickly with a minimum viable product. Then establish metrics to measure and evaluate product performance.Dave McClure‘s Startup Metrics for Pirates is a great summary of the types of metrics startups can build into their applications and marketing analysis to track the effectiveness of their ability to attract, convert and retain customers.

    Startup Metrics for PiratesView more presentations from Dave McClure.

    How do you avoid expensive build, market and fail attempts?

    Elements of a Startup Growth Curve by Sean Ellis
    Elements of a Startup Growth Curve by Sean Ellis

    Now you’ve got your metrics. You validated your minimum viable product. How do you get traction without spending a ton of cash?

    Go figure out what you can do for zilch. That’s right nothing. Nada. Zip. Zero. Zilch. Assume you’ve got a marketing budget that is zero dollars. Then go figure out how you’re going to spend it to find, convert and retain customers. Pick a big, ostentatious goal. A million uniques. A million dollars in revenue. 25 new paying customers. The actual numbers are going to be specific to your startup. But the goal is to drive those numbers for as little (think $0) as possible using:

    • Extreme customer service
    • Inbound marketing
    • Conference submissions
    • Social media engagement
    • Blogging

    There are a lot off different activities that startups can do to help drive customers. Go drive real traction. Get to’er.

    Need some inspiration. Check out:

    What are your favourite examples of startup marketing on the cheap?

  • Sysomos acquired

    News has leaked out today that Toronto-based Sysomos, a social media monitoring firm, has been acquired by MarketWire.

    As usual, the terms of the deal are not being disclosed, but we do know that, like BumpTop, Sysomos was funded out of the Growthworks Commercialization fund. That would put this deal at well north of $25million, likely landing in at around $35million.  Sysomos was also funded by Ontario Centres of Excellence, who were also instrumental in supporting BumpTop. In fact, like Bumptop, Sysomos also originated at the University of  Toronto and does retain some useful and unique IP.

    This is the second exit for Scott Pelton, who only took over managing the Growthwork’s comm fund in 2008. By Canadian VC standards (or any for that matter), he is on fire and, by my estimate, is chalking up one of the best IRRs that the business has seen yet in this country. Who says VC is dead?

    Sysomos has made rapid progress since taking investment and has managed to consistently raise the bar of social media monitoring standards. No doubt that MarketWire is looking for ways to develop beyond their more traditional media monitoring solution to something that offers more social media coverage. Sysomos’ strong analytics capability will no doubt be useful to MarketWire customers as well.

  • Day 1 as Entrepreneur in Residence

    I am starting my new role as Entrepreneur in Residence at Innovacorp today.

    While a lot of the details of what that means still need to be worked out, I can tell you what it means for me in the short term:

    • I will be home. I have been traveling a lot in the last year. 85,000 miles in the last 6 months. That kills your creativity and I am looking forward to having my feet on the ground more often.
    • I will be reconnected. Some of you may of noticed that I basically fell off the face of the earth in January 2009. David Crow picked up the slack in blogging here. After selling Firestoker and joining Dachis Group, I felt that I had no time to stay connected to the community. I am looking forward to getting re-engaged and to start moving some of the conversation about what it means to be a startup in Canada forward again.
    • I will be working with startups. Innovacorp has invested in some pretty great startups here in Nova Scotia, and I am going to work with a few of them and help as best I can. I will be working with Ben Forcier and the Investment team, as well as Stephen Hartlan, the CEO. I have had a chance to get to know Ben, Stephen, Patrick and many of the other folks at Innovacorp in the last few months and I have been impressed with all of them. I love digging in to startups and figuring out what makes them tick and that was a big part of why I agreed to join as EIR.
    • I’ll be building my own startup again. I can’t help it. Let me at it! This will be my focus.
    • I’ll be blogging more. Enough said.

    The decision to leave Dachis Group was a tough one and certainly the most bittersweet thing I have ever done. I had a chance to work with some of the most devoted, brilliant and kind people I have ever been lucky enough to be involved with. In a year and a half we went from 4 of us sitting in a board room in Austin to 150+ employees, 2 major acquisitions, offices in 5 cities and we were able to count the largest companies in the world as our customers. Looking back on it, it seems wild, but the truth is that it feels like Dachis Group is just getting started. As the company hits milestones and continues to grow, I will feel proud every step of the way, and I will continue to contribute in every way I can.

    Things have been changing quickly here in Canada however, and I am glad to be part of the community again. The momentum is building slowly but steadily: The Job Board has more startups than ever looking to fill positions, we are seeing more and more new financings, and we are seeing some of the first exits from members of the community. The Canadian economy is also strong relative to foreign markets and the quality of talent available in Canada means that we should be able to be more competitive internationally than ever. Access to capital is still “complicated” in many ways, but we are seeing significant changes in availability and the sophistication of the investors deploying capital in the country. I hope that that shakeout continues.

    This is an incredibly rich place to build a startup, and I plan to make the best of it.

    Have something interesting? An idea or a new startup? Get in touch and let’s make it happen.

  • Week in Review

  • Riding a Mega-Trend Isn’t the Same as Solving a Real Problem

    Ben Yoskovitz just nailed a big issue that a lot of startups need to come to terms with: A trend is not a marketplace

    But be careful. Riding a mega-trend isn’t the same as solving a real problem. Big, bold statements are great. Startups can very effectively align themselves with mega-trends. But it’s equally important to peel away the big numbers, inevitable trends, and macro factors that seemingly drive opportunity — and get into the nitty gritty details.

    Trends can be powerful and they can distract you from building a sustainable business before you even realize they are, in fact, just a trend. Like platforms, developing on top of a trend takes a certain skill, and a lot of good timing.

    There are a few people who are able to see through a trend to the core problem that sits at the middle of it. Howard Lindzon is someone I admire for his ability cut through the bullshit of a trend and also when to get off the wave.

  • StartupDrinks – YYZ, YUL, YYT, YQM, YYC, YHZ, YFC, YSJ

    StartupDrinks LogoFriendly neighbourhood reminder that tomorrow, June 30, 2010, is StartupDrinks (well tonight in Saskatoon & Regina). On June 30, 2010 you can join entrepretreneurs in:

    Jevon is going to be hanging out in Halifax. Ray is going to be in Montreal. Jonas, Bryan and I are planning on being at Grace O’Malleys (aka Granuaile), 14 Duncan St, Toronto, ON.

    It’s a great opportunity to get out of the office. To be social. To connect with others that are struggling building companies like you. What will we be talking about? We’ll be talking about “How to grow your traffic from 1k to 35k on $0” and other things. What do you want to talk about?

    Here’s

  • Week in Review

  • The best laid 15 year plans

    Southern Alberta Railroad Tracks
    Photo by ecstaticist

    OMERS and ABP announced the launch of INKEF Capital, a € 200 million venture fund that is focused on deploying € 100 million in Canada in 5 years.

    “In the first five years, € 100 million is anticipated to be invested in start-ups in each of the territories, the Netherlands and Canada. The initial portfolio will naturally be weighted towards early stage companies which will mature over the fifteen year term. Deal flow will come from various sources, including technology transfer offices of universities, informal investors, regional funds and from spin-offs of new technologies by existing companies.” 

    This is great. It’s nice to see new capital getting ready to be deployed to Canadian entrepreneurs. What’s interesting is the reason that INKEF believes it is differentiated than other capital:

    “INKEF Capital distinguishes itself from other investors by its long term investment horizon and active mentoring of the start-ups.”

    Makes me wonder what the other firms have been doing? Passive mentoring? It will be interesting to gather more details as content becomes available (Currently http://inkefcapital.com/ is not active and the WHOIS record returns a registrar and intellectual property firm in the Netherlands). This looks it is a direct investment vehicle for OMERS & ABP,  “programs for direct investment as a promising new strategic option”.  I can’t wait to hear Mark McQueen’s take on this, but given we’re in Day 9 of his hunger strike I suspect that you’re stuck with my limited insight.