StartupNorth

Year: 2010

  • Twitter acquires Smallthought (the dabbleDB people)

    Twitter announced today that they are acquiring Smallthought, the company behind DabbleDB and Trendly.

    About 4 years ago, Avi Bryant landed at Democamp 5 and blew us all away. Not only did he show off one of the sexiest apps we had seen yet, his demo set the bar for everyone that came after.

    This does not seem to be a large acquisition by any stretch, and neither side is playing it up as such, but it is a well deserved kudos to Avi and the team for what they have built.

    It is hard to argue: For Canada: it sucks. More of our top talent going south and disappearing from the Canadian scene.

    Those days are over however, with the C100 and an increasingly healthy startup community here in Canada, there will be many opportunities for the Avi’s of our community to contribute back, and perhaps return some day better than ever.

  • Week in Review

  • Grow – A Conference – Aug 19-21, 2010

    Grow 2010
    Our friends at C100 and Bootup are bringing Dealmaker Media to Vancouver for a great event in August. If you don’t know Dealmaker, you should. It’s run by a Canadian, Debbie Landa. They produce 2 of the most valuable events for startups in Silicon Valley and Los Angeles – check out Under the Radar for a list of events and companies.

    Dealmaker MediaThey are producing an event, Grow 2010, in Vancouver on August 19-21, 2010.

    The event is a 3 day event with an invite-only Day 1 to connect Canadian founders with the best and brightest from Silicon Valley and across CAnada. Days 2 & 3 feature great speakers and the opportunity to build unique lasting relationships.

     If you’re an entrepreneur and you missed MeshU in Toronto (and it’s really too bad, this was one of my favourite events of the past 2 years), you should attend Grow 2010. Buy your ticket today and it’s $185, if you miss the super early bird (or as I like to call it the just getting in from a late night), you can grab an early bird ticket for only $230. This is unbelievable! Add in an approximately $700 flight it’s possible to do this for less than $1500. It’s worth the opportunity to meet the companies, build the connections, and help grow your company.

    We’ll be coordinating shared hotel rooms for entrepreneurs from Toronto, Montreal, Waterloo, Ottawa, Halifax and anywhere. If you’re not local to Vancouver we’ll help you find a shared room to manage your costs. Add a comment if you are attending and we’ll try to help you find a roommate.

  • Engines for Massively Scaleable Startups

    I was excited to attend MeshU (maybe a little too excited). I love it when events over deliver. MeshU was a fantastic conference. I saw two of the best in-the-trenches startup sessions with Sean Ellis and Dan Martell. They both presented ideas that are changing how I think about product design and go-to-market activities. April Dunford then added an updated framework  for product marketing which was a great evolution of traditional product marketing. Sean Ellis added his model for Key Elements of Massively Scaleable Startups that presented a new idea of the marketing basics that need to be present for high potential startups.

    Key Elements of Massively Scalable Startups – A Marketing Framework based on April Dunford & Sean Ellis

    The breaking down of 4 elements coupled with traditional strategy and tactics make for a very effective marketing evaluation of most startups.

    Gratification Engine

    The Gratification Engine was a new piece of the marketing activities. What differentiates must have products and services? How do you reward your customers? How does your application turn “cold prospects into highly gratified customers”? This is a change in my thinking about the role of making your users feel like rockstars.  

    “you can’t force customers to want, need or like what you have created.  Building an effective gratification engine is an iterative process driven by a lot of prospective customer feedback.  Once you get the basics right, your process of gratifying users can be optimized with tools like Performable for landing pages and KISSmetrics for full funnel tracking/improvement (I’m an advisor to both).” – Sean Ellis

     It builds upon seminal work of Kathy Sierra about engaging users. The Gratification Engine pushes this out beyond the existing experience but treats the conversion and effectiveness of new users.

    Making a Bestseller
    Making a Bestseller by Kathy SierraHow fast and how far can you take your users? by Kathy Sierra

     Where this hit home for me was starting to think about the game mechanics used for upsell and cross sell offers for new customers. Dan Martell, Dave McClure, Marc Gingras and I had breakfast at StartupCampMontreal and discussed how to build effective offers for existing customers to invite their friends to an application. There was a great discussion about using game mechanics around the offer. You have existing users that if they invite new users, i.e., their friends, where if the friends sign up that both the friend and the user get new unique functionality. It changed my thinking about many times I’ve received an offer to sign up from a friend for a service, and how the effectiveness of this would change with some basic game mechanics:

    “Jevon has invited you to join X. Jevon is 1 sign up away from enabling the super awesome next level feature. Sign up now and enable the feature for both you and Jevon”

    This all has to be done in an open, honest and unintrusive manner. But it’s about how do you enhance the lives and experiences of customers and potential customers. There are great opportunities to use game design and mechanics to help improve the experience and conversion rates in web and mobile applications.

    Putting the Fun in Functional

    View more presentations from amyjokim.

    Power to the Players

    View more presentations from amyjokim.

  • Marketing metrics

    Photo by Darren_Hester

    Mike McDerment from FreshBooks gave  a great presentation on the basics of web application marketing metrics. He focuses on the metrics, systems and reporting that all companies should be building into web and mobile applications. It is a must read for any entrepreneur building a web application.

    Metrics

    Cost Per Acquisition (CPA)
    How much does it cost you to get a customer? It’s a simple enough calculation, how much do you spend on sales and marketing to acquire each customer. Roll up your staffing costs, your ad buys, your outbound marketing, etc.
    Average Revenue Per User (ARPU)
    How much revenue do users generate? How do you track it? Does it change based on segment? How do you increase it?
    Churn
    What percentage of your existing customer base leave every month? This is different than CPA because this is about customer satisfaction and retention. Don’t think this is important? According to April Dunford churn is a killer. “The probability of selling to an existing customer is 60-70%. The probability of selling to a new prospect is 5-20%”
    Lifetime Value (LTV)
    How long does a customer continue as a subscriber? Does their ARPU change over time? Do you have ways to increase their spend or reduce their churn?

    These basic metrics are expanded by Dave McClure in AARRR! Startup Metrics for Pirates. Where the metrics are divided into 3 main categories:

    1. Get Users (Acquisition, Referral)
    2. Drive Usage (Activation, Retention)
    3. Make Money (Revenue)
    Startup Metrics 4 Pirates (Montreal, May 2010)
    View more presentations from Dave McClure.

    It seems so simple on surface, but as CEOs and startups we need to be committed to building the systems and metrics into our products. I was just floored at MeshU when I heard Dan Martell talk about the Flowtown.com Startup Immune System where they are beginning to use the lower level business performance metrics to automatically rollback design changes based on performance against the baseline. You can only start doing if you’re building on top of metrics. The idea of having automated your software deployment and sufficiently built business metric baselines that you could autoroll back poor performing changes. At Nakama, I wanted this so much. Not because I had bad developers but because we often made design decisions based on limited customer feedback and I wanted the system to protect me from my own hubris.

    Metrics are good place to start. One of the best ways to understand how your company is performing is to begin measurement. Mike has done a great job

  • Week in Review

  • CVCA – Interview with David Adderley

    I had a chance to catch up with David Adderley, the Chair of the conference this year, before this week’s CVCA annual conference in Ottawa. I wanted to find out more about what he thought about some of the new fund models that are emerging in Canada and just where the business as a whole is going.

     

    Is Venture Capital in Canada at an inflexion point this year? Will we emerge from these two days with an entirely new business in this country? I think the answer is No — and I think that is a good thing. We have stopped looking for a silver bullet or a dramatic sea change, but from what I can see people are ready to get back to work and to find a way to make this work with a model that makes sense for this country.

     

    On with the discussion:

     

    The introduction to the conference  says that the world is emerging from a crises and then says re: VC “In response, new innovative models and strategies for creating value are emerging.” Do you think that Venture Capital in Canada is developing a new model? What are some examples?
    The investment strategies that many VCs employed during the bull market for technology venture capital of the late 1990s and for the first half of the past decade—which were arguably focused more on a “gold rush” approach of selling companies rather than building them—do not work in a more “normalized” market.

     

    What we are seeing in Canada (and elsewhere) is venture capital returning to its historical roots, when VCs acted like entrepreneurs and applied their domain knowledge and know-how to help start-ups get off the ground. This means VC firms who have small nimble teams of partners with multiple business experiences and technology domain expertise. The investment projects are generally “local”, with founding entrepreneurial teams that have skills developed around the core technology and managerial competencies of the specific geographic region. Professors Kaplan and Lerner’s recent paper, “It Ain’t Broke: The Past, Present and Future of Venture Capital”  is informative on this point.

     

    There should be more focus on investing around the core technology competencies in Canada rather than simply following US trends (e.g. “me too” Web 2.0 companies) without having the depth of talent in Canada to execute. For example, both Toronto & Waterloo have deep domain expertise in Digital Multimedia and Wireless & Mobility around which clusters of VC-backed projects can be built.

     

    As for specific investment strategies, there is renewed focus on the “intensity” versus the “velocity” of capital. This means more of a back-end loaded, milestone-driven approach to investing. Also, the more successful firms are applying a “Seed-to-C” funding approach, with the formation of syndicates that can take companies all the way to cash flow positive, meaning less reliance or no reliance on “late stage” VCs or “B round” VCs.
    What do you think the story of Venture capital has been in Canada since the last CVCA?
    What we’ve seen in Canada is a restructuring and consolidation of the VC market, resulting in a significant reduction in investment activity over the past number of years. What remains is a much smaller set of mid-sized (sub $200 million) and smaller (sub $50 million) funds. Whether or not this represents the “normalization” of investment activity in Canada remains to be seen.

     

    You’ve seen “declared” interest in Canada by some US funds, but relatively little investment activity from them.

     

    VC plays a key role in any industrialized or emerging economy, driving innovation and job creation in high-growth sectors, as demonstrated by many academic studies. There does appear to be a growing awareness at the government level that action must be taken if Canada is going to continue to innovate and leverage its R&D strengths, and fund its most promising ideas, entrepreneurs and start-ups.
    A new crop of micro-funds have started to emerge in Canada. What role will these funds have to play in the future of VC in Canada.
    Yes, a number of “micro funds” have emerged in Canada. They go after what they describe as less capital-intensive projects, or projects where the injection of capital can be very back-end loaded, such that a small investment is made at the beginning, allowing the start-up to attract key industry-specific angels and to secure customer traction before bringing in significant money. This sounds more like the historical way VCs acted rather than necessarily a “new” approach.

     

    I’d also ask whether the emergence of new micro funds in Canada is driven more out of necessity, i.e. an inability to raise significant capital in Canada, versus a systemic need to find a new model for VC funding that works.

     

    Will these funds have a real impact in positioning Canada as a leader in innovation? For Canada to develop the next RIM, we need entrepreneurs, start-ups and investors who are targeting the same kind of ambitious, platform technology projects that have made Silicon Valley an engine of growth for the US economy.

  • Week in Review

  • Be the next Bumptop

    Too bad Bumptop wasn’t actually an ExtremeU company. However, the recent acquisition of Bumptop should help raise the profile of the 2010 Extreme University.

    If you’re a student, a founder or just thinking about starting something you should apply to Extreme University. This is a world-class program, from an up-and-coming venture capital firm in Canada. They have a track record of selling companies to big players (Bumptop to Google, J2Play to EA). The Extreme Ventures, XtremeLabs, and Extreme University programs are building into a fantastic training and breading ground for a new generation of mobile and Internet startups. It feels like something big is happening inside the walls of Extreme Ventures.

    Extreme University 2010

    Who?

    We are looking for four smart and fast moving teams to participate. Typically all members of the two-three person team will be deep technically, but at least one of the founders should have a technical background.

    What?

    • Get an initial $5000 + $5,000 (US) per founder in exchange for a 10% ownership stake in your company
    • Move your team to our shared ExtremeU office space at Yonge & King (downtown Toronto)
    • Have weekly mentoring sessions by industry experts in technology, funding, legal, PR, marketing and HR
    • Meet a who’s who of experts at our weekly socials and have an opportunity to practice your pitch and demo your in-progress prototype
    • Have access to local shared resources to accelerate product development (mentors, servers)

    When?

    Applications are due by June 4th, 2010. The program starts Monday June 14th, 2010 to Thursday September 10th, 2010 at the ExtremeU offices in Toronto at Yonge and King. The final demo day will be Tuesday September 16th, 2010 at DemoCamp

    How?

    It’s a great program located in downtown Toronto for early-stage entrepreneurs and founders. The Xtreme Labs has a great track record. If you’re interested, make sure you apply before the June 4, 2010 deadline.

    Alumni – The Class of 2009

    UkenUken Games
    Uken Games makes highly addictive games for social and mobile platforms.

    Uken Games was born in March of 2009 when two normal guys decided they wanted to have super powers. Given real world limitation, they turned to the virtual world to make their dreams a reality. They built Superheroes Alliance, their first game, which eventually grew to over 150,000 monthly active users. Since then, they’ve launched 2 other games: Villains and Twisted Treasure have amassed over 300,000 total users. Going forward, they are committed to building a strong community around each of their games, expanding across other both social (Facebook) and mobile (iPhone, Blackberry) platforms. Uken Games has received a follow on investment and are driving hard towards this goal.

    AssetizeAssetize
    Assetize is a Twitter ad network that enables publishers to monetize their social content. Publishers within the Assetize network range from large news and media organizations to individual users. The company has also partnered with a premiere sports agency to launch FanWaves – a Twitter monetization network exclusively for the sports world. The growing list of FanWaves publishers includes the NHL, NY Knicks, Phoenix Suns, Washington Capitals, as well as several professional athletes.

    Next, the company plans to extend their monetization solution to other social networks, as well as other links stemming from media websites and blogs. Given the nascency of this space and lack of history, one of the challenges Assetize has faced is partnering with advertisers willing to market through social channels – a difficulty that is expected to decrease as brands realize the immense potential of social networks. Following Extreme University, Assetize is generating revenue and has secured a seed round of financing. The company is also currently in the process of syndicating a larger round from local and US-based VCs.

    LocationaryLocationary
    Locationary is changing the way that data on local businesses and other places is collected and verified.

    This data is fundamental to the local search and local advertising markets which have revenues approaching $50 billion a year. Google and other local search engines currently buy the bulk of their local business data from aggregators that have employees copy the printed yellow page directories. The current process can’t scale and results in expensive, stale and outdated information typically 1 to 2 years old. Locationary has created a patent-pending, crowd-sourced solution to collect and verify this information across the globe.

    Locationary is growing quickly and now has users in over 70 countries. They’ve collected data on over 20 million places and are now updating over 100,000 places a day. In this business, the fresher the data, the more valuable it is; and that’s what makes them special. Locationary has raised a Series-A investment through the connections made at ExtremeU.

    Extreme Labs has a history of bringing great mentors and presenters to interact and engage with ExtremeU participants. In 2009, participants met some of the best lawyers, founders, VCs and others in Canada.

    Albert Lai Kontagent Startup Lifecycle
    Ali Asaria Well.ca How to get funding
    Colin Ground Cassels Brock & Blackwell Setting up a VC friendly structure
    Dan Debow Rypple Sales & Marketing
    Leila Boujnane Idee Business Development
    Mike McDerment Freshbooks Product Management
    Rick Segal JLA Why do a startup now?
    Rick Yazwinski Tucows Agile Development
    Sal Rocco Stonewood Group How to hire superstars

    The list of already confirmed speakers in 2010 is amazing:

  • Open Coffee Ottawa – May 26

    Next Wednesday (May 26) StartupNorth is organizing an Open Coffee in Ottawa. It is an opportunity for entrepreneurs, developers, and investors to connect at an informal meetup. We’ll be heading to Bridgehead Coffeehouse (109 Bank Street, Ottawa) from 10am to 1pm.

    Open Coffee Ottawa
    Bridgehead Coffeehouse
    109 Bank Street, Ottawa
     10am to 1pm