StartupNorth

Month: March 2011

  • Mid-Stage Startup Analytics (or when to pivot)

    I heart mid-stage startup life.  Its dirty, gritty, hard decision making where you really learn your business inside out.  You can turn yourself into a successful business or you can drive your business into a classic brain-eating, zombie company living out its life sucking on SRED claims.

    Its a constant mix of battling short vs long, trying to fundamentally answer two questions:

    1.  Is my initial business model/strategy succeeding?

    2.  Is there a better business model/strategy out there?

    Or… to pivot or not to pivot.  The non-chalance which pivot is thrown out by the startup blog-orati gets me a bit annoyed.  Its really damn hard to tell if you are succeeding or failing at any given point in time for most mid-stage companies.  Unless you are part of the super successful 1% or the super sucky 1%.  But for the rest of the world, you probably have sales & customers – but maybe not enough, or maybe not profitable customers.  Its actually quite challenging to stare at your data, disassociate yourself emotionally and come up with a clear rational answer on if your problem is execution (experiment & learn) or strategic (pivot)… and if its strategic, where do you go next?

    So I thought I’d shed some internal light as to how I’ve seen this process managed.  Lets pretend you have a product, and you’ve done a few releases and made it better.  You have some customers who pay for it.  You’re not yet break-even nor have you landed financing to let you pursue this indefinitely.  I.e. you are the normal typical startup 1-4 years into life.

    Dave McClure’s seminal startup metrics slide deck is a great start for figuring out which data & metrics you need as a company to judge oneself.  In the early days of Peek we coalesced around these metrics:

    -cost of acquisition.. how much do you spend to get a sub

    -customer satisfaction… Net Promoter Score is one of my favourites here (one question survey – would you recommend us to somebody else, lots of bechmarks to compare to)

    -churn… deep dive stats on reasons why people churn

    -segment data… cut this up by demographic, sociographic, psychographic (what needs were filled when they bought it), etc

    Then the basic approach was this.  Take your segments and look for over/under-indexers in each of the above.  Look for patterns:

    -does a certain segment churn faster?  i.e. are some segments better quality customers.  Does this align to a channel?

    -do you out index the standard demographics in a certain category?  For instance do you have 2x more mom’s than you should based on normal demographic distribution.  Are those mom’s also better users?  or do they churn fast?  The over-indexing may look small at first, a proverbial green shoot.  Water and fertilize it!  We over-indexed in some weird segments – like cost-conscious small business owners.

    -are some segments happier than others, do they have better usage patterns and higher customer satisfaction…

    -compare this with channel, you can gain big clues here.  For instance lets say you have partnerships with Yahoo & AOL and have ads on both their sites.  If Yahoo is outperforming AOL, try to understand the demographic, psychographic reason for it.  Cross compare to churn in these cohorts.  Maybe Yahoo is more small business oriented who have a need for your product while AOL is an older, consumer base who do not.

    -also cross compare this to product versions, do things get better as new product changes are introduced?  We always noted that faster performing UI led to happier customers (and so has basically every study out there – see the seminal Microsoft/Google search research on how shaving even 50ms is a big differentiator).

    Use this data to keep aligning product/market/channel fit.  At some point (I’d argue you need to follow a process like this for 12 months +), you’ll have either exhausted a lot of opportunities and improved, or you’ll have not.  I personally like really leaning on cost of acquisition as the telltale signals that strategy is wrong and you’re not going anywhere.  At some point you’ll get product/market fit and word of mouth, virality and referals start to happen and you don’t need to spend as much time, energy, and/or money on marketing to a specific segment.  If this doesn’t happen, if the only way for you to move your product is to always be juicing marketing in a way that is not affordable, then you probably need a new product/business model.

    And at that point, after working tactics for a good period of time and tracking how it impacts metrics, then I’d “pivot”.

    One last note, this is far more art than science.  Picking metrics, finding tactics to improve them, reading trends, and moving on them – this is where the team (esp the CEO & marketing folks) earns its money as relentless executioners of the day to day business.

    One last, last note, pivoting is really expensive & hard.  Depending on how big your pivot is, you probably have to lay off staff (e.g. if you have expert consumer marketing staff and you are pivoting to enterprise… wooops), get board members and advisory board members who understand this space, re-brand yourself to the market, go get introduced to a whole new set of strategic potential partners, discover the industrial eco-system around your new pivot, maybe find new investors who invest in the space, and so on and so forth.  And thats why you need to fight like mad to make your current strategy work.

  • Startup Festival coming to Montreal – Why it’s important

    I know that David just posted about the upcoming Startup Festival, but I thought I would add my own thoughts:

    I have definitely been getting the feeling that the whole “startup conference” format is getting a little stale. The same formats in the same cities with most of the same speakers. The real benefit of any conference, the ability to spend time with smart people, is still enough of an incentive to keep us coming back.

    So when Philippe told me about what he is working on for the Startup Festival in Montreal, I needed a minute to re-set my thinking. When I did that however, it was clear that this would be something new.

    The announced lineup is looking great so far, but that is not the really exciting part. The entire format of the event will be much more fluid and engaging than a typical 1-2 track conference agenda.

    Philippe is engaging with the community and opening up the event as a platform for other groups to throw in and create their own events and activities during that time. We (the royal We – Startupnorth) are looking in to doing our own event one evening.

    I am excited about an event that is focused on openness and a shared sense of purpose with the community.

     

  • A Startup Festival

    Our friends Philippe Telio (@ptelio), JS Cournoyer (@jscournoyer) and Alistair Croll (@acroll) have pulled together a spectacular festival in Montreal for startups. They launced today at AccelerateMTL and the speaker list includes great folks:

    This is just the tip of the iceberg. A fantastic group of entrepreneurs, marketers, advisors and investors converging on Montreal at the very beginning of the Just for Laughs comedy festival (which looks to be happening July 14-31, 2011).

    It is great to see the availability of capital being deployed by Jacques Bernier and the Teralys Capital team start to propagate out into the culture building events. The creation of YearOneLabs, Real Ventures, AccelerateMTL, NextMontreal, Notman House are all directly or indirectly beneficiaries of the capital available in Montreal. It might feel like these changes, conferences and programs happen overnight, but it has been a 5-7 year campaign from a dedicated group beginning with Montreal Startup, John Stokes and Austin Hill. This group has been laser focused on building a culture of high tech entrepreneurship and the necessary infrastructure from education, funding, investment, talent, culture, media and events to support the current and next generation of entrepreneurs. It is really a feat and accomplishment that has made Montreal a hotbed for new companies.

  • Year One Labs — The Perfect “Incubator”?

    I abhor the term “incubator”. I remember in fifth grade when our teacher brought in a chicken incubator to show us how chickens are born.

    We waited and waited and waited a while longer still.

    All the little Chickens were dead, it turned out. We weren’t quite sure why but most of us thought that one of the guys in our class with “anger issues” was somehow responsible.

    So to this day when I hear the term incubator, I think of a sea of dead chickens and the broken dreams of little boys and girls.

    So I was surprised when I walked in to Year One Labs today and, rather than chickens, I saw a lot of people. Not just any people either, but some of the best entrepreneurs I have met in years.

    We wrote about the launch of Year One Labs back in September 2010

    The current portfolio of Montreal based Year One Labs includes:

    High Score House

    HighScoreHouse was founded by Kyle Seaman and Theo Ephraim. The company is building a fun, entertaining solution to help parents use positive reinforcement to motivate their children.

    They have yet to launch but you can learn more at highscorehouse.com.

    Localmind

    Localmind was founded by Lenny Rachitsky and Beau Haugh. Localmind allows people (from the web or their mobile phone) to ask questions of people checked in at locations. Questions can be in real-time or not. The big vision is to empower people to know anything they need to know about any place at any time.

    Localmind is currently available online at localmind.com.

    Please Stay Calm

    Please Stay Calm was founded by Garry Seto andKen Seto. The company is building a massively co-operative location based social game with a zombie theme. They have not yet released the game, but you can sign up for news at pleasestaycalm.com.

    And you can learn more about the game and their progress on their blog.

    as well as Assemblio and one other as of yet unnamed startup.

    There are some things to love about Year One Labs:

    • The founders of Year One Labs have their own money invested
    • The founders of Year One Labs are experienced founders with good operational backgrounds. It seems clear to me that they know how to gradually disengage as the founders of resident companies get their feet under them. They aren’t constrained by awkward incubator contracts or “client service agreements” where a lot of resources go more and more unused as a startup outgrows them. That flexibility is important.
    • They have a bar built right in to the lobby

    It’s not all ice cream and pie for these guys though, from the outside it is clear to me that follow-on financing relationships are always going to be tough for groups like this and keeping the lights on does become a heavy expense over time.

    This sort of activity, much like Extreme Venture Partners in Toronto and the work that BootupLabs had been doing in Vancouver is the lifeblood of an early stage startup community. Whenever politicians give speeches and talk about things like the “IT Sector” and “knowledge workers” — this is what they are talking about. We have to find careful ways to support efforts like Year One Labs but also keep the market competitive enough that the best ones may rise to the top. In the current model of massive infusions of cash for real-estate and bureaucrats does not let the market pick the winners.

    The entrepreneurs are the ultimate customers here and they will be the ones who make or break Year One Labs and every other similar effort in Canada.

  • Salesforce acquires Radian6 for $326 Million

    This will be all over the news today so I won’t try to keep pace with the commentary, but the news that Salesforce has agreed to acquire Radian6 a Fredericton, New Brunswick company founded in 2006 ,is out.

    I won’t try to keep pace with then endless coverage that will be happening, but here are some thoughts on what is cool about this:

    • Ride the Winners: There is no doubt that Radian6 has had a lot of offers over the years. Competitors such as Techrigy, ScoutLabs and Sysomos likely sold out WAY too early. This is something Roger Chabra has been saying to me for a while: When something is working, stick with it.
    • Canadian made: Radian6 was built and financed entirely in Canada by Summerhill, BDC and Brightspark. They funded Radian6 early and they stuck with it. That’s a great and all too rare story.
    • New Brunswick made: When I tell many of you that I have moved to Halifax I sometimes get questions like “is there any startup community there?” or “Is there any talent there?” — Now I have an easy answer to what I have already found out: This region is brimming with talent and with the right leadership great things can be accomplished.

    Congrats to the entire Radian6 team as well as Summerhill, BDC and Brightspark. This is big news and a great story.

  • Ted Livingston is insane in the best sort of way

    A lot of people talked shit about the recent valuation of Kik. It all seemed a bit insane and I admit the numbers I heard seemed wild. That was until word dropped that Union Square Ventures has joined the deal alongside RRE.

    Today Techcrunch is reporting that Ted Livingston is using a chunk of the money that he took off the table in the recent financing in order to further back UWs Velocity dorm/program.

    Say what you want to but Ted Livingston gets it and the moment he had the chance to do it: he gave back. That is all too rare a thing. He obviously did well in the transaction that generated the extra $1million, but not THAT well. He is obviously just an incredibly generous person. I am totally inspired.

    If we can continue to back and inspire entrepreneurs as passionate as Ted then we just might get somewhere.

  • Indochino goes big, raises $4m in capital

    We first covered Indochino when they launched back in 2007. To say I was excited would be an understatement and anyone who knows me knows I have been advertising their stuff to anyone who will listen since then. The news has finally landed that they have closed a $4million round led by Madrona Ventures.

    Indochino is also one of the original Boris Wertz Deals™ and was further backed by Wertz’ Burda Digital relationship.

    More than anything we have seen Kyle and the team remain true to their vision over the years and while I am sure they have hit their share of bumps along the way, they have never wavered in their dedication to their concept.

  • The Tech Bubble IS the Recovery

    I keep hearing nonsense about tech bubbles recently. I think people are losing sight of the opportunity in front of them right now.

    There are something like 500mm broadband customers in the world right now. There are over 5b mobile users in the world right now. Of those only about 500m have 3G (i.e. broadband) access.

    So there is still something like a market of 5b people right now who will over the next 5-10 years start using the internet as part of their daily lives. With new smartphones & new tablets, price points are reaching levels where broadband will be affordable to all these people. And as broadband becomes available, new internet delivered services & products will be used. MASSIVE OPPORTUNITY.

    But thats only part of the story. Basically, still in this day, there are tons of service/industry sectors where the internet is barely used. I’m talking about you health care! There are major major industry changes coming in sectors like government, health care, real estate, law, delivery, etc. Many government services still require paper for submission. Anybody done taxes or applied for a visa – think neither of those two could be done better? Many doctors still rely heavily on pen and paper (prescription pad anybody?). Many legal & financial transactions are still quagmired in a world of yesteryore, completely non-digitized. Anybody bought a house recently? There are multi-billion dollar opportunities here.

    On top of riding disruption in many service & industrial sectors, there are still major changes coming in the way we consumers use the internet. Last year e-commerce accounted for 4% of all commerce, and online advertisting was only 13% of all advertisting. Meanwhile the average person is spending more and more time online and consuming more and more internet services, meaning that commerce, advertising & media production will all explode online. MORE BIG OPPORTUNITY.

    And, more so, most infrastructure still hasn’t even been hooked up to the internet! Can you turn lights on/off over the internet in your house? Is your car on the internet (driving as a service – DaaS??)? Are large buildings on the internet, can we remotely control them? Are local bridges on the internet throwing off readings from sensors, cameras, etc? How many more devices, buildings, cars, etc can be added to the internet? A few billion++?

    And, with 5B people now having access to GSM phones, you think the world of communication isn’t still evolving fast? Want to know why Kik, Color, GroupMe, Beluga, etc are all getting massive amounts of money and its no joke??? When was the last time you sent a text? Was the experience kind of lame (you had to remember a weird 9 digit number that represents that person , type in T9, etc)? Did you pay some stupid amount of money for it – like $20/month for unlimited texting? Were roughly 5 TRILLION texts sent last year globally at revenue of something like 5-7 cents per text – wow a $250B market!!! Has MMS been a total failure with a horrible user experience that nobody outside of Germany ever used to share photos? Did it still generate $31.5B in global revenue last year??? You think its not worth giving a company like Color $41mm to take a crack at that revenue??? If I were a mobile carrier right now I would crap my pants every time I read about one of these companies raising big money. Entrepreneurs & VCs have started a mobile messaging WAR against the carriers – because its a big opportunity, not because they are being stupid.

    And hasn’t it gotten cheaper and less riskier to launch new web products & services, like cheaper by several factors. Shouldn’t people invest in big market/low risk opportunities?

    And doesn’t Silicon Valley have massive leverage and far more competitive advantage over EVERY WHERE ELSE IN THE WORLD (and maybe New York.. and maybe the collective geographical diaspora known as University of Waterloo graduates). Can China, India, Europe, blah, blah, anywhere really, truly come close to competing with Silicon Valley head to head in making money out of the future of the internet?

    So there are BIG massive billion dollar global opportunities. And there are unique advantages in the US globally. And its cheaper and less riskier than ever to invest in these companies.

    Isn’t this EXACTLY the policy the people, the government, the investors, the entrepreneurs, the hackers, the inventors and everybody should be endorsing? Is it bad that easy fed printed money/gov’t stimulus cash has trickled down into the valley and created a surge in investment in high-tech? Don’t Americans want to kick ass and win and have most of the new billion dollar companies built here? And isn’t this a true legitimate chance for the country to recover in the long-run? Isn’t it less risky and a better idea than Friedman telling us to invest in better solar panels every day in the New York Times? Where else would you put this money? Building bridges???

    I’m not even American, I wish you guys would blow this chance so up here in Canada we’d build the best tech companies! But at least some of the funding will flow to the hands of the our University of Waterloo students who will eventually move home when they have babies.

    But in all seriousness, I think every startup who got funded recently, should realize they have a civic responsibility to bust their asses off with HUSTLE AND HACK. These are tough economic times for many, and you have the opportunity to do something about it and make a difference. I don’t want to read articles about the 4 monitors on your desk, or the ipad you got when you joined, blah blah blah. Don’t act like over-privileged, whiny, little bitches spoiled rich kids. Get out there and help re-build.

  • DFAIT Technology Growth Initiative Business Bootcamps

    Departement of Foreign Affairs and International TradeDFAIT is sponsoring the Technology Growth Initiative (TGI) Business Bootcamps Spring 2011 to help Canadian companies go-to-market in specific US markets (Boston, Denver, Los Angeles, New York, Palo Alto, San Diego, San Francisco/Silicon Valley and others). The program provides startups with access to webinars, a one day bootcamp session and direct connections with VCs and local entrepreneurs to share experiences and find funding.

    The one day bootcamps are being help in April and May 2011 from Halifax to London. The bootcamps are interesting, they provide entrepreneurs the opportunity to pitch and get feedback from trusted experts (yeah right I think I served as an “expert” in 2009 ;-). But it is a great opportunity to get a different set of eyes on your pitch. And it plays to the old adage, “how do you know when an entrepreneur is dead? he stops pitching”.

    Registration for One Day Business Bootcamp

    • Halifax: April 27th, 2011 – Cleantech and ICT
    • Quebec City: April 28th, 2011 – ICT
    • London: April 29th, 2011 – Cleantech, ICT, Life Sciences
    • Toronto: May 2nd, 2011 – Cleantech, ICT, Life Sciences
    • Ottawa: May 3rd, 2011 – Cleantech, ICT, Life Sciences

    There is also the upcoming April 6th, 2011 11:30EST seminar with Mike Grandinetti (he’s also a TechStars mentor) focusing on “Lean and Mean Startups”.

    April 6th: 11:30 EST (Upcoming Webinar – Soon)

    1. Lean and Mean Start-ups – Presented by: Mike Grandinetti, Managing Director, Southboro Capital, Boston.
    2. So you think you are ready? – 10 things you need to know before presentation day – A candid talk on presentations gone horribly wrong and how you avoid that – Presented by: Coby Schneider – Miller Thomson & Others.

    These are great opportunities to learn about expanding into specific US markets. The DFAIT team brings key players to local markets and makes it easy to establish relationships that allow companies to grow. There are lots of opportunity to criticize some of the efforts, but the team at DFAIT have run this program for the past few years with varied success. It’s worth the time of startups actively looking to expand their customer base (this means that you’re beyond seed stage, you probably have customers, you have a product, you’re looking for a scalable business model) to explore how DFAIT can help.

    The event is co-hosted by our sponsors and friends at KPMG are corporate partners helping DFAIT and startups. There are a lot of cross-border issues concerning corporate structure, financing, taxation and other where KPMG can leverage their experience to help early and growth stage companies.

  • Web Startup Society Career Fair

    Entering StartupThe Web Startup Society at the University of Toronto is hosting a startup career faire on April 7, 2011.

    This is a great opportunity for local startups looking to hire developers, interns, engineers, designers, and other smart problem solving kids from UofT.

    Startups can apply to recruit, it’s $50 and the deadline is March 25.

    Web Startup Society in partnership with Career Centre invites startups to apply for Startup Job Fair to be held on April 7th, 2011 from 1-4pm at Career Centre, Koffler Student Services Centre, 214 College Street, Toronto, ON

    This application form will help us select which Startups would be eligible. A team of review panel consisting of someone from the career centre, a CS faculty member, and a KMDI member will decide which Startups would qualify based on two simple criteria.

    We’re looking for companies that already have funding and have demonstrated the potential to provide a good level of job experience for student applicants. If you’re one of the companies that get selected, we request a $50 fee to cover the expenses of holding the event. If you have any further inquiries, kindly send an email to [email protected]. For more details, check out

     

    Appy for UofT Startup Job Faire