StartupNorth

Month: November 2011

  • Everyday be hustlin’

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    AdParlorCongratulations to Hussein, Kristaps and their team at adParlor.

    In case you missed it, Toronto-based adParlor has been acquired by AdKnowledge. adParlor is the second Canadian acquisition for AdKnowledge, who acquired Vancouver’s Super Rewards in July of 2009 for a reported $50 Million.

    They managed to build one of “the largest [Facebook] Ads API vendor” and do it here in Toronto.

    “We’ve established an office over here where we now have 11 employees, and we’re all based and comfortable in Toronto. We do have our business development manager in San Francisco way more than he’s here in Toronto.” – Hussein Fazal (LinkedIn, @hussein_fazal) on Mixergy

    Even more impressive is that they built a site, that manages over one billion impressions a day, without raising outside capital. This is freaking impressive. I’m sure there was likely a combination of SR&ED credits, IRAP money, and others. Every entrepreneur should take note: A billion daily impressions without venture funding. Go read or watch Hussein’s interview on Mixergy, he talks about the 2 pivots for the company, the hard decisions, staying in Toronto. He doesn’t talk about all of the successes like the MaRS AlwaysOn trip, the CIX Top 20, but their relentless hustle and drive built a great business with massive traction.

    “no one has hustled harder, stayed humbler, and executed better than him.” – Anonymous VC Comment about Hussein & adParlor

    Thanks for building a fantastic example for Canadian entrepreneurs.

  • Wave Accounting acquires Small Payroll

    Emboldened with financing from OMERS Ventures and Charles River Ventures, Wave Accounting is consolidating their position as a leading provider of SaaS business applications, expanding from accounting into payroll with the acquisition of Small Payroll.

    “Our intention is to do for small business payroll what we did for small business accounting. Namely, we’re taking something complicated, confusing and expensive for the small business owner, and making it ridiculously easy and affordable.”

    Small Payroll was launched in 2009 by Sean Walberg, an application developer in Winnipeg, Manitoba. He discovered a need for a straightforward, affordable payroll tool when he was faced with deductions for a caregiver he hired for his children. “I had worked at a big payroll company, so I understood what needed to be done. Even so, I found it to be a pain to use the government’s online calculators and then keep track of things on spreadsheets. And the payroll companies are too expensive, especially for the little guys.”

    Wave Payroll handles all the aspects of payroll that most small business owners will need, including:

    • direct deposit to employees’ bank accounts
    • calculations of wages and overtime
    • withholding deductions; and monthly remitting to the government
    • income tax forms (including the Canadian T4) and Records of Employment

    All the features will be included in a simple pricing model, for a flat rate of a few dollars per employee per pay run. Wave Accounting and Wave Payroll will operate as complementary but separate applications. Wave Accounting will remain 100% free. Wave Payroll is now in private beta.

    For an invitation to the public beta, sign up at: WavePayroll.com

  • Startup Weekend Toronto & GEW

    Startup Weekend Toronto is coming back for it’s third event in just over year. The city is making a name for itself amongst the global Startup Weekend community, having held some of the highest quality events, including last June’s which turned out to be the largest North American event held to date.

    The city has lots of great events but that’s not what gets me excited. It’s the quality, innovation and momentum that Toronto’s entrepreneurs have that is inspiring. Personally, I never had any interest in running events but I liked the idea of Startup Weekend and was inspired by Startup Weekend’s CEO, Marc Nager and his the team… at least enough to agree to run a single event. Once you’ve been involved in one, it’s hard not to keep it going. The energy, enthusiasm and drive of everyone who’s attended the last two Startup Weekend Toronto events is infectious.

    Last June’s event was a raging success with over half the teams still taking their projects forward and gaining some real traction 6 months later. Vizualize.me is the perfect story of the possibility of a single weekend. A brand new idea gets pitched for the first time. A group of strangers come together as a new team. In under 54hrs, the team iterates, refines, pounds the pavement for customer feedback, signs up over 10,000 registered emails and puts an awesome final presentation together to take first prize. What’s more impressive is what comes next! The Vizualize.me team decided to commit full-time and see where they can take this. As of today, they have over 300,000 registered users, have been covered in Mashable, Fast Company, TechCrunch to name a few, and have gone through a full private and now public beta program. Eugene Woo is actively speaking to investors as they run this startup out of the Ryerson Digital Media Zone.

    November’s Startup Weekend will officially close Global Entrepreneurship Week Canada (GEW) and will be part of the Global Startup Battle with over 65 Startup Weekend events happening around the world during GEW. The winning team from each city event will compete against all 65 cities with a chance to win a trip to DEMO in Singapore. Toronto is going to impress the global startup community once again with a world class event. Check out the event details from the site and by following the action on twitter using #swtoronto .

    There are still a few tickets left and StartupNorth readers can have them at a discount. See you there!

  • Startup Blood Bath – What a Recession Feels Like

    Today looks like a bit of a blood bath on the markets, so I figured it is as good a day as any to talk about what an economic downturns feels like for startups. I was “fortunate” enough to launch a company the day Lehman collapsed in 2008 (Sept 15th!!), and got to see the first hand impact of the downturn. We also were raising a B round during that time.

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    Most media seems to paint the picture of this post-apocalyptic world where suddenly all funding disappears and everybody wakes up and the tide has gone out and everybody is naked. I disagree. To me, the downturn felt more like death by 1000 paper cuts, such as:

    • Your churn will climb. Partly because of non-payment, failed credit cards, canceled credit cards, etc. If you do churn reports, “cutting back” and “not feeling the value” will increase as reasons.
    • Suppliers/Partners will stop paying you in a timely way, some never. Your average AR period will start to run at first slightly longer, then much longer. You’ll probably need to hire a baseball bat.
    • If you have physical product, distributors/channel will send back inventory because they are getting rid of any “risky” inventory and focusing on basics, i.e. products & goods that move easily like toilet paper and milk.
    • Conversion rates will start declining for every marketing trick you try (except lowering price). And with that, cost of acquiring customers goes up. You’ll also probably just invest more into marketing as an initial reaction to declining customer counts.
    • Your ISP (or any low margin, commodity supplier you use) gets “acquired” by 3 different entities in 12 months and start having annoyingly regular outages.
    • Angel investors, or anybody holding debt, turn into vicious debt collectors. As terms reach they demand outrageous interest. Now you are paying 2 employees worth of interest per month.
    • You are forced to lower price, at first by small amounts, and then gradually more.

    So if you increase churn by 2%, increase acquisition costs by 10%, chop price/revenue by 10%, do you know what you have???

      A Broken Business Model that is Not Fundable.

    More good news, VCs and angels get caught in this churn. Exits disappear (2008 VC backed M&A was down 54% from 2007!!!) and with it RoI. Many “busted business models” appear in the portfolio, and soon they have to get written off. It gets nasty. VCs who are dying stop feeling like the Fred Wilson-ian brothers-in-arms company builders, and they start to feel more like debt collection agents. SELL YOUR COMPANY! MERGE WITH THIS CRAP COMPANY! LETS PARACHUTE IN A NEW GOLDEN CEO! PAYCUTS! WHY ARE YOU GUYS GETTING PAID?

    The Good News

    Here’s the first good news. Only two things on the planet can force you to die: 1. YOU – You Give Up & 2. Debt Gets Called.

    The second piece of good news. Some businesses do great at managing downturns. Why? Execution and a little luck. You can track all the little death by a 1000 paper cut stuff I listed above, see that the world is changing and manage it. If people stop paying you or start delaying on payments, you gotta get out there and do some hard nose collecting. If churn starts to rise because of credit card defaults, try to bill in new ways – use different billing dates, bill in multiple smaller chunks, etc. If you have to lower price, get a new product out or a range of products so you can defend average price. If you see it coming and are fast enough, you can react and your company can survive.

    The third piece of good news. All of this starts happening before big market moving catastrophes happen. Bad “paper cuts” were happening months/weeks before Lehman collapsed. In the summer of 2008 other startups I knew were having churn & credit card payment issues.

    There are a lot of folks who survived 2008/2009 and built profitable businesses around Canada. Would love to hear some of your thoughts.