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.
They 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.
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 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.
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:
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.comStartup 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
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.
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.
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.
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.
“This acquisition reinvents the newswire and we’re terribly excited about it. It’s of benefit to our clients because we’re taking dna13’s technology platform, which is best-in-class, and marrying it with CNW’s suite of offerings. For the first time we’ll be providing an end-to-end solution that will really allow communicators to manage every facet of the communications process. Everything from creating content; targeting your message; distributing your news and information; understanding how that information is being received by your audience to further refining your message and developing metrics. That will all be available to CNW clients in one, single platform.”
– Carolyn McGill-Davidson, President and CEO, CNW Group
This makes a lot of sense since CNW Group is a reseller of the dna13 platform under the MediaVantage brand. No details about the purchase price have been disclosed.
Is there any questions that the Canadian venture captial industry is in turmoil? There is a change that is happening, it might just not be happeing as fast as it could. Mark McQueen talks about the the creative destruction of the VC industry in Canada.
“There’s no robust “new class” of VC firms coming in behind the current oligarchy, with a similar amount of capital to deploy as those they are planning to replace. We are witnessing the destruction piece of the equation, for sure, but not the rebirth that is the essence of “creative destruction” if it is to succeed.” – Mark McQueen, Wellington Fund
While there are a few new players entering the market (I’m looking at you ExtremeVP and Mantella VP), we’re seeing a lot of roadkill. There are firms that are not able to raise their next fund, partners that are on life support, startups that are left to wonder what happen to their partners in raising additional capital. However, many that remain are digging in and fighting for their way of life. They are lobbying for support to “manufacture an environment that is hospitable to their investment style”. Adam Adamou at Caseridge Capital Corporation argues that the existing venture players, the Canadian VC oligarchy, has successfully lobbied for restrictions that have kept out new players including the public/private venture capital that was used to fund RIM.
“The traditional venture capitalists see themelves as the founders of a “Silicon Valley North” and they follow the US trends, which unfortunately do not apply to our Canadian market. They seem to see themselves as avant garde investors in tomorrow’s technology companies, however, they behave more like bankerss[sic] – preferring security and downside protection over opportunity”
Yikes, that’s a damning review of the Canadian venture industry. However, I’m not sure that the suggested alternatives including Capital Pool Companies and the TSX-V are really better choices for Canadian entrepreneurs (or investors). (I’m not an expert on CPCs or TSX-V but when my friends and trusted advisors like Mark McLeodprovidecommentary, I listen). What I took away from The Adamou Rant is that many of the funds have a vested interest in the maintaining something akin to the current system. Governments should look critically at the numbers being presented and who is presenting them.
The State of a Nation
Is the sky falling? What is the state of venture capital in Canada? Is it really this bad? And why does it matter to early-stage entrepreneurs? Should we all just move to Silicon Valley, New York City, Boston or somewhere else?
The Canadian VC environment has been challenging for a lot of entrepreneurs. As entrepreneurs, you need to understand the environment that you will start, fund, and grow your company. Canada has a strong track record of access to capital, a stable economic policy and should be a great spot for entrepreneurs. It’s also unique. Canadian companies tend to be at a later stage of corporate development and raise less money than their US counterparts. I’ve written about the impact of the state of the funding environment has on startups. And what entrepreneurs can contintue to expect to see, includes:
The number of investors will continue to decrease
Valuations will continue to decrease
Customer uptake will be slower
Need to become cash flow positive
Acquiring entities will favour profitable companies
VC investments in Canadian firms hit a 14 year low in 2009
US venture market saw US$18 billion invested in 2009, Canada saw only $1 billion (5.5%) our economy is approximately 12.5% the size of the US economy
Up to half of current Canadian VC funds will not be able to raise their next fund
Ontario government has sunset the $1 billion Retail Venture Capital Industry
“Section 116” was fixed in the 2010 Federal Budget, however, this is not a silver bullet
117 disclosed cross board investments since January 2008 (this includes Canadian investments in US companies)
Canadian Fund of Funds have lots of capital to invest in foreign led funds: EDC ($1.2 billion); Teralys ($700 million); OVCF ($205 million)
A New Hope
We need to hope that from out of the ashes will emerge a better funding environment for Canadian entrepreneurs. Whether this is led by new funds, angel investors, US funds, or the existing players learning from their mistakes, it doesn’t matter.
We’re starting to see a strong set of the big players making acquisitions across Canada:
Our startups need real capital to continue to compete on the world stage. But They can’t survive on SR&ED credits alone. We need to hope that this creative destruction happens quickly, so that something can rise from the ashes and we can witness the rebirth of the Canadian tech startup.
Our friends at the C100 have issued the reminder that the submission deadline is April 29, 2010 for their 48 hours In the Valley. Did you wonder what entrepreneurs thought about the last mentoring session? Check out the comments from both the entrepreneurs and a mentor below.
The C100 has an impressive list of members. And continues to participate in events like the DFAIT Entrepreneur Bootcamps and through tele-mentoring sessions which ran most recently in Ottawa (I’m assuming with folks at OCRI).
There are bound to be more US-led foreign investment firms making their way across the border with the elimination of the long dreaded Section 116. There have been a number of US firms that were making investment in Canada prior to the removal of this taxation law including: Rho Ventures, GrandBanks Capital and Bridgescale Partners. Bridgescale is an interesting firm. They are focused on the later stage deals but realize that these deals are part of a larger ecosystem.
Bridgescale is led by Rob Chaplinsky. Chaplinsky is a Mechanical Engineering grad from the University of Waterloo (with an MBA from Harvard). He cut his chops as a general partner doing early-stage deals at Mohr Davidow Ventures. He’s a little old school, investor in Bluecat Networks, and a little new schook, he’s an investor in lean startup ninja Eric Reis’ IMVU.
There is also Howard Gwin. Howard’s located in Canada. He’s on the ground helping companies, serving on boards, and generally helping companies grow. Currently he serves on the boards of Coveo, dna13, Kinaxis and others. He’s on the ground and focused on helping Canadian companies. He was on the board of Taleo which has a market cap of >$1B. Not a bad guy to have on your board.
The interesting part is the desire to build connection and community. It’s similar to the efforts that the C100, which aim to help Canadian startups connect with senior level talent and connections in Silicon Valley. The Bridgescale team has created Digital Puck. Apparently all Canadian startup CEOs and founders are hockey fanatics (well, that’s not far off from the truth). Digital Puck is an opportunity for Canadian startup leadership teams to connect with each other and other key players. The goal is to help bootstrap the next generation of companies, and if I’m not a rocket scientist to help educate and grow companies that Bridgescale can invest in. The goal is to build the connections. It is through the connections that value is transferred. It may not always be a direct transfer, and the Bridgescale team seems to understand the need for individuals to be connected across Canada.
Mentor Monday is a mentoring forum for private company CEOs that will take place in the afternoon of the last Monday of every month. There will be three CEOs at each event – a mix of early and later stage companies. On hand will be several very experienced Digital Puck board members – current or past CEOs, CIOs, COOs, and other VP level technology backgrounds. The CEOs will get a great forum to test your business strategy, explore growth plans, look for contacts, board members, advisory board members or just discuss things on your mind. If you are interested in attending, please RSVP on the “Events” section of DigitalPuck.
Whether this is a Silicon Valley firm looking for better valuations on mid-to-late stage deals in Canada or a set of Canadian expatriates looking to make investments in their country of origin, it’s all good for Canadian startups. I participated in today’s inaugural Mentor Monday session that saw 3 companies present today including:
It will be interesting to see this event evolve, but I think the session was incredibly valuable for each of the startups. It was most valuable as an participant when the founder introduced their business and then described the business problem they needed advice solving. It was very similar to a board meeting with a lot of outside connections. Where else do you get feedback from CEOs, technologists, funders, lawyers, accountants, etc. There is some evolution that needs to happen to the format, but it was a great session. Definitely a great forum for companies that are looking for go-to-market strategies, sales channel discussions, and other growth questions.
Our friends at the C100 are hosting 20 Canadian companies on May 18-20, 2010 in Silicon Valley. Interesting tradeoff, accepted startups will need to weigh participation in the C100 with participation at OCE Discovery, MeshU and Mesh (assuming you don’t win the GOAP ticket from StartupCamp Montreal). It shouldn’t be a huge debate, because the opportunity to engage with Canadian mentors in Silicon Valley should be pretty straightforward for most startups.
This is a variant of TechStars for Canadians. You get the chance to connect with the most connected Canadians in Silicon Valley. You can the opportunity to pitch, receive mentorship, and gain access to business development resources. This is a great opportunity for local startups to gain access to markets, companies, and decision makers in Silicon Valley.
“These customers and markets don’t need to be located in Canada. In fact, Canada can often serve as a providing ground, an incubator, for a variety of market segments. We need to leverage the unique attributes of a diverse population of immigrants for the creative tension of differing viewpoints, and to help forge connections with remote markets.” Creating a Venture Culture, The Mark News
Ontario Centres of Excellence are hosting their innovation-to-commercialization conference again in Toronto. The OCE Discovery 10 conference is happening May 17-18, 2010 at the Metro Toronto Convention Centre. They have a history of bringing great keynote speakers including Clayton Christiansen, Nassim Nicholas Taleb and Sir Terry Matthews. 2010 is no different, the OCE team is bringing Steve Wozniak to Toronto.
Sure we know Steve from the Apple I and Apple II computers. You might even know him from Dancing with the Stars. You probably didn’t know that the Gipper awarded him the National Medal of Technology, the highest honor bestowed America’s leading innovators, in 1986. And Steve Wozniak is still working on new technology. He’s a the chief scientist at Fusion-io working flash-based memory architectures for storage. He’s on a member of the board for member of the board of directors for Jacent, a developer of cost-effective telephony solutions, Danger, Inc., developer of an end-to-end wireless Internet platform, Ripcord Networks and others.
He’s an engineers engineer and knows a thing or two about tech startups. He’ll be at OCE Discovery from 2:00pm – 3:30pm and this includes a book signing opportunity (Mac nerds rejoice, even more impressive if you have an Apple I or Apple II to get signed).
“Every engineer—and certainly every engineering student—should read this book. It is about the thrill of invention, the process of making the world a better place, and the purity of entrepreneurship. I, Woz is the personal computer generation’s version of The Soul of a New Machine. It is, in a nutshell, the engineer’s manifesto. I hope that the so-called “innovation experts” and MBAs choke when they read it.” – Guy Kawasaki
The rest of the OCE Discovery 10 schedule is packed full of startups, policy makers, innovators, academics. We’ll be hosting a DemoCamp, while not currently as cool as the “Ontario’s Next Top Young Entrepreneur Start-up Pitch” happening on Monday, May 17 which will give grant the winning startup a “non-recourse micro-loan of up to $18,000 ($6,000 per team member) to launch a new start up, have access to advisory services and have the opportunity to network with key mentors and private investors”. It is a great opportunity for local startups to demo their wares and do demand generation with local investors, government agencies and businesses.
We’ll be doing a bunch of work to clarify what type of startups can maximize the value from presenting and start accepting nominations for demos in the next couple of weeks. What DemoCamp for details.
Discovery DemoCamp Tuesday, May 18, 2010 3:15pm-4:15pm EDT
Inspired by Toronto’s Tech community, see showcase technologies presented in 5-minute demos by some of the communities hottest inspiring web, mobile and social media startups.
They are producing an event, Grow 2010, in Vancouver on August 19-21, 2010.
