StartupNorth

Author: Jonas Brandon

  • Zombie Factories

    We like to give out a Zombie of the Year award in our annual Unicorn Awards. The Unicorn Awards are the far more lucrative and weighty cousin of the upcoming Spotlight Awards (are you going?).

    In 2013 Danielle Morrill wrote Zombie Startups and the gem is stuck in the middle, which I just noticed called out in this post today.

    Are you a Zombie Startup? Here are the top 9 hints that you may be running one:

    How do you know if you startup is falling into this trap? Here are some hints:

    • You don’t want to get out of bed in the morning
    • You don’t want to go out in public for fear you’ll have to explain what you do
    • You haven’t hit 10% week-over-week growth on any meaningful metric (revenue, active users, etc)
    • You’re working on the same idea after 12+ months and still haven’t launched
    • You’ve launched a consumer service and have less than 2% week-over-week growth in signups
    • You’ve launched an enterprise service and have less than 2% week-over-week growth in revenue pipeline
    • You are the CEO and hole yourself up in the offices so you don’t have to talk to employees and can read TechCrunch
    • You’ve hired consultants to figure out revenue, culture, or product in a company of less than 10 people
    • You’re at SXSW right now reading this post and trying not to cry

    I think there is a Canadian context here as well. We have two more hints:

    1. You will miss payroll if you don’t get your SR&ED cheque in the next two weeks, and this has happened more than once.
    2. You spend more time meeting with and filling out forms for government economic development agencies than you do speaking to customers, angel investors and/or venture investors.

    Being a zombie startup in 2008 was one thing… Frankly that was probably good enough to just pass the time, but if you are treading water today you are missing out on one of the most founder-friendly and lucrative financing environments we’ve ever seen.

  • Products are Lines, not Dots

    I see a lot of founders and startups struggling with explaining what they are trying to accomplish. Many are just focused on how they are going to do the next thing. The next release, the next pitch, the next campaign.

    Releasing a product is not an accomplishment in and of itself. Launching isn’t either. Getting a feedback and signs of traction never quite feels like enough.

    Why are you doing all this?

    Mark Suster wrote an important blog post in 2010: Invest in Lines, Not Dots.

    The tl;dr: Relationships are important.

    It’s easy to think that when you meet someone once, you’ve MET them. It just isn’t true. A relationship is that line that is formed across a series of encounters.

    Products are no different and the sins that we commit are the same as those Mark describes.

    Mark says:

    “[ . . ] I tell entrepreneurs the following: Meet your potential investors early.  Tell them you’re not raising money yet but that you will be in the next 6 months or so.”

    Screen Shot 2015-01-20 at 1.01.31 PMIn a world of fast iteration and Running Lean, it’s easy to think of products as the entire picture. It’s one big giant dot that we hope brings us success and a mass of users.

    It’s never like that though.

    Your Product  is a relationship with your users. Like Mark (and the rest of us), Users invest in Lines, not Dots.

    When you have that first meeting you need to not only make a good impression, but you have to tell everyone where you are going. We call it Vision.

    Release Early, Then Release With Purpose

    Fast product iteration is important: You listen to users, you monitor and assess metrics and you make changes that bring your product closer to perfection.

    Perfection is not what you need: Purpose is. Why are you releasing and why should users and customers continue to invest in you and your product with their time, money and feedback?

    In looking for perfection (product/market fit?) it’s easy to think it is something that *just happens* and then you are instantly successful. It’s never like that. It takes work and focus, and a vision for how the future is going to be different for your customers because of it.

    Screen Shot 2015-01-20 at 1.23.18 PM

    Vision is what defines the future you see for you and your customers. It’s why they try things for the first time and it’s why they will stick around even when you don’t quite get things right.

    It’s easy to miss and it’s easy to get bogged down in the day to day, but if you have it and if you can articulate a vision, then you have a better business plan than you could ever put in a doc or deck.

    When you iterate on your product and deliver releases, it should be about taking the customer closer to your vision for your product and why it’s important.

     

     

     

  • We Should Be Building Empires

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    Last chance to get your tickets to this incredible event!

    We don’t build a lot of empires around here.

    Empires are big, they grow fast, and they use momentum to determine where to apply resources. Empires don’t respond, they set the new rules.

    Carnegie. Rockefeller. Gates. Zuckerberg.

    Lutke. McDerment. Baker.

    We’ve had empires come and go, but we haven’t built the sort that stick around for 100 or 1,000 years.

    We need to startup building empires.

    In 2008 we held a conference in Toronto. Some of you might remember it. We were going to call it something like StartupNation, StartupConf or something else,. but we decided to call it StartupEmpire. Why?

    We thought it was important to put a stake in the ground about the kinds of companies Toronto startups needed to think about building: Bigger, badder and more resilient.

    Next week we are re-doing it. StartupEmpire is taking place in Halifax this time, a startup community that is in much the state that Toronto’s was 5+ years ago. It’s time to focus our gaze out in to the world and to say ‘”I’m coming for you.”

    You can hear from some of the most ambitious and experienced entrepreneurs in Canada right now including April Dunford, John Baker, Dan Martell, Bala Kamallakharan and a lot more.

    Get your tickets now, there are only about a dozen left!

  • You are supposed to break the rules

    Great entrepreneurs truly do not care about the rules.

    If you haven’t noticed, there are a lot of rules.

    Some come and go with the times, others never seem to go away:

    • You are supposed to dress a certain way
    • Finance your company this way
    • You pitch deck should look like THIS
    • You, in your industry, with your product, it’s not the way it’s done

    And there are the big rules, the regulations:

    Great companies are built by breaking rules. We call them ‘norms’ but they are rigid and they feel real until someone destroys our idea about ‘how it’s done’.

    • Marc Benioff decided to sell software as a service when everyone believed they had to install software on premise
    • Steve Jobs built expensive but beautiful machines when every other hardware company believed they had to be cheap.

    and so many more.

    And it’s happening, there are more great stories of breaking the rules and the amazing companies that result:

    • Figure1 is breaking the rules in Healthcare
    • Wattpad has done away with not only publishers, but with most of the old creative process

    Who else comes to mind?

    Sometimes a pure rethinking of technology can completely rewrite the rulebook. Bitcoin is readily looked at as an alternative to fiat currency, something that was unthinkable before a purely electronic currency was conceived.

    Breaking the rules goes by many different names like ‘disruption’ and ‘innovation’ but they all start with someone rethinking an old way of doing business. When we look back on what they’ve accomplished we often like to call these rule breakers ‘clever’, ‘brilliant’ or ‘strategic’. The truth is that they didn’t get ahead by adding complexity, or navigating what existed. Most of the time they were able to get ahead by pushing aside the rules and focusing on the opportunity.

    The rules almost always come to mind later.

    As the world becomes more and more ‘wired’ I believe that startups will run in to regulatory hurdles more and more often. Like uber, AirBnB, Lyft and others, the rules sometimes represent a massive opportunity to create efficiencies in a place everyone else thought was off limits.

    There are little rules, and there a big rules. No matter which stage a company is at, it’s the rule breakers who get noticed, they are the ones who crack a market open and feed off the the plump center.

  • Get them out of the building: Travel support from Volta

    Graffiti at VoltaWhen Ben Yoskovitz moved to Halifax to join us at GoInstant he left the growing Montreal community and brought a lot of fresh perspective to what needs to happen in Nova Scotia to grow the startup ecosystem.

    The #1 thing he noticed was the successful startups were the ones getting out of the building and on to a plane. Spending significant amounts of time in San Francisco, New York or wherever you need to be is an important part of growing your network of people you can rely on to build your business.

    Today Volta is announcing a travel support program for startups. You have to be small (<10 employees) and young (<3 years old).

    This hits home for me. When I was living in Charlottetown and 19 years old I had my first attempt at a product startup, it was called Blogtrack. It had what seemed like an insane number of daily active users at the time, just under 10,000, and I had no idea what I was doing (still working on that). I also had no money really, certainly not enough to blow on a trip to Boston for Bloggercon. A guy named Lee Brammer at what is now called “Innovation PEI” offered to help cover some of the costs for the trip, which meant it was (just barely) affordable. It was, for me, an eye opening trip, eating dinner at a table for 4 with Dave Wiener, Betsy Devine and Dan Bricklin just about blew my mind.

    Anyway, the point is that sometimes you really need to get out there and just do something you might not have otherwise. Good things almost always come from it and the truth is that it can be hard to make up for sitting across the table from someone and really getting to know them.

  • Atlantic House @ Grow next week in Vancouver

    voltadiamond

    The buzz has been awesome about the GROW conference next week. Just a few weeks after Startup Fest in Montreal. The summer season is moving quickly…

    A Startupnorth we’ve helped organize the Ontario House along with Communitech and the Waterloo community, and now we are announcing that along with Volta we are organizing the Atlantic Canada House.

    In this case Reza Kazemipour the San Francisco based CEO of Oris4, a Halifax company, has stepped up and personally funded the house. Amazing to see such commitment from the local community.

    The Diamond on Powell street and if you are around, stop by between 6 PM and 10 PM for a drink and see what Atlantic Canadian Entrepreneurs are working on.

    We still have a few tables available and if you are Atlantic Canadian company looking to showcase your product to West Coast Entrepreneurs and Investors, apply to Milan @ Volta ([email protected]) and he will hook you up with a table.

    Currently, from our neck of the woods we will have Compilr, topLog, DraftCam, EmailOpened, ModestTree and Oris4 with few others to be added to the list shortly.

  • DemoCamp Halifax 3 – David Crow edition

    logoGreat news. Democamp is going back to its roots (it is happening at a bar this time) and Milan has lined up David Crow to speak. He will be in town because he is working with The Next Phase on some stuff so it seemed like a great time to put him to work.

    David is the co-founder of StartupNorth, founder of DemoCamp, co-founder of Nakama (ask him about this one… a wee bit ahead of its time), co-founder of Influitive and is currently in residence at OMERS Ventures. He has a better pulse on the Canadian Venture and Startup community than anyone else. He’s also a father to two of the sweetest little girls you will ever meet.

    This Democamp is going to be kept small and 100% focused on great demos from high potential startups. It will be a lot of fun. Think of it less as a conference and more like a chance to hang out with some friends. We are calling it Mini because we are getting rid of the frills but I promise the startups and their demos will be as BIG as ever.

    The event is free for Entrepreneurs and Students. We could use a few sponsors to cover costs, so please get in touch with Milan if you can help out. These sponsorships are a great value because they are just meant to keep the event out of the red.

    You can register on Eventbrite.

  • Should you pay to pitch an angel group? What the data says

    tennis-serve-technique-pitchWe have seen a pretty amazing wealth of information about financing models and structures come to light in the last 10 years. It wasn’t that long ago that VC and Angel financing were dark arts which few entrepreneurs understood. We have always worked hard to demystify startup financing on StartupNorth and have done a long series of articles which was focused on shedding light on angel investing as an option for entrepreneurs which began in 2006.

    But the question we hear a lot is “Should I have to pay an angel group to pitch them?” 

    I’ll keep it simple: Generally the answer is No. By definition angel groups are made up of wealthy individuals who are happy to foot the bill to organize the group.

    For example a group might have 100 members all paying $1000 a year. That would mean that the angels themselves are fronting $100,000, which is generally enough to hire a part time (or even fulltime) director or organizer as well as to host the necessary meetings (sometimes members will donate space for the meetings as well or offer other services in-kind).

    But if you do have to pay, how much should you expect to pay?

    The Angel Capital Association provides direct guidance on this here.

    • 31 out of 81 angel groups surveyed charge fees.
    • Of the groups that charge, the range of fees is $175 – $750
    • with two outliers at $1,500 and $3,000, average = $580
    • average without outliers = $338

    We have surveyed all Canadian groups and with the exception of one of the outliers mentioned by the Angel Capital Association above, fees in Canada are at similar levels but are charged less often (closer to 25% of the time).

    We have only found two groups in North America which currently also charge a percentage fee (Both in Atlantic Canada, one charging 8% and the other charging approx a 1/2 percent to 2 percent) of the transaction, so generally speaking you will never have to give another fee or piece of the transaction over to the group. We have not completed our research on this and if we uncover any more we will share that data here.

    Our advice? Tell the angel group that you prefer to forego the fee completely. If they believe you have a great deal then a shrewd angel group will still want to get an opportunity to fund you. If they say “no way”? Then you have to decide just how serious you think THEY are.

  • On Values

    A friend of mine, who just finished his time after helping grow a startup very quickly, said this to me tonight:

    A company has 3 sets of values: the ones they want people to think (what a corporation engraves in their lobby), what management believes is important (policies and stated benefits), and finally the values demonstrated by the people who succeed. The first is bullshit, the second is throwing money at the symptoms, and the last one is the only thing that matters.

    It’s a great observation (along the lines of the Netflix culture deck) but it is also a challenge.

    As founders, employees and even investors our values translate in to very real things for our employees and customers.

    Which values do you live?

  • What you need to know about starting a startup in Atlantic Canada

    Building a product and growing a startup is a different experience no matter where you live. In many ways every startup experience is completely unique and totally predictable all at the same time. The goals, struggles, opportunities and outcomes are each different and geography is one other thing that can be thrown in the mix.

    Building a startup in Atlantic Canada IS different, for better and for worse, than Toronto, Austin, San Francisco or anywhere else.

    IF you want to build a competitive, scalable, high-potential startup in Atlantic Canada then here are some of the most basic things I think every entrepreneur here needs to learn:

    Get your butt on a plane

    It is hard to understate this. Your customers aren’t here. Your partners aren’t here. Your investors might not be here. It is the nature of the place and you need to accept it.

    Get on a plane and go see the people who are going to make your business, and you personally, successful. Every startup has different needs but it is best to err on the side of caution. If you are building an enterprise tech startup then you need to be in San Francisco. If you are building a media company then you had better be ready to spend time in New York. If you are selling to brands then I hope you like Atlanta and Minneapolis.

    If you are fundraising then this is even more important. I’ve seen entrepreneurs lose a financing round because of a single bad phone call. It sucks but body language and a few dinner tables can make all the difference. Get out there, the world wants to meet you.

    Government support doesn’t matter to the customer or your competitors

    There are some really great programs available to support tech startups around here. Non-dilutive and relatively flexible IRAP, ACOA and other agencies really can be a great option. The fact is though that you are competing against world class startups who aren’t waiting for an application to get approved and who don’t need their SR&ED credits to make their next hire. Your competitors are moving at a lightening pace and you can’t afford to sit around.

    You should be moving so quickly that you can hardly manage to get an application in for a project before you find yourself completing it. Government financing should be strictly secondary to acceleration capital which is going to help speed your execution.

    You don’t need to compromise

    Startups in Atlantic Canada should not compromise on anything. We don’t have to so we shouldn’t. We have been telling entrepreneurs not to put up with bad terms from local angel groups but the issue runs even more deeply than that. Focus on attracting the best investors and don’t put up with bad deals.

    There is a tendency to confuse “we are different” with “we deserve different” here and while it’s ok to BE different we don’t deserve anything less than the best.

    The talent pool is world class so you should hire world class

    I have hired in a lot of talent rich places and I can say without exception that we have some phenomenal talent in Atlantic Canada. Like recruiting anywhere it can be gruelling. I got lucky: I hired Ben Yoskovitz. I didn’t hire him as a recruiter but he does it in his sleep and it has helped us scale without compromise.

    Be picky and only hire those developers, designers, product owners and anyone else who you could drop in to a room in San Francisco, New York, Tokyo or Taipei and not have to worry about how awesome they will be. They are right here in your backyard to start looking and never hire less than awesome again. 

    … and finally

    You are expected to take on the world

    We do not need more me-toos and I’m not talking about lifestyle businesses here. Choosing to live and work in Atlantic Canada is not the easy road and it was never meant to be. We have built many world class companies here and we expect no less from you and your startup.

    Making a dent in the universe is not only doable, it’s what you should be striving for. We should be leading the country and globally as a place that punches far above its weight. There is no reason to hold back, because the alternative isn’t a lot of fun.

    Do not compromise on the size of your vision or the ferociousness of your execution. You should be audacious in your dreams because building a startup in Atlantic Canada is not about being in Atlantic Canada it is about being FROM Atlantic Canada, and that is a big difference.

    These are just a few thoughts, but many of you have built startups here and in other places. What’s your experience and what are your tips for the next generation of startups we are seeing emerge now?