StartupNorth

Author: Jonas Brandon

  • David Crow is moving on from Microsoft

    John Oxley outed the news tonight. David Crow, one of the partners in crime here at Startupnorth, will be off the payroll at Microsoft as of the 24th of September.

    David has spent the last 4 years going to bat for startups inside Microsoft. Anyone who has asked for his help knows just how relentless he has been in making sure that the best entrepreneurs got the support they needed.

    I’m happy to see David moving on. Not because of anything to do with Microsoft, but I just think 4 years is long enough for anyone to stay at a corporate gig. It’s time for David to get back in the game and to kill it.

    Having worked with Dave to organize dozens of events and to write this blog, I can tell you that he is rare in his focus and his ability to obsess with details while still keeping this big picture in perspective (and to remind the rest of us about why we are doing what we are doing).

    He’s not talking about what’s next yet, but I know it’s going to be great.

  • Learn to get burned

    Picking co-founders and early employees will always be one of the scariest things you do. Even as you are doing it for your 3rd, 4th, 5th of 15th time, you never feel like you are getting better at it, you just start to get a bit more paranoid and careful. There is however a certain breed of entrepreneur out there who have a little more grit in their teeth. Their wrinkles are a little deeper, and their eyes just have that look of intensity that not everybody has.

    Who are these people? These are the battle hardened fighters who have been through the wringer and they have survived. They are the ones who have learned to get burned.

    Getting burned can come in many different forms, but a few stick out in my mind:

    • The useless co-founder
      Smart, fun, caring, prompt. They have all sorts of good qualities and it seems like all of the elements of a great co-founder are there, but when it is time to focus and execute, they start to flake. It isn’t a straightforward flakiness either, it is an awkward, confused and maddening unreliability that makes it even worse. Not only are they not delivering, but the excuses are insulting. They still talk a pretty good game at times, but under the surface you are getting angry.
    • The over-sold employee
      You are a startup but you are growing. You are hitting that stride (10-20 employees) where you need a few great managers. You need someone who is seasoned enough to navigate the ins and outs of a growing employee base without having to come to you all the time. The truth is that you are still running pretty lean though, and these folks cost a lot of money, so you end up with someone ambitious but inexperienced. Sales managers, biz dev, marketing, wherever you put them the result is the same: They oversold their skills as a manager and you’ve been burned.
    • The big team
      You came up with a killer product with a few friends and it seems like all the right people came to the table at the right time. Before you know it you have a founding team or 4, 5 or 6 people. You love them all and it kinda feels like college all over again. Everything just works at first and you get off to a pretty good start. You’ve been burned. Big founding teams become unwieldy and as time goes by different personalities start to accentuate. If you get the mix just right then big teams have some potential, but that usually means getting at least one person out of the mix. If you are starting up with a big team then you have to be ready to get burned, or to recognize when you are the one doing the burning.
    • The “operational investor”
      “I spent 10 years as a CEO before I became a VC” “we only do strategic investments where we can help move the company to the next level for a win-win and synergies with our portfoliotized group of investments” “I am an angel investor because I like to stay close to the company”. Most investors will try to sell themselves to you with some promise of value-add. You’ve seen The Dragon’s Den, Kevin O’Leary would be ready to promise his expertise to an oven mitt knitting startup in exchange for “50% of the action”. Most of these guys are full of crap and the ones who aren’t are golden. If value-add is part of their pitch to you, then make them prove it will happen.

    Both sides lose
    When you hear about someone getting burned you have to remember that the story is never what it seems. There are two sides to what is going on and there will always be a bit of truth to each story. Like in any relationship things get messy during a divorce. People say things they shouldn’t, and it is easy to try to hurt eachother. A “I have to win” mentality can take over and it is hard to shake. If you are on the other side of a vindictive co-founder or employee then it can be hard to look past it.

    You can try to win all you want, but everyone loses. What makes the difference is that some people pick up and focus on what’s next, while others sit and stew. I have done both and believe me, you don’t want to be doing the latter. Those who sit and stew once rarely do it again however, because it is just as painful for them as it is for everyone else.

    Avoid the inevitable
    I asked Rob Hyndman, a Toronto based lawyer who works with a lot of startups, what you can do when you are forming your company to help prepare for getting burned. It might feel overly pessimistic, but the more seasoned you are, the more willing you will be to plan ahead.

    It’s very hard to deal with relationship problems if you don’t have the right structure set up in advance, and you burn a lot of cycles trying to nudge people in the right direction if you don’t have the means to force them to it when you are ready to act.

    Having your energy drained by an ugly divorce is one of the surest ways to sap your enthusiasm for your mission and keep you too distracted to tend to what needs to get done. These relationship problems are one of the biggest early risks that you can minimize with proper care in advance.

    Shareholders agreement provisions like founder stock vesting, and provisions that ensure that founder disputes can be resolved, including with the departure of people who aren’t “working out”, are useful approaches to resolving relationship problems.

    Don’t waste time
    Learning to get burned isn’t about getting burned over and over again, it is about seeing it coming before it happens and heading it off in advance. You need to pick carefully and have a backup plan in place. When it does come time to break it off with a bad partner you need to make it clean. Specifically

    • Be up front: No letters. No emails. No phonecalls. Don’t hide behind a lawyer. This is face-to-face stuff. If it means flying halfway across the country on a Saturday to do it, then you do it.
    • Be sure and be clear: Assuming you have done more than enough to give them a chance to either find a role that works for them, or to do the quitting themselves, then it is time for you to do the hard work for them. When you are being “up front” you also have to be clear: It’s over. It’s over and this is why. State your reasons clearly but don’t talk down to them.
    • Be humble: Like it or not, you screwed up as much as they did, and you are going to be the one left holding the bag of crap. You are not righteous. Take responsibility for what you got wrong.
    • Work together: Especially with co-founders and early employees. You asked them to buy in to something that you wanted to create. Like it or not at some point you sold them on this and they bought in (I know that is true, because you are the one doing the firing now). Work equally as hard to find a way out that makes sense for them and does the minimum amount of harm to their future (and in turn, yours).
    • Work for eachother: In every case it will be a net-benefit to both sides if both sides have a bright future. Work hard to make sure that eachother are successful. This takes an incredible amount of maturity and foresight, but as long as you are building something of your own, you won’t feel like you are missing out on what your former partner, employee or employer have gone on to build.

    It sucks, but it is going to happen to you at some point. Learn to get burned.

  • John Philip Green joins CommunityLend

    Big news in the Toronto startup community today. John Philip Green, one of the founders of LearnHub.com, has joined CommunityLend.com as CTO. We have covered CommunityLend in the past as they have worked around regulatory hurdles to become the first provider of peer-to-peer financing in Canada. They have raised over $2.5 million to date.

    John has helped to advise CommunityLend from the very beginning, so this seems like a natural fit. I am a bit disappointed that he won’t be working on a new startup of his own, but it is great to see him end up at such a high-potential Toronto startup.

    Savvica, which John founded with his wife Malgosia, has been growing quickly and is back primarily by  Shantanu Prakash, the founder of Educomp Solutions. John and Malgosia have developed significant operations in India, with over 60 employees there at present, and a headquarters in Toronto. Savvica and its sister sites have evolved significantly in the last few years and now includes Learnhub,  JumboTests, Nuvvo, Studyplaces and EduIgnite.

    CommunityLend, who announced John’s joining today, is the only provider of peer-to-peer financing in Canada.

  • Week in Review

  • NextMontreal.com launches – "news and opinion on technology and startups"

    NextMontreal.com is going live today. It is the result of a push by Ben Yoskovitz to create a new source of information for the Montreal community after MontrealTechWatch went dormant over a year ago.

    Why now?
    When first thinking about this project, Ben wrote:

    When the site was active it provided a great deal of exposure to Montreal, and helped build a stronger community. There’s a lot going on in Montreal for tech startups and entrepreneurs, but without adequate reporting, too much of it doesn’t get the attention deserved.

    At that time, MontrealTechWatch had been more or less dead for over a year and the tech community was very quickly gathering momentum again.

    What about MontrealTechWatch?
    In the time since Ben began working on NextMontreal.com, Heri started blogging regularly on MontrealTechWatch again. I advocated for the community to restart MontrealTechWatch, so I was glad to see that. The existence of two community sites in Montreal will cause some confusion, but I think it is fine. Both sites compliment eachother, have very different operating models, and will most likely each find specific audiences within the Montreal tech and startup community.

    The role of community sites
    There is a broader discussion that we need to have about the role of community blogs in Canada’s tech hubs. We need blogs which aggregate people, ideas and events in order to showcase the activity in places like Montreal, Toronto, Vancouver, Edmonton, Calgary, Quebec City and Atlantic Canada. There are cool things happening in all of these places, you just have to scratch the surface to see what is going on.

    Running a community site is hard though, and it takes dedication. NextMontreal will be testing a new model, which will hopefully bring scale to this concept and a broader set of voices to the community.

    No matter what, Montreal should count itself lucky to have so many people who are so passionate about making the startup community in the city thrive. Most do it for little or no direct reward, and those are exactly the people you want behind the wheel.

  • Week in Review

  • Hanging out in the City of Champions

    One of the first things that strikes you as you are driving in to Edmonton from the airport, besides how long the drive is, is the entrance sign to the city. It is declared the “City of Champions”, and it kind of takes you off guard. St John’s is the “City of Legends”, Montreal the “City of Saints”, “Toronto the Good”, the list goes on, but nobody seems to aspire quite like Edmonton aspires.

    We are constantly looking to Montreal, Toronto and Vancouver as the beacons of the Canadian startup community, but the truth is that those cities do not always carry their own weight when put up against smaller cities who are hustling to make things happen. Edmonton has an aura of wealth, there is money pulsing through this place, and like Texas before it, Edmonton has a pedigree of entrepreneurialism from those days. This city is punching above its weight. At least, that is the romantic view of Edmonton and Alberta in general.

    When you hit the ground here, it is evident something is going on. Cam Linke and StartupEdmonton are at the center of what has been happening. Cam started running Democamp‘s in Edmonton in 2008 and has gone on to throw LaunchParty‘s, StartupWeekends and other events. Without hesitation, we can grant him the title of “David Crow of Edmonton“. . . (“Don Quixote de la Mancha” ?)

    I had a chance to grab lunch with Cam today while I was in town. We talked about what he is working on, what is happening in Canada and what we wanted to get out of GROW in a few weeks. He also gave me his list of Edmonton’s most promising startups. Here are some of my favorites:

    Fotojournal. A blog platform for photographers to showcase their work. It feels a bit like Flickr did in the beginning in that it is something that aficionados “get” at this point, but photo journaling could be the next evolution of the basic sharing we see today. People love to tell stories, and some people love to tell them with their camera. (See also: Clustershot from PEI)

    Beamdog. An app store for games for the PC. This is taking ambitious to a whole new level in competing with Steam as a distribution platform. They have an impressive number of games in their catalog as of now, but in the absence of large scale distribution deals with publishers, my guess is that it will be tough to get mainstream content. Cam pointed out that they really have the beginnings of a killer app store platform however, and there are a lot of opportunities for them to slide horizontally, or to focus on specific niche’s in gaming. It will be a cool company to watch as I think we will see them iterate a few times.

    Yardstick Software. An employee training and test administration platform. Enterprise HR is a tough market historically, but things are definitely changing. HR departments are making more of their own purchasing decisions these days and consumerization of IT and cloud computing trends are playing out quickly in this market. My guess is that these guys are already doing pretty well. (See Rypple, Toronto)

    Empire Avenue. Buy and sell your friends (I just bought a lot of RANNIE). Empire Avenue is an explicit mechanism to assign value to the objects and people we interact with on the web. In a way we are all doing this everyday: We friend and unfriend people, we subscibe and unsubscibe from newsletters and other things that affiliate us with companies, and we share links and bookmarks. Empire Avenue lets you put a stake in the ground and buy shares in something you think will rise in value. I’ll be honest, I still don’t have it figured out, but it seems just crazy enough that I want to follow it. After I signed up, it was fun and the first few things I needed to do (buy some shares in friends) seemed clear. The rumor is that they have closed a first round and it will be announced tomorrow.

    Edistorm. An online whiteboard for groups of people. “Edistorm takes the metaphor of sticky notes on a boardroom wall and brings it online allowing anyone – anywhere to brainstorm with only a web browser.”. A neat app, the product execution seems good and the price is right for the customer. They have done everything right so far, but I can’t figure out the market side of the product/market fit.

    Other Edmonton startups include

    Smibs -“business network and software products help you connect, share, collaborate and get things done the smart way.”

    Tooq – Contractor and Small Business Toolbox

    TeamRemind -“A simple and effective way to organize your team. Make sure everyone is up to date” (See: YourTeamOnline and Teampages)

    Newspond – Techmeme like intelligent aggregator. (See: Rogers Ventures funded Thoora — might be a good acquisition for Thoora actually, considering they are looking for experienced relevance and ranking developers edit: they were at least)

    Democamp and Launchparty regularly attract 200+ people here and Cam will be organizing the first Founders and Funders dinner this fall. There is talent and ambition here. Smart investors will get on a plane and take a look at what is happening.

    City of Champions? I’m willing to believe it.

  • Week in Review

  • Week in Review

  • Finding a future for Venture Capital in this country

    I wrote a guest piece for The Mark News this week, which was published today. I tried to look at some of the endemic problems which gave us our last swell of Venture Capital funds in Canada, why I thought they came in to being, and what might be next.

    I also tried to spread the blame around a bit.

    At the end of the day, those who hustle and build things that people want will win. It doesn’t matter what side of the table you are on, the rules are the same.

    Get out there and hustle.