StartupNorth

Category: Startups

  • 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.

  • iStopOver and PlanetEye merge raising $3M

    iStopOver, the peer-to-peer accommodation rental marketplace incubated by Brightspark, has merged with PlanetEye, the interactive travel guide spun out from Microsoft Research – in the process raising a round of up to $3M from GrowthWorks and JLA Ventures, PlanetEye’s original backers.

    The merged company is adopting the iStopOver brand and will focus on expanding the rental business. iStopOver is poised to launch in new markets, having recently validated its model by facilitating thousands of bookings (valued at $1.25M) between hosts and guests during the South Africa Soccer World Cup. It is free for hosts to list a property, iStopOver captures a booking fee of 6-15% on each reservation.

    iStopOver’s Anthony Lipschitz will serve as COO and Mark Skapinker as Executive Chairman of the company. PlanetEye’s Jonah Sigel, who will continue on as CEO, shared his thoughts on the value PlanetEye brings to the venture in addition to its development team and portfolio of patents pertaining to interactive maps:

    The unique ability to show a potential customer everything they want to know about a specific area, the restaurants, the events, the attractions, social media happenings and more will help that customer make a more informed booking decision.

    With greater resources to invest in development and marketing, iStopOver is well positioned to compete with AirBnB in this emerging online travel segment.

  • Lessons from C100 Mentoring in Toronto

    We wrapped up another amazing C100 Mentoring (C1M) session the other week with mentors in San Jose talking live and in-person to a group of great companies in Toronto via Telepresense. As with all of these “TP” meetings, the wonder of the technology quickly melts away and the groups on either side of the video wall were able to really get down to business.

    We were fortunate in this last C1M session to have Rick Spence of the National Post sit in on the session and he shared his main take-aways in a recent article headlined:  Startups get face-time with Valley veterans.

    It is always interesting to read what main points a third party to a C1M session zeroes in on. From Spence’s point-of-view (with some of my commentary) the main things that the recent C1M start-ups need to think about are:

    • Keep it quick; or as he put it “sum up the pitch early.” He highlights that companies need to perfect the elevator pitch. Say what you do quickly and simply. Spence says 30 seconds but I would argue that event that is too generous for the real world (we give you some leeway in C1M, so 30 seconds is OK.) Out there, keep it to 15 to 20 seconds and keep it punchy!
    • K.I.S.S me! That’s right, when you’re out there trying to explain what it is you do, keep it short, sure, but please also “keep it simple, supplicant”* If your technology or application or web service or whatever cannot be explained in simple language then what you are doing is either (1) too esoteric for these crude Earthly market or (2) not explaining it right. If the answer is (1), you’ve got bigger problems but more often the answer is (2) and you need to step back, detach yourself from your product/service, and figure out how to articulate your value-proposition in a simple, compelling manner
    • “Focus, Focus, Focus”- I won’t add any commentary here. Just focus on those three words and the point is made
    • Note when I said “K.I.S.S. me!,” specific reference was made to articulating a“value-proposition,” that was on purpose. Sometimes we love to talk tech and how great our little service or gizmo works. If you’re after engineering brownie points, that approach works great. But if you’re after customers, forget the tech and focus on value.
    • Sales is what it is all about. There is only one group of people that can make any business successful, start-up or otherwise. No, it isn’t investors, partners, or event the founders themselves. The only group of people who can make a company a success is customers and securing their support is called selling. Make sure you find someone who knows how to do that.

    These insights are a very good summary of the conversation across all three companies. We touched on each of these points in one way or another with each company we met.

    In addition to the points listed above, the mantra that I was repeating for each company was segment and prioritize.

    I know that a lot of new companies have to throw whatever they can against the wall and see what sticks. That approach has its place, but it can also burn precious resources with little return. I’m a huge fan of looking across your (potential) customer based, segmenting them and then having a laser-focus on the ones that will be most profitable. Too often, I got the sense companies were trying to do everything all at once. Even if a product/service has multiple applications, there needs to be the discipline within a company to figure out which application has the most immediate promise and then going after the relevant customers.

    *I have to admit, I had to look up what “supplicant” means. The Dictionary.com definition was “a person who supplicates”, which wasn’t very helpful.

  • Open House at Bootup Labs

    Bootup LabsJevon, Jonas and I are all heading to Vancouver for Grow Conference happening Aug 19-21, 2010. But I’m hear in Vancouver hanging out at Bootup Labs.

    Bootup Labs is holding open office hours this week. Basically if you’re a startup and you’re in Vancouver and you want need some touchdown space, you should visit Bootup Labs.

    Bootup Labs
    163 West Hastings Street
    Vancouver, BC

    David Crow at Bootup Labs
    Hanging out in the middle of Bootup Labs

    This is a fantastic place. There is a fantastic vibe. There seems to be real evolution and growth of Bootup Labs since the dark days. I’ve been hanging out the past day or so with:

    There are a lot of companies, entrepreneurs and things to like happening at Bootup. I am really impressed with a few things.

    1. The space – it is gorgeous. It’s the right mix of location and finish. The offices are safe, comfortable, and interactive. There’s a great mix of open working areas, private meeting rooms, a kitchen and private offices with sliding doors. The natural light. And it’s nice but not posh. As companies demonstrate traction, there is incentive to find different space, for example Dimerocker has moved out. Having Mozilla and Strutta as “anchor tenants” also reduces the risk to Bootup Labs. It also means that there’s a lot of fun interesting people flowing through.
    2. The location – it is right on the edge of Gastown. There is a great mix of restaurants and other things going on. I had breakfast at the Medina Cafe just around the corner from the office (best breakfast I’ve ever had). There’s the Fluevog store. It’s a great neighbourhood that has come a long way since I first visited Bryght in 2005.
    3. The companies – all of these companies and the entrepreneurs working there are pushing really hard and demonstrating traction. There are exits, see Layerboom acquired by Joyent. And there are a lot of good things happening.

    My recommendation is that if you’re in Vancouver you come hang out at Bootup Labs with us. Ping me @davidcrow or @startupnorth or just drop by 163 West Hastings St in Vancouver. I’ll be here until August 20.

  • 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.

  • EmpireAvenue raises seed funding from W Media Ventures

    EmpireAvenue, the world’s first influence stock market, where you can buy and sell virtual shares in your friends and brands has raised it’s first round of seed financing from W Media Ventures. Something hinted at in yesterday’s City of Champions round up.

    The Edmonton based startup, founded by former BioWare, Electronic Arts, and MySQL employees, has in a matter of months developed a robust social trading platform and attracted over 15,000 users. The new capital will allow the company to continue development and launch Avenue Rewards, a platform that connects brands with influential individuals. A similar business model is being pursued by Klout, a competitor in the influence market.

    As part of the financing, Boris Wertz of W Media Ventures will be joining EmpireAvenue’s board. Boris is easily one of the most active early stage consumer internet investors in Western Canada, with a portfolio that includes: Tynt, Suite101, Indochino, Yapta, and many more. He brings an incredible depth of experience to the venture; EmpireAvenue’s stock is rising in a major way.

  • 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.

  • CanCon 3.0

    I was doing some evening reading I came across and interesting  thought on the intersection of social networks and content:

    Media is fast-becoming an important area for the social network. The news feed, long a place for friends to share personal photos and thoughts, is becoming more of a content discovery engine

    I’ve posited elsewhere on the role of content in the evolution of the Internet. In a nutshell, if Web 2.0 is the social web, then I respectfully submit for your consideration that Web 3.0 is the content web. What I mean by this isn’t that the Web 3.0 is about taking traditional content that has been available in traditional media (literature in books; movies on film; music on CDs) and putting them on the web, obviously we are well into that trend. What I’m referring to is entirely new forms of content that have yet to be created for the social web

    Then my thoughts drift to Canada and the potential behind Canadian start-ups. Canadians have always been innovators in content, even if that innovation didn’t happen at home. Note:

    So does all this bode well for Canadian content companies? As we think about national competitive differentiators, aspects of a country’s economy that sets it apart from the rest of the world- should we be thinking content?

    If Canadian start-ups could combine technology smarts and content smarts, could the result be a whole new class of content, the likes of which we haven’t seen yet?

  • My favourite flavour Vanilla Forums

    Vanilla Forums 2

    Congratulations to the team at Vanilla Forums. In the past year they’ve attended TechStars in Boulder, moved to Montreal, and released version 2 of Vanilla Forums. What is Vanilla?

    “Vanilla is an open-source, standards-compliant, multi-lingual, theme-able, pluggable community forum.

    Over 350,000 sites use Vanilla Forums to manage feedback, spark discussion, and make customers smile.”

    There are competitors ranging from bbPress, phpBB, and punBB (like others we’re torn between bbPress and Vanilla – the proxyConnect plugin allows us to integrate Vanilla with WordPress). But Vanilla is a leading solution offering a great user experience, simple customization and hosting with a large user community. Plus they’re funded by our friends at Montreal Startup which makes them an easy choice.