Some rights reserved photo by Seattle Municipal Archives
Startup Weekend Toronto, which kicks off June 3, is almost sold out; if you’re on the fence, don’t wait much longer, StartupNorth readers can save 20% by using discount code: STARTUPNORTHSW
This June’s event will have a strong focus on lean startup principles. A fantastic set of speakers are lined up to provide practical advice so you can take what you learn well beyond the weekend itself. While there is no “right” way to start a company, Startup Weekend is here to help provide you with as many tools and connections as possible to help you succeed.
A great set of speakers for Friday night will kick things off and prepare you for what’s ahead. Throughout the weekend there will be mentors dropping in helping teams with their projects. Saturday night, founders will share war stories. The judging panel includes experienced investors and entrepreneurs who you will have a chance to connect with. Startup Weekend will round up with dinner and awards at an awesome venue to be announced shortly.
The winner of Startup Weekend will enjoy more than just street cred, in addition there will be a cash award to help move the project forward, entry into the Ryerson DMZ for 4 months, video production to help on the marketing front, pro bono legal services, a chance to demo at the next Democamp Toronto (June 9), and more.
There are a lot of different formats and presentations about how to create a pitch for investors. I’ve included my favourites about the structure and template – the resources include Viagra, Sequencing, Hacks and the Art of it all. These are great resources about the structure of your presentation and about what to do (or not to do) in your presentation.
For me one of the best ways to learn is to see real world examples and to rip, mix and burn these into my one words and formats. And we are trying to gather a list of great sample pitches. I’ve included Mint.com, Zapmeals, and an awesome angel pitch from Ali Asaria at Well.ca. But we’re looking for additional examples of great pitch decks to help entrepreneurs see what has worked for others.
The Art, Hacks and Dysfunctional Love of the Pitch
Once upon a time in my startup life, we stumbled across the deal of a lifetime. A large company was spinning off a subsidiary, and they were paying someone a few million bucks to take it off their hands.
Most folks looked at the numbers and said “no thanks” – $7mm in revenue and spending about $20mm… yuck. But these guys were running the exact same business as us, similar subscriber counts and all, and we knew they could be run spending $3-$5mm per annum (which is what we were spending). For instance their CEO was getting $4mm/annum and ours was making $1/annum (perfect example of why big companies can be bad at launching new products). So we put in a bid for -$2mm (yes thats a minus in front). I.e. pay us $2mm to take your company, and have it generate $2-$4mm a year in cash for us. Booya. You could imagine how excited we were. We basically re-enacted this Monty Pyton scene every day in the office for 2 weeks (word of caution – this is 10 minute video and there’s a part 2):
Yaaaaar, corporate raiders be we.
Until, sadly, of course, somebody outbid our -$2mm offer. Damn. I suppose -2mm isn’t that hard to outbid.
I’m telling this story to give another “meme” to startupdom. Lean product development, social marketing, customer development, iterations, pivots, etc – these are the more popular memes of today. Well there’s another one thats not mentioned enough – Hustle and Flow – doing deals, business development, partnerships, strategics, m&a, etc. There are many big famous startups who had deals with a big elephant: Google powering Yahoo, Amazon powering Target, the Microsoft/Apple/IBM/Xerox tangle, RIM’s pager deal with Ericsson. Its a crucial part of growing your startup, you gotta be able to do deals.
One of the current killer “deal-oriented” startups in Toronto right now is Kobo Books (@mserbinis). Kobo got frickin’ Li Ka Shing to back them, the guy is a business legend! Why waste time with tiny business punks like Paul Graham and Dave McClure (I joke) when you can have a business God invest in you. Plus Kobo has done huge, killer deals from top to bottom in every category of their business – checkout their partner list in here. That my friends is big pimpin’ Canadian startup style.
Here’s another one, check out the list of deals Fixmo (@ricksegal, @shyamsheth) has done. They acquired a company (Conceivium) as a year and a half old startup! How many of you entrepreneurs in your first year or so wake up and say “lets buy a company”. On top of that, as an unknown one year old startup they walked into the Department of Defense in the US and nailed a massive deal. That is pure brass-balled, biz dev game.
Would love to hear some other great Canadian business hustler success stories from folks (or near misses, or disasters), or give us your favourite links/resources for networking, bd, m&a, hustling, pimping, whatever. We’ll be following up with some resources and tips to help your biz dev game.
It feels like come the lazy days of July and August most of Canada shuts down for summer vacation. There are no new deals to be done. There are meetings, lunches, maybe even a golf foursome but not new deals. So why not take the opportunity to attend one of the local events with other geeks, entrepreneurs to learn and share your experiences.
DemoCamp
The next Toronto DemoCamp is happening June 9, 2011. We are very lucky to have Howard Lindzon keynoting. Howard is a long time friend of StartupNorth. He has been kind enough to attend StartupEmpire and even kinder to let us republish some of his posts here. This will be an awesome session focused on helping entrepreneurs.
There are local DemoCamps happening in Guelph, Edmonton, Calgary, there are LaunchParties and New Tech Demos. These are great ways to get out of the office/garage/basement/cube and start talking to real people, hustling for attention and gathering feedback.
StartupFestival
Montreal is an awesome city in the summer time. There is the Comedy Festival. There is the Jazz Festival. There is the Grand Prix du Canada. The event is being hosted by Dave McClure who knows a thing about making making new opportunities. He runs 500Startups and the ultimate startup travel event, Geeks on a Plane. StartupFestival is a great opportunity to visit a historic city, and plan on building new relationships and discovering new business opportunities.
And just in case you didn’t have enough of Canada’s favorite entrepreneurial bad boy, Howard Lindzon, you can see him again in Vancouver at Grow Conf 2011. This was one of my favourite events in 2010. Debbie Landa and the team at Dealmaker Media have put together a great event that mixes Canadian entrepreneurs (Brian Wong, Garrett Camp, Howard Lindzon, Leonard Brody) with decision makers from Silicon Valley (Wesley Chan – Google Ventures, Mike Parker – TribalDDB, Mike Ghaffary – Yelp, Rob Hayes – First Round Capital). I had the opportunity to talk to Minister Clement at the cocktail hour about brain drain, homecoming, funding, angel investing and other things. It was a great conference focused on helping Canadian entrepreneurs.
Rather than lament about the downtime. There is an awesome opportunity to use the dog days of summer in Canada to keep networking and connecting with other entrepreneurs, with investors from the US, and to set up opportunities that might come to fruition later in the year. I love the program goals of Geeks on a Plane.
Meet startups, geeks, and investors in cities around the world.
Learn about trends in internet, mobile, and other tech platforms.
Gain insight into local markets, demographics, business models.
Meet cool people, new ventures, have fun on planes, trains, buses.
My advice, is you should stop bitching about the travel costs and figure out how to make an investment in yourself, your startup and the community and figure out how to attend one of these events and get back more than you put into travel and lost opportunity. There are lots of great opportunities to meet customers, potential investors, to find new partnerships, and to grow your business. If you don’t see an opportunity, try making one, host a party, do a customer event, plan a launch. Make it work. Debbie and Philippe and everyone involved with both StartupFestival and Grow Conference are dedicated to making great startup conf0erences in Canada, but they are not going to do it all for you. Use these events to make an opportunity.
By now you have heard Microsoft is purchasing Skype for $8.5B, a company which was spun out from eBay in 2009 for $2.75B. In 18 months nearly $6B of value was created for investors, many of whom are Canadian pensioners. Faster than a speeding bullet, a courageous $300M investment in Skype has turned into nearly $1.1B. I for one would like to know who to thank at CPPIB.
This is not an apples to apples comparison, but the Skype investment tops the results of every fund CPPIB has invested in. If one factored in IRR this deal would blow everyone out of the water. Other Canadian pension funds are ramping up venture funds (e.g. INKEF). Wonderful news given the paucity of capital available in the Canadian ecosystem, however I would argue that Silver Lake, Andreessen Horowitz, and Index Ventures were important stakeholders – so perhaps what we’re really looking at is the Fantastic Four. It follows that Canadian LPs should concurrently invest into independent funds who will source opportunities and ensure alignment with entrepreneurs.
Ask a miner “What is Canada’s most precious natural resource?” and you’ll be sure to stump. The answer is easy… Canadians.
One of the tricks to Silicon Valley’s winning streak is that they back not only repeat entrepreneurs, but repeat teams. Just like one of those wonderful chocolate fountains you occasionally fortune upon at weddings, Silicon Valley recycles people. A team forms, builds a successful enterprise, people move on to try some new things, and projects that find traction attract back the core crew.
Is Canada effectively recycling people? Think long and hard, because if we aren’t the fountain is drying up – end of the party. I can name a handful who have ventured abroad and returned: John Green (@johnphilipgreen), Malgosia Green (@HeyGosia), Dan Morel (@dpmorel), Farhan Thawar (@fnthawar), David Crow (@davidcrow), Jeese Rasch, Zak Homuth (@zakhomuth)… the list goes on, but it could be longer. Maybe our friend Howard Lindzon (@howardlindzon) will start his next company in Canada?
What is bringing them back? Visa issues, sometimes. Spouses, more often. Schools for children, okay I’ll take it. But it would be much better if what brought our best and brightest home was opportunity. And the crazy part is, it is knocking. We have a safe multicultural inclusive country, close to major markets, with investment matching funds up the wazoo, and here is the most beautiful part – our nation is brimming with high caliber engineers (who are getting scooped up by Twitter, Facebook, and Google as you read this post).
Part of the challenge is funding. Canadian entrepreneurs are picking up and moving to New York, San Francisco, Boston, Boulder, and even Santiago (yes you read that right, Chile – in the southern hemisphere) for minuscule sums of seed financing so they can focus 100% on their startups vs their day jobs. Just ask Ken Seville (@civisidedotcom).
Myopic policies might attempt to discourage cross border exits, which are vital and create deep new linkages. Instead what we need to learn is that the opportunity is keeping the founders engaged once they head for warmer climates. I can guarantee, foreign direct investment will not thrive in the absence of results. To generate returns we need to recycle teams.
I am particularly excited about a handful of intiatives that address this gap including: Toronto Homecoming, C100, and Startup Visa. Let’s find ways to support their efforts.
I’ve always thought it weird that there is a perception that risk is front-loaded for startups, i.e. the person(s) who start it take all the risk. In some ways, the risk of starting a company (especially a web startup) is lower than ever:
there are great grant/tax credit programs like IRAP and SRED
there are more incubators, angels and providers of small seed funds than ever
its faster than ever to go from concept to commercialization -> you can have paying customers in < 6 months
It just isn’t as hard as it once was to raise $20-$50k and/or have a company generating a few thousand dollars in revenue to cover the early founder(s) costs. The big “risk” is that your life & business align to this cost structure. Your business needs to be able to run with only 1-3 people at first. Your life – no fancy sports cars, no big mortgage, no massive piles of credit card debt, etc. I’d hypothesize, there is a strong parallel between managing personal finances and being able to start a company.
Another big “de-risker”. You have control as the early founder! Only you can lay yourself off. And you control the culture and lifestyle of the company, i.e. you are a lot less likely to hate your job or get fired for hating your job or leave suddenly or have a heart attack or just generally hate life.
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Reward-wise, you have a huge chunk of the reward. Shares, not options. Big founders cut. Maybe no vesting. Dividends. There are a lot of paths for you being well rewarded for the risk you took. On top of that, your experience as a first-time entrepreneur will make the second time around all that much smoother, it’ll be easier to raise money, easier to hire, easier to find business partners, and so on. You can have a career as an entrepreneur.
Now, lets compare that to what is traditionally thought of as the “low-risk” employee, lets say employee #8. Poor employee #8 takes on massive life risk, and often gets very little in reward.
Reward-wise, they get something like .5% of the company, so on a typical $20-$30mm exit they get $100-$150k. Hardly life-changing money. If you are a super-star in the company you may get granted up to 1 or 2% but they’ll be vested over an annoyingly stupid schedule such that you’ll have to be at the company for 6-8 years to “earn” them.
Now compare that to all the risks of being employee #8:
you are far more likely to get laid off than any of the founding team
you are far more likely to get laid off than a non-startup job
you may simply not get paid a few times… missed payroll is no uncommon event
you probably in fact took a pay cut, or at best, you’ll miss out on bonuses when there are a few tight years
you will likely work a lot longer hours
there’s no “fast” trade-off, you’ll need to work there 4-7 years to earn your $100-$150k stock option reward, and you may have given up way more than that in time & salary to get there
So, in summary, its a lot better to start your own company than to be employed by a startup. And in many ways its less-risky and better to start your own company than to “have a job”. And I wish I could make more people take the entrepreneurial leap themselves because its simply not as scary as it seems.
Editor’s note: This is a guest post by serial entrepreneur and investor Howard Lindzon of StockTwits andSocialLeverage. He was born and raised in Toronto and has a soft spot for his hometown and Canadian entrepreneurs. You can find this post on Howard’s blog and to stay up to date you can follow him on Twitter @howardlindzon or StockTwits @howardlindzon.
Nobody knows!
Nobody knows what the next 10 minutes will be like, let alone the next 10 years.
It used to be no one cared what the next 10 minutes were going to be like. Twitter has changed that for good at this point.
What we can do is look back for patterns and try to project them into the future or as we do in the stock market all day, spot patterns that are upon us or emerging.
Let’s also keep in mind that public companies are generally a lot less risky than private ones. Less work and lower risk. That is how it used to be for public shareholders, but that era has ended for good. Let me give you some perspective on how much things have changed since the last tech cycle.
Amazon.com, the world’s largest Internet retailer, went public at a $440 million valuation. Hard to believe, isn’t it? A company worth $90 billion today was worth just over $400 million when it went public in 1997. That skimpy valuation represented less than one times its forward 12 months of revenues, a multiple more closely associated with a corrugated cardboard manufacturer than the most important innovator in retailing in the past 100 years.
eBay went public at a $650 million valuation, representing less than three times its forward revenues. Amazingly, this valuation was considered adequate even though at the time of its IPO, eBay had already established itself as the pre-eminent auction site on the web. Go back to the earlier part of the 1990s, and it gets even more extreme. Cisco, the most important company in computer networking infrastructure, went public at $225 million, a valuation representing just over one time its annual revenues.
William is talking my book so I totally agree but I always have one foot out the door. I have been called to task often over my years managing money for being too risk averse.
I consider myself ‘liquidity averse‘. I don’t mind paying up for the highest momentum public companies for the liquidity they provide and I won’t pay up for start-ups for the liquidity denied. I assume liquidity is a miracle and need to maximize my upside for that risk. STARTUPS ARE HARD! No matter what happens the next 10 years, you need to read this post and remember the miracle of effort needed to make a start-up succeed.
Not many people I have run across in my 13 years of managing money deploy my strategy or thinking and that emboldens me. I believe the two ends of the investing spectrum are very connected and I am fascinated by the ‘tells’ I see by watching the all-time high list and Angel List.
While I am not sure of the next 10 minutes, let alone the next 10 years, I am confident in my work that thousands of web entrepreneurs will take notice and follow my strategy in the years ahead.
This June’s event will have a strong focus on lean startup principles. A fantastic set of speakers are lined up to provide practical advice so you can take what you learn well beyond the weekend itself. While there is no “right” way to start a company, Startup Weekend is here to help provide you with as many tools and connections as possible to help you succeed.
