StartupNorth

  • TTW Startup day: Albert Behr on Exit Strategies

    I attended some of the sessions on Wednesday for Toronto Tech Week, here are my notes from Albert Behr’s session on exit strategies:

    “If you don’t know where you are going, you might not get there”. Was the headline advice at the “Designing for Liquidity” startup day event of Toronto Tech Week. Kudos to the organizers for pulling together some great startup content, the day was a great warmup for startupempire soon to come.

    The Liquidity event panel had good stuff from Tim Lee of Gowlings on the legal side of selling your company (hint: you’ll need a lawyer), Tim Lee of GrowthWorks on the VC perspective (yes virginia, there still is VC activity in Canada, just as much as pre-bubble …but… to fewer companies and you can forget about early stage, how you raise your first 0-4M is your problem, learn to love angels, government handouts and your bootstraps). But the real barn burning presentation was Albert Behr on how to get from zero to sold in three years. Here’s my hasty notes:

    First off: the IPO is dead. SOX killed the IPO, so did the bubble. There’s only two ways to a happy ending these days, keep running your company into the sunset or get bought out.

    Tech is still a great market. 3 Trillion a year. But here’s the challenge. We’re 30 years into the industry and it’s now an oligopoly. Doesn’t matter what tech you build there are only, maybe 30 players out there that matter that are your exit strategy for acquisition. And the list is getting smaller, the list of companies on the Nasdaq is down 25%.

    And the tech cycles are getting faster. You are only hot when you are hot, you will never be hot again. There’s only one company in the history of tech that has been hot twice, and that’s Apple. You are not Apple. You have maybe 3 years, or 30-36 months to make it. So build a 3 year business plan and get the hell out there. Forget 5 year plans.

    Here’s the strategy. Choose you 2-3 likeliest suitors and and “antagonize” the hell out of them until they buy you.

    But remember we are Canadian we have to play to our strengths. Everyone makes the same mistake and tries to sell direct. Canada is great at producing engineers, we are not good at scaling. Do not go toe to toe with direct sales forces of your American competitors, they will have 3 times as much money, they will blow you out of the water (anecdote, one time I raised 27M, a lot of money for a canadian company right? Wrong, my one competitor raised 90M, the other 140M. I had one sales guy in NYC, they had 14. Don’t take the market head on.

    Instead, build your channels, license your technology, go the OEM route. Don’t worry about margins 100% margins of nothing is still nothing. All that matters is footprint, getting your stuff distributed. You’ve got only 30months to get your product on to every “Walmart shelf” [insert top three distribution channels for your industry here].

    So first, lock down your IP. This is very important. Provisional file everything, it’s not free but it’s not that expensive either. Provisional filings are cheap, do it in Canada, the US and Europe. In Albert’s companies he gives the CTO’s quota’s of 1-2 IP filings a quarter.

    Canada is good for starting out, build your first 0.5M in revenue here, not to prove that the distribution works, but that the technology works. The dogs will eat the dog food. That the product/beta is ready. Then look south, focus on (only) the US and western parts of Europe. You need the distribution deals here to drive you to the 5-10M revenues where you start to become interesting to acquisitors.

    Tightly integrate your stuff with 2-3 existing players, both technically and businesswise. Create the app that gives blackberry an edge over iphone, give microsoft an edge over IBM etc.

    Then go to the big guys with a deal. Don’t be a Canadian wimp, use linkedin and go straight to the general manager or VP in charge. In the US they do deals, if you have something that might grow their business, they will give you 10 minutes of their time. White label your technology, let them slap their brand on it. (Only after you’ve locked down the IP). Make it a product that brings them incremental sales, and or a competitive edge.

    Use exclusivity deals, but tie it to revenue targets and make it time limited so they have incentive to move it and you get your product back if they don’t.

    Then, this is how you antagonize them. They’ve now outsourced engineering to you by proxy. As the sales grow and they keep having to pay royalties, they will see where this is going and you’ll drive their CFO crazy. The company will come to you to buy you out. Sell at 4x revenue multiple and move on, next company…

    easy right?

  • Start Building Empires

    StartupEmpireJevon and I apparently picked a conference name that exists as a registered trademark. We have been informed by our lawyer that our usage of the name did not infringe on the existing trademark. Rather than start with a potential tenuous situation, we decided we would just rebrand the conference.

    StartupEmpire is the new name. Does it remind you of Star Wars? Or the British Empire? It is ostentatious. It is bold. It is intended to inspire entrepreneurs to start building empires. History remembers the legacy of successful entrepreneurs. JP Morgan. Andrew Carnegie. Howard Hughes. Henry Ford. Bill Gates. Steve Jobs. Jeff Bezos. Mark Cuban. Our goal is to provide the tools to help build the next generation of entrepreneurs build their empires.

    What: StartupEmpire
    When: Thursday, November 13th and 14th, 2008 (all day)
    Where: Diesel Playhouse 

    56 Blue Jays Way
    Toronto, Ontario M5V 2A2

    We are focused on practical, real-world advice from entrepreneurs, investors and industry experts that will help early-stage companies at different stages. How do you build a cashflow statement? What does a marketing plan and budget look like for a startup with no money? What tools and services are available to set up your development, testing and production environments? How important is source control and bug tracking? What does a product roadmap look like for a startup practicing agile development? What does a basic shareholders agreement look like? How do you avoid getting sued? What do you do when you get a cease-and-desist letter? What is a term sheet from an investor? How does a developer do business development?

    We?ll be announcing the next set of speakers in the next couple of days. We?re also interested in learning about what you would like to see at StartupEmpire. Drop me a note with what would make you attend StartupEmpire in an instant.

  • Have something to say? StartupEmpire call for speakers

    We have launched the official call for speakers for StartupEmpire (more on the name change from Dave later tonight — you are going to have a chuckle).

    We are looking for great workshop and panel proposals as well as keynote nominations. You can fill out the form here to make your submission. We have already had an overwhelming amount of submissions, so if you have emailed us already, please consider re-submitting through this form. I will try to dig through my emails, but I am bound to miss some.

  • CVCA – Global Customers, Investors and Acquirers – October 15th, 2008

    I will be speaking at the Canadian Venture Capital Association’s upcoming professional development day on October 15th. I will be on a panel with Rob Lane, from Overlay.TV and Maggie Fox from Social Media Group.

    Our session description is

    ?Going global” is no longer an option for many companies. It is a necessity. This session will examine issues and strategies in building international networks that will lead to business opportunities and enhanced returns. Learn how to link into international networks of customers, partners, acquirers and investors to better position your companies for global success. The role that social technologies can play in fostering these global networks will also be discussed.

    Other sessions include “THE BIG PICTURE ? KEY STRATEGIES FOR CREATING ESSENTIAL INTERNATIONAL NETWORKS” with Jennifer Brooy,Vice President, EDC Equity and Rajiv Pancholy, Chairman and CEO, TenXC Wireless as well as “RELATIONSHIPS WITH GLOBAL SYNDICATE PARTNERS AND ACQUIRERS ? THE VIEW FROM HOME AND ABROAD”

    It looks like a good day and if it is typical of CVCA events, the biggest value will be in having a chance to hang out with some of the other attendees who tend to be other startups (the smart ones go to CVCA events when they can afford them) and funders.

    The half-day event is $299 for non-CVCA members if you attend in-person in Toronto, and $70 if you watch it from one of the simulcast locations in Vancouver, Calgary, Winnipeg, Ottawa, Montreal, Quebec City, Fredricton or Halifax.

  • Weekend Reading – The Design Edition

    This weekend: The Design Edition. A number of Canadian Startups (PlanetEye, b5media, LetsCube, etc.) have been working on redesigns. These overhauls are more than a coat of hex paint… in many cases, they reflect a evolution of the business thesis.

    First, let’s head on over to PlanetEye. They’ve noticeably cleaned up the site and reorganized around the travel pack. The idea being that users will research trips, build up travel itineraries, and then book their trips. We’ve written about PlanetEye before, so you probably already know the genesis related to sharing of geo-tagged photos and travel plans. Things now seem to be shifting towards travel booking. They are also working hard on content partnerships to backfill listings. My only concern is that getting to ‘booked’ is way more work than on other travel sites. For example, compare the booking experience at TripHarbour.

    Going through the re-design process is really interesting because it’s not just the look and feel but how the site meets the needs of users. In many ways, it forces you to re-think a lot of things. – Mark Evans, Director of Community for PlanetEye.

    Next, let’s gather around b5media’s latest creation: the Starked entertainment portal. As familiar as most of us are with RSS readers, my guess is that the general population has no clue how to use those odd little orange icons. The central question b5media seems to be addressing is how to pull users across its network. They’ve already organized channels and now are presenting these channels as portals. Will these portals be able to aggregate the long tail readers? For example, will a Britney fan want to read about Alba? And if so, why not visit a mainstream site? We’ll have to wait and see… But I would bet that at the very least these portals help attract advertisers.

    As one of the most successful channels in our network, entertainment was a natural choice for b5media to build a destination website for the constant flow of new information published on each individual blog. In the next few months, we will be launching more b5media portal websites. – Jeremy Wright, CEO of b5media.

    At an earlier stage is Let’s Cube. Much like PlanetEye and b5media they are working on refining the product, albeit without OPM (other people’s money). I asked the founders recently to describe their site in 140 characters or less. Here is what they had to say: “”Discover what your friends find exciting. Share what you find interesting. Let Let’s Cube recommend you what you’ll find fascinating.” Give *cubing* a try and let the guys know what you think!

    We have been working on making the UI as clean an possible. We have deployed the first iteration. What do you think? – Shahzad Salim, Cofounder of Let’s Cube.

    And finally, I would be remiss without pointing you to three excellent recent ‘redesign’ posts by members of our local tech community:

    Dan McGrady, founder of Integrate Sales and Contrastream, put together a list of 10 Inspiring SaaS Website Designs and shared his thoughts on what each site achieved.

    Mike McDerment, founder of Freshbooks, shared the story of how the team surrendered to process and elected a Design Dictator (less scary than it sounds)!

    Jeff Fedor, founder of ParkVu (still in stealth mode), wrote about his early days quantifying the ?right? amount of change in shoe cushion and how those lessons carry over to software design (less boring than it sounds and a lesson innovators need to pay very close attention to, lest they find themselves ahead of the curve).

    Love the redesigns? Hate them? Your startup been making design changes also?

    Constructive critique in the comments 🙂

  • StartupNorth, the Conference, is off to a great start!

    So, we’ve had a bit of a name change, so forgive some of the logos, etc as we make the switch. When you run a conference like your startup, you have to learn to iterate quickly! I am sure it is not the first change we will be making.

    Tickets sales have been going on steadily since yesterday, I am really excited about it and if we run out of early-bird tickets before the deadline, we will add some more at the early bird price up until the deadline.

    We’ve received a lot of feedback through comments, twitter, email and blogs and it has almost all been really constructive and helpful. If you have emailed us about leading a session or volunteering, we will have more information for you next week. Some really incredible people have stepped forward.

    There is still a lot of work to be done to make this a great conference. While it is in Toronto (which is purely logistical for us in doing our first conference), we are trying to make this as national as possible by bringing in more speakers from across the country.

    You can get your tickets over on the website and we will be posting more updates next week.

  • Announcing StartupNorth – Canada's Conference for Startups – November 13-14

    A lot of you have probably been wondering why we haven’t announced any events lately. That’s because we have been working on something really fun.

    I am happy to finally go public with StartupNorth, the Conference.

    David and I wanted to create something that would give us all a place to come together, connect, learn and that we would all walk away from feeling inspired.

    We will be making announcements here over the next few months as we get closer to the conference. We are still working on bringing on more great speakers and a day of pragmatic, hands-on, workshops.

    We are going all out to give you a world-class conference right here at home, and we will be asking you for your help, a lot. In the next few days and weeks we will taking your votes on what sessions and workshops you want to see and really need.

    What is it? Canada’s conference for Startups
    Who will be there? Students,?Entrepreneurs?and Funders
    When is it?? November 13th and 14th, 2008 in Toronto, Ontario
    Day 1: Practical hands-on workshops and speakers to help entrepreneurs learn how to get started or, for those with a startup, how to take it to the next level.?Workshops will include:
    ? Asessing your market opportunity ? Why should I use your product?
    Strategies for getting users
    ? Presentation skills for developers ? Legal pitfalls for startups
    ? Shaking the money tree ? Pricing Models
    ? Product Design ? First customers and other business development pitfalls?
    ?
    Day 2: Networking, speakers and in-depth panels with a focus on Canada’s role in the international startup ecosystem.
    ?
    Speakers include:

    Can’t wait to see you there, this is going to be fun!

  • On Sunday, Jevon announced that Brightpark, one of Canada?s most famous technology VC?s, has begun doing contract web work.

    This is the second VC-incubator in Canada, in the last year, that has moved to doing contract web development. Not long ago, STN Labs (located in my company?s hometown of Guelph) made a similar move. STN Labs once touted itself as being a solution to the ?VC Problem in Canada? ? they were hybrid VC 2.0 / Angels that came in early and had real operational experience. Well it didn?t work: STN unofficially stopped investing and is now primarily doing contract web-work.

    Jevon mentioned Ventures West and Celtic House in his blog post ? hinting at how Brightspark?s announcement fits into the bigger picture of VCs in Canada.

    There are big differences between Brightspark and STN versus Ventures West and Celtic house. The latter two were both traditional, large scale VC?s, while Brightspark and STN were both recently propped up for getting in at early stages, being hands-on, and also doing incubating.

    Over the last two years, I?ve heard many fellow entrepreneurs talk about how the the old style of VC investing is dead. Conversationally, the Brightspark and STN models were, last year, seen as the solution for the problem.

    Turns out that neither was right. All VCs, big, small, traditional, or innovative: all are having trouble.

    Focusing again on the bigger picture, it?s interesting to look at what is similar between all four VC?s mentioned here and to look at the VC?s in Canada that are still actively investing and think about what?s special about them.

    I?ve met Mark and Tony from Brightspark and consider them friends ? I know them both as brilliant people, the kind of guys with whom entrepreneurs would be honoured to work. I don?t see this as a sad move for Brightspark, both Tony and Mark are walking success stories who get to work on projects that are driven by passion. They?re still doing that.

    In the general sense, it?s pretty simple to see what?s going on in the big picture (even ignoring this recent announcement from Brighspark):

    We don?t have a surplus of interesting businesses with numbers that will make VC?s happy.

    At the same time, Canadian VCs talk about how they invest with the hopes that only 1 out of 10 businesses that they fund will be slam dunks, while at the same time they are too risk averse to invest in businesses that have only 1 in 10 chances of succeeding. No business can filter through this impossible sieve: returns of the size demanded by large VCs require small startups with high risk. Many of the VCs I meet in Canada think that they can get around this impossible sieve problem by being smarter investors: every VC I know says that they will not have 1 in 10 success rates ? rather, they aim for success 4 or 6 times better than this rule of thumb. Looking at their past history, however, they all admit to success rates much worse than the same rule of thumb.

    Of course this has a cyclical effect. With funding scarce, working as an employee at startups in Canada, pretty much across the board, is not a great way to get a high salary. And although salary is only part of what makes a job great, it is ? realistically ? an important part. So we get a brain drain. And as funding is more scarce, and success stories even more scarce, less technology grads are willing to take big risks and pitch big adventures to investors. It?s just too scary. Less funding means entrepreneurs are being more careful, taking smaller risks, and growing more slowly. Startups now build leaner teams, hire less experienced executive teams, and release products every two years instead of twice a year.

    All these facts lower the possibility of grand slams.

    American VCs aren?t doing something to make themselves magically better ? it seems to me that it?s just that many of them control much larger sums of money, and from a distance it?s easiest to see what only the most successful ones are doing. Larger pools of money allow the larger VCs to keep their eyes out farther in the future, holding out while this sub-economy recovers.

    Advice to Canadian entrepreneurs: look towards the growth of Angel groups, raise as much money as you can to weather the storm, tighten your vision, look towards less standard Web 2.0 business models, and be patient.

    Advice to Canadian VCs: don?t worry I am not presumptuous enough to think I have any idea on how to advise Canadian VCs.

  • CollectionBuddy.com – BrightSpark is back to catalog your collection

    Back in January we broke the news that Brightspark, previously one of the most visible VC firms in Canada, was changing how they did business. Instead of looking for deals to invest in, which they complained were too few and far between, they would instead create web-based businesses themselves, or they would partner with other entrepreneurs to start businesses. Which BrightSpark would have an operational role in.

    Tomorrow Toronto based Brightspark 3.0 will be announcing their first new business, Collectionbuddy.com, which is described like this: 

    Collectionbuddy?s ambition is to be the world?s largest living, user generated catalog of collectible items – The definitive encyclopedia of collectibles.

    It is a tool for researching any collection or collectible, from McDonald?s toys, Airport Postcards to Delftware pottery.

    The site?s content is user generated in much the same way as Wikipedia. The categories of collectibles are very similar to that of eBay?s.

    Brightspark is also announcing that they are able to help build web-apps for your startup.

    I have to admit, it is a little bewildering to see one of the most aggressive and interesting VCs in Canada turn in to a web consulting shop in the last 8 months. I am not sure why they didn’t just drop the Brightspark name completely and start fresh.

    When I spoke to Mark Skapinker in January, he lamented that they literally just could not find enough good deals here in Canada and that was the primary reason they had for heading down this path.

    In the last year we have seen this re-creation of Brightspark, turmoil at Celtic House, a gutting at VenturesWest (read the comments for some interesting analysis), and rumors are swirling about several other firms. This is a time of change, and we have to work hard to make sure that it is good that comes from it. You can’t blame Brightspark for not getting creative at least.

    In the coming days I plan to chat with the BrightSpark team to find out how this transition has been going, and if it has been worth it.

     

     

  • Akoha Starter kits – get'em while they're hot

    Montreal based Akoha, who are going on stage tomorrow at the TechCrunch50. We have previously profiled their angel round and I have been watching their progress closely. 

    We can’t say much about what Akoha is, but what I can do is give you all an exclusive invitation to get a free starter kit. These kits, which will only be available until tomorrow, will be mailed out to you right away. 

    Head over here to the Akoha store (powered by Shopify.com) and sign up for the starter kit, and remember to tune in to to Akoha’s presentation tomorrow.

    I also came across a vote for who will be the most promising startup presenting at TechCrunch50. You can vote for Akoha, as they are neck and neck for 1st place.