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30 May 2015

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Snapshot of the ACA Summit 2015

In mid-April, I attended the 10th annual ACA Summit hosted by Angel Capital Association in San Diego. With about 600 people in attendance from dozens of countries, it was an excellent chance to get tuned into the latest trends happening in angel world at large.

And since Angel Investing is now a global phenomenon, it is interesting to note that ACA Summit can have two faces. On one hand, it is a very international gathering of Angel investors and yet sometimes the content reflects the fact that ACA is primarily an association of US Angel investors, for example by showing trends without regard that Canadian angels are just across the border.

The international range of attendees was striking, with many delegations from various European countries; Latin American countries like Mexico, Chile and Barbados; India; a particular concentration from Australia and New Zealand and of course Canada. Regarding this antipodean concentration, one attendee found it odd that there were more of participants from halfway around the world than from Canada.

I am a member of the program committee for Canada’s own 2015 NACO Summit which is being held October 6-8 in Niagara-on-the-Lake, Ontario, right on the US frontier. I see a huge opportunity to learn and connect with more US and global angels.

Each year, the Angel Resource Institute publishes statistical information and trends in US Angel investing and at ACA released their 2014 Halo Report.

I’ve chosen some personally curated highlights both of that report and the overall conference:

  • Overall US Angel investment was about US$25 billion in 2014, surpassing venture capital investments. This represents over 300,000 investors in over 70,000 deals. We continue to have less comprehensive data for Canada, but we still lag on a per capita basis, but the gap is narrowing.
  • Although Crowdfunding was a major topic of discussion, it is still less than 2% of the above $25 billion figure, definitely lagging places like the UK where it is already at 5%.
  • Median deal size grew over 10% to $2 million in 2014, when co-investment is included. Median pre-money valuation grew 20% to $3 million.
  • The largest region for  deal dollars (17.2%) was the Great Lakes Region (from Wisconsin to Ohio), surprising to those who thought most deals happen in California. Further, almost 50% of all deals are in states on the Canadian border, clearly presenting cross-border syndication opportunities.
  • Perhaps because of high valuations in the tech “hot spots”, such as New York City and California, more syndication across greater distances was reported, which goes against the traditional notion of investors focusing within a one-hour drive. Again, while the studies of greater cross-country syndication didn’t extend into Canada, it is easy to extend this trend cross-border. A drive could be to focus on those sectors requiring specialized skills such as medical technologies and life sciences.
  • There were a lot of great sessions on emerging, and ongoing, issues, such as crowdfunding, the new SEC Regulation A+ (mandated by the JOBS Act to simplify raises up to $20 million even from non-accredited investors), an ever increasing push to build new and innovative Angel Funds and even post investment Board governance.
  • In that vein, I ran an open panel on “Best Practices to Build a Private Equity Portfolio – Tools and Strategies”.  What was notable was how primitive such angel portfolio management really was. One participant suggested angels portfolio management was comparable to that of public company portfolios 100 years ago. As Angels learn that a passive approach with little portfolio management is sub-optimal, leading Superangels, the advanced Angel groups and the trend to angel funds are all pushing for more professional portfolio management. Although historically they have worked separately, the increased involvement of Family Offices in the world of angels is also starting to drive greater portfolio discipline. New software tools are emerging to help here as well, such as Seraf – Portfolio Management for Angel Investors which was built by angels unable to find a way to automate their portfolio management.

In summary, ACA Summit 2015 was a fabulous opportunity to meet, network and learn from some of the best global angels and understand about emerging models and best practices. Many side bar conversations, dinners and drinks in the garden were packed with wisdom from around the world.

In October, our own NACO Summit will be a great opportunity for Canadians to similarly share and learn and to connect with a more global perspective as our Angel ecosystem continues to grow from strength to strength.

2015 National Angel Capital Summit

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acquisitions

8 Feb 2015

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Top 25 Waterloo Technology Acquisitions – Wisdom from the Data

The acquisition of MKS by PTC in 2011, caused me to reflect a bit on what good acquisitions might look like and what they might teach us about building (sometimes elusive) long term shareholder value. As a result, over the last 6 months, I’ve progressively assembled a collection on the most significant acquisitions in the Waterloo area. To my knowledge, such information has hitherto never been collected. We all love to speculate, but it is more productive to ground that speculation with facts.

The following table is intended to summarize value creation through the lens of several key benchmarks.

Rank Company Acquiror Acquisition Price [4]
(UIS$ millions)		 Date Acquired Date Founded Company Age
(years)		 Employees LTM Sales
($US Million)		 NOTES Price/Sales Revenue/Emp CAGR $/Employee
1 Pixstream Cisco 369 December 21, 2000 1996 4 196 5.4 2 68.3 27 551 47.2 1.88
2 Dalsa Teledyne Technologies 341 February 14, 2011 1980 31 1000 200 3 1.7 200 000 0.85 0.34
3 MKS PTC – Parametric 304 May 31, 2011 May 1, 1984 27 360 75   4.1 208 333 0.96 0.84
4 Mitra Imaging AGFA Healthcare 252 January 3, 2002 1990 12 400 50   5 125 000 3.38 0.63
5 Bluegill Checkfree 250 April 28, 2000 1996 4 150 20 5 12.5 133 333 68.57 1.67
6 Unitron Phonak 91 November 22, 2000 1965 35 300 62.6 6 1.5 208 667 0.67 0.30
7 SlipStream RIM 91 June 1, 2006 2000 6 120 13 7 7 108 333 14.33 0.76
8 Tsavo Media Cyberplex 75 June 10, 2010 2001? 9 120 110 8 0.7 916 667 6.83 0.63
9 WATCOM Powersoft 74 February 11, 1994 1981 13 100 8 9 9.3 80 000 2.4 0.74
10 LivePage Janna Systems 68 September 20, 1999 1990? 9 12 1 10 68 83 333 3.64 5.67
11 EMJ Synnex Canada 64 July 14, 2004 1979 25 350 303 12 0.2 865 714 1.18 0.18
12 Dspfactory AMI Semiconductor 51 September 9, 2004 1998 6 75 16   3.2 213 333 14.87 0.68
13 MapleSoft Cybernet Systems 49.8 September 1, 2009 April 30, 1988 21 50 12 13 4.1 240 000 1.17 1.00
14 PrinterOn Samsung 40 September 2, 2014 2000 14 50 10   4 200 000 2.15 0.80
15 SS Technologies Woodhead Industries 35 July 31, 1998 1991 7 75 50 14 0.7 666 667 11.6 0.47
16 Reqwireless Google 32 2001 June 23, 1905 4 15 1   32 66 667 30 2.13
17 TribeHR NetSuite 30 October 22, 2013 2009 4 24 4.5 18 6.7 187 500 45 1.25
18 GBG HighJump Software 26 November 1, 2006 1991 15 200 22 11 1.2 110 000 2.09 0.13
19 PostRank Google 25 June 3, 2011 March 1, 2007 4 20 0   n/m n/m n/m 1.25
20 Kaparel (Pixstream) Rittal 21 December 10, 2000 1996 4 30 7.1 17 3 236 667 50.62 0.7
21 VideoLocus LSI Logic 20 November 14, 2002 May 1, 2001 2 17 0   n/m n/m n/m 1.18
22 RapidMind Intel 19 August 19, 2009 2004 5 25 3   6.3 120 000 18 0.76
23 BufferBox Google 17.5 December 30, 2012 2011 2 10 0   n/m n/m n/m 1.75
24 Software Metrics Equitrac 8 February 1, 2000 September 1, 1992 8 35 3 16 n/m n/m n/m 0.23
25 Volker Craig NABU 5.9 1981 1973 8 45 5.9   1 131 827 6 0.47
TOTAL     2364     11.16 3779 982.5   11.5 259 998 15.8 0.62

NOTES:

  1. Sources: public records, internet, personal recollections and interviews with 25 key ecosystem participants. In the interests of data utility, I welcome any revisions or comments regarding accuracy or completeness.
  2. All data are “normalized” into US Dollars, using an exchange rate current on the date of the acquisition. The use of US$ reflects the fact that most technology companies are really valued in US$ and hence that makes comparisons, both across the data and to other jurisdictions, more meaningful.
  3. The sample set is limited to my sense of what a technology company is – your mileage may vary.
  4. Acquisition PRICE includes cash, stock and post deal incentives, including earn outs.
  5. Several companies were re-acquired after the first acquisition (e.g. WatCom and LivePage). These follow on transactions are not reflected in this data.
  6. Some companies spun out several acquisitions, such as Kaparel which was sold out of Pixstream or SS Technologies, originally spun out of Sutherland Shultz.
  7. AGE represents the time in years from founding to the (first) acquisition.
  8. EMPLOYEES is the world wide count.
  9. SALES, given the high growth nature of many of these businesses, levels generally reflect the run rate at acquisition, rather than purely using an LTM (“Last Twelve Months”) measure.

CONCLUSIONS

The above data suggests a lot of trends and insights. It contains a wealth of insights, and also the individual narratives of each of these companies is, in itself, worthy of more discussion and analysis. In aggregate, however, the data suggest some key ideas to me:

  1. Acquisition prices are a great proxy for long term shareholder value, precisely because leading global technology companies provide an informed, third party valuation that likely has way more science than most earlier stage technology company valuation.
  2. Building larger companies takes time. The myth of the “quick flip” startup is (mostly) just that.
  3. As I discuss in my next post, building major technology companies is hard. We don’t (yet) seem to have “cracked the code” on this and need to learn how to build more over time.
  4. The aggregate scale of these companies, at the time of their acquisition, is materially significant to our region – almost 4 000 employees and almost $1 billion in revenue.
  5. Companies take much longer to build than most would expect. While the range in ages from 2 to 35 years is quite diverse, the average age of 11.2 years shows the time, resources and hard work to build real businesses.
  6. Acquisitions are good for our economy. Many people consider acquisitions to be a bad thing, but for those companies that were already at reasonable scale, most have continued to grow post acquisition. In addition to the wealth generated and its spinoffs, the acquirors bring new ideas and often jobs to our region. This is yet another reason why building larger technology companies is so important.

I am hoping that this data collection regarding acquisitions, and my initial take on conclusions, might stimulate further discussion around the notion of building significant value in businesses.

Please feel free to comment, or even contact me, with insights, questions and corrections.

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RHBL-GTAN-JOLT-2013-02-12-1024x765-1

4 Jan 2015

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The Downside of Meeting Requests

“Expectation is the mother of all frustration.” – Antonio Banderas

Meeting requests are an amazing invention. Pioneered, and standardized, almost 20 years ago by companies like Microsoft (as part of Outlook/Exchange), Novell (Groupwise) and Lotus (now part of IBM Lotus Notes) this innovation had great promise to automate an essential, yet completely routine, aspect of modern life.

The ascendency of meeting request usage, also rides several trends:

  • In the 1990s, I had an Executive Assistant who scheduled my time, acted as a “gatekeeper” and also worked on many projects. She was a master tactician who managed to keep 3 or more Type A executives productively multi-tasking. In many ways, sadly, such personal assistance is being subsumed by..
  • Increasing computational power means that automation of routine tasks, personalized to the needs of individuals is much more of a reality,
  • The mobile revolution has made meetings much more multi-modal and virtual, but also means that most executives must be productive even while being mobile nomads, and
  • Calendars have migrated from paper – I switched about 20 years ago – to desktop computers using Outlook and the like, and now to the ubiquitous smartphone and tablet devices. Such mobile devices are both convenient for calendars, but also frustratingly fiddly places to enter complex meeting details.

Thus, enter the humble Meeting Request which has swelled in popularity. I received my first such request from an Outlook/Exchange user around 2000 and they remained rare until perhaps the last 5-10 years. Now they seem to be everywhere.

In homage to my friend and colleague, Jim Estill, the quintessential time management guru, I ought to be cheering this time saving invention.

And, yet my enthusiasm is sorely tinged by a frustrating implementation resulting in suboptimal user experience …

Top 10 Meeting Request FAILs:

  1. Trojan Horse: It has always seemed odd to me that a thiFrustrating Meeting Requestrd party inviting me to a meeting could embed their own meeting information in my calendar, and yet I am unable to edit this “foreign” request that has invaded my calendar.
  2. Split Personality: If Jennifer invites me, Randall,  to a meeting, then why does my meeting title say “Meeting with Randall” instead of “Meeting with Jennifer”? Computers are designed to automate routine tasks so there is absolutely no excuse for this one.
  3. No Annotation: I write comments in the notes fields of my calendar all the time. Why can’t I say, for example, “Joe is a bit dodgy” or “First met back in 2001”?
  4. Duplication: Many times I receive a meeting request for a meeting that I have already carefully crafted an entry in my own calendar. Again, computers are supposed to be smart enough to figure these things out and merge them in an intelligent way.
  5. Bad Versioning: Many times when meeting information is changed, such as time or venue, the update isn’t seamless. For example, it is common to have both the original and the updated version lingering in my calendar.
  6. No Scheduling: Meeting requests are often used as trial balloons in trying to schedule busy people into meetings. The endless rounds of “Accept”, “Maybe” or “Decline” responses can end up being quite frustrating, especially for many person meetings. These, often fruitless, interchanges underscore the fact that meeting requests don’t automate routine scheduling. Instead, people have to resort to tools like Doodle to vote on alternatives, and then manually schedule the winning result.
  7. Verbosity by having superfluous words in the limited real estate of the meeting subject line. E.g. pre-pending “Invitation:” or “Updated Invitation:” onto the front of a subject, effectively burying the important words. Many times they are put there to increase the impact and readability of the email subject line to ensure opening, but distract in the actual Calendar entry.
  8. Invitations from Google Enterprise Apps or GMail tend to be the most arcane and ugly. Originally, I chalked this up to Google Calendar‘s relative immaturity compared to Outlook, but the brutally long notes and long subject lines continue to stand out as worst in class, almost to the point that I dread getting invited by Google users.
  9. Lack of Anticipatory Computing: in an age where mobile devices know location, existing meetings and other personal habits, the trend to predictive intelligence could be incorporated into smarter meeting requests. For example, combining meeting requests with shared “Free/Busy” data could remove many manual scheduling steps.
  10. No Personalization: Like my contact list, I put a fair bit of thought into crafting a calendar that is both useful now, but also provides a detailed audit trail of my business interactions. To do this, I use conventions, categories and other techniques that, sadly, cannot be injected into these un-editable meeting requests that instead reflect the third party initiator’s preferences.

Do let me know in comments if I missed any major points.

Given the power of networked computing to automate, why is there such a lack of excellence and progress in this particular area?

In fairness, I believe that part of the problem lies in the interplay between competition and the vagaries of formal industry standards. That said, this should be no excuse.

It is admirable that, unlike word processing formats, the various pioneers started to develop standards call iCalendar (and later vCalendar) around 1997 to standardize file formats (like .ical and .ics) and email server interactions. I do know the Microsoft attempted to extend the functionality with some very useful things around that time. But, for some reason, a great idea got off to a good start, but seems frozen at an almost Beta level of functionality.

To conclude, please read this post, not as a gripe, but instead as a call to action to developers to help take the humble meeting request to the next level of user experience. Any takers?

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3 Oct 2014

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Canadian Angel of the Year Award

Angel of the Year Award: Yuri Navarro, Jérôme Nycz, Randall Howard, Michelle Scarborough

At the NACO Summit in Québec City, it was truly humbling to receive the Canadian Angel of the Year Award. I see this partly as a calling to be an ambassador to continue to help raise the Angel bar in Canada in the coming years. I wish to thank all those kind colleagues who, unbeknownst to me, wrote letters of nomination. Also, this is all based on the remarkable people at GTAN and in the Waterloo and Canadian ecosystem generally.

In response to the award, and recognizing the opportunity to build on current success, I shared the following observations and future challenges at the closing Keynote on Friday 3 October, 2014.

“TODAY’S CRITICAL MASS CAN POWER A QUANTUM LEAP”

Closing Keynote NACO Summit, Québec City Friday 2 October, 2014

Bonjours, mesdames et messieurs. Good morning, ladies and Gentlemen.

I hope that Yuri was aware of what he was unleashing by inviting me to share perspectives and future challenges of Angel investing in Canada! Not unlike a startup running on “fumes”, Canada’s angel sector reminds me of the quip from cartoonist Bill Hoest: “I just need enough money to tide me over until I need more”. I’ll start by looking back to help us paint a future directional context.

As Angel investors, we’ve watched a powerful people-driven engine, coming from nowhere, to become a key enabler of Canada’s future prosperity. As Angels, we fuel innovation companies with our capital and mentorship, ultimately creating some of the highest value jobs for 21st century Canada. What’s not to like about that?

Let’s turn the clock back about 5 years. In 2009, the global economy endured the infamous credit crunch, perhaps the worst economic correction since the Great Depression. I observed this to be the final nail in the coffin for a large number of Canadian venture capital firms, for years struggling to generate viable returns. The seeming extinction of venture capital A-rounds and the bleak landscape for young, emerging companies, compelled me, as a seasoned tech investor, to get involved with the founders at Golden Triangle AngelNet (GTAN) in Waterloo-Guelph-Wellington-Stratford area. In a pattern surely repeated across Canada, Angel Groups from a slow start quietly and persistently worked to fill the funding gap through a labour-intensive “syndication” of Angel capital, with other groups and with government co-investment. In Ontario, this meant repurposing MaRS IAF from its origins as a VC on-ramp to co-investment in Angel rounds, lobbying that ultimately led to the Feddev “Investing in Business Innovation” (IBI) program, and BDC convertible notes.

A typical syndication for a top tier investee company might entail half a million dollars of Angel money being spun into $1.5 million or more. I used to describe this approach as providing “half the money of a VC A round for 10 times the effort”. At the time, I imagined this to be a strategy for a short term “bridge” of Canada’s innovation ecosystem to a more sustainable future. How did this market correction turn out for Canadian Angels?

NACO stats show a remarkable growth in total Angel investment. Between 2012 and 2013 alone, Canadian Angel group direct investments grew a stellar 120% from $40 million to $89 million. Of course, this doesn’t capture the aforementioned co-investment leverage that Angel investors attract nor does it cover investments outside of NACO members. All of us rightfully deserve to be proud of such collective impact.

But is it enough? Both from my own international investing and available statistics, it would appear that Canada’s Angel ecosystem is ahead of Europe on the maturity curve. I would estimate Canada has a 3-5 year head start on Europe. On the other hand, our American friends are definitely well ahead in maturity, deal dollars and information gathering. Angel Capital Association (ACA) data shows almost $25 billion of total US angel investment in 2013. To be at this level, on a per capita GDP basis, Canada would need about $2.8 billion of annual Angel investment. Even counting all the leverage, Canadian angel investment needs to grow 5 to 10 times over the coming years just to achieve parity with the US.

In Waterloo, home of Perimeter Institute, we tend to love Quantum Mechanics metaphors. Thus, propelling today’s critical mass through a quantum leap is a mission all of us need to work on collectively and individually, whether as angels, angel groups, NACO, governments, venture capitalists, sponsors, in fact, each and every ecosystem participant.

So, I will conclude by identifying just five of the gaps that we collectively need to fill:

  1. Scaling: Recently, my friend Steve Currie, VP Strategy at Communitech, observed “Canada is great at starting companies, but not so good at growing them beyond the 5 year horizon.” This means less job creation but also smaller exits. In a study of 183 recent high tech exits versus 2300 comparable US exits, the average US valuation was US$384 million versus US$100 million for the Canadian companies. I don’t know about you, but I find it simply tragic to leave so much value on the table. Angels have a huge role both in mentoring management skills around scaling, but also pivotal to financing that scaling. And, bigger exits, will in a virtuous circle, drive more Angel investment.
  2. Giving Back: We need more of our successful serial entrepreneurs to become (super) angels and continue to start new ventures. In the Silicon Valley, Paypal alone had 14 serial entrepreneurs like Peter Thiel and Max Levchin whose experience and wealth helped build legends like LinkedIn, YouTube, Tesla, Kiva and Yelp. While we do have a few super angels, we have yet to spawn someone like Ron Conway whose 600 investments include Google, Facebook and Twitter. Canada needs more titans like Mike Volker and Jim Estill.
  3. Deal Discipline: Great companies grow and scale partly because of external motivations. In the 1990’s the hottest companies all wanted to do an IPO and that involved a playbook of enhanced management, systems and processes that also helped the companies scale into better organizations. VCs also played a part, but today, this role often falls onto Angel investors, hence requiring a more “institutional” approach versus becoming just another retail asset class.
  4. Co-investment: Government funding has been critical to our success and it is key that funding increasingly backs Angel choices rather than governments having to choose winners. That said, there is plenty of room for more. For example, our Feddev IBI program in Ontario provides a 50% match while the almost identical “Double Equity” program in Austria does a 100% match to angels. And, the Angel Tax Credit, so common internationally, in parts of the US and in BC, would provide a much-needed boost to overall Angel resources.
  5. Operational Innovation: Currently, most angel groups run as nonprofits using largely committed volunteer deal structuring and with little automation of the process. A big reason for this is Securities Regulations, especially in Ontario, that put a chill on innovations that might trigger an expensive regulatory burden. While there is some hope that the proposed Equity Crowd Funding rules might provide the clarity for such innovations, there is also the risk that this is a force that further pushes deals into a retail mode when what we need instead is more institutional discipline.

With these key points in mind, and assuming the right environment, I have no doubt that greater innovation in business models will fuel growth of a larger and more sustainable Canadian angel landscape. All of us can play our part. To dial up our game, will be an aggressive, yet I believe achievable challenge. And, we need even better measurement so we can regularly monitor, and report back to ecosystem participants, our progress.

The road forward isn’t just about traditional business. Because Angel investors’ motivations uniquely straddle the ever-blurring boundary between “passion capital” and Wall Street-style finance, Angel investing will increasingly be a great exemplar of Social Innovation. To me, the culture of collegiality and sharing resembles my experiences in nation-building around charitable foundations.

The last five years have witnessed an unprecedented expansion of Canadian Angel investing and we are poised for even more remarkable growth in the next five. In the words of the incomparable Alan Turing,

“We can only see a short distance ahead, but we can see plenty there that needs to be done”.

Now, let’s get to work …

 

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22 Nov 2012

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“How ya gonna keep ‘em away from harm?” – The Sequel

Almost four and a half years ago, I penned what some called the obituary of Blackberry (see “How You Gonna Keep ‘Em Down on the Farm”). My intentions in writing that missive were, in fact, quite the opposite.  Back in 2008, a year after the first iPhone, Blackberry didn’t appear to be heeding the threat of major market disruption, let alone making a response. I thought that writing such a post might incite some action. Sadly, while I got loads of reaction from all over the world, the one missing piece was that this was singularly not registering inside the “Faraday Cage” of RIM headquarters at Philip and Columbia in Waterloo.

For many years, to continuously hone my expertise as an investor and participant in the next generation mobile ecosystem at VERDEXUS, I have maintained a “production” device and a “testing” device which allows me to sample the greatest number of new applications and platforms in my daily business and personal life. At the time of the 2008 blog, I switched from Blackberry as production device and iPhone as testing device. At that time, I promoted iPhone to production and introduced an early Android device into the testing status.

The four and one-half years since then, representing four to five mobile device generations at the rapid pace in which these are deployed, has seen a lot of innovation and change in the mobile universe. The first production version of Android occurred one month after the aforementioned post. Today,  over nine releases later, Android 4.2, known as Jelly Bean, is a mature and polished mobile platform.

Mobile user experience has, as it were, come up from the Farm and we are now definitely in Paree. It’s hard to imagine how things could get much better, yet an even more exciting future in mobile will undoubtedly unfold. The pace of change has been almost mind boggling, with Android appearing to move almost twice as fast as iOS, the more proprietary Apple platform running iPhone and iPad.

As a young platform, Android has long shown promise. Being an open source operating system primarily developed by Google, but customized by various device manufacturers, not to mention the ever-meddling carriers, has been both a blessing and a curse. Initially, Android seemed “rougher around the edges” and more techie in feel than the uber-polished and legendary iPhone experience, which is produced end to end by Apple.

Conversely, the limitations of the Apple closed ecosystem approach are starting overtake the advantages. There are numerous examples. If you simply want to plug in your device via USB and load music and other files, Android shines by bypassing the need to go through iTunes. While iTunes has its advantages, many of us simply want more control over our cross-device media file deployments. Another even more telling example is the recent debacle in which Apple turfed the tried and true Google Maps application in favour of a badly implemented and incomplete version of their own. This is but a single example of where Apple’s legendary quest for control is wearing thin.

While giving more control to mobile application developers has its challenges, it is clear that no one company, no matter how sainted, can determine, let alone sully serve, the desires and needs of the entire mobile universe.

It is a combination of this clear advantage, coupled with the incredible progress inAndroid and its handset manufacturers, that has led me to promote my newest device to production and render the formerly top-billed iPhone second tier status of my test device.

For me that device is the Samsung Galaxy Note 2, which with its 5.5″ screen is sometimes dubbed a “phablet” (ie. a combination of  phone and tablet). Essentially a super-sized Galaxy S3, this phone is nimble, fast in computational processing and with speedy network connectivity. I first saw Europeans use it a few months ago, a cool and capable device, but perhaps an acquired taste for some

 

Perhaps it is simply my poor vision, but the large screen size is versatile and a joy to work with for all sorts of browsing, content and documents. The S Pen stylus, even for those who don’t want to do handwriting or line drawings, transforms the mobile browsing experience by removing the navigation problems on many sites with menus which are small on mobile screens. Samsung has even developed an SDK around the S Pen which could create a whole new application ecosystem, assuming this next generation stylus gains sufficient market traction.

Is my recent promotion of Android to top device spot the end of my quest for mobile perfection? Absolutely not! In fact, only one week ago, I personally promised my colleague Alec Saunders, the ubitquitous and transformational new VP of Developer Relations for Research In Motion, that I will definitely  give the new Blackberry BB10 devices a serious try. And, not just because “Devs, Blackberrry Is Going to Keep on Loving You”. I truly do like much of what I’m hearing about their capabilities.

Stay tuned – the mobile world is a fascinating and ever changing one.

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29 Oct 2012

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Tech Terroir

In the world of wine, the concept of terroir describes a centuries long process in which the climate, soil, grape varieties and dedicated vintners, symbiotically develop a unique “sense of place” for a wine region. A favourite of mine, the garrulous  and quintessential Californian vintner, Randall Grahm, while trying to establish the old World notion of terroir in California postulates that it is a long term proposition and can take centuries to develop.

As both a wine lover and serial tech entrepreneur, I firmly believe that building a tech cluster is similarly a very long term process. Ironically, the epicentre of tech clusters is in California. The Silicon Valley, which got its start in the 1950s remains the major cluster worldwide as “… no other place as yet has the Valley’s scale and resilience.”

Although I started my tech startup career in the US, it was in the Canada’s leading tech cluster of Waterloo where I built major companies and was one person who got that cluster started. Like Silicon Valley’s origins in Stanford University, the Waterloo cluster was initially fuelled by University of Waterloo. Over time, a combination of executive and programming talent, capital and professional services capabilites led to the current state of almost 1000 technology companies. By contrast to Silicon Valley, Waterloo is a must younger cluster, having started just over 25 years ago compared to the 60 years of Silicon Valley. It continues to mature around some key ingredients such as global strategic marketing capabilities and sufficient capital to fund on a globally competitive basis.  Experienced people may well be the most important ingredient in a cluster’s maturation.

Further, I feel that all who have been fortunate to build wealth and experience in business, owe an obligation to “pay it forward” to the next generation. My own contributions include significant startup mentoring, Board and strategic roles in organizations like Communitech and Innovation Guelph, and for the last 3 years a Board role and chairing Selection Committee for the Golden Triangle AngelNet (GTAN). In just 3 years, GTAN has grown to about 150 paid accredited investor members who bring a wealth of experience to the 25 funding transactions to date. And, it goes without saying, that many of those financings might not have happened without GTAN having emerged to fill a significant funding gap as VC’s became largely extinct. Acting as a superangel to syndicate angel network deals is a tremendously labour intensive exercise, but one that I and others believe will pay off in the long term economic prosperity of our region.

I firmly believe knowledge-based companies to be the key ingredient of our future economic prosperity, so such company-building competence is mission critical for our region, province, country and globally. As globalization occurs, we see more and more regions clambering to reap the riches of the innovative, tech startup world.

To that end, at Verdexus, we have always taken a transatlantic perspective, primarily to have a more global window on building companies that can achieve world leadership in their chosen businesses. Over the years, I’ve worked with startups across the United States and Europe in the dominant clusters such as Boston, Chicago, Silicon Valley, London, Munich, Berlin, Stockholm and more. To round out my experience, over the last few years, I’ve sampled some key emerging regions by volunteering as an expert judge in places as diverse as Brussels area, Warsaw and Torino. A week ago, I had the opportunity to judge startups associated with the European Space Agency in Toulouse France as well as in Istanbul, Turkey. The latter Istanbul venue, EU Venture Forum was jointly sponsored by EUREKA (the pan-European research and development funding and coordination organization) and Europe Unlimited from Brussels. Collectively, these more than a dozen regional events ultimately feed into a pan-European venture prize in Berlin in December.

It has been very instructive to visit various clusters. This grassroots view, from the perspective of startups, reveals much in common globally but also a few surprises. Based solely on interacting with local startups, on a global perspective, it is clear that culture and experience vary greatly across various Euroopean regions. For example, I was pleasantly surprised that Warsaw had some of the smartest and most sophisticated business startups I’d seen anywhere. And, remember, they are pitching in English which is not their native language. Conversely, the cluster around Torino appeared to have a long way to go before its startups would begin to measure up globally.

Pitching in Istanbul

Similarly, the startups I saw in Istanbul were impressive. Some companies, following a model also common to the emerging markets of Central and Eastern Europe, were essentially cloning an existing business model into the 80 million strong Turkish market. More significantly  others were clearly building globally strong technology startups. One pleasant surprise was that, of the eight companies that I coached the day before the forum, three had women CEOs. This was a surprise for Turkey,  but sadly women-led companies remain all to rare in Canada

The calibre of engineering and basic technology talent was very impressive. That said, it was also clear that the level of support ecosystem around these startups is very limited – at least compared to what we see here in North America. One direct challenge was that in Europe companies appear to receive generous R&D funding which seems to encourage more of an engineering mentality than a market-driven one. In essence, projects stay too long as “science projects” and the culture and skills to get projects to market seem to suffer as a result. Although this is a generalization, there are many exceptions.

In the area of capital, the meltdown in Venture Capital A Round investments is about 3-4 years behind what already occurred in Canada. One particularly European challenge is that more and more of the VC funds have moved their offices and focus from regional markets to London, meaning that companies in the regions often have less direct access to capital. Conversely, the growing role of Angel Networks and Superangels to fill the gap is still in its infancy in Europe. I suspect that will change over the next two or three years. Venture funders like to either be close (1 hour travel) to their portfolio companies or, at the very least, to have a local investor who can “provide adult supervision”. Increasingly, experienced serial entrepreneurs will be called on to fill that key local role as Angels and Superangels. It is clear that the notion of Tim Draper going to Estonia and finding Skype is definitely the exception rather than the rule.

And that takes me right back to the notion of “tech terroir”. As global innovation increases, and people around the world vie to build ever stronger tech startup ecosystems, it is the dedicates entrepreneurs in the sector who magically nurture these maturing ecosystems. As one of the entrepreneurs that I coached mentioned, she wants to:

“make innovation easier in Turkey and to make life easier for entrepreneurs”

So, in addition to building a great global business, she also takes time to help move the needle of her local ecosystem forward. It’s a very encouraging sign that continues to inspire me as I engage with the new globalized world of tech startups.

 

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2 Sep 2012

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[Book Review]: The Innovator’s Dilemma

The innovator’s dilemma by Clayton M. Christensen

Published by HarperBusiness
WorldCat • Read Online • LibraryThing • Google Books • BookFinder

 

This summer I took time to re-read an oft-overlooked volume that I believe to be the essential to anyone working in marketing and innovation. In this review, I’ll provide a few examples of why this book needs more attention, particularly here in Canada where we definitely need to up our game in marketing of innovation and technology.

Clayton Christensen, as Associate Professor of Business Administration at Harvard Business School, is a leading academic researcher on innovation. Yet, he still manages to provide practical and pragmatic strategies that real companies can use. And, most importantly, his theoretical groundwork is based on extensive, data intensive research over longer period of time with real companies and markets going through disruptive innovation.

The latter term is often thrown around lightly in technology company circles. A Disruptive technology (or innovation) typically has worse product performance in mainstream markets while having key features that interest fringe and merging markets. By contrast, sustaining technologies provide improved product performance (and often price) in mainstream markets.

The book covers real markets, including the various generations of disk drives starting with 14″ drives in the 1970’s to today’s 2.5″ (and smaller) drives. By studying hundreds of companies that emerged, thrived and failed over a 25 year period, some clear patterns emerge. Further examples across a broad range of markets, include he microprocessor market, the transition from cable diggers to hydraulic “backhoes”, accounting software and even the transition of industrial motor controllers from mechanical to electronic programmable models.

The key message of the book is that the playbook for normal (“sustaining”) technology innovation must be thrown away for disruptive technologies. Disruptive technologies break traditional rules in many, often counter-intuitive ways:

  • Financial – typically disruptive technologies are more expensive and have lower performance than existing products. This effect causes financial managers to kill many such innovations.
  • Marketing: the normal rule to “listen to your customers” must be thrown away – instead many educated guesses with repeated failures are the only path forward.
  • Organization: given the ability of normal strategies to reject disruptive innovations, such practices as heavyweight teams (which silo the team with more autonomy) and even spin-outs are the order of the day.

Entrepreneurial writings, not to mention my own experience, encourage us to celebrate failure. Beyond the power of learning by trial and error, The Innovator’s Dilemma, for the first time, provides an analytical framework as to why such failure is so critical in new markets.

One area where the book could provide more guidance is that of differentiating disruptive from sustaining technologies. Such discrimination is absolutely critical to ensure the right strategic approach to the new technology is adopted. Generally easy with the benefit of hindsight, such determination can be very tricky, and error prone, when first confronted with such new technologies.

This is a book that anyone working with products in fast moving markets needs to re-read regularly. It surprises me that, 15 years after publication, how few product marketers and senior executives appear to have benefited from the deep wisdom Christensen imparts.

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01-Honeywell-6050-processor-memory-etc-scaled-1

17 Aug 2012

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The Bun Reunion “AfterMath”

After welcoming people to the 050th Reunion of the ‘Bun and other 1970’s computing at University of Waterloo in mid-August 2012, I’ve gathered together a photo album, the brief presentation from the Gala and the many comments received outside of the earlier blog post.

Before the Gala, almost 100 photos were gathered which have grown to almost 250 contributed by various attendees. Enjoy browsing the memories.

78a Dave Conroy
Dave conroy
Honeywell 6050 c1972
02 Honeywell 6050 System Controller
Sytem controller
03 Honeywell 6050 Terminal Room
04 Honeywell 6050 card reader
Card Reader
05 Honeywell printer
Line Printer
05a Output Boxes
06 Honeywell 6050 tape drives
07 Honeywell 6050 Varian electrostatic plotter
08 Honeywell disk drives
Removable Disc Driver
09 DGC
10 Randall Howard
Randall Howard
11 Burloaf
Dave Buckingham
12a Preston at Erbsville Kartway
12b Charles F
Charles Forsyth @ Math/Unix
12c Eric Manning
Eric Manning
14 Dave Martindale with date
Dave Martindale
15 Hallway
15a Robert Biddle
Robert Biddle
16 CSC 1
17 CSC 2
18 Jan Gray
19 CSC 3
20 CSC 4
20a Russell Crook
21 Mike Lecuyer
21a Robt's Buttons
22 Johann 1
23 Johann G
24 Math Unix with toy
25 Russell and Robert
26 Math Unix 1
27 Mark Niemiec
27a Preston June 1977
28 Charles and Madeline
37 Mark N
Mark Niemiec
38 Jim Gardner
Jim Gardner
39 Ian Allen
40 Ron Dragushan June 1978
41 RJH 2
42 Alex White 1
43 Vic DiCiccio
Vic DiCiccio
44 Charles Forsyth
45 Dave Martindale
Dave Martindale
46 Peter and Sylvia with date
Peter & Sylvia Raynham
47 Wendy Nabert Trace Metals Lab May 1978
Wendy Nabert Williams
48 Rohan with date
Rohan Jayasekera
49 Hide and San-qui
Hide Tokuda & San-Qui Li
50 RJH 1
51 Bike Trip with dates
52 DGC and Rand with date
Dave + Randall @ Mark Williams
53 arwhite
Alex White
54 RJH at MKS
Randall @ MKS
54a hacks wedding pic
The Hacks @ Randall&Judy Wedding
54b Math bldg
Math Building
55 Morven
Morven Gentleman
56 Morven
Morven Gentleman
57 manning 2001
Eric Manning
58 Eric_150x212
Eric Manning
59 Ciaran
Ciaran O’Donnell
60 Michael Dillon
Michael Dillon
60a Peter and Flaurie Stevens Wedding Aug 2012
Peter & Flaurie Stevens
61 Rick Beach
Rick Beach
62 RickBeach
Rick Beach
63 Brad
Brad Templeton
64 Brad
Brad Templeton
65 brad-templeton
Brad Templeton
65a Ian Chaprin
Ian Chaprin
66a Ron&Amy_Chicago_12_08
Ron & Amy Hansen
67 Jon Livesey I think
Jon Livesey
68 Harley Hahn
69 Johann
Johan George
70 ksbooth2009
Kelly Booth
71 Mike Malcolm
Mike Malcolm
72 Ian Allen
Ian! Allen
72a lccarson 3
Linda Carson
72b Lccarson
Linda Carson
73 Dan Dodge
74 dan dodge
Dan Dodge
77 Dave Huron 2
Dave Huron
77a Anne Smith
R Anne Smith
78 Trevor
Trevor J Tho,mpson
00 Math Building
Math Building

I’ve also included the brief presentation from the Gala on Saturday 18 August, 2012 in case anyone wants to see that: