Growth Times

Karen Mazurkewich, Financial Post, in an interesting article on Monday entitled “The new uber-angels” comparing the VC-fund approaches of Ontario and Quebec, declares on the Ontario Venture Capital Fund that “What Ontario didn’t — or couldn’t — predict was the lack of potential co-investors for these funds.”

Karen, I would invite you and Ontario’s decision-makers to step up your due diligence and review Growth Times’s August 4th, 2009 blog post entitled “Who Will Match Ontario’s $250M Emerging Technologies Matching Fund?”……………..

Really, was it that hard to anticipate? Ontario could have predicted this, but there were political and financial forces at play and incompetence at the top. Let me guess that the persons in charge will actually get rewarded with more assignments and rewards for their mistakes, while the rest of us in the private sector get to work harder to actually make innovation happen.

[Addition to the post following subsequent inputs I received: the setup of the Ontario Venture Capital Fund remains such that Business Angels can barely play. The restrictions pretty much rule it out ($1MM min investment, full net worth disclosure, etc.). They should reduce the barriers for Angels to participate, given they are one of the few true sources of capital these days.]

As a rule, I am starting to realize that the public institutions in this province, and that includes a lot of the nonprofit hubs, are not quite designed to really encourage innovation. Except in rare cases, they are designed to grab taxpayer’s money and redistribute it to their supporters based on loyalty, not performance.

One thing Ontario and Canada really needs to get urgently, is that smart regulation has much more leverage than direct intervention. If Ontario really wants investments, it should work to repel section 116 to get American capital flowing here.

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Canadian entrepreneurs, Fund Due diligence, Financial Post, Financial Services, innovation, Investment, Karen Mazurkewich, Ontario, venture capital

In my experience helping entrepreneurs, the most important success driver of any business founder is the capacity:

1. to know their success drivers,
2. and to keep everything they do tied to those.

So being able to keep one’s eyes on the prize and not get lost in the weeds is the top quality any good entrepreneur should cultivate. In this age of information overload, however, requests are being thrown at us from every direction, and in the midst of that flood it can quickly become difficult to discern what matters from the rest.

Luckily, whatever problems technology throws at us, the human brain can still solve.

One method I recommend to solve the focus problem is to create two living documents to keep you on track:

• A Masterplan, that lists both the overall goals for your business and the immediate milestones you are pursuing. Think of each as, respectively, your cardinal direction (I find that concept more flexible than a “destination”, which sets things a bit too much in stone), and the first island your boat should be headed to (in that same direction!)
• A To-Do List, prioritized roughly

A few implementation tips:

• Keep it simple. Both documents don’t have to be fancy. In fact, they really shouldn’t be. Try to keep them as concise and as clear as possible. The longer and fancier – as in feature creep - both documents become, the least chances you’ll use them and the more chances you’ll get lost on the way
• Use standard software. For the masterplan, use a text editor like MS Word. For the to-do list, use a spreadsheet program like Excel, with 2 columns: Task, and “Done” (and if you’re good at excel, you can add an automatic timestamp for the Done entry). If you want my excel template for the to-do list, email me at gregboutin “AT” growthroute.com
• Keep one version only. This one is obvious, but you should have only one version of each document. If you spread the information over more than one version, you’ll have version control issues, have conflicting objectives across the versions and won’t be able to assess the priority of tasks against each other as easily, so avoid that. Yes, even if you work on more than one business. If you want to create similar documents for your personal life, however, I recommend keeping those separate.
• Update them every time. Very important: always, always keep both of the documents updated. Those should be working documents. Remember, they should be the unique source of truth for your business goals and your tasks. Captains use maps, compasses and task lists for the same reason. Yes, captains have task lists too. Or they should, in any case.
• Start small. Iterate, completing each document over time, especially after each shower when you finally got some strategic thinking time!
• Prioritize to-dos intelligently. I suggest a prioritization based on a loose combined factor of importance and urgency as perceived by the entrepreneur. Some like to separate both, thinking what’s urgent is not necessarily important. I disagree. First, it complicates your list. Second, the more important it is, the more urgent it should be, and vice-versa. But sure, some things are very important and can’t be done today, due to some dependency. Then either list the dependency, if that’s an action you should do soon, or downgrade the to-do, or move it to the Masterplan and make it part of your ”first island”: it might be important but it’s not actionable immediately, which is the key criteria for a working list. What’s top of list is what you should do next.
• Align both documents. Check whether the actions you’re pursuing – which should be listed in your to-do list – further the goals in your masterplan. If not, or not much, scrap them. Understanding why some actions you listed do not align with the goals you expressed in the Masterplan may also lead you to revise those goals.
• Share, but own. You are welcome and even invited to share your masterplan with your trusted partner(s), and to ask them for inputs. But remember, you are the Captain, and for as long as you are, you continue to own and be responsible for those documents.

What’s your system? Have recommendations? Please share.

Lead building a business, business creation, commercialization, Entrepreneur, entrepreneurship, focus, innovation, masterplan, Start Up, tech venture, Technology, to do list

At Growthroute, we believe that start-up leaders should encourage candid inputs on their company and products, and be open to discussing things that don’t work. They should welcome that feedback at least as well as they receive compliments on their successes.

Highlighting deficiencies in due time (and offering solutions) gives entrepreneurs an opportunity to address them before they really hurt, while surrounding oneself with yes-sayers is a well-known recipe for failure – and yet still as common today as it was millennia ago. So you don’t want to surround yourself with either yes- or nay-sayers, you want smart folks who tell it as it is. In the age of twitter,  getsatisfaction, yelp and blogs, being able to productively process their feedback - even when perceived as harsh - is more important today than ever before. Not doing it means not getting it.

It all starts within

In my experience, rowing in the right direction as a company requires a unique ability to invite, intelligently filter and incorporate constructive criticism. This ability must be built into your start-up culture and processes. It is absolutely critical not to prevent anyone -be it in your team or outside- from expressing substantiated concerns – and even less substantiated ones. And that starts with not punishing them when they do. Companies who don’t practice this miss critical market signals and drown in their own self-delusion.

It also starts at the top. The founders are usually the single biggest impediments to fostering a culture of constructive criticism. More than any other type, entrepreneurs tend to be driven by a strong love of freedom and independence, and we also like to be solely associated with the decisions that led our companies to success. While entrepreneurship pride helps us at many levels, unfortunately, it also makes it harder to open ourselves to criticism and learn from it quickly. 

Have you experienced start-ups that felt a lot like the Church of Scientology? Where you were “in” or “out”. Part of the tribe, or outcast. Where performance mattered less than “fit” with founders, something so fickle it leaves everyone with a differing thought wonder whether they will be around the next day. You know, organizations where real decisions are taken behind close doors, people who don’t contribute anything are still around because the founders like them, and turnover is high.

Too many start-up founders think that to row in the same direction, team members need to be somewhat constrained in their ability to think critically. They establish a culture encouraging groupthink and “following the leader” – while punishing anyone voicing a different opinion on fundamental leadership matters . There, “team-playing abilities” actually mean “blind submission to the top”. That kind of personality cult and indoctrination may feel good for the founder but it’s not doing any service to the company. Silencing people who sighted the icebergs might help momentarily calm the passengers (including investors, often a key reason for the opacity  – more than anyone, they should encourage a culture of transparency) but it doesn’t make danger disappear.

As entrepreneurs, please, let’s not require anyone to “believe”. Belief is not prescribed, it is earned. No one “believes” because you ask them to or pay them for, they believe because there is a good reason for them to. It’s our job to give them a reason. Don’t ask your people to “believe” in you and your ideas. Make them believe in your company by showing its capacity to fix mistakes, to correct trajectories and to produce great things as a result. Hire not followers, but people who showed they can accomplish great things and have a commitment not to you or even your vision, but to the success of the company.

At a company I previously was involved with, I highlighted – only after completing plenty of value-added projects as most there know well- that product development was well behind schedule (several release deadlines missed) and politely suggested that for a while, one of the founders might want to spend his time make the technology work as opposed to dealing with other matters. Most people in the team had the same concerns. Opening up my mouth was not in my direct interest, but in that of the company, and that’s why I did it. I also thought the founder would be clever enough to integrate that feedback productively instead of reacting to it instinctively.

Saying it publicly was interpreted as a lack of faith, and I was fired summarily. Keeping in line with the overall philosophy, at the time I was warned against talking publicly about my experience – the kind of things that makes you want to write a blog post about it. Much time has passed, but the company stagnates with a solution that, by all accounts, still doesn’t work and does not achieve traction. Many of my colleagues there, including my successor, have experienced the same fate and been ousted – scapegoats are obviously in demand. If that’s the culture you want to create, be ready for the results. Very sad, especially since it would be so easily fixable, and so much potential is lost by this approach.

Every company has problems. What differentiates the winners from the losers is the ability to recognize those issues and address them quickly and openly. Even a core deficiency can usually be fixed quite rapidly, once spotted. One just needs to be able to hear the signals.  Foster an atmosphere of truth. Chances are everyone will row in the same direction if they feel you are going in the right direction and that they contributed to choosing it. People naturally want to believe and to contribute.

Same goes for outside critics

Repeatedly, founders make the mistake of thinking that journalists, product reviewers, bloggers, and other messengers threaten a company’s momentum. They don’t. What does is how good the company’s solution is, and how the company reacts to their feedback.

In practice, I am sometimes contacted and asked to comment on new products, especially on my blog Semantics Incorporated. I also pick new solutions on which I want to offer my impressions. In two cases since the start of this year, entrepreneurs expressed discontent when as part of my review, I highlighted a few core deficiencies (quite often even next to an ocean of praises!). One even launched personal attacks on twitter as a result (see my blog if you want to know who did ;)

I am not alone. In the recent and less recent past, unfortunately, I have witnessed quite a few entrepreneurs being keen on receiving public accolades but quick to dismiss any constructive comments – and even go out of their way to attack the commenter instead of recognizing her help, thanking her, genuinely asking for clarifications and clinically considering the comments as valuable inputs – which would be the right thing to do, and would gain them lots of public goodwill. Other entrepreneurs, like Andraz Tori when I criticized the email version of his product Zemanta (whose blog version I praise extensively and continue to use avidly – see at the end of this post) have done just that and earned my highest respect.

Being told that your baby is ugly is tough as an entrepreneur. I know that first-hand. But the good news is that, unlike the biological kind (for now), you are not stuck with this baby as is, you can improve it. And while you may have heard that your product is ugly, the commenter may have just intended to say that it would have more potential with some minor changes.

I work quite hard at trying to provide unbiased and productive analysis, and as a result my comments often highlight weaknesses and shortcomings, next to strengths and praises. I always strive to provide corresponding solutions. That’s nothing personal. I don’t make exceptions to that rule, even with friends, and I don’t want anyone, even friends, to spare me the truth either.  Now, don’t take me wrong, there are some rules of engagement: not criticizing everything with little or no substance and without trying to offer solutions, not using overly aggressive language, and not doing it with a hidden agenda, for example. But when assessing whether someone has crossed those lines, remember that the common entrepreneur’s bias works towards magnifying those signals and minimizing the actual information that they channel. So, before you throw down the gauntlet, take a minute, think about what the person is trying to say, and reflect on what could be useful in the context of your company.

Let’s not be utopian, human nature is at work here. Ego gets in the way. As a rule, we tend to prefer those who support us. But ask yourself: who, really, supports us? The ones providing constant positive feedback, even if insincere? Or the ones highlighting a potential trap that may prevent you from reaching our objectives? Don’t be so quick at dismissing constructive criticism and qualifying your commenters as biased or unproductive whiners. More often than not, they are not. The main reason most of us comment on things is ultimately because we want them to work better for us. When human nature becomes highly counter-productive, override it.

Of course, I am not interested in any feedback you might have on this post ;) (well, if you really insist, you can place a comment, and I also just claimed a GetSatisfaction page for Growthroute at http://getsatisfaction.com/growthroute - it may take a few days before they approve it, apparently, so please be patient and do return to it!)

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Develop, Scale blogs, constructive criticism, customer feedback, Entrepreneur, feedback, getsatisfaction, innovation, journalist, leadership, market feedback, product development, product review, Start Up, twitter, yelp

I will soon have another opportunity to test my beta talk on the Divide between Technologists and Business folks, and why that is the number one root cause of tech venture failures (see my slides – torn apart by Slideshare, here!). Communitech has kindly invited me again to speak, this time at their entrepreneur group in Guelph, where I currently reside. It will take place from 6-8pm at SYNNEX Canada Ltd, 107 Woodlawn Rd W.

As a preamble to this talk, I just came across a very interesting blog post, recommended by Guelph’s very own Brydon of start-up Brainpark, arguing for the need to shift from a product development mindset to a customer development approach. I added some comments there too.

I look forward to seeing many Guelphites and having a good chat about this topic. Bring your war stories!

Canadian entrepreneurs canada, divide, entrepreneurship, Guelph, innovation, market development, marketers, product management, start-ups, tech divide, techies, venture

Canadian Business totally misses the mark in its poorly researched editorial on Ontario’s Green Energy Act and the Emerging Technologies Fund in the June 15 issue.

I support innovative ventures in the cleantech space on a daily basis through my consulting practice at Growthroute Ventures, and I recently co-authored an article entitled “Could Ontario be the Next Germany?” with regard to both the Act and the Fund, published in Renewable Energy World Magazine, the most widely-read magazine on clean energy.

As we all know, Ontario has been pouring money by the billion into the car manufacturing industry and other dinosaurs. It is about time some public support be devoted to innovation in cleantech. The Green Energy Act is modeled after the German incentives, which are recognized in the industry as widely successful. California, which Canadian Business refers to as a great model, has in fact been seriously discussing moving towards the German system. But more importantly, Canadian Business’s assertion that California’s model is significantly different in its support of clean energy — claiming it does so less selectively– is downright incorrect. Among many other examples, the western State pays a premium for 5 years on all solar photovoltaic projects, and offers select incentives to wind and biomass projects. This “winner-picking” approach Canadian Business criticizes is a constant in the energy industry, as a quick look into the huge tax incentives our government is offering for oil sand exploration, or all the public money that has gone into nuclear power R&D, would have told the editor. The support now offered to cleantech is a minuscule fraction of those amounts. If Canadian Business advocates for a leveled field, it should make sure it is looking at the entire field first.

As for the Emerging Technologies Fund, it is again just a drop going to innovation against the ocean of dollars poured into the US car manufacturing black hole. Canadian Business forgets to note that Quebec recently announced the launch of a fund offering over 3 times the amount of Ontario’s fund, and that la Belle Province is increasingly being seen as much more supportive to innovation than Ontario. Dismissing the Ontario’s ETF initiative on the basis that there is little venture capital money to match, and that “most VC-backed investments fail”, demonstrates a serious misunderstanding of how venture capital works. VCs bet that out of 10 investments, nine are going to fail or just get by, and one or two are going to make up in a big way for all the others. The metric that matters here is the investment ROI on the entire fund, not on individual investments. The VC industry raises its money from larger funds, who allocate their investments based on ROI and risk. Until now they had found it quite lucrative to place bets on VC funds.

But Canadian Business argues that VC investments are inherently too risky. Taking the magazine’s logic to its conclusion, it is not advocating against the Ontario fund as such, but against the VC model as a whole, in essence saying that VC investments are bad investments, and that no money should be put into that model. The truth is, the VC model may be under fire, but again, one needs just to take a look at the broader picture to see that is but a flawed assumption: how about the recent financial returns from the securities industry, the car manufacturing industry, or real estate? If we are to invest anywhere, I say putting more money in the hands of VCs (and angels too, by the way) is as good a bet as any. Actually, it is a much better bet.

The VC industry in the US is widely seen as a critical catalyst for the rise of the Silicon Valley. Companies like Google, eBay, Facebook, Cisco Systems and a number of other innovation heavyweights act as vivid proof that the model works. In my daily job, I constantly witness how the quasi-permanent lack of funding for early-stage innovation in Canada stifles growth and highly-qualified employment. I am not arguing against Canadian Business on the importance of letting markets do their magic, and getting out of the way, but at a time when the government is distorting those by throwing money at any moribund dinosaur that can still shout, I say any effort to direct funds to the innovative sector through the existing channels should be encouraged and supported. Certainly, reducing taxes and removing regulatory barriers to all forms of investment is needed (making it easier for US VCs to invest here is a definite need!), but it does not prevent other initiatives that leverage the power of targeted incentive towards sectors of strategic importance for our collective future.

Shame on you, Canadian Business, for popularizing half-baked arguments on the Green Energy and Green Economy Act and Ontario’s Emerging Technologies Fund. You couldn’t serve the purpose of traditional corporate money-grabbers any better, at a time when the job-creating innovative economy is in dire need of your support.

PS. And while I’m on Canadian Business, what is it with its choice for the “25 most influential people in business“? All white male except for one woman! The magazine might want to drink a bit of its own medicine, see their last-page article “Women wanted“, as I doubt there aren’t more females or visible minorities in the top 25…

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Canadian entrepreneurs canada, cleantech, emerging technologies fund, Fundraising links, green energy act, innovation, innovation policy, Ontario, venture capital, ventures

My friend Fred Sweeney of VG Partners pointed me to this interesting call for help by the biotech industry in Canada, whose start-ups are finding it difficult to raise money to survive, let alone thrive. In these times of hardships, the ventures with the least obvious path to commercialization and revenue are the ones who suffer first and most. Given the lengthy development cycles and uncertain payout, biotech ventures evidently stand at the frontline of the crisis.

What all that shows is that a start-up should at all times be able to articulate the revenue model it is proposing to pursue. It should tie all its current efforts to this model, or “reverse-engineer revenue” as per the expression I coined at GrowthRoute. Doing just that provide three benefits: one, you stand in first row against competing start-ups when comes the time for VCs to hand out cash; two, keeping your eyes on the prize helps you identify where to focus your efforts today, and better allocate your current resources; three, spending some time thinking about how you will make money could point to nearer-term sources of revenue you may not have thought of.

Without a destination and a map to get there, you can have a tight ship and yet run it in circles. Better to never count on the government to get you back on track.

Develop, Fund biotech, biotech industry, business model, canada, commercialization, customers, eyes on the prize, Fred Sweeney, government programs, innovation, innovation entrepreneurship, Revenue model, Technology, technology commercialization, venture capital, vg partners

Great entry by Jon Worren on Why the chasm still exists, on the blog of Toronto’s innovation hub MaRS. Nicely complements the last post on this blog.

Develop chasm, hub, innovation, mars discovery district, toronto