A Golden Age for Indie Business

“the mainstream startup narrative is owned by VC backed startups who’s success and ambition are often measured by the amount of capital they’ve raise. That’s a fine narrative, but not the only one.” – Bryce Roberts on Indie.vc

I have been focused on furthering the narrative of VC backed startups. From the start of DemoCamp almost 10 years ago, the goal was to find venture fundable companies. It also allowed the use of venture funding has become the default proxy for determining the success of companies and the health of the ecosystem. The more venture capital deployed the healthier the ecosystem with more jobs and greater impact. There are a strong number of Canadian venture funded companies:

Is venture funding the only narrative that matters? There are other companies in Canada that are participants and help define the ecosystem?

“there’s a cultural shift towards taking little to no VC investment, staying independent longer (or indefinitely) without sacrificing the ambition for building large, profitable and impactful businesses”
Bryce Roberts

There are crazy entrepreneurs across Canada that are building big, impactful companies.

There are companies that are building outside of the narrative of venture capital and venture funding. They are defining their own rules leveraging distribution and monetization paths to companies outside of the venture narrative. These are important companies. I really like Bryce’s description of these businesses as “indie” and not “lifestyle”. Just like independent music, I think it better represents the ethos and motivations of these business owners.

“Can we provide the resources and networks founders would traditionally get taking VC money, without all the expectations and baggage that come with it? Would an early focus on cashflow and sustainability v. fundable milestones stunt growth or lay the foundation for a more scalable long-term culture? Is it possible to maintain and independent attitude and ethos with an outside investor on your cap table? And could these types of companies compete, and win, against their traditionally VC funded peers?”
Bryce Roberts

It’s exciting to see a venture fund recognize the importance of these independent business. To look at the tools, milestones, connections and content around cashflow, sustainability, recruiting and culture.  Before the funding announcement in July 2014 it was easy to imagine FreshBooks remaining an independent. Mike McDerment has been a fixture in building and supporting independent companies and events like Mesh Conference for the past 10 years. The assumption is that FreshBooks was able to build strong culture and was able to raise financing at their own terms. This is a really interesting time, and it is amazing to see a group of independent technology businesses grow in to large, impactful companies.

As Bryce says, “we’re entering a golden age for Indie businesses”, and I can’t wait to see the companies that it brings.

Featured photo by Andrew Stephenson 

The Calendaring Land Grab

There is a lot of chatter about calendar being the next native iOS application (much like Mailbox and Taskbox for Mail) that is set to be out replaced by a startup.

Atlas Scheduling Re-Invented - Today Feed  - Events & TasksJust looking at my phone you’ll find:

I’m hopeful for Atlas because it has the potential to replace and improve on Tungle.me, ScheduleOnce, Doodle, Skedge and others (see Adam Popescu’s article on Mashable). I’m hopeful that it is as useful a calendar as Sunrise, but the advanced scheduling features are something I still crave post Zaplet (it’s funny, I remember building those screenshots back in late 1999).  The group scheduling application is feature, not a fully functional calendar.

I seem to struggle with  the business model for calendaring applications. I understand why companies like Apple, Facebook, Google and Microsoft need to have applications that are engaging and functional for users on their respective platforms. But it feels like a user acquisition land grab. But one that is focused on engagement and not monetization. I guess a queue of >500,000 users can net you an acquisition around $100MM users.

Marketing Technology Landscape

Marketing Technology Landscape by Scott Brinker @chiefmartec http://chiefmartec.com/

Scott Brinker provides a must read summary of the 5 meta-trends that underly most modern marketing.

  1. The great digital migration of marketing (and business).
  2. The convergence of paid, earned, and owned media.
  3. Customer experience as the core of marketing.
  4. Rise of the creative/marketing technologist.
  5. Agile marketing management.

The post lays forth a strong foundation for marketers and investors looking at understanding the competitive landscape of different offerings. Interestingly as a practitioner it also provides a great summary of the tools available to enable potential tactics. There are a few logos and companies I think are missing in the landscape, for example, Calls section is missing Twilio and Voxeo/Tropo. And the diagram is missing the entire SMS marketing enablement which are both part of the breakdown of VoIP and SMS through programmatic APIs. I am also trying to figure out where in the list to put InfluitiveCustora, TotangoSpinnakr, Bloom Reach and a few others. It is an amazing list. There are a few new companies that I need to check out and learn more about.

Thanks Scott!

Marketing Automation Startups

Marketing technology, if you believe the infographics and Gartner, that marketing will spend more on technology by 2017. There are an incredible proliferation of new tools available to marketers and product developers. Here is a short list of the tools that I have been evaluating for automating different parts of the marketing process.

  • Totango – Trial conversions and user engagement.
  • Portrait Sofware – Predictive analytics on best next action and behavioural customer segmentation.
  • Custora – Behavioural segmentation and analytics for retail customers.
  • Intercom.io – It’s like Rapportive for new customer signups.
  • The Sunny Trail – It’s like Rappportive for new customer signups.
  • Spinnakr – Custom target content based on behavioural analytics.
  • RJ Metrics – Hosted analytics.
  • Retenion Science
  • HubSpot – CRM/Marketing Automation
  • Spark by Marketo – Marketing Automation for SMB
  • Pardot – Marketing Automation

A combination of Pipedrive CRM System and HubSpot for the CRM (I just love the stage view for Pipedrive, it’s like Trello or Asana for sales) and then adding Intercom or The Sunny Trail and Spinnakr for specific situations.

What marketing automation and customer engagement tools are you track?

B2B Marketing Guide by KISSMetrics

The team at KISSmetrics has provided a B2B Marketing Guide infographic. Some of the facts I found interesting:

  • 85% of B2B marketers invested in event marketing in 2010
    • 28% of this group plan to increase their event marketing investments in 2011
  • 69% of B2B marketers intend to try new digital marketing approaches in 2011
Lots of great stuff. Make sure you also check out A Startup Marketing Framework by April Dunford and 10 Marketing Lessons for Early-Stage Tech Startups by Mark Suster. Great contexts to better understand B2B Marketing.

B2B Marketing Guide by KISSMetrics

Meet with me in Vancouver

Grow Conf, Aug 19-21, 2010 Vancouver, BC

I’m heading to Vancouver for the Grow Conference. If you’re a startup, an investor or a service provider in Canada you should be at this event. Read my Top 5 Reasons to go to Grow. (Random note: I’m surprised that Peer1 or Q9 or MyHosting or iWeb or RackForce didn’t see this as a potential sponsorship and marketing event. Further evidence that tech startups are the Rodney Dangerfield‘s of Canadian businesses).

Bootup LabsI’ll be in Vancouver Monday, August 16 through August 20. On August 19 & 20, I’ll be at Grow Conference (I am currently open for breakfast on the Thursday August 19 if you’re interested). I am staying downtown so if you’re up for breakfast, lunch or dinner and you want to talk startups, product/market fit, marketing, BizSpark, technology, or better yet if you can show me where to get a bourbon manhattan. I’ll be working out of Bootup Labs, 163 West Hastings Street – Suite 200, Vancouver, BC and WavefrontAC, 1055 West Hastings Street, Vancouver BC.

I’m looking to talk to entrepreneurs, intrapreneurs, investors, policy makers, technologists and designers. I’d love to learn about new companies in Vancouver that are:

  • Building on the Microsoft stack including Azure, SQL Server, Silverlight, Windows Phone 7, IE9, and other emerging Microsoft technologies. I’m happy to chat about BizSpark and other programs available for startups.
  • Not building on the Microsoft stack, I’d still love to talk to you. I’d love to learn about your choices whether they be PHP, Rails, Android, iPhone, AppEngine, BigTable, Hadoop, Solr, Cassandra, RIAK, VoltDB, open web, etc.
  • Startup fund-raising and Vancouver. I’d love to get an entrepreneurs take on the funding scene. What’s it like to raise capital form W Media Ventures, GrowthWorks Vancouver, VanEdge. Who are the angels? What works? What’s broken?
  • Pitching StartupNorth. We get a lot of submissions of standard press releases. I’ll tell you what works in getting our attention and maybe this can help you get the attention of other bloggers and more credible press.
  • How to demo like a demon! I’d like to see entrepreneurs demo their wares. Come show me your software, the coolest thing about your solution, something that changed your life. Real software always makes me happy.
  • Emerging business models and go-to-market strategy – I’d love to talk about new pricing models, new consumer advertising models, economic and growth models that will allow startups to monetize and survive.
  • Health 2.0 – I’d love to see startups in the patient care space, new health tracking, personal health informatics, aging population support. I think this is a fantastic market segment, though highly regulated, but it’s a area that I have a personal interest in.
  • Social CRM – Microsoft just release CRM5 (ok CRM 2011). Salesforce continues to evolve their platform. There are new competitors like Jive and Lithium. I keep looking at HighRise and BatchBook for my personal contacts. Love to chat about the space, the players, what customers are looking for, etc.

These are all just suggested topics. I’m in town, I actually don’t have an agenda for 3 days.

Find time on my calendar and book a meeting with me at tungle.me/davidcrow


Six Slides

Can you pitch your company in six slides? I can’t believe that Fred and Brad raised the first USV fund  with only six (6) slides.

“We learned to simplify our story and we learned how to create six killer slides. And killer slides are not slides with a dozen bullets each. They are six powerful points that combine to tell the meat of the story.

So when you sit down and build your pitch deck, think of six slides that will inspire and leave something for the imagination. The best part of six slides is that you will get through them in time to have a real substantive conversation face to face about your business. Imagine that.” – Fred Wilson

Constraints are a great thing. They help entrepreneurs filter and focus their presentations and messages. Getting your pitch down to six slides is going to be a challenge, and challenges are fun. I’m a big fan of the sequence of slides recommended by  David Rose’s, chairman of the New York Angels,  but even this sequence is 15 slides.

  1. Company Title Page
    Start with the name and logo of the company, the name and title of your presenter, a one-line description or tagline about the company, and the dollar amount of the round you are raising.
  2. Business Overview
    Boil down your elevator pitch to one sentence. Tell us what you sell or do in very concrete language. This sets the context for the rest of your presentation.
  3. Management Team
    Show us your talent and experience, with one line of background (two lines max!) on each member.
  4. Market
    What’s the environment in which you operate, how big are the segments, what are the pain points?
  5. Product
    How do you solve a customer’s pain? What exactly do you do? This can be illustrated with a clear product or screen shot, or a simple process diagram, but if we don’t know what you do, we won’t know why we should fund you. (But don’t spend too much time on this, since you’re pitching the company here, not the product.)
  6. Business Model
    Who pays whom, how much, for what and from where. What does this mean for annualized revenue streams?
  7. Customers
    Who are they, how many are there, how do you distribute to them, and how are they attracted and retained?
  8. Strategic Relationships
    If you have any, make sure we know about them.
  9. Competition
    Who and how threatening are they? What are the differentiation factors? Include both direct and indirect competitors. Remember that everyone has competition, even if it is just “the old way” of doing something.
  10. Barriers to Entry
    How will other potential competitors be kept at bay?
  11. Financial Overview
    Show us your top-line revenues and expenses, and EBITDA two years back and four years out.
  12. Use of Proceeds
    Where will our money take you?
  13. Capital & Valuation
    How much have you raised previously, who are your current investors, what are you looking for in this round, and how do you come to your suggested valuation?
  14. Review
    Provide a brief summary of what you said, in this same order, narrowed to the five or six most important points.
  15. Contact Info/Next Steps
    Lead us into the next step, such as a follow-up meeting for due diligence…and include your contact info!

I can immediately reduce this to 7 slides, it’s not 6 but it’s close. The goal here is not to provide all of the information in these slides but to boil down the critical information to the salient points. I have been using Business Model Generation and the work of Alex Osterwalder to help build a better understanding of business model, value proposition, key partners and revenue streams. This combined with the slide sequence is a really effective way to model your business, customers, partners, costs and revenues.

Engines for Massively Scalable Growth

Reposted from my StartupNorth post.

I was excited to attend MeshU (maybe a little too excited). I love it when events over deliver. MeshU was a fantastic conference. I saw two of the best in-the-trenches startup sessions with Sean Ellis and Dan Martell. They both presented ideas that are changing how I think about product design and go-to-market activities. April Dunford then added an updated framework for product marketing which was a great evolution of traditional product marketing. Sean Ellis added his model for Key Elements of Massively Scaleable Startups that presented a new idea of the marketing basics that need to be present for high potential startups.

Elements fo Massively Scalable Startups - A Marketing Framework based on work by April Dunford & Sean Ellis

The breaking down of 4 elements coupled with traditional strategy and tactics make for a very effective marketing evaluation of most startups.

Gratification Engine

The Gratification Engine was a new piece of the marketing activities. What differentiates must have products and services? How do you reward your customers? How does your application turn “cold prospects into highly gratified customers”? This is a change in my thinking about the role of making your users feel like rockstars.

“you can’t force customers to want, need or like what you have created. Building an effective gratification engine is an iterative process driven by a lot of prospective customer feedback. Once you get the basics right, your process of gratifying users can be optimized with tools like Performable for landing pages and KISSmetrics for full funnel tracking/improvement (I’m an advisor to both).” – Sean Ellis

It builds upon seminal work of Kathy Sierra about engaging users. The Gratification Engine pushes this out beyond the existing experience but treats the conversion and effectiveness of new users.

Making a Bestseller by Kathy Sierra How fast and how far can you take your users? by Kathy Sierra
How Fast and How Far Can you Take Your Users? by Kathy Sierra
How Fast and How Far Can you Take Your Users? by Kathy Sierra

Where this hit home for me was starting to think about the game mechanics used for upsell and cross sell offers for new customers. Dan Martell, Dave McClure, Marc Gingras and I had breakfast at StartupCampMontreal and discussed how to build effective offers for existing customers to invite their friends to an application. There was a great discussion about using game mechanics around the offer. You have existing users that if they invite new users, i.e., their friends, where if the friends sign up that both the friend and the user get new unique functionality. It changed my thinking about many times I’ve received an offer to sign up from a friend for a service, and how the effectiveness of this would change with some basic game mechanics:

“Jevon has invited you to join X. Jevon is 1 sign up away from enabling the super awesome next level feature. Sign up now and enable the feature for both you and Jevon”

This all has to be done in an open, honest and unintrusive manner. But it’s about how do you enhance the lives and experiences of customers and potential customers. There are great opportunities to use game design and mechanics to help improve the experience and conversion rates in web and mobile applications.

View more presentations from amyjokim.

View more presentations from amyjokim.

Outsourced play

Hockey Fan
Photo by shuck

I learned about the idea of outsourcing play from Alex Manu’s book The Imagination Challenge. I’m guilty of outsourcing play from Formula1 to UFC (don’t ask, but it’s cathartic and I feel a little schadenfreude). Evidence of the continued outsourcing of play is the continued meteoric rise of fantasy sports.

“It is estimated that 26 million Americans play some form of fantasy sports league, a fact that has created an industry worth close to $1 billion a year according to the U.S.-based Fantasy Sports Trade Association.

“The average amount that each of these players spends on their hobby might be $500 per year or so, moreover, these figures appear to be growing — even in a down economy — at near-double-digit annual rates.”

If those figures continue at that pace, fantasy will soon overtake reality. Professor Quinn points out that, by comparison, the National Hockey League’s (NHL) total attendance is 25 million per year, bringing in close to $3 billion in the process.” – James Montague, CNN

InGamer SportsThere are a number of new startups attacking this growing market space. There are some changing dynamics with the availability of real-time data that offer a change in the game play that has been the weekly engagement model of traditional fantasy sports pools. There is a Toronto-based startup, InGamer Sports, that is building a new game using the realtime statistics for baseball and hockey to engage players. They launched during Game 1 of the 2010 Stanley Cup Finals with The Hockey News. Nic Sulsky provided metrics about their launch. 

InGamer Numbers from Game 1 (Nic says “small but powerful”)

  • 0$ spent marketing only a link on TheHockeyNews.com
  • 113 Unique Visitors
  • 40:19 Average time on site
  • 52 Games created (46% conversion)
  • 37 Registered Games
  • 18 Unique Taunters
  • 228 Taunts
  • 28 people had their browsers open to the end of the game

I don’t have any ability to judge the metrics, i.e., I’m not an expert at the existing traffic or conversation rates for fantasy sports and The Hockey News. It’s a fun game, you pick 5 players who get points for their performance. You have the option to select new players that change at each period. You can then in real-time taunt and challenge your compatriots. The interaction is currently 100% web-based but it’s not a huge stretch to see the UI move beyond the browser to mobile in particular. Great fun, too bad it’s not Toronto (like the Leafs are making it to the Cup, pipedream) and Calgary I can hear John Bristowe taunting Mark Relph in real-time.

It’s great to see InGamer build an application that extends the impact that leagues and players have with their fans. It’s a great opportunity to build deeper experiences and help get fans to that flow state of engagement while watching their favourite teams. It’s not full baked and they are changing based on customer data.

Interested?

You can play tonight during Game 3, and the best part the Sutter family will be playing InGamer. Check out http://hockey.ingamersports.com/ or http://playerscup.thehockeynews.com to play.

From out of the ashes

Reposted from my StartupNorth post:

Photo by Timm Suess http://www.flickr.com/photos/lord_yo/3493740271/in/set-72157617600789670/
Photo by Timm Suess

Is there any questions that the Canadian venture captial industry is in turmoil? There is a change that is happening, it might just not be happeing as fast as it could. Mark McQueen talks about the the creative destruction of the VC industry in Canada.

“There’s no robust “new class” of VC firms coming in behind the current oligarchy, with a similar amount of capital to deploy as those they are planning to replace. We are witnessing the destruction piece of the equation, for sure, but not the rebirth that is the essence of “creative destruction” if it is to succeed.” – Mark McQueen, Wellington Fund

While there are a few new players entering the market (I’m looking at you ExtremeVP and Mantella VP), we’re seeing a lot of roadkill. There are firms that are not able to raise their next fund, partners that are on life support, startups that are left to wonder what happen to their partners in raising additional capital. However, many that remain are digging in and fighting for their way of life. They are lobbying for support to “manufacture an environment that is hospitable to their investment style”. Adam Adamou at Caseridge Capital Corporation argues that the existing venture players, the Canadian VC oligarchy, has successfully lobbied for restrictions that have kept out new players including the public/private venture capital that was used to fund RIM.

“The traditional venture capitalists see themelves as the founders of a “Silicon Valley North” and they follow the US trends, which unfortunately do not apply to our Canadian market. They seem to see themselves as avant garde investors in tomorrow’s technology companies, however, they behave more like bankerss[sic] – preferring security and downside protection over opportunity”

Yikes, that’s a damning review of the Canadian venture industry. However, I’m not sure that the suggested alternatives including Capital Pool Companies and the TSX-V are really better choices for Canadian entrepreneurs (or investors). (I’m not an expert on CPCs or TSX-V but when my friends and trusted advisors like Mark McLeod provide commentary, I listen). What I took away from The Adamou Rant is that many of the funds have a vested interest in the maintaining something akin to the current system. Governments should look critically at the numbers being presented and who is presenting them.

The State of a Nation

Is the sky falling? What is the state of venture capital in Canada? Is it really this bad? And why does it matter to early-stage entrepreneurs? Should we all just move to Silicon Valley, New York City, Boston or somewhere else?

The Canadian VC environment has been challenging for a lot of entrepreneurs. As entrepreneurs, you need to understand the environment that you will start, fund, and grow your company. Canada has a strong track record of access to capital, a stable economic policy and should be a great spot for entrepreneurs. It’s also unique. Canadian companies tend to be at a later stage of corporate development and raise less money than their US counterparts. I’ve written about the impact of the state of the funding environment has on startups. And what entrepreneurs can contintue to expect to see, includes:

  • The number of investors will continue to decrease
  • Valuations will continue to decrease
  • Customer uptake will be slower
  • Need to become cash flow positive
  • Acquiring entities will favour profitable companies

Mark McQueen provides the best summary of state of the Canadian Venture Capital landscape I’ve seen in a while:

  • VC investments in Canadian firms hit a 14 year low in 2009
  • US venture market saw US$18 billion invested in 2009, Canada saw only $1 billion (5.5%) our economy is approximately 12.5% the size of the US economy
  • Up to half of current Canadian VC funds will not be able to raise their next fund
  • Ontario government has sunset the $1 billion Retail Venture Capital Industry
  • “Section 116″ was fixed in the 2010 Federal Budget, however, this is not a silver bullet
  • 117 disclosed cross board investments since January 2008 (this includes Canadian investments in US companies)
  • Canadian Fund of Funds have lots of capital to invest in foreign led funds: EDC ($1.2 billion); Teralys ($700 million); OVCF ($205 million)

A New Hope

We need to hope that from out of the ashes will emerge a better funding environment for Canadian entrepreneurs. Whether this is led by new funds, angel investors, US funds, or the existing players learning from their mistakes, it doesn’t matter.

We’re starting to see a strong set of the big players making acquisitions across Canada:

Our startups need real capital to continue to compete on the world stage. But They can’t survive on SR&ED credits alone. We need to hope that this creative destruction happens quickly, so that something can rise from the ashes and we can witness the rebirth of the Canadian tech startup.