Ontario

The local product design economy

Update: I changed the verb acquiring to joining. A lot of the chatter has been about how this is not an acquisition. And I agree. It is not. As the post states at the top, TeehanLax is shutting down. It is reminiscent of the Smart Design closing (see Dan Safer’s post) and some of the reasoning behind the Adaptive Path acquisition by Capital One. It sucks. But I’m not planning on leaving Toronto, and I’m celebrating my friends like a wake and trying to understand the implications.

TeehanLax is shutting down. This is getting a lot of coverage:

Why so much coverage? Well it is because TeehanLax was one of the best design firms around, if not the best in Canada. They designed 2 of my favourite apps: Prismatic and Medium. You could see the tension between the services side of their business and the desire/pull of being a product company.

I first met Jon and Geoff back in 2004. It was after the release of their PVR report comparing the user experiences of the Bell and Rogers PVRs to TiVO. They had an interesting approach, doing interesting work, just trying to build a different kind of company. That was evident when Jon agreed to host BarCamp Toronto in November 2005. It was a different approach than Sapient, ModemMedia, Scient, Viant, Razorfish or other agencies in Toronto were taking. It wasn’t a client development strategy, it wasn’t a recruiting strategy, it was an offer to participate in the conversation.

Photo by John Lam

The shutting down of a company that I described last week as a “building big, impactful [indie] company” is interesting. Jon, Geoff, David (Jeremy, Peter, Tamera and the entire team over the years) you built a company that I respected. And I am very happy that you’ve made the best decision for you and your families. It’s your company, you get to make the decisions, so don’t listen to the naysayers.

Photo by Tom Purves

Here are a couple of observations about one of my favourite design firms shutting down in Toronto.

Short term: design talent availability
There is a bunch of design and development talent that is available for other Toronto companies to hire. These people have been trained in one of the best design cultures in Canada. They produced an environment that produced some of the best products in the world. If anyone from the TeehanLax team needs connections to interesting companies please drop me a note and I will do my best to connect you.
Short term: More people evaluating Toronto companies for acquisition
This is the third Toronto design and development company acquired in the past 24 months. JetCooper acquired by Shopify. Xtreme Labs acquired by Pivotal. Now TeehanLax shutting down and joining Facebook. This is important. Toronto is a great place to acquire talent. Hopefully there is an equal respect for the design and development work being done here. (This excludes the amazing talent like Mike Beltzner, Mike Shaver, Scott Boms, Sam Ladner and others).
Longer term: The loss of a gravity centre for design talent
There are other places that are gravity centres. Pivotal Labs is a great place for engineers and designers to learn the power and efficiency of paired environment. Farhan and team are doing wonders to explore and implement a very powerful cultural tool. TeehanLax built a culture that produced great digital products and experiences.

“We were happiest when the products we were creating reached our standards. We were happiest when we spent time thinking about how to create the conditions and circumstances for this to happen. We were happiest when we were working with our team members.”

It will be interesting to see if the T+L diaspora can have an impact on the ecosystem like the Trilogy diaspora in Austin or IDEO diaspora in Palo Alto.
Services firms are not destined to be huge companies
The back of the napkin math I use to calculate a services business is approximately $200k in revenue per employee. Sold at under 5x EBITDA (given a 20-30% margin and averaged revenue of past 2 years plus forecast using error correction of previous forecast, lets say 1x revenue). There is great business, it’s just a hard business to scale nonlinearly. And when “someone slides a number across the table big enough that you just can’t say no” a product company that is scaling like crazy is likely to be able to slide a bigger number than a services company. It feels like we’re seeing that ceiling being hit by XtremeLabs (sold to Pivotal), TeehanLax (joining Facebook), JetCooper (sold to Shopify), maybe BNotions (AK has departed for Gallop Labs).
Opportunity in the product/design/user experience space
TeehanLax was a design firm. It was a design firm that respected technology. There are other firms in Toronto that are a mix of product, design and technology including Normative, SayYeah, BoltMade, Nascent, TailoredUX among others (including those with a more technology focus Venn, Pivotal Labs, OK Grow!, Isle of Code, The Working Group, BNOTIONS, EndLoop Studios, Unspace, Rangle.io, People & Code, Digiflare, Functional Imperative, Metaware Labs). TeehanLax showed that it was possible to build a world-class design shop in Toronto. I’m hoping someone realizes this is the combination of the caliber of the output, the process to build the culture and the requirement of building the business/revenue streams.

Interesting times in Toronto. Congratulations to Jon, Geoff and David. Thank you for being amazing. And the best of luck on your journey.

Not your typical tech startup incubator

by davidcrow

This is just too awesome. It looks like the Hyperdrive team staring as a Blue Man like group doing an interpretive dance number. And because when you’re trying to stand out as a startup incubator/accelerator/cyclotron you need to think different in order to change the world.

I guess I know why I’m ordering a red body suit.

Hacking Health

by davidcrow

A Hacking Health Follow @hackinghealthca event is happening October 19-21, 2012 in Toronto. The event focuses on bringing innovation to health care. It brings together clinicians with developers, designers, and entrepreneurs to look for real world solutions based on real clinical experience. It should be a very interesting event. The Montreal event has a 138 developers, 28 designers, 66 healthcare experts and 32 mentors. This signals a huge opportunity in the healthcare clinicians and practitioners for new tools and change. I wonder if the health care funding mechanisms/decision making will limit both the development and the adoption of any potential tools. It would be an interesting to discussion to have with others at the event.

The event in Montreal generated 19 projects, including:

HemoTrack – a mobile app that collects real time usage of Factor VIII, bleeding events and uploads that information to a web application accessed by physicians to monitor their patient’s health. This project included Dan McGrady Follow @dmix
Kinect Burn Area App – Using the off-the-shelf Microsoft Kinect, the 3D depth sensor feature accurately and rapidly provides doctors measurements of total body surface area. The camera feature allows clinicians to visualize and accurately mark the area of the burn on screen and automatically calculate the % of body surface area burnt as well as fluid requirements of the patient.

I’m hoping to get out and participate (weekends are incredibly valuable, taking time away from kid activities and time means this really has to deliver value for my participation).

UW VeloCity Evolving

by davidcrow

Some rights reserved by Вεη

December 31, 2011 marked the end of my reign as the Entrepreneur-in-Residence (EiR) at UW VeloCity. The VeloCity residence announced a new leadership team before Christmas Holiday. I’m still affiliated, I’m still an alumni and I’m still an avid supporter.

I was lucky enough to spend 6 months with the students and their companies in Waterloo. I made the trek down the 401 to Waterloo almost every Tuesday night for dinner. The dinners were modelled after the YCombinator dinners. We brought in our friends and acquaintances from the world of high tech entrepreneurship to talk to the students. To share their experiences starting companies, raising funding, working with cofounders, etc. The goal was to provide a social, educational experience for the students and hopefully teach them something about the industry and software culture.

I was an undergraduate back in the early 90s. I wrote Objective-C on NeXTSTEP boxes. But no one at Waterloo really promoted starting a software company as a career path, maybe I’m just an idiot, but I never thought that I could start a company and sell the software I was writing. There were a few startups (MKS, RIM, Maplesoft) but this wasn’t a career path that was promoted. You could argue may this was because I was in the Kinesiology department. But spent a significant portion of my time in CS and SYSDE (SYSDE142, 342, 542 and others). The closest was a class about database management in the department of Management Sciences but it definitely wasn’t about entrepreneurship (how much do I still hate Access).

It wasn’t that hadn’t been exposed to entrepreneurship. I grew up in an entrepreneurial household, my Dad had left Clarkson Gordon to start his own small business accounting and consulting firm in the early 1980s. And my first real job was with a small usability consulitng firm, but I thought that I would get a job at CIBC or IBM or maybe Delrina. I was never provided the skills, the experience or even the awareness that entrepreneurship (software entrepreneurship) was a career path. I went to CMU for graduate work, and I was exposed to founders from MIT, CMU, Stanford and other places. My first job after grad school, I did research at UIUC and was exposed to things like early Netscape. But it wasn’t until I started working at Trilogy Software with a bunch of Stanford graduates did it become clear that I could start a software company. I always wished that someone had shown me entrepreneurship (beyond consulting) as a career path.

My view about VeloCity comes back to my own experiences at UWaterloo. And the role that VeloCity needs to play in exposing and educating UW students about high-tech entrepreneurship. It will be great to see the evolution with Mike Kirkup (LinkedIn, @mikekirkup) and Brett Shellhammer (LinkedIn, @bashome). VeloCity represents something that wasn’t available to me when I was a UW student. For me, VeloCity represents the next stage of evolution for the University of Waterloo cooperative education program:

” the solution was not just classroom instruction but “the co-operative program,” which offered students alternating terms of paid work in industry to get practical experience.”

Velocity feels like a starting ground for the next set of education at Waterloo. With the launch of MITx in addition to Open Courseware, MIT is attempting to change the face of higher education. There is inspiration and direction from TED, TEDx, and SingularityU. There is also the rise of self-learning platforms like Codeacademy, Khan Academy and others. It is time that UWaterloo explored evolving the cooperative education program beyond the constraints of the existing program. For me VeloCity represents the start of a new academic experience.

I can’t wait to be a part of what is next.

Mesh is TO’s most important DIY conference

by davidcrow

Mesh Conference is Toronto’s most important DIY conference.

That’s right Mesh Conference is a DIY event. It’s the Do-It -Yourself endeavour of small dedicated group of individuals. And you can see each of their personalities and interests in the schedule and speakers. Rob Hyndman (@rhh), Stuart MacDonald(@stuartma), Mark Evans(@markevans), Mathew Ingram(@mathewi), and Mike McDerment (@mikemcderment) have been working very hard since 2006 to build a world-class that has attracted renown speakers, mayors, and attendees. The secret is that Mesh is an event that all of them want to attend. The reason they invest time and effort into this event is because it is really for them.

Why is Mesh Toronto’s most important DIY event?

There are great events ranging from my DemoCamp to EcommerceCamp, from MakerFaireTO to Open Toronto, TechTalksTO to HackTO. There are a great number of local events that have emerged. The thing about Mesh is that it started in 2006. Over 5 years ago, shortly after the first BarCampToronto. And since the very first Mesh, it has always had an air of professionalism that others should strive to obtain. Mesh from the very first event was an event that was world class. It was Canadian in size (about 1/10th the size of a US event). But it has always been DIY, it has never felt DIY.

Rob, Stuart, Mark, Mathew, Mike and Sheri deserve true accolades for building an event that defines the emerging technology, emerging culture, emerging policy in Canada. Thank you!

I hope to see everyone at the Allstream Centre this week.

Mesh 2011

by davidcrow

Apparently I’m late to the game with the recognizing that Mesh Conference 2011 has announced a new location and their schedule.

New Location

The conference moves to the Allstream Centre at the CNE grounds. This is a first year Mesh won’t be at MaRS. I’m hoping the new space allows for new conference experience. MaRS is a fantastic venue, but Mesh has really outgrown the space. It will be interesting to see how Sheri and the team organize lunch, social events, and other interactions to build strong connections between attendees.

Speakers

I’m excited there are a lot of my friends who are speaking at Mesh. These folks are just world class and it will be interesting to hear about their experiences.

I’m also incredibly stoked about Gabe Zichermann (LinkedIn) from GamificationCo. Gabe wrote Game-Based Marketing and hosted The Gamification Summit. Looks like another conference that covers marketing, culture/society, business, and media. It’s a great Canadian take on the web, technology, politics and culture.

I am disappointed that MeshU did not survive the fiscal constraints of running a conference. I know from our past experiences running StartupEmpire the lack of sponsorship and revenue that a smallish conference can generate. I’m hoping that there will be something for design technologists and entrepreneurial technologists in Toronto in the near future.