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Democamp3 was a huge success. There was a packed house of about 80 or so people, 6 demos, beer, good conversation and discussion. Plenty of excitement back stage with power bar shortages and six demos crammed on two pool tables. The scene reminded me of being back in the hardware lab when I first started in technology. Wires everywhere and lots of hussle and bussle and tweeking of things. Great fun.

The evening started with Nelson Ko demonstrating his “My trip for world peace - wikified”. I really enjoyed Nelsons pairing of Google maps with wiki technology. The demo showed Nelsons travels around the world and various points of interest with virtual pins and wiki notes. I am sure there are many other applications for the wikified map.

The second demonstration was by Misha and Borris from Thintropy. This was in my opinion the hottest technology at democamp that night. Thintropy has developed a thin client agent for had held devices. What this means is that your blackberry or handheld device can essentially be a dumb terminal and still provide web access and video streaming capabilities. This could potential remove a bunch of components from the handheld devices. Misha was using the event as a primer for his demo in New York the next day. Best of luck, very cool product with tons of potential.

The third demo was Peter and I showing our distributed calendar. The first part of the demo went great and then the demo gremlins raised their ugly heads. The remote server we were using ground to a halt and challenged demo driver and speaker considerably. Peter did a great job ad libbing while I wrestled with the server. I mentioned that we had lost the Internet and someone from the audience quipped “isn’t that kind of big to lose” I replied “I am sure we will find it soon.” Anyway I think we made the best of a challenging situation.

Break Time

Next up was Robert Norris from Straterra. Robert was demonstrating a very cool log manager software product for the oil and gas industry. The product allows scientists to keep notes, pictures and a visual representation of core samples and strata data from oil exploration. Robert mentioned that this was a collaborative effort from some Ottawa based software programmers and Calgary based geologists. Really neat product.

Alec Saunders from Iotum presented their new Talknow product. I had seen Iotums previous demonstration of the relevance engine and must admit I didn’t quite get it. Coupling Talknow with the relevance engine completed the product offering. Alec presented a very animated demonstration where John and Jill were using Talknow to zero in on a date. Very informational and entertaining.

Last but not least was Bruce from Carleton University. Bruce was demonstrating a voice synthesis product that has been developed at Carleton. They have used this to create voice from text as a tool to augment and enrich the students learning experience. Bruce requested that those in attendance go to CU to check it out and offer their comments and suggestions.

All in all a great night. Many very positive comments and expect we may need to think about  a larger venue in the future or implement some form of crowd control.

Cheers,

Ian Graham

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I will start out by saying that I believe a business strategy is the way to go for your start-up. However, I also believe that you can have a business strategy while satisfying your investors exits strategy requirements. Investors want to make money, so knowing and understanding their exit requirements can actually help to manage the funding stream and grow your business, provided you produce the results. Injecting funding early on can also accelerate the growth of your company by enabling a broader marketing launch and providing cash for all sorts of other business enablers.

When you grow organically you maintain control and tend to grow at a steadier pace. When you receive external investment you give up some control but should increase the growth rate of your company. Control and business strategy are different. You can give up some control but continue to execute on your business strategy. If you continue to deliver results as promised you will continue to have a significant influence and control over the company’s direction. 

If you believe that the market opportunity for your concept is extremely large then external funding will help you get there sooner. After all a small piece of a huge pie may be better than a big piece of a little pie. Regardless of the type of funding you have you should be executing to a business strategy rather than an exit strategy. I have seen this a few times now where entrepreneurs are so focused on securing funding and sorting out their exit strategy that they forget their corporate mission or business strategy.

You can have a business strategy and satisfy your investors exit requirements at the same time but remember the end game is a successful business not a cheque.

Cheers,

Ian Graham

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This post will be a bit of a potpourri on some topics I have meant to come back to but just haven’t had the time lately.

Clash of the Titans.
I noticed in the newspaper the other day that Rogers Market Cap had eclipsed that of Bell. Bells revenue is flat while Rogers is on a definite upward climb. Unless Bell implements a new strategy in a hurry they are in serious trouble for the foreseeable future. I have done some work to get Rogers and Bells financials on an equal footing so you can compare the two, but this has proven to be a bigger challenge than I first thought. When time permits I will have more details. In the mean time keep a close eye on Bell’s leased line subscriber attrition and Rogers “Home Phone” service additions. This is the real battleground for Rogers and Bell and where the fight for Eastern Canadian subscribers will be won or lost.

Vonage
I Saw some press regarding Vonage. Their sales for all of 2006 were $500M!! That is a drop in the bucket in terms of North American voice market. The release also implied that they were still not profitable and there was some question about their longevity. VoIP is a reality but will it be the much tallyhooed revolution that everyone was predicting or a quieter evolution within the existing service providers.

On the Competitive Intelligence front I plan on adding a post about the Stakeholder analysis in the near future. There are a couple more posts on how to manage the funding cycle, economic discussion related to Entrepreneurship and the occasional life long learning post.

Cheers,

Ian Graham

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Ottawa democamp3 is scheduled for 29th January at the Clocktower REstaurant on Bank Steet. The Clocktower is just south of the Queensway and on the east side of the road, a great venue.

For more information check out this link and sign up on the wiki if you can make it out.

http://barcamp.pbwiki.com/DemoCampOttawa3

cheers,

Ian Graham

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My good friend Peter Childs and are a starting out on a most excellent adventure. Decloaking will commence shortly as we launch these most excellent software products. … stay tuned.

Part of getting ready to hit the road means having a name for these ventures. I have got to tell you this has proven to be quite a challenge. We have had a number of cool names but they are always taken. A couple of times the domain names have been claimed by cyber squatters who camp on names hoping to make a profit.  As a matter of principle I will never pay one of these cyber squatters for a name they do not have any right to register. The name search continues.

I did come across one article that I found helpful with some company naming ideas.

We should have our name and contracts sorted out within the next couple of weeks.

Cheers,

Ian Graham

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I attended the Otttawa eBusiness Cluster session last night regarding funding the buyer and seller perspective. Marwan Forzley CEO and President of Modasolutions was the seller (seeking funding) and Ron Warburton from BDC Venture Capital was the VC. Both presentations were excellent and the event was a great learning experience. One of the items in Marwans presentation was the funding funnel.

Getting funding from an Angel or a VC is a similar to selling a product or service to a customer. This sales version is known as the sales funnel or pipeline and the funding pipeline is very similar. The steps in the funnel are listed below:

Introduction
This is where you present you elevator pitch to the potential funder and work at starting to establish a relationship. The goal of the introductory meeting is to get the next meeting.

Pitch
This is a level of detail greater than the previous meeting where you work at continuing to sell the idea and build the relationship. The goal of this meeting is to get another meeting.

Detailed Pitch
The rubber starts to hit the road here. The detailed pitch is essentially a summary of your due diligence documentation. This is likely a series of several meetings with the outcome being the funders want to touch base with your potential customers.

Customer Calls
Due diligence on the part of the funders wanting to confirm first hand the potential of your product with the customer. Out come is to move to a term sheet.

Term Sheet
Congratulations you are almost there a term sheet means you are well on your way to a formal agreement. If this is a seed or early round there may be only one or two investors. If this is a later round then you may need to manage your investors to syndicate the deal.

Closing
Deal is signed and you have received your funding.

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One topic that continues to surface in the local Ottawa media is the skills shortage paradox. By the way I think I am the first to coin the phrase skills shortage paradox, at least I haven’t seen it used elsewhere. The paradox is made up of two polar opposite points of view;

- Knowledge based employers who can’t find skilled labour,

- Displaced technology workers that can’t find employment.

This topic reminds me of a line from the Dire Straights song Industrial Disease “two men say they’re Jesus one of them must be wrong”. Actually in this case I think it is not a case of right or wrong, black or white, more shades of grey with the truth being somewhere in the middle.

Before starting out on my own I had experienced displacement from a technology company, I think most people in the local tech community have at some point or another. I have also worked over the past year and a half with many small and start up companies. Therefore I feel I can offer a balanced and reasoned perspective on the whole issue.

There are a number of key factors contributing to the skills shortage:
- Diversification of local technology sector
- Experienced workers exiting the sector
- Declining enrolment in technology courses at college and university

Pre-Bubble burst (2000 - 2001) the majority of technology sector in Ottawa was based around 3 - 5 anchor companies that employed approximately 40% of the workforce. These anchor companies were large and focused on telecom technology.

When the bubble burst the telecom sector tanked and the anchors and other players shed significant portions of their workforce. The technology sector did not have the capacity to absorb the displaced workers. Therefore several things started to happen; some experienced technology workers left the sector altogether, others started to form their own companies. The net result was that many new companies were formed, in fact if you look at the OCRI’s company numbers there is a significant increase in company formation after 2001 peaking in 2003. Not only were there more companies forming but they also tended to be in technology other than telecom.

I often meet up with former colleges and friends that used to work with in the technology sector but are now working; in real estate, as financial planners, for the federal government, or some sector other than technology. During the contraction many experienced technology workers migrated to other sectors of the economy.  The net result is that the pool of experienced technology workers shrank. Couple this with the fact that enrolment for technology related course has been way down in the past few years what you have is a workforce that has contracted.  Fewer experienced workers and fewer graduates.

As mentioned the composition of the Ottawa technology sector has also changed considerably. There are more smaller companies and they are in a wider variety of markets.

Therefore the overall result is in my opinion not a skills shortage but a skills mismatch on several fronts. First of all many workers have telecom experience and employers are requiring knowledge of different technology. Second the pool of talent for technology has shrunk; I believe this to be the case. Where many people have large company very specialized skill sets the current need is from small companies, which require a broader skill set.

During the bust employers were used to being able to find an exact fit for their job requirements because of the large supply of talent. In the past two years the technology sector prospects have improved considerably with quite a bit of hiring by the smaller companies and there is a much smaller pool of talent to draw on because of this and the contraction. Therefore employers are not able to find that exact match.

That’s my perspective on how the situation has evolved. I think there is some truth to both sides; employers are having difficulty finding the skills they need and workers skills may not be the perfect fit for the empoyer are having trobule finding employment. A creative solution to resolving the skills mismatch would work to the benefit of both.

Cheers,

Ian Graham

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Every once in a while a teacher can have a profound impact on a students perspective on life. For me this was a lesson taught by Michael Miles my professor for Organizational Behaviour. One of the first lessons he taught was called the “Reading Test”. The reading test is a power point slide shown on the white board at the front of the class. Michael Miles then asked the students to count the number of “F” in the slide. After 30 seconds the slide is turned off and everyone shares his or her results.

At first I thought the reading test was a really cool test and took it at face value. After reflecting on the lesson over a cold Stella with one of my fellow students the true meaning of the test hit me like an epiphany. The slide is really a metaphor for life and shows what a difference how you approach life can make it. Every once in a while I have a look at the slide to remind myself of what is important in life. Anyway shouldn’t say too much more about until you have taken the test yourself.

How many “F” can you find?

Cheers,

Ian Graham

Instructions:
Carefully read the slide so that you can understand the context of what is written. Once you have read the slide go back and count the “F” in the slide. Give yourself about 30 seconds to complete the test.

Reading Test Below:

Finished files are the results of years

of scientific study combined with

the experience of years.

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The competitive intelligence cycle is an iterative five-phase process consisting of;

- planning
- data gathering
- analysis
- communication
- evaluation

I have written a couple of previous posts on planning and data gathering. Today’s post is with respect to analysis.

There are tons of tools and resources available for analysis of the information collected in the data gathering phases. QuickMBA and NetMBA have lists of some commonly used tools that you can check out. The three tools that I have found particularly useful in preparation for analysis of CI data are:

Value Chain Analysis
Stakeholder Analysis
Positioning Graph

The Value Chain Analysis is a graphical representation at each step or link in the process that adds value to the development of a product from suppliers on left to end user or customer on the right. The end customer is the final destination and consumer or user of the product. When you are developing a product your customer may or may not be the end user of the product. For example, a supplier of software development tools would sell to companies that develop software and they would in turn sell to distributors, VARs or possibly end users.

I typically use the value chain analysis to help determine pricing and margin aspects of my products. By knowing the value chain and the margins of your suppliers, competitors and distributors you can make an informed decision about pricing points for a new product. The value chain is also incredibly valuable in helping to determine your optimal channel to market.

The Stakeholder analysis is a representation of the different stakeholders and their interactions in a market place. The Stakeholder Analysis is somewhat more dynamic and less deterministic than the value chain analysis. The Stakeholder Analysis shows stakeholders and how they interact and influence other stakeholders in the market. I typically use the stakeholder analysis to help develop my marketing plan and determine which stakeholders will exhibit the most influence on my target market.

The positioning graph has price on the Y-axis and quality on the X-axis. In my opinion price is almost always a function of what the market will bear and perceived value. Price versus perceived Quality will yield your positioning relative to the competition.

Cheers,

Ian Graham

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I wanted to take a minute to wish everyone a happy and prosperous new year.
All the best for 2007.

For my first post of 2007 I thought it might be interesting to take a look back at the funding activity in Ottawa for 2006. 2006 was a grim year for Ottawa start-ups in terms of funding. The total investment according to the OCRI fund meter was $190.75M in Canadian Funds. The actual total should be less in my opinion. The reason that I say that is because the deal for Airwide solutions is more of an acquisition than VC funding and therefore I have excluded the Airwide deal for 28.7M. There were also four other deals that I am aware of that were not included in the OCRI list, Triacta $1M, Pinpoint Selling undisclosed, Embotics undisclosed and Solace Systems also undisclosed. With the subtractions and additions my best guess at the Ottawa VC funding level for 2006 is approximately $170M CDN.

According to Ian’s list there were 16 deals in 2006 for Ottawa Start-ups, 2xD, 8xC, 1xB, 1xA and 4 x seed rounds. The vast majority of the deals were follow on rounds in more mature start-up companies. BDC Ventures was the most active of the Ottawa area VC participating in 8 of the 16 deals and one seed round; Vengrowth 5 deals, Growthworks 3 deal, Ottawa Angel Alliance 3 deals, with Wesleyclover, Newbury Ventures and Goldman Sachs each participating in 2 rounds. The Ottawa Angel Alliance and BDC Seed Fund were essentially the only groups in the city doing any funding at the seed level.

My take on the situation is that in order to see improvement and more funds available at all funding levels there will need to be some successful exits in early 2007. If there are some successful exits then this will allow the local investors some new capital to invest. If there are not some exits or new injections of funds 2007 could be an even leaner year than 2006. In my opinion the amount of funds available is less of a concern than the fact that the money invested is largely in later rounds. In order to keep a healthy pipeline of young new companies there needs to be seed funding available and right now there isn’t. My best guess is that the total of all seed funding invested in Ottawa in 2006 is $3M to $4M. In a word anaemic and this low level of seed funding could have some serious repercussions in a few years if it continues.

There is some relief on the horizon, maybe. The Ontario Government and Ministry of Research and Innovation seems to recognize many of the issues facing early stage entrepreneurs and is in the process of putting some programs in place. More on this in my next post.

Cheers,

Ian Graham

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