Billions With Zero Knowledge - Austin Hill, Entrepreneur & Angel Investor

In the last two weeks while I was traveling, two Montreal based companies were acquired by large US companies.  In and of itself, this is a great thing to celebrate in our Canadian technology community - but there was something additional worth celebrating in each of these cases.

These companies were co-founded by some of my former employees at Zero-Knowledge Systems.  Small bonus is that I get to scoop my buddies at StartupNorth, MapleLeafTwo and MontrealTechWatch - which rarely happens

Microsoft acquires Montreal based Credentica

In the year 2000, Zero-Knowledge acquired the rights to Dr. Stefan Brands work and hired Stefan to help us build privacy-enhanced identity & payments systems.  It turns out we were very early into the identity game, failed to commercialize the technology - and during the Dot.Com bust cycle we shut down the business unit and released the patents back to Stefan.  This was groundbreaking stuff that Stefan had invented, and we invested heavily in trying to make it real, but there weren’t enough bitters in the market at that time.  We referred to the technologies as the “RSA” algorithms of the identity & privacy industry.  Unfortunately the ‘privacy & identity’ industry didn’t exist.

Stefan went on to found Crendentica to continue the work of commercialization of his invention. Today he announced that Microsoft has acquired his company and he and his team are joining Microsoft.

Microsoft’s Identity Architect Guru Kim Cameron has more on the deal on his blog (he mentions the RSA for privacy concept as well).

Adam Shostack (former Zero Knowledge Evil Genius, who also created a startup & currently works at Microsoft) has this post up.   George Favvas, CEO of SmartHippo (also another Zero-Knowledge/Total.Net alumni - entrepreneur) also blogged about the deal as well.

Congratulations to Stefan and the team.  This is a great deal for Microsoft, the identity industry and his team. (I know we tried to get Microsoft to buy or adopt the technology back in 2001 :) 

Stefan has been an entrepreneur working on commercializing this technology for almost 15 years.  He has persisted in the face of many downfalls and this is a great day for him.

EMC acquires PI Corporation

Almost five years ago, one of my top employees, Alexis Smirnov came to me to inform me he was leaving and joining a new startup called PI Corporation.  Although I was sad to see him go - I gave him my enthusiastic support.

At the time Alexis Smirnov was Lead Architect and Product Manager for Synomos, a spin out of Zero-Knowledge Systems that I ran (and ultimately shut down) which was working on personal data protection policy systems.  Alexis was one of the founding architects of PI Corporation where he joined Paul Maritz to build an innovative & secure personal information data store.

Also part of the founding team was former Zero-Knowledge scientist and cryptographer Dr. Adam Back.  (You can still see the founding team page for PI Corp at Archive.org since it’s been taken down from the PI Corporation website).

EMC is now building a cloud computing service with Paul based on this technology.   Much of PI Corporations founding team was in Montreal and grew to include 5 former Zero-Knowledge team members (Props to Adam, Phil, Andrew, Alexis and Roger) working on a diverse international development team.

EMC’s VP Technology Alliances Chuck Hollis has more on the details of the privacy related acquisition and what it means for EMC on his blog.

Congratulations to all the PI Corporation team.

Startups Birthing Startups - It’s Startup time & do you know where your FairChildren are?

When speaking about the benefits of joining a startup during my speech last week at StartupCamp Waterloo, I mentioned the great number of former Zero-Knowledge Systems employees who have gone on to be part of founding teams of other startups. (I currently track 12 former employees who have created their own startups or been the on founding team of startups since leaving Zero-Knowledge - I’m sure there are more.)

This cycle of entrepreneurship was something my brother, father and I fostered @ Zero-Knowledge.  We made entrepreneurship a key part of our culture, promoting employees thinking and acting like mini-entrepreneurs. We had ‘Startup 101′ courses at our Zero-Knowledge University employee orientation week.   We taught employees about venture rounds, cap tables, stock options and we shared details about how we were planning on growing & funding the company. This was based on the belief that knowledgeable & empowered employees would be better able to understand the how’s & why’s of the companies operating decisions. We believed it would help them weather the challenges of startup life while identifying and executing on opportunities. I think this was a contributing factor to the culture of entrepreneurship that grew out of ZKS.

I won’t dismiss the other contributing factor could have been employees getting a front row seat to many of our mistakes that might lead them to have said “if these guys can do it - why not me?” - which is just as valid a reason to join the startup game.

John Stokes at MontrealStartup asked about companies birthing startups recently.

David Crow highlights the ‘Fairchildren‘ principle in a recent post about Toronto’s startup culture. 

The concept Fairchildren hasn’t been defined tightly, but I think if you were among the first hundred employees of startup, or where a senior executive at a pre-revenue startup and go on to be a founding member of a new startup then you can consider yourself a ‘Fairchild’.

I can’t keep track of all my former colleagues but I hear from more and more of them who reach out for advice on startups, financing and to leverage the alumni network for introductions.

The simple truth is that startups give birth to other startups.  Employees meet each other, great teams get experience working together and lessons are learned that lead to other ideas and startups being formed.

Both of these deals are great examples of what happens when startups birth startups, and I’m very proud of my former colleagues success with these ventures and hope that their time at Zero-Knowledge helped contribute to their startup adventures & success.

This is not unique to Zero-Knowledge, nor were we the start or finish of this.  Many companies have been formed from the employees of SoftImage & Discreet, Megatoon Studios in Quebec City grew into divisions @ TotalNet & and gave birth to A2M the gaming company - there are countless examples of Corel employees starting new startups.

Canadian Fairchild Unite

We need support & showcase the Canadian Fairchildren of startups.  So if you are a Canadian Fairchild, a founding member of a startup that grew from another startup - please introduce yourself (Leave a comment, or contact me privately).  I want to hear your story.

On Fri 7 Mar 2008.