Billions With Zero Knowledge

Last summer my friend Patrick Lauzon and I spoke about the need to create a new type of networking event that would bring together founders of technology firms, angel investors and venture capitalists.

We held the first Founders & Founders dinner last November with a private group of 75 people.   With the help of our sponsors, iNovia Capital, Neotech Capital and Montreal Startup the event raised $1,000 for the Montreal Barcamp community.

The event was a great success, and was quickly replicated in Toronto by our friends David Crow and Jevon MacDonald.

2nd Founders & Funders Montreal Announced

We are pleased to announce that we are going to be holding the second Montreal Founders and Funders dinner this coming May 14th in Montreal.

To help expand the community of people we invite to the event, we are opening up a registration form for invites allowing anyone who is a founder, angel investor or VC investor to request an invite. 

We are limited to 100 seats for the dinner.   The fee for the dinner will be $100 which will include drinks and dinner.

Given the interest we received after the first event and the fact that we won’t be able to invite everyone who has expressed interest to the dinner.  As a result we are also going to be hosting an after dinner open cocktail networking (A nice roof top terrace party).  The networking event will cost $20 and include two drink tickets.

Attendees to the dinner will be able to attend the networking event.  The networking party afterwards is open to anyone interested in the technology community in Montreal (not just Founders & Funders).

All profits from the event will go to support Barcamp events in Montreal.

How to Get An Invite

If you would like to attend the dinner, or the networking event after the dinner please fill out the following form and let us know who you are.

We will be contacting everyone with details on the location & registration for the dinner in the coming weeks.  We will also be announcing the great sponsors who are supporting us throw the event.

You can keep track of the event on the Founders and Funders blog.

If you would like to sponsor the event please feel free to contact me.

On Fri 18 Apr 2008. 1 Comment

Silicon Valley loves risk taking and failure. Canadian investors are risk adverse and scared of funding real innovation.

-Many Canadian Entrepreneurs

This something I hear from many entrepreneurs who lament the challenges of raising capital in Canada.   It’s a gross over simplification, but a catchy idea when people are having a hard time raising funds.

It’s true that Valley based venture capital firms not only accept that failure happens, they celebrate it by recycling the best parts of the team, idea and lessons learned for a new project.

In Canada we don’t hear enough about our failures and the people who go on to find success with new initiatives.

I was thinking about these cultural differences when I read this post by Wade Roush “When Startups Fail” where he interviews entrepreneur Christopher Herot about Zingdom’s shutdown. 

Part of the reason high-tech entrepreneurs are attracted to Silicon Valley is the perception that it’s a place where risk-taking is encouraged. West Coast venture capital firms not only excuse failure, so this perception goes, but celebrate it: if a high-tech entrepreneur doesn’t have a couple of tanked companies on his resume, he probably wasn’t being innovative enough. By contrast, the perception about investors in New England is that they penalize failure, which therefore becomes a taboo subject.

Both perceptions are probably exaggerations. But whereas West Coast companies come and go like the butterflies in Santa Cruz, it’s still unusual to hear any of the details when an East Coast startup closes down. That’s why a blog post last week by Christopher Herot has been attracting so much attention.

I met Christopher at TED this year and read his post about shutting down Zingdom with a lot appreciation for his honesty in posting the details of shutting down his company.  I’ve had to shut down my share of companies and have had many failures that have contributed to my successes.

If you swap out New England & East Coast with Canada you have the same perception that investors penalize failure and attach a negative stigma to projects and teams involved in them, which therefore becomes a topic not often talked about.   

So it is in that vein that I ask Montreal local entrepreneur, Martin Dufort to answer some questions about his experiences with Kakiloc (a location based social networking web experiment that shut down in November, 2007).  I met Martin in the Barcamp community in 2006 and got to see the hard work that he and his partner Alain put into building Kakiloc.

They were innovating on a number of fronts and I enjoyed introducing them to various investors where they often impressed people, but ultimately were not able to secure funding.  (If you hadn’t seen their demo where you could watch them drive up to your meeting via the web - you missed something very cool).

I really would like to congratulate Alain & Martin for their failure. I can’t wait to see which eventual success they will be able to attribute this failure too. Their willingness to admit a failure, discuss what they learned and move on to new adventures is what true entrepreneurs do and they deserve a lot of credit for doing just that.

First I would like to thank you Austin for giving me this opportunity to tell the Kakiloc story. I’ve learned a lot from this endeavour and reflecting on it and the associated failures and the shutdown could be valuable for anyone trying to startup a business and being faced with the same challenges.

1) Tell me a bit about when you & Alain started Kakiloc and it’s original vision?

The inception and the ideas for Kakiloc were derived from an open source project I created in June 2005: Rufopode. This project still available on RubyForge, but no longer maintained, was a small library enabling the extraction of GPS receiver data in order to properly plot them in Google Earth. My goal was to view and visually compare multiple training sessions and provide insight into my training schedule. The ultimate goal was to provide a realtime view of other athletes riding the same course and compare performance accomplishments.

I quickly recognized this was targeting techno-savvy people and the audience size was very small. I then brainstorm on how to apply this to a broader audience: Locate friends and family members using GPS technology while on the move with your cell phone. After explaining the concept to Alain, Kakiloc was born and we started coding the concept.

2) How far along did you guys get in your development and what were some of the main challenges?

We started prototyping the concept in November 2005 at the same time that the Google Maps API was picking up steam. Within a week, we had a rough prototype using Ruby on Rails for the Web site and Python on the Nokia S60 mobile platform. We were able to retrieve the GPS coordinate from the phone and map it on Google Maps so we could follow our location in real-time. It was quite astonishing at first. We knew we had something interesting with a lot of potential so we went forward with the implementation without thinking about the underlying business model. At that time this was mostly another hobby project.

From there, we showed it to people and they were really enthusiastic. Our first public demo was at the OGRE meeting [http://location-based.blogspot.com/2007/08/looking-for-windows-mobile-beta-testers.html] and an iPhone version [http://montrealtechwatch.com/2007/03/31/the-future-is-mashups-and-mobile-services/]. Also it’s much harder to raise money in Canada if you are ill-prepared on the financial side or if you business plan is not rocket solid. The large number of VC funds in the US and especially in the Valley, allows you be much more successful and gather interest at a much earlier stage even if you are ill-prepared. We are still missing that initial commitment spark here to ensure very early-stage companies can continue to innovate and move forward within the Canadian ecosystem.

Companies like Loopt (with $12M in funding), Plazes ($2M Euros), and others are also exploiting the location-based aspect. However they started with a very focused goal and built on it. Plazes even tailored down their mobile functionality to respond to user’s criticism about being too complex. However, the market is still open and we are seeing more of these companies shifting their business model: Loopt is now providng Location-Based Ads (LBA) in collaboration with CBS. You have to be agile and follow the market wave. If you have a clear understanding of your roadmap and your capability, that’s easy to do. We did not have that 20/20 vision and that’s why the uptake on our service was pretty low.

6) One of the most important things I see entrepreneurs not knowing, is when to stop and move onto other things.  What went into your decision to shut down the Kakiloc experiment ?

We were maintaining stats about registration versus usage level. We had a very low usage rate. People registered, specified their initial location and then expected something return. For most of them, there was no reaction because none of their friends were in close proximity. The fundamental action-reaction paradigm was broken. We were unable to achieve a sustainable user base. At that point, we needed to take a huge decision. Either we re-launched the site to be more focused and easier to use or we shifted our business model to explore a specific vertical (a business model shift). Still with no funding available and nothing in the medium-term pipeline, if was very difficult to do either. We discussed the future roadmap, the re-shift, we weighted the pros and cons, we read the seminal book by Seth Godin “The Dip”.

After a number of days of insightful introspection and discussions, my partner Alain and I decided to split. We made an agreement that I could continue to use and operate the Kakiloc intellectual properties. This was a very friendly split. However, the service quietly died as a consequence. It is impossible for a single person to handle everything. That’s the reason why, starting a company solo is 95% of the time a big no-no. You have no one to bounce ideas to, discuss issues, promote and demote stuff. Kakiloc was shutdown on November 6th, 3 days after the death of my mother. The official announcement was actually sent on November 29th to all our contacts [http://location-based.blogspot.com]

The Kakiloc technology is still alive and I’m looking at the right fit for it. I’m also evaluating other options in the real-estate business where it could be applicable. Lately, interesting things are slowly starting to surface and I should be able to potentially announce something interesting very soon.

I’ll keep you posted. Thanks for the opportunity Austin.

Happy location reporting - Martin

Thanks Martin for participating in this interview. I’m looking forward to your next adventure as an entrepreneur.

Ben Yoskovitz wrote a post about celebrating failures that also mentions Kakiloc.

On Tue 8 Apr 2008. [6] Comments

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. [5] Comments

Instead of trying to answer the Aquinas like epistemological question of how many angels fit on the head of a pin, this post is about the changes that are occurring in the Canadian angel community for high-tech startup funding.

For a community of angel investors to be effective, there needs to be a density of intensity that creates, attracts and supports healthy deal flow and investment activity.  This density of intensity acts like a vacuum drawing entrepreneurial talent, mentorship, other investors and VCs providing a series of experiences and market data on what is working.  We see which deals & people attached to deals are worth re-investing in and it helps create the proper farm system for later stage investing and success.

Done right it creates a system that achieves escape velocity and can continue with its own momentum giving birth to many high tech success stories, that in turn feed talent, capital and mentors back into the community.

Historically there have been a lot of problems with the various attempts to organize the angel community in Canada.

While not the only example, a visible sign of these problems was the Toronto Angel Group and Toronto Venture Group suspending operations.  I only had cursory run-ins with these groups, but I know from many other angel investors and entrepreneur friends that these organizations failed to galvanize the community and service either the angel or entrepreneur communities effectively (despite a lot of volunteer effort by many people I respect and consider friends).

A healthy angel community that provides such a farm system for venture investors is becoming even more critical in todays market where rapid development and the lower cost of building web applications puts most deals below the venture capital radar. 

There is currently an oversupply of early stage capital in Quebec, with more then a billion dollars of new venture capital going into VC coffers in the last 5 years targeted at early-mid stage investing. Despite this we do not have enough companies reaching the threshold of being ‘venture ready’ to access this capital.

There are many exciting developments occurring in the Canadian early stage technology community, with Montreal seeing it’s fair share of that activity.

Beyond Montreal across Canada I’m seeing the seeds of an active community of early stage angel investors. One such example is the new Toronto-based angel group Maple Leaf Angels who are building a community of angel investors and have been quite active in doing deals in Toronto.

The National Angel Organization is working to focus some of this activity and last year published a great reference document on creating angel groups. Bryan Watson and Daniel Mothersill are actively helping seed and advise networks of angel investors on banding together.  People interested in angel investing (either from the point of view of an entrepreneur, or investor) can check out their document of best practices that explains many of the in’s and out’s of angel investing.

The role of angel investors is critical in Canada’s innovation ecosystem, and one that has been often overlooked.

Randy Komisar (entrepreneur, VC partner with KPCB and author of a great fable on high tech startups, The Monk & the Riddle) in this interview with Brown Hen points to a critical aspect of the Silicon Valley culture of innovation.

Successful people also reinvest in innovation; they want to be a part of the next big thing; they want to help mentor, guide and support aspiring entrepreneurs. This reinvestment is probably the most significant reason Silicon Valley is so prolific in terms of innovations.

To create this community we need to bring together the entrepreneurs and angel investors from successful companies that feed the density of intensity (i.e. Lot’s of deals with experienced mentors occurring quickly within the same geographic area).  Some of these deals with fail, but if the pace continues and a few succeed we will begin to see more of a cohesive investment, talent and technology community emerge with all the benefits that other geographic centers of technology innovation have created (NC-Raleigh, Denver, Israel and some of the activity out of Europe all come to mind).

This ecosystem also requires successful exits.  What would happen if Canada had a bunch of exists like Club Penguin (In the Gaming industry, Canada has a critical mass of talent and an ecosystem that we should be seeing more independent web-based game developers going out on their own)? What if we had a number of web-based exits like Flickr & StumbleUpon that find the mentorship, capital & management talent in Canada without choosing to go to the Valley?

That is what the valley has developed over the last 50 years, a very focused and rapid cycle of innovation & failure that creates expertise, learning and reached a critical mass of activity to achieve its own velocity to support new innovation.

This is not going to occur overnight.  It will take time, and the work of many dedicated individuals willing to put their own money, time and effort into building the communities of innovation that attain their own escape velocity.

This is not something any single person can do (people with more resources, time & experience than I have tried). My own contributions need to be measured given that I have a startup working towards launch and another team I support as Chairman & co-founder having just launched.

On my own part creating successful, high profile projects that our teams, investors and the community can be proud of is part of how I can best contribute to this ecosystem.  Given my focus on these projects, I’m no longer doing any direct new angel financing deals for the foreseeable future.

I am however involved in a number of initiatives to help support this type of ecosystem.

I am involved as an investor, and on the board of directors of Montreal Startup, a new early stage investment fund comprised of angel investors as the limited partners.  I am also serving on the board of directors of Les Anges Quebec, a new angel network being created in Quebec. 

With the help of my friend & local angel investor Patrick Lauzon, we organized & hosted a dinner called Founders & Funders last fall to bring together VCs, Angels and Entrepreneurs. This event was also held in Toronto, hosted & organized by Jevon McDonald and David Crow.  We are going to be hosting more of these across Canada with the help of other local groups.

I’ll be posting more details on these initiatives over the coming months.  Each initiative approaches the problems of early stage funding, creating exciting opportunities in different ways, but I feel they are all complimentary and provide me with an outlet to support early stage entrepreneurship while allowing me to stay focused on my day job

On Sun 24 Feb 2008. [3] Comments

Being part of a startup includes a mandatory ride on an emotional rollercoaster that will  find ways to break your nerves and patience, straining every relationship you have at various times throughout the ride. 

Startups are powered with emotional rocket fuel, but never seem to lift off in a vertical fashion.  Your emotional rocket fuel is actually powering a crazy up and down rollercoaster ride that can make lesser people pass out.

Recently I’ve been caught underwater with three large transactions occurring at the same time, two of which were unplanned resulting from some events outside of my control but need to be tended too regardless of what I had on my schedule.

Each are complicated and carrying lots of small moving parts, differing personalities, large expectations, opportunities for profit & loss with the corresponding communication problems that tend to arise and need to be worked out.

In each case my relationships with my partners, and the outside parties we are doing business with have been tested in positive (in the case of my partners) and some negative ways.

I like what Marc Andreessen recently wrote in his post on Why Not To Do Startups

First, and most importantly, realize that a startup puts you on an emotional rollercoaster unlike anything you have ever experienced.

You will flip rapidly from a day in which you are euphorically convinced you are going to own the world, to a day in which doom seems only weeks away and you feel completely ruined, and back again.

Over and over and over.

And I’m talking about what happens to stable entrepreneurs.

There is so much uncertainty and so much risk around practically everything you are doing. Will the product ship on time? Will it be fast enough? Will it have too many bugs? Will it be easy to use? Will anyone use it? Will your competitor beat you to market? Will you get any press coverage? Will anyone invest in the company? Will that key new engineer join? Will your key user interface designer quit and go to Google? And on and on and on…

Some days things will go really well and some things will go really poorly. And the level of stress that you’re under generally will magnify those transient data points into incredible highs and unbelievable lows at whiplash speed and huge magnitude.

Sound like fun?

Marc’s a smart guy who gave me some great advice the couple times I met with him when I was building Zero-Knowledge Systems.  He’s been doing some great blogging sharing his considerable experience on startup life which is worth checking out.

The fuel that drives startups and any growing company is passion and intensity.  The day to day decisions may affect the navigation, but you need this startup fuel to create the momentum to face the daily challenges of startups and to achieve escape velocity.  

This startup fuel (Mix equal parts passion, intensity, and relentless need for getting things done) is volatile and needs to be mixed and handled with extreme care. In my experience it takes at least 2 co-founding partners to both create and safely handle this startup fuel.

I advise lone entrepreneurs I work with to get some sort of co-founding partner before they go any further for two simple reasons.

#1 Reason you need co-founder

• If you can’t convince someone else to jump into the startup void and join you on your adventure then odds are you aren’t a good enough personal sales person to do what it will take to build a company without a co-founder creating a no-win situation.   Creating companies takes team building and millions of moments of convincing (sales, financing, hiring) and if you can’t find a co-founder who is better than you at something and convince them to join you in your adventures then it doesn’t bode well for your abilities to build a company. 

In the Valley it’s easy to find a co-founder and the environment is incredibly supportive in teaching smart people how to operate startups and navigate the industry.

Finding startup minded people in Canada is more challenging, since we don’t teach or promote risk taking and entrepreneurship as a career option. Culturally we have many smart and successful people, but we don’t have an abundance of risk orientated startup minded people compared to other countries. 

It can be done if you work at it.  My partner, Fred Ngo started to organize Barcamp in Montreal specifically to help meet other people interested in startups.  That’s where we met alongside with Ben and started the discussion that led to the creation of Standout Jobs.

My buddy Marc Chriqui at ILovetoPlay also just announced a co-founding partner, Sandy. - Congrats to Marc since this is a big step in building a company. 

#2 Reason you need co-founders

• More importantly, startups are emotional rollercoasters and they are only fun when you have trusted co-founders and partners to ride the ups and downs with you.  Your partners and co-founders talk you down when you are angry, and up when you are down.   Then you swap sides as you take the lead in talking them up when they are down and you are riding high.   Many times you are both looking at a shitty situation, sigh together, suck it up and know that you both will fix whatever problem has occurred. This becomes easier because you know you’ll be in it together.  Would you try to lift an 800lb. weight without a spotter? 

The ability to bounce ideas off each other and act as emotional cushions while riding the startup rollercoaster is essential to the success of the company.   Teams that bleed together, succeed together.   Because at the end of the of day, it’s the tough times when peoples real characters are tested. You will always be learning about the characters of your partners at the same time you are judging the characters of all the people you will be dealing with in your daily startup adventures (financing, sales, hiring).   Many of the characters you will meet aren’t worth your time and will suck the energy out of you and you need your partners to help you ride that out and help you both learn from the experiences. 

The most important thing your partners help you realize together is at the end of the day it is just a ride.   Although it may not feel like it, the situations are never as bad as they seem and the intense twists and turns are just normal by-products that come from mixing any intense activity with a highly volatile amount of passion, piss, and guts poured on for fuel.

I am very lucky to have some great partnerships with my various co-founders that have all come in handy this last couple of weeks. 

Despite weeks like I just had, I love what I do including all the ups and downs - and that is only because of the partners I have.

Startups are adventures made fun and enjoyable because you share the experience with people you enjoy riding rollercoasters with.  Not because you have any real control of which twists and turns you will be riding on any given day.

Thanks to my co-founders who help me keep my perspective and my activities intense, rewarding and always full of adventure.  

• Alex and my team at Akoha have been pulling together some great stuff for an upcoming team offsite.  Alex works with me on all aspects of my business affairs and he and I talk throughout the day about all our decisions to help each other balance our ideas and activities.  We have been friends for more then a decade and can talk each other up and down any situation.  We keep each other in check.  (I’m looking forward to introducing the whole Akoha team once we come out from behind our curtain for our premiere.  They are all co-founders in our project.).

• Ben and Fred my partners at Standout Jobs are incredible in their level headed and practical way of tackling day to day startup adventures.  We each have had the fun and nerve racking moments tackling some curveballs in the last month. As these curveballs come faster and more erratic Ben and Fred have been incredible to work with.  We discuss how we tackle the issues of the day and move on to the next thing.

• My father and brother, who I have been working on some exciting Radialpoint business with. This required us to work through some complicated financial and business decisions. Working with family comes with a unique set of advantages and challenges.  One of the benefits is that you can pretty much always trust that family will figure out ways to make things work, which is what took a lot of time to work out this week but we sorted it out in time for some tough deadlines since the transaction needed to close quickly.

• Todd (our financial Analyst & Spreadsheet jockey), Katherine (my executive assistant) and Rosalie (our bookkeeper & admin assistant) at Brudder Ventures who have been helping me deal with juggling all the various meetings and financial aspects related to each of these transactions. Knowing that I have a strong financial and administrative teams to compliment my skills on creating companies is a great piece of mind.

• My greatest co-founder in my projects is my partner at home, Kelly.  She has been incredibly supportive by taking care of so many life details allowing me to focus my time effectively on the projects on my plate.  Many of my early startups were done without a relationship in my life.  I would always date after the startups were in revenue generating mode because I couldn’t handle the distraction from work.   At this point in my life, I appreciate having a loving partner at home who reminds me to take breaks and is the ultimate anchor of what is important.   Thanks babe for all your help & support.

If you have the right friends along for the ride, I still can’t recommend a more satisfying experience then working for a startup. Whether you are part of the founding team or an early employee there is an incredible amount of pride that comes from contributing to the fuel that creates something new and of value.

On Sat 30 Jun 2007. [8] Comments

I wanted to congratulate my Standout Jobs partners Ben and Fred on the recent announcement of the angel round of financing for our project.

I’m also pleased to welcome our new partner Garage Technology Ventures Canada who is joining me in the financing of the project.   As Ben mentions in his post we didn’t originally set out to raise this money when we started the project.

Part of what makes a startup so interesting is how many times it changes, and how quickly. We didn’t start out looking to raise such a large amount of money, but the opportunity to move quickly and change the game in recruiting was too important. And Garage’s interest in working with us as a team, and in our product ideas, means we just added a great partner.

“Go big or go home,” is the philosophy behind Standout Jobs. It’s not the way every startup should be imagined or run but it works for what we’re doing.

What’s critical for any startup is to find your own philosophy and approach. Believe it. Focus on it. Live it. Drive everything towards it.

I couldn’t agree more.  Although I provided the initial financial support for Ben and Fred to get going, we were going forward on a plan that required very little capital.   Both Ben and Fred has made strong financial commitments to the project with their own savings, and we were moving forward with our plans in a bootstrap mode.

As we began to understand the opportunity and got feedback on our early prototypes we saw the opportunity to do something much bigger then we had initially thought.

With the large changes occuring in the online recruiting and job marketplace (this is just a few of the changes) we decided to explore raising some additional financing to allow us to get a core team together faster to build a product that was worthy of the opportunity.

I’ve raised a lot of money for my various companies and unfortunately the angel technology market in Canada isn’t active enough for rounds to come together quickly.  

Tom Sweeney and Louis Desmarais at Garage Canada recognize this fact and are working to develop new programs to help early stage companies like Standout Jobs accelerate raising angel rounds.

The ability to move quickly and work with Garage made our discussions quick, and we ended up not shopping the deal around with other investors.   I’ve done auction sytle fundraising in the past where I’ve maximized valuations by spending months getting competing term sheets to be sure I got the best deal. 

I know the market for this stage of financings and have sat at both sides of the venture capitalists table enough recently to know that there was a good fit and deal with Garage.

The speed at which Standout Jobs is moving made it an easy to decision to work with Garage and not spend the normal time associated with fundraising.  

To put this in context, we took about 3 weeks to sign the term sheet from our first meeting with Garage and Standout Jobs.  My partner at Akoha, Alex and I spent about 5 months working on a smaller sized angel round last fall when we brought outside angel investors into Akoha.

Unfortunately the density of angel investors in the Valley allows these angel rounds to occur quite quickly as syndicate of experienced angel investors can close up to a million dollars in about 2-3 weeks for a qualified deal with the right team attached.

In some markets, speed is critically important and Canadian companies are at a disadvantage if they can’t raise the capital to execute as rapidly.

I’m really excited that Standout Jobs is on this track, and happy to be working with Garage Canada on this project.

Look for more news this Fall when the company launches our offering.   In the meantime if you are interested in how companies are using video and social media to improve their employment brand check out the Standout Jobs blog. 

Here is a video that wasn’t done by us, but is a great example of showing the team and culture of a company.

Michael Arrington (who I had a great time with at Mesh) picked this up and mentioned “…they should use this as one of their primary recruiting tools.”

We wholeheartedly agree.  What a great idea for a company

Side Note

Ben and Fred were both great in the fundraising process. 

I coached them on how to present the company, and assisted in how we describe the offering, especially in planning how to approach to market.  All I really did was coach though, they became experts in financing decks on their own which lead Fred to joke that he can always rent out his newly developed powerpoint skills on eLance if things didn’t work out and we needed to bootstrap

Thankfully things worked out just fine.

On Tue 5 Jun 2007. [4] Comments

I have been on vacation for a week in Mexico with my girlfriend Kelly and am posting this using a small internet cafe, and a slow dial-up connection.

Fact is I’m loving the time away from the office, for no other reason then I use my vacations as reading weeks and I’ve been reading two books at day and am full of insights. (And a little color for my Casper-like Canadian winter skin suit I’ve been wearing).

Before I left Montreal, I did an interview with Kristina Tomaz-Young from Smart Initiatives where she wrote the following,

You would think that this would be enough and he would be soaking in the rays in Tahiti with his feet up. But nope, not Austin! Retirement is far away. He’s relentlessly on the go, advising and investing in start-ups and building yet another game-changing company.

The full interview is available here

March and April were really busy but great months for Akoha as we raised some more angel money and rounded out most of our core development team with the hiring of 5 additional people.

During the back to back days of work that is part of the heavy lifting required while creating companies it’s hard often for me to relax. I’m in my groove working longs days and I actually have to force myself to take a break sometimes. Thankfully my partner Kelly knows a lot of the warning signs when I’ve been pushing too much and usually steps in, makes plans for my vacation and tells me when I’m leaving the office and where we are going.

Only once I’ve left the office that I realize how much I needed to take a small break.

So I’ll be back next week, catching up on email and starting on some blogging again (which became sparse when we were trying to hire 5 people due to the incredible amount of time hiring good people takes).

In the meantime, here is a great quote that I started my reading week with from Ester Buchholz.

Life’s creative solutions require alone time. Solitude is required for the unconscious to process and unravel problems.

Others inspire us, information feeds us, practice improves our performance, but we need quiet time to figure things out, to emerge with new discoveries, to unearth original answers.

On Fri 27 Apr 2007. [4] Comments

The number one job of any leader is talent development.  Recruiting, retaining, equipping and developing the talent in your team is the not only the most critical part of creating a successful company it is also the hardest.

Raising financing takes time. Dealing with customers, partners and earning revenue takes time. Working on product and getting any of the millions of tasks done that need to be accomplished to be able to afford to employ anyone takes time.  Once an organization has accomplished all these tasks and has enough money, or business to justify hiring it is often hard to switch gears on your plans and go slow enough to allow you the time to do hiring well.

Hiring is the item that most companies don’t plan for or make enough time for.  It takes a lot of time to do well, and there are always areas to make changes or new talent that needs to be developed to fit the businesses changing needs.   Scouting, developing and nurturing top talent is something that is a full time job of the the entire senior management team. 

Just like sports coaches are constantly working on finding the right mix for a winning team, there are constant tweaks and changes that need to occur and a huge payoff for finding the fit that allows a great winning team to begin to form.

Despite the payoff it is surprising that many times hiring gets pushed back as a priority, often being delegated completely to 3rd parties or outsourced entirely by using offshore contractors to build core intellectual property.  

Management personally spending time in recruiting top talent is the best investment any leader can make.  Hiring top players, who have the intelligence, passion and are a cultural team fit in the right positions is the single biggest leverage a management team has in building a successful company.

In addition to taking the time to record a video for one of our job postings (others are coming soon) I’m spending a lot of time personally scouring the worlds campuses, local technology firms and the Internet for top talent.  A huge percentage of Zero-Knowledge’s staff moved to Montreal to work with us because we recruited across Canada, globally from Silicon Valley to Europe and throughout the world.  When looking for talent, I spend a huge amount of time searching for top people regardless of where I have to look to find them.

Top talent loves to work with other top talent.   For Internet web software companies in Montreal there is an incredible number of great people working in the video game & graphics industry, creative agencies, corporate marketing departments and throughout the world on University campuses that are interested in great Montreal opportunities if you reach out to them.

Often time great people are being unrecognized in their current jobs, or have a life long passion for working for a small startup company, or on a product that can make the world a better place.   The only way to find this out is to meet a huge number of people and see if your dreams match with theirs.  Top talent is never looking for jobs.  Jobs need to hunt out top talent.  That takes time, and requires every tool in the shed.

Internet video is a tool that offers great promise to help in recruiting online. It allows for the hiring team, and company to put their message out there and start a conversation with candidates.  It is just another tool though.  The companies top leadership needs to love recruiting the best people and be willing to invest the time to reach out in every way possible to meet potential candidates. 

The company needs to make recruiting top talent a top priority. It takes putting some of your companies best sales people out there spreading the word about why your company is the place for top talent to come work. It takes hiring with your heart on your sleeve with passion.

Here is a little video I shot recently while driving to UC Berkeley on a recruiting trip.   Just some random thoughts on recruiting while I was driving.

If you are a Web Developer/Integrator (Javascript/HTML/XML) , Flash developer, Graphic Artist, Illustrator/Comic book artist, Python Developer or Web Application Architect available for consulting or full time positions then please introduce yourself. 

An interest in or experience with Internet startups, online multi-player games, game development, online web communities, social media or so called ‘Web 2.0′ tools and technologies is a great plus.  Akoha is recruiting for a few positions right now, but we are hiring throughout the summer and into the fall in these areas and are interested in meeting talented people.

On Fri 23 Mar 2007. [2] Comments

Sometimes the light’s all shining on me
Other times I can barely see
Lately it occurs to me
What a long strange trip it’s been.
Truckin, Grateful Dead

I wrote this post in October 2006 but delayed in posting it until I had time to get comfortable with blogging. Although I’ve edited it a bit in the last couple of weeks before posting, most of the content remains the same. I attempted to write a shorter version of it recently, but decided that I would retain the original format of the post I wrote almost six months ago. It is fitting that I’m posting this from the TED conference since it was the TED conference that inspired the idea for my new project, leading me to leave the company I founded with my brother & father.

It was almost a decade ago in the spring of 1997 when Hamnett and Hammie (my brother & father) and I had just sold our Internet provider Total.Net and had begun to work on a new venture. Our new company was based on the idea that we could build a number of services to protect individuals privacy and security online by making military grade encryption and privacy technologies easy for consumers to use.

There was a very large discussion going on about the fears of Internet users regarding privacy and we felt we could make a positive impact on millions of peoples lives with our solution.

While trying to come up with a name for our new venture, I developed a list of all the encryption & privacy related concepts and keywords that I sent to Hamnett & Hammie. It was my father, Hammie who in a meeting at my apartment keyed onto the words Zero Knowledge from a description of Zero Knowledge Proofs that I had sent around. Shortly thereafter Zero-Knowledge Systems was born. At the time, tongue in cheek names were all the rage and everyone was trying to stand out in the crowded early days of what would become the dot.com boom.

We knew going in that we would catch a lot of grief at times with a name like Zero-Knowledge - but we wanted to stand out. We stood for something different, and the name just seemed to fit.

Our Incredible Journey

The name of course, was only the beginnging of what would become an incredible journey that has lasted almost a decade for me personally.

Our staff would go on to plaster downtown Montreal and our office neighborhood with stickers proclaiming “Changing the World with Zero-Knowledge”. I’m still having to turn down requests from people who want to get some of our old T-Shirts or posters. We wanted the world to know what we stood for - power to the people - privacy for all - we were passionate about changing the way the future would look. We were social entrepreneurs believing that we could both make a profitable company and a contribution to the betterment of society at the same time.

I began capturing notes, journal entries, photo’s and video of the companies ascent early on. I had the idea of writing a book about the companies experience one day. This may have been youthful hubris & arrogance but at the time I was confident we would be a billion dollar company eventually and people would want to know how we did it. Given the time this was not a crazy idea, but you could say I was literally Chasing Billions with Zero Knowledge.

Did we ever have stories though, lot’s of good stories.

Over the course of the next nine years I would rub shoulders with incredible industry and world leaders, extremely well armed cypherpunks, brilliant scientists and luminaries of the technology and venture capital industries. (Too many links to post, but Google has a decent memory of my past activities you can peruse if you are curious.)

I began to spend time with incredible people actively involved in changing the world. I gave speeches at the World Economic Forum, traveled the world meeting and working with global leaders on issues ranging from Ethical Technology Design, Privacy, Security, International Cybercrime law, Canada’s technology innovation strategy, net neutrality, technologies role in social responsibility and many meetings on technology & human rights work.

Amidst the world travels we would also become media darlings, appearing on 60 minutes, CNN, WSJ, NY Times and in hundreds of publications as we became one of Canada’s highest profile Internet startups and acted as a regular expert on the issues of Internet privacy and security.

We brought innovative Silicon Valley style recruiting & retention ideas to Montreal as we exploded onto the Canadian technology scene.

We conducted intelligence agency briefings with most of the alphabet soup agencies, battled killer typhoons in asia, and were taxied to silicon valley in private jets as investors wooed us. We set Canadian records for our financing’s and for awhile were members of that generation of dot.com media darlings.

The Tough Times

There were also a lot of very tough stories and painful lessons we had to learn.

Reducing our head count by the hundreds because of undisciplined growth while reacting to the meltdown of the private and public equity markets. Managing teams while teetering on the edge of bankruptcy as we restructured debt, getting out of potentially crippling lease obligations & negotiating a recap with the investors to keep the company going. We faced the challenges of discontinuing the companies flagship product and having to completely reposition the companies products, target market, technology and structure while trying to keep the doors open.

We would experience some of the downsides of being media darlings as the companies shift in direction and layoffs became popular targets for reporters writing about the dot.com bust. Articles with sentences like “Blood runs in the halls at Zero-Knowledge as the firing carnage continues” to report our reductions in staff made each step that much harder as the articles made their way to partners and customers.

In early 2003, as the company started to generate positive cash flow - I started joking with my brother that if we ever told the inside story of our rise, fall and survival through the bubble that we should call it Chasing Billions with Zero Knowledge.

The phrase struck me as a fitting moniker for our own journey as a company, some of the investment trends that contributed to the dot.com bubble, and many of the ideas & entrepreneurs I encountered.

To be clear, I believe that most every company begins with zero knowledge. Assumptions and theories abound but actual knowledge of what the future may hold for the company is a pipe dream. There are so many questions from team, to product, to competitive landscape that the only real bet you can make is that shit will happen and things will need to change. Every enterprise begins with zero knowledge.

The process of building innovative enterprises requires experimentation and failure. How much experimentation is a function of risk appepitite and cost of money. The cost of money was incredible low and the risk appetite for technology stocks were so much in abundances that we were fielding random calls from retail investors looking to buy stock or get on a waiting list for the IPO for almost 2 years before we even had revenue.

I don’t believe even now in hindsight that we were ever chasing billions while clueless. We proved ourselves able to play by the rules of the that time and raised money and built real products & teams in a way that the market was rewarding (Getting big fast, become the market leader by the size of your brain trust and the broad range of your opportunities).

When the rules of the market changed, we changed with them and made sure we could continue to work with customers finding a business model and customer profile that would grow with us. We made a lot of mistakes that in hindsight now seem obvious. But we rushed into our mistakes recognizing them as valuable lessons and we were eager students.

A New Story - Radialpoint Emerges

I often get questions about the fate of Zero-Knowledge Systems. For those interested in our early experiences as a company, I’m posting a case study done by Professor David Phillips that was written over the course of many interviews and on site visits with our staff throughout the early days of the company. David recently sent me this copy to distribute.

Zero-Knowledge Systems - An Early Case Study in Systems of Surveillance. David J. Phillips, Professor University of Toronto

It highlights some of our successes, mistakes, and our early adventures as a company.

It is an account of the early Zero-Knowledge history (it ends about 2001/2 as we made the transition into the Radialpoint business and turned the company around). Like with all accounts, it can never capture even 5% of what was occurring behind the scenes, but it captures much of what was occurring around the company and provides a good account of our early rise and fall from grace.

When we started Zero-Knowledge my internal email signature carried the phrase “Make new mistakes more often”. Our team culture helped us to react and evolve as we saw new opportunities, identified failing products and responded to the dramatic shifts that occurred in the capital markets.

Zero-Knowledge Systems not only survived but changed its name and is now a thriving company called Radialpoint.

The company has emerged as one of Canada’s fastest growing technology companies, Quebec’s 2nd fastest growing technology firm and a market leader in managed consumer Internet services for broadband providers. The company has been profitable for years, is growing quickly and is now providing Internet value-added services for a community of more then 20 million broadband subscribers through its broadband provider customers. This is one of the largest aggregate broadband subscriber bases in the world.

Writing about the last bubble bursting and the dot.com graveyard that ensued was popular sport for many members of the media. Now we have reporters writing about the impeding Web 2.0 bubble and asking when it will burst. I think enterprising reporters could do well to explore companies such as Radialpoint that have survived the dot.com fallout and emerged stronger, smarter and battle hardened. There are great stories out there for those reporters not just looking to write about what Apple announced.

While I know this story well, and I believe in it with all my heart, the Radialpoint story is no longer my story to tell. The story of how Radialpoint emerged from the dot.com bubble and became one of Canada’s largest software-as-a-service companies that quietly cornered the ISP market for desktop delivered services will be told someday.

That story will be told by my brother, father and the team that continues to work with them there. It is their story to tell.

The team working there deserves to take a bow and get full credit for the incredible work they have done. I’m no longer part of the day to day operations at Radialpoint- so I will not be posting about it’s business on this blog.

I left Radialpoint, in June of 2006 to work on my new projects. This was a very difficult thing to do, but I was no longer the right person to help lead that company.

After the sabbatical I took to help my brother fight and ultimately die with dignity from his battle with cancer, things changed for me. It took me awhile after his death to find my footing again, but I needed to do that outside of the company in an area that I felt I could make a difference in the world. My mind and heart had drifted into a new domain and I couldn’t both follow my heart and try to do the work that Radialpoint needed at the same time.

I remain an investor, friend, family member and supporter in every way of Radialpoint and the team there.

In many ways, the team from Radialpoint plays a heavy influence on the work I am doing now since I learned an incredible amount from my brother, father, our managers, our teams and the staff we had. In the school of hard knocks and practical entrepreneurship I was incredibly lucky to have the mentors, partners and teams that I did.

I want to thank all the teams that worked with me throughout the years. I can say without a doubt, I learned more from you then the other way around.

Large amounts of thanks goes to the my brother and father, our management team (especially Marty, Veronique, Carlos that I worked with so closely) and all the direct reports and teams throughout the years. I also need to thank my assistant for almost a decade, Elizabeth. She has had the pleasure of seeing me at my best, and worst - and was always there working hard to make sure that others only saw me at my best, which I’ll be forever grateful for.

I had the incredible opportunity to work with family, an incredible management team and hundreds of bright staff as they navigated the changes required to keep our company thriving. Their support of my eccentric ideas, my crazy personality and most of all their support of me leaving to do a new project was crucial to me having the confidence to tackle what I’m now working on.

Billions with Zero Knowledge - The Blog

Since I won’t be blogging about Radialpoint that much, and my new project will most likely be operating under the radar for awhile this blog is very much a personal sandbox for me to play in. I’m not marketing or selling anything (at this point) - just having fun and looking to be part of the conversation.

I’ll be writing about topics that I feel I can add some unique point of view too. I won’t be covering or reposting other stories, tracking the latest moves of other bloggers or any specific industry.

I’ll be writing about the topics I care most about which are,

• The state of the Canadian startup scene from an entrepreneurs & angel investors perspective
• Promoting Canadian entrepreneurs
• Social Entrepreneurship
• Grass root authentic conversational marketing, Social media and Angel Investing
• Online communities, open innovation and collaborative open source models for community production
• World Hacking (finding easy hacks to make the world a better place), World Changing

One of my major complaints on all the government committees I participated on for innovation was the lack of a strong culture of mentorship in Canada. This combined with a little bit of angel investing from experienced entrepreneurs could help us nurture the next generation of startups and provide a farm system for the venture capital industry. I’ve seen this model work throughout the world in creating a culture of sharing of experiences resulting in the bundling of great advisory experience coming with risk capital.

I have been very fortunate to have had the experiences I’ve had and I hope by sharing my experiences that I can help a new generation of Canadian entrepreneurs begin to shape their own dreams.

My tagline for this blog is “Changing the World with Little Bits of Knowledge”. I believe that there exists within the technology community the power to change the world both for the good and bad, and I hope my projects and this blog help play a small but meanginful role in the postive aspects of this change.

On Thu 8 Mar 2007. [13] Comments

While in Toronto recently I took the opportunity to sit down with my StartupCamp Canada co-organziers and community instigators Rob Hyndman, David Crow and Stuart McDonald.  StartupCamp Canada is now a go.

We are still finalizing the date, but it will be in the last half of June in Toronto.  (The final date will be announced in the coming weeks). It will be a full day packed with some of the top Canadian entrepreneurs from all over the country and the world.  We are going to mix presenting content, doing small team coaching and providing lot’s of chances for interaction with entrepreneurs, VCs and technologists interested in the Canadian Startup scene.

Here is a quick video I shot while we were having breakfast yesterday in Toronto.

I was attenting the Canadian Venture Forum and frankly the entire situation was depressing.  Even some of the VCs on the nominating comittee for the conference were tellling me they couldn’t get companies without business models or revenues to be accepted and were tiring of the entire futile excercise of doing the conference.

Most of the serious venture investors I know didn’t bother to attend and if they did it wasn’t to look at companies to invest in, it was to say to hi to a few friends and they generally popped in for a few minutes and left the conference.

It was more like a meeting of aging Canadian bankers then anything I’ve come to know as a venture conference.  At every venture conference I go to, there is an engergy in the room, excitement everywhere and you can see deals being fought for in the hallways and companies leave the conference with term sheets. 

This conference was very indicative of many problems of our venture industry.   The program had some good speakers (David Lawee & his wife Lorna were great) and the Toronto Venture Group is working hard to promote Canada but I feel most of the good content was wasted on the audience and the quality of the presenting companies and venture investors to listen to them was dismal.

Instead of just complaining, we are hoping to build off the experience of Democamps, Barcamps and StartupCamp in the Valley to put together a conference based on sharing first hand experiences that helps entrepreneurs succeed.  

Some of the topics and sessions we are considering,

• Private elevator pitch coaching with top entrepreneurs who have succeeded in raising large amounts of funds, and building great businesses.
• Lot’s of panels with entrepreneurs sharing practical lessons on how they build their Canadian companies and the problems they faced.
• A BoF session for early stage entrepreneurs discussing the challenges they are currently facing in building their companies.
• What can the Canadian technology commuity, governments and entrepreneurs do to better support an early stage startup community.
• Entrepreneurs guide to understanding early stage financing & company creation (Love money, angel money, IP rights, partnership & shareholder agreements, first VC round, strategic partners).

These will be multiple sessions and we are still working on the agenda, so if you have comments or things you’d like to see included please let us know.

Please head over the to wiki and sign up, and let any of the organizing group know if there are specific things you would like to see on the agenda.

On Wed 7 Mar 2007. [8] Comments