In an effort to spur on their local economies, many provincial and city officials have been wondering what it takes to create the next Silicon Valley. From cities in Canada, the U.S. and worldwide, we’ve seen the emergence of numerous policies all designed to encourage start-up activity. There have been taxpayer-sponsored VCs, mentoring programs, generous tax credits and direct subsidies, accelerators, incubators, and co-working spaces.
These may all be important programs that have some effect on changing the trajectory of a local ecosystem, however they neglect one key fact: great companies are built by great entrepreneurs who succeed despite an imperfect ecosystem, despite a lack of local capital, and despite the absence of good mentors. In other words, great entrepreneurs make it happen in unlikely places.
A prime example is how Greg Zeschuk and Ray Muzyka built Bioware in Edmonton (a city that had no gaming talent or large tech ecosystem to speak of). Bioware was later sold to Electronic Arts for $860M.
So does this mean that local governments are powerless when it comes to attracting special entrepreneurs like Zeschuk and Muzyka? Should they just sit back and see what happens? Not necessarily. Lately I’ve been wondering if there’s a role for a local Chief Talent Officer, whose focus is to attract the best and brightest to their cities and municipalities?
For example, some of the questions for a Chief Talent Officer to consider include:
- How can you implement (or lobby the federal government for) entrepreneur-friendly immigration policies like the Startup Visa?
- How can you contribute to make the local universities best in class?
- How can you support local accelerators / incubators whose focus is to bring in talent from out of town?
- How can you brand your city / province as a desirable place to live for the creative and entrepreneurial people you are targeting?
- How can you make it as easy as possible to start a business in your city?
This is no easy task, as all these areas span the authority of many different institutions and organizations. I’d imagine the Chief Talent Officer would spend the bulk of his/her time persuading other people and departments to do the ‘right’ thing. Yet I’m growing increasingly convinced that this is the only lever for large-scale, long-term results.
Helping an area’s local entrepreneur community is important, but that along won’t change the game or spark the next hotbed of innovation. Attracting the best and brightest from all corners of the world will.
Globalization and immigration are often hot button issues, but they can be crucial to local economies. Over the coming months, I’d like to think deeper about how local municipalities can spur a tech upsurge, and welcome your thoughts as well. Stay tuned.
It’s the age-old debate among start-up circles: which is more important to the success of a start-up: the strength of the sales/distribution strategy or the quality of the product?
On one end of the spectrum, many start-ups think that great products sell themselves, while the other camp argues that it’s the channel and monetization that define a company’s success.
The simple answer to the question is you need both. To be successful, a stand-alone company needs a top-notch product and a clever distribution/sales strategy. However, there are a few nuances to add to the discussion.
1) Start-ups are generally more successful when the founders are product-driven. It’s typically much easier to add sales expertise to a product-driven organization than it is to add product focus to a sales-driven start-up. Sales is more of an execution game, meaning a start-up can hire senior executives to shape and refine the sales and distribution strategy. On the other hand, a great product requires great leadership with the right product instincts. Those intangibles are usually much harder to add.
2) Sales-driven companies can turn into service organizations. Sales-driven companies are often focused on maximizing short-term return on investment and this mindset can shape product decisions. The natural consequence is that sales-driven companies can evolve into service companies as they are stating to build every feature that clients are asking for instead of following a long-term product vision.
3) The consumerization of IT is putting more emphasis on product. Historically, software and products were sold to a company’s purchasing agent and CTO. The sales cycle hinged on the ability of the vendor’s sales team to make the right contacts and manage the sales process and relationships from start to finish.
Today, it’s a different story. The CTO and other management no longer serve as gatekeepers for which products are used in the organization. Products are now introduced directly to end users. This trend has a double impact (and both in the product-driven start-up’s favor):
- Small start-ups that don’t have a large sales force can now sell their products in the enterprise.
- The enhanced role of the end user in buying decisions makes the product experience all the more important. Good products that are easy to use take hold in this environment.
While the sales cycle may be changing, start-ups still need to focus on their sales and distribution strategy. Products, no matter how great, usually don’t make money on their own. As a result, product-driven companies need to focus on distribution in order to succeed in the long-term.
It has been almost a year since the initial launch of Version One Ventures and the first 12 months have been very busy with about a dozen Seed and Series A investments. So it is time to get some help to manage the fund and I am excited to announce that Version One is hiring an analyst.
The analyst position is a two- to three-year role where you will learn about what the venture capital business is all about and get the chance to work with some interesting startups. The primary responsibility of the analyst is to help manage the day-to-day activities of the fund, including:
- Helping to identify new and interesting entrepreneurs and companies in the 3 focus areas of the fund (e-commerce, SaaS, marketplaces/platforms)
- Performing market research and due diligence for potential investments (interviewing customers/users, testing products and services, and/or financial modeling)
- Helping with reporting for our investors, including writing quarterly updates and preparing LP advisory board meetings
- Working with existing portfolio companies, including helping out with hiring, financial modeling, and research
- Executing projects of your own direction that help Version One and/or our portfolio companies
We’re looking for someone who demonstrates:
- Native understanding of the ecosystem of web and mobile products
- Strong written and oral communication skills
- Good product instincts – you get what a great web or mobile product is made of
- Strong interpersonal skills – you’ll often be talking to entrepreneurs and other investors
- Good Excel modeling skills
- Ideally, prior design or programming experience or work in an investment or internet-related position
As Version One is investing across North-America and has portfolio companies from New York to Seattle, Los Angeles to Toronto, you should also be excited about travelling and “airbnb’ing”.
If you’re interested in the position, please send me an email at bwertz [at] versiononeventures [dot] com. Your email should contain 2 things:
First, I am looking for links that represent you. Linkedin is good but I am generally more interested to understand how you think and what you do: your Twitter account, your blog, a website you built, a project you helped. Second, I would like to get your take on 3 questions: “Why do you want to work at Version One Ventures?”, “Which web and mobile products most inspire you and why?”, and “What is the biggest insight you recently had about start-ups?”. Please limit your answers to 2-3 sentences per question.
Applications are open until Friday, June 21. The position is available immediately and is based in Vancouver, B.C.
If you have questions, please leave them in the comments below. Looking forward to hearing from you!
The easiest path to growth and profit is up, and the most deadly attacks come from below
This quote from Clayton M. Christensen’s The Innovator’s Dilemma perfectly encapsulates how startups can find success over incumbents in their markets. Incumbents often look left, right, and above – yet sometimes they’re most vulnerable from below. The tiny market niches and startups who play there are often too small to capture an incumbent’s attention. However, it’s these small startups that begin in the long tail that have the capacity to disrupt over time.
For example, Hootsuite started as a free Twitter tool for small/medium business and casual users; it’s now a social media dashboard serving Fortune 500 companies like Seagate and Pepsico. Zendesk initially focused on tech startups and now has more than 30,000 clients including global giants like Disney and Vodafone.
For startups, the message is that you should develop your business in the long tail, focusing on those customers in your market that the incumbents don’t care about. For example, Clio, a company in my portfolio, first focused on providing legal practice management for solo lawyers and very small firms (today, Clio is now serving firms with over 50 lawyers).
Narrowing your focus to a smaller piece of the pie offers several advantages. First, customers in the long tail usually require a smaller feature set which means that you can get a MVP into the market faster. Second, you have the unique opportunity to tailor your solution for a few particular use cases… and thus make a superior solution for a certain segment of the market (one that’s much more useful than a one-size-fits-all tool from an incumbent). This will enable you to build a community of loyal, passionate customers.
In addition, by focusing on selling to smaller companies in the long tail, you’ll benefit from shorter sales cycles. Smaller businesses are far more agile when it comes to purchasing and deploying a new technology than Fortune 500 companies. It would have been a much different story had Clio first tried selling a cloud-based management tool to large legal firms (which are notoriously slow to adopt anything new).
As you build out your product and develop a brand in the long tail, your reputation in the market will spread. Enterprise SaaS products can be viral, as companies are tightly connected to dozens/hundreds/thousands of suppliers, customers, and partners. High utility products are shared, enabling you to extend from the long tail to win larger accounts and move up.
Start-up success typically boils down to three elements: hard work, talent, and luck. Yet when we dissect the successes and failures of other start-ups, we tend to focus on the hard work and talent of the team, completely disregarding the important role that luck (or the lack thereof) may have played.
Luck definitely played a huge role in my career, both on a company-level as well as a personal level. In the early days of AbeBooks, our company got lucky twice. Luck struck first when Barnes & Noble approached us to become a reseller of the books of our sellers. This immediately doubled revenues of our sellers and attracted more inventory to our site. And then luck came again, when Amazon bought our competitor Bibliofind and folded it into the main site. This led most sellers to leave Bibliofind and join AbeBooks.
I’m certain that without both of those events, AbeBooks would most likely never have become the uncontested market leader in the used books space. And while one could argue that our hard work and talent created the right environment for Barnes & Noble to approach us, I have no doubt that both scenarios could just as easily played out another way…completely altering the course of events.
And I also got lucky a few times on a personal level. Back in 2003, I felt like leaving AbeBooks and starting something new, but my parents convinced me to stay at the company. That proved to be the right decision, as most of the success of AbeBooks (including the ultimate exit to Amazon) came in the subsequent years and defined my career.
What’s the moral of these stories? Don’t underestimate the power of luck in shaping the future of your start-up. For some this may be unnerving…after all, luck may play such an important role, yet we cannot do anything about it. However, instead of worrying about luck or fate, focus on what you can control. Aim to create the right environment for luck and its opportunities to take hold.