As some of you know, I have experienced some recent [ahem] frustration while trying to build a technology business in Vancouver.
I experienced some catharsis last night reading Kevin Curry’s (is he a real person?) comments on the Vancouver startup scene over at TechVibes. You should really follow the link and participate in the discussion @ TechVibes, but I have pasted my thoughts and response below as well, for posterity:
I, too, had the opportunity to both work and raise capital in Silicon Valley. While I think every city has its fair share of bad, mediocre ideas (the Valley has lots too — see MC Hammer’s latest enterprise) I believe that the far more common theme here is ideas that are derivative, in which the best hope for success is a bunt, not a home-run.
Startups are supposed to swing for the fences, but there are too many startups here who fail to understand market limitations and try to boil the ocean. I spoke to a pair of entrepreneurs who honestly believed that they could replicate craigslist, zagat’s, epicurious, citysearch, and about half-a-dozen other best-in-class sites with a few hundred thousand dollars and no technical skills between them. I was embarassed for them.
The opposite problem is also true here: people looking at a technology sector and deciding they want to be in that space, without a clear idea of what the product will look like. That too is the wrong approach.
The best services and products solve problems. I’m not suggesting that RosterBot is the end-all be-all of web services, but it’s as successful as it is because it addresses a need, and I as an entrepreneur and athlete happened to experience that need so I was well-qualified to figure out how to solve it. It solves an obvious problem with some effectiveness, and it was built within the parameters, opportunities, and limitations that govern it.
Is it the next Google? Obviously not… but it was built entirely without outside funding and without defocusing me from other career obligations and objectives — and it’s beating other “Social gaming” sites because it is laser-focused on addressing the real needs that teams have.
I too have experienced major frustration with investors in Vancouver. I have always been comfortable saying “I don’t know” when, in fact, I don’t know something. This always played well south-of-the-border, when used in good measure, but here investors are looking for any sign of weakness to exploit in an entrepreneur and immediately go for the jugular.
There is a lack of respect between entrepreneurs and investors in this city. For the most part, I think that disgust is earned by both parties. To fix it, you’ve got to start from the top.
Vancouver has no successful mid-size (in U.S. terms) venture-backed technology startups. You can’t expect someone to go from junior individual contributor at a tiny aenemic startup to CEO of another aenemic startup in one step. With respect to many of the smart engineers I’ve met who are running small companies here, this is too often the case — and because they’ve never managed others or driven strategy and marketing, the results are predictable.
The lack of an informal apprenticeship system for information technology, such as exists within the medium to large technology companies in Silicon Valley, means there is little opportunity for workers to gracefully climb the ladder from junior engineer or marketer to senior management or company founder. Lots of folks have skipped this, and with some success — but I would submit that this is more due to happy accident and raw talent than anything else. So the catch-22 is that we need successful startups — who can stand on their own two feet, and not flip to the lowest bidder — in order to create more successful startups.
In the meantime, consider the following: we don’t need capital sources that are Canadian in order to nurture executives and companies on the Vancouver technology scene… and in fact doing so is putting the cart before the horse.
The Film and Video Game industries in this city are examples of technology-centric businesses that have developed and flourished within Vancouver, creating tens of thousands of jobs each, with capital from outside the city.
What we need to do is nurture programs that make it advantageous to invest, and remove the red tape from investing, in Canadian (and BC) venture startups for foreign VCs, and work to lure them to our city and province. This will attract capital from south-of-the-border, where investors are more seasoned and better-connected — and can bring more capital and greater exit opportunities to bear. These more seasoned investors will also act as a natural weeding mechanism to separate the wheat from the chaff in the local community, and they’ll force local investors to be more competitive and to bring more value to the table if they wish to participate in the upside opportunities. Honestly I think local VCs would appreciate and welcome the help and wisdom of their bigger cousins.
Solve the capital problem, and the other problems will fall into line over time. You’ll get mature, free-standing, profitable technology companies with seasoned entrepreneurs and middle management running them. We will all benefit.