Me: “You mean right this second?”

CEO: “Yeah”

Me: “I am writing a blog post about Vancouver’s tech investment community”

<slight pause>

CEO: “That should take about five words”

Ouch.

First, the good news:

There is enough of an investment story locally that this post is approximately 560.27 times longer than expectation.  In fact, there has never been a more robust technology investment community in Vancouver. In the past couple years, it has increased significantly in both breadth and depth.

Now the bad news:

There is no where near as much capital in Vancouver as is needed to support our ecosystem. Our lack of investment is holding us back.

After spending five months traveling and facilitating Startup Weekends in dozens of communities around the Globe, Joey Aquino wrote a fantastic post about Vancouver titled: “Out Of All The Places I’ve Been Here Is One Place Investors Need To Start Looking At…”

He identified our world class combination of entrepreneurial and latent creative talent as a huge asset. Unfortunately, Joey also notes that the volume of local investment is insufficient to support the ecosystem.

Our lack of investment leads to a cycle where our most talented entrepreneurs (like Andrei Pop, Jon Chui, Jordan Menashy) leave for locales south of the border as they can’t find the underlying investment and opportunities in Vancouver. Increased injections of capital would go a long way to boosting retention of Vancouver’s most promising talent.

As an investor, there had never been a better time to invest in Vancouver. As an entrepreneur, here are some stones to look under:

What it is: IRAP (Industrial Research Assistance Program) is a government program designed to spur innovation in Canada. It was launched post WWII to inject entrepreneurial capital into the country. Recently, the Harper government has directed increased resources towards IRAP.

When to Contact: It is never too early to get in touch with an ITA. Even if you are just starting out, you want to make sure the IRAP folks are aware of who you are, what you are doing and where you are going. If you are in the web space in the Lower Mainland, the ITA you want to collaborate with is Rizwan Kheraj. Rizwan is a former entrepreneur with exits and is a wealth of information about technology in Vancouver. If nothing else, fire him an email with the title “Please add me to your mailing list”. His regular mailouts will keep you abreast of the various government programs available to you as a technology entrepreneur.

IRAP works by funding projects. Projects are particularly risky portions of your product that have some degree of technical uncertainty. In general, they will fund up to 80% of salaries for full time technical people and 50% for contractors. I have heard rumblings that there is now funding available to cover portions of other overhead costs like project managers and market validators. IRAP does not take any equity in exchange for the funding.

IRAP is never the only money in a project, meaning you have to have other sources of funding to support the costs of the project IRAP doesn’t cover which could include personal savings, investment or sales.

Like all Gov’t programs, IRAP funding is cyclical. In general, money is earmarked from November to February to be allocated beginning April 1st. Fortunately, unlike previous years, in 2012 the budget was not fully allocated until August. Hopefully that trend will continue and IRAP will be able to build a funding schedule that supports entrepreneurs year round. Fingers crossed this will happen in 2013.

Tips for Success: First and foremost, you need to recognize the metric that IRAP’s success is measured on. Unlike traditional investors whose primary concern is return on capital, IRAP is measured on its ability to create jobs in the Canadian economy. In any dealings with IRAP, make sure you address your commitment to growing sustainable technology jobs in the Lower Mainland.

Other Gov’t programs to check out if you are looking for larger funds include: Canadian Innovation Commercialization Program (CICP) and the Canadian Media Fund (CMF). I received a small amount of funding from IRAP in 2010 and collected the experience in this blog post.

Two years ago the list of Vancouver Angels would have been: Jason Bailey, Mike Edwards and Boris Wertz. Thankfully this list has multiplied.

In general, an Angel will invest somewhere between 25K-100K. An ‘Angel Round’ is when multiple Angels get together for a total of 500K-1M. In an Angel Round there is usually one lead investor who will write the largest cheque and will reach out to other Angels as an advocate on your behalf.

Mike Edwards

Niche: Is it fair to say “everything”? Mike’s investments range from Clean Tech to Social to Analytics to Stocks to Games to Restaurants. His investments thesis has spanned from “only female founders” to “people who suck at pitching” to “Mack Flavelle” .

Mike is far and away the most active investor in Vancouver, winning BC’s 2012 Angel of the Year and somehow was nudged off the Canada-wide version of the same award by Dan Martell. smh.

Activity Level: What comes after prolific?

Tips for Success: Mike has told me he never gives money the first time you talk to him. One of the things he looks at it is the ‘Sun Principle’ which is equates to: Each time you talk to him, do you have a new key founder, employee, investor or advisor? Are you attracting the people you need to succeed the way the Sun attracts (and holds) planets?

Dave Johnson

Niche: I don’t think I have met Dave. Dave was one of the founders of Nitobi (acquired by Adobe) and he invested in Skyscrpr. I have no idea how active Dave is going to be going forward, but Nitobi are the creators of Cordova (née PhoneGap) and I would imagine that most of his investments would be either in developer tools or have a large mobile component.

Activity Level: Unknown

Tips for Success: No idea, help appreciated.

<update>

@jjheaslip just have a look at my angel list profile for more (eg storypanda and 7geese) great write-up btw :)

— dave johnson (@davejohnson) February 6, 2013

Dave’s Angel List Profile

</update>

Ryan Holmes

Niche: Ryan has gotten involved as an advisor and investor with a number of startups including LaunchRock, Wantering and 7geese. All of Ryan’s portfolio seem to have a large social component.

Activity Level: Rising. With Hootsuite divesting some of their risk in mid 2012, Ryan was able to take money off the table and write some cheques.

Tips for Success: Ryan is probably the busiest tech person in Vancouver. For maximum value, make sure you have a product that he can easily see the value of in seconds. Also, he would likely be interested in products that can ease the pain points of managing/growing an ever expanding team as it scratches his own itch.

Jason Billingsley

Niche:  Jason was a founder of Elastic Path which is a Java e-commerce platform.  Jason has a great understanding of the e-commerce space and his recent project is in the Real Estate market.

Activity:  On the up and up.  Jason dipped his toe in by joining Food.ee‘s post GrowLab round. Hopefully he is just warming up that cheque-writing hand.

Tips for Success: Jason is a smart dude who cuts right through bs.  He has a fantastic understanding of the e-commerce space.  And he has a newborn, I would be willing to bet he would be interested in products related to new families.

Mark Payne

Niche: Mark is the former CEO of BCIC and a Mentor at ACETECH. He is primarily based in Kelowna, but frequents Vancouver. His passions lie around sport, music and travel and his background is in logistics.

Activity Level: Medium, Mark seems to make fewer investments, but takes on a larger role when he does. This is to the benefit of the teams he invests in. Above everything else, Mark is an absolutely fantastic guy to grab a beer with.

Tips for Success: Appeal to Mark’s passions and spend time getting to know him.

Boris Mann

Markus Frind

Niche: Markus has invested in a number of startups including MyDealBag and Offeron which are both in the daily deal space.  Obviously with his background at Plenty of Fish Markus has a great understanding of online dating and businesses that need to overcome network effects to succeed.

Activity Level: Low.  POF generates significant revenue and Markus keeps the vast majority of his attention focused on that product.

Tips for Success: Seems to me that most of the companies he fund work out of the the POF offices. It’s a long-term play, but going to work for POF could be a successful way to get on Markus’s funding radar.

Jason Bailey

Niche: Gaming

Activity Level: Dormant? Hard to tell if Jason has tied up his funding in the Rickshaw or is simply focused on making East Side Games totally bad-ass, but his cheque writing hand seems to have taken a pause in recent history.

Tips for Success: I would say it would have to have a gaming component. That being said, when I was working at GrowLab Jason told me he wanted to build Go-Karts with paintball guns on them. If all else fails, run with that.

Geoffrey Shmigelsky

Niche: Genetics and smart people. Geoffrey is one of the founders of Singularity University and had a recent exit with Androcyte.

Activity Level: Holding pattern. Geoffrey goes back and forth between Vancouver and the Valley. It’s unclear how active he plans to be locally moving forward. Geoffrey is a ****ing smart dude, let’s hope he takes a keen interest in what is going on north of the border.

Tips for Success: Geoffrey can more than hold his own in conversations related to web technologies, the guy can code. Although he provides great early product feedback, you are likely going to want to have something to show him.

Ralph Turfus

Niche: Ralph had early success selling management software to municipalities. Although he has certainly expanded into other industries, he has an exceptional understanding of the government sales cycle and would be an excellent advisor/investor in that space.

Activity Level: As far as I can tell, Ralph has been one of the cities more balanced and stable investors over the past decade.

Tips for Success: In the best way possible, Ralph is old school. If your business model is completely disruptive, this might not be the spot. However, if you are in more traditional sales environments, there are few in the city that have more experience selling and distributing software.

Peter Smyrniotis

Niche: Enterprise, Enterprise, Enterprise. There are few (if any) people in Vancouver who understand the B2E sales cycle better than Peter.

Activity Level: Going up. Although a relative newcomer, Peter has been active in recent months connecting startups with capital.

Tips for Success: For best results, a B2E play is almost a necessity. Talk to Peter early, but expect best results when you have a product in market with some level of fit and want to explode your sales.

Vantec

Full Disclosure: I have only been to one VANTEC meeting.

Based on the questions in the audience, there is an interesting combination of people that have a great understanding of the current technology landscape and some that are out of touch with what is occurring around them. If you are seeking funds, this is a forum you should absolutely explore, but be aware you are going to be pitching to a room of ~30 investors that run the full spectrum in terms of understanding Internet technologies.

GrowLab

What it is: GrowLab is a local accelerator that takes on ~5 companies, 2 times a year for about $25,000 in investment and takes back somewhere between 5-10% of equity depending on the stage of your company. If you are selected, you are matched up with one of the partners (Boris Wertz, Debbie Landa, Jason Bailey, Leonard Brody) or Executive Director, Mike Edwards. They kick your ass for three months and help position you to take on 500K-1M when you graduate.

When to apply: When you have a product with traction. The acceptance rate at GL is low, less than 5%. They used to joke that it was more difficult to get into Grow Lab than it was to get into Harvard. I am not certain that is still true.

Tips for Success: If you don’t have traction, don’t bother spending the time filling out the application. Given the number of applications, at best, I would guess that one team per cohort would come in pre-traction. And that team would be builders of exceptional skill.

In terms of team composition, Jason used to refer to the “Golden Triangle” as a key filtering component when selecting companies. That is having three key skill sets filled out by the founding team in some order:

1. UI/UX Wizard

2. Marketing Voice

3. Technical Horsepower

Most of the successful applications are known to the Grow Lab folks before acceptance. In the last cohort, two entries were members of the Launch Academy. Other teams are recruited actively from Eastern Europe and the Valley. You can boost your chances of success significantly by getting on the radar of one or more of the partners.

Venture Capitalists (VCs) generally invest when there is a proven business model that needs capital to scale market penetration and sales. Unless you have exits on your resume already, this is not where you are going to get your first funding. However, it is still important to engage VCs early so you can plant the seeds of your company’s story arc. Generally speaking, VCs write cheques in the 1M+ range.

There is a general shift in Vancouver of money that has been traditional tied to mining/resource investing shifting towards technology investing. Based on my conversations, the mining folks are not getting the returns they are accustomed to and are looking for alternative opportunities to invest. This shift is still in its infancy, but growing.

LX Ventures

What it is: LX Ventures is a publicly traded fund of technology investments allowing anyone to buy into an active portfolio of companies. Leveraging public markets is the ultimate in high-risk/high-reward investment. And there is no better team in Vancouver to do this than Mike Edwards, Keir Reynolds and Ray Walia

LX raised an initial round in the fall and made a half-dozen investments. They are closing a larger round in the near future and I expect them to be amongst the most active investment teams in Vancouver.

The investment thesis is going to be three pronged. First, there will be a number of standard tech investments. Second, they plan to acquire and consolidate teams in the same verticals. Finally, they plan to identify problems themselves and then build teams around the problem to execute.

When to contact: I don’t have a definite answer here, but basing it off their previous investments, you want to get in touch with them only when you have already been validated in the market and with other investors. ie. This isn’t the spot to look for your first money.

Cheque size: Although they have written smaller cheques, sweet spot is likely 250K+, especially if they raise another round as planned.

Version One Ventures

Boris Wertz‘s (relatively) new fund is a rumoured 10m. Boris started a rare book marketplace in Germany that was acquired by Victoria’s Abebooks (which he joined as COO), which was then acquired by Amazon. Boris’s sweet spot seems to be around e-commerce and SaSS businesses with significant traction and talented teams. He avoids social startups. If you are in the social space and Boris says “No”, don’t take it personally, I have heard from multiple people that he passed on early stage Hootsuite.

When to contact: Boris is the ultimate in German efficiency. Although you want to get on his radar before a transaction, you are best served by not wasting his (or your) time. In his eyes, a product demo link counts for exactly 1256.8 times more than a business plan. And knowing the answer to your (LTV-CAC)(Customers(1-churn)) matters 57.8 times more than a product demo. Please forgive my math, but hopefully you get the idea: More so than most investors, numbers matter to Boris.

Cheque size: Again, guessing here, but with the new raise Boris would probably be reluctant to write a cheque for less than 500K. Boris has levelled up from his times as BC’s 2011 Angel of the year and is now a full fledged VC.  From what I can gather, Boris does about 10 deals a year with less than half of them occurring in Vancouver.

Yaletown Ventures

I don’t know a lot about these guys. They have ties to GrowLab and made follow on investments with 2 companies from the last cohort. That to me suggests post-angel rounds with a cheque size minimum of 250K, likely edging more towards 500K+. They seem to major in Clean Tech with a minor in Internet Technologies.

Vanedge Capital

Founded by ex-EA Exec Paul Lee, Vanedge has made a number of investments in later stage companies in Vancouver. If you are in the gaming industry, they are great to connect with as a result of their expertise and domain knowledge. The team is personable and incredibly talented, including Tony Lam. Again, just guessing, but due to the size of the fund the cheque size is likely 500K+.

Vancity

A bank writing cheques to startups?  It is in fact true!  I have heard everything from 50K+ lines of credit to actual investments in companies with some socially responsible component.  This is a triple bottom line organization.  The person I have has conversations with at Vancity is Kalen.  Vancity is only going to work with companies that are fairly well established, but could be an interesting partner for the right team.

As you can see, there are a few funding options available in Vancouver. And 2013 promises to see an increase of that number. Anyone I am missing? Should your name be on this list? Where have you had the best success funding your projects?  If you are looking to invest or just have more questions, follow up with me about specifics.

Background:
Big Mama was founded my Ramona MacLeod to solve her own pain. As a student, she recognized that textbooks were an expensive line item and wanted find a way to reduce how much of her tight budget went to the University’s bookstore. Unlike most, she built a solution to her own problem and has since sold textbooks to thousands of students across Canada, “Improving their lives one textbook at a time”.

Action Plan:
1. Segment users to identify the top 10%
This is an important element in any growth strategy, getting more top users. Fortunately in ecommerce, it is easy to arrange your users in terms of total value. If your site is a social network or content site, you may want to use time on site or number of ads clicked as the metric.

2. Use the email addresses to connect to their social spaces via Full Contact
Full Contact is the service I used to cross reference from email address to social accounts like Facebook, Twitter and Meetup etc. There are certainly services available. Inserting a group of email addresses into Full Contact returns all of the social spaces associated with that email address. What you get back is a wealth of imagery, interests and topics for your top users.

3. Cluster the users by demographics and interests
With a moderate number of users, you can do cluster analysis by hand. For larger data pools, I leverage Mechanical Turk to help segment by race and age. Simple counts of interests and topics reveal where to focus your attention.  More complicated user bases need proper cluster analysis.

Ramona knew her customer base was more than 50% female. What she did not know, was that amongst her top users, nearly 90% were female and over 60% were Asian. Interests and topics bubbled up that allowed us to tightly focus our advertising efforts.

4. Talk face-to-face with segmented customers.
With a tip of the hat to the good folks at the Lean Startup Machine, this was the time to “get out of the building”. With clearly defined customer segments I hit campuses across Vancouver to understand current textbook purchasing habits of people matching the top user profile. Turned out their were large Facebook groups dedicated to book exchanging with fellow students. As a secondary channel, students use Craigslist to find the books they need. Speaking face-to-face also gives you an opportunity to listen for keywords your target audience is already using.

Results:
The result of this user base analysis dictated that we focus our growth and acquisition strategies on two channels, Facebook and Craigslist. Highly targeted Facebook ads were released. Because we were highly cognizant of the demographic profile and interests of our target audience, we were able to achieve high CTRs out of the gate. We are also exploring a Craigslist solution similar to that employed by Airbnb to access more of our target audience.

Conclusion:
Having a deep understanding of your top users can drive your advertising and positioning strategy. Current analytics tools do not provide this.  If you sell product over the internet and are looking to boost your sales by 25% over the next three months, get in touch.  Lets chat about getting you more profitable and influential customers.

For those of you that aren’t aware, POF is the world’s largest dating site and is entirely owned by CEO Markus Frind. The Pixel Crafters Meetup group had the rare opportunity to ask him a wide variety of questions about his business for about 90 mins.

(For a list of the questions and responses from last night check out Jamie Bueza’s excellent recap)

Spending an hour and a half sitting next to a man who hooks up more people than anyone on the planet was a fascinating experience.  Markus got into the dating world not because he was trying to scratch his own itch (he met his wife outside of POF) but because he was trying to learn asp.net so he could add it to his resume and get a better job.  Needless to say, the success of POF was a welcome side effect.

Markus finally hired his first employee when the site reached 15 million users (not a typo) and he could no longer cope with the customer service requests.  Since then POF has grown from a couple of servers in a basement of Main st. into a 66 person team spread over 2 floors in the Harbour Center with stunning views of the North Shore mountains.  Markus accomplished all of this without a dime of investment.  In fact, POF was profitable almost from the moment it went live.

Markus’s exacting nature drove home the message that as a entrepreneur you need to focus where you add the most value to your business and delegate everything else.  For Markus, his efforts remain on driving POF’s growth. In fact, if we put together a word cloud of his responses last night, there is no doubt the word “Growth” would dominate the image.

Like many successful entrepreneurs I have had the chance to meet, Markus was busy doing the actions that the rest of the startup world had yet to articulate and brand.  Today, what Markus has done since 2003 is called “Growth Hacking“.  However, for nearly a decade, Markus has been segmenting his users and focusing on retention, virality and growth to drive POF to the top of the dating landscape in dozens of countries around the world.  It seems to me that the most successful entrepreneurs are not chasing fads or researching trends but instead are following their instincts and focusing entirely on building a successful business.

Of course, Markus is not the only person in the Startup community who has identified Growth as the one KPI to isolate.  YC’s Paul Graham recently wrote an insightful essay on Growth stating:

“If there’s one number every founder should always know, it’s the company’s growth rate. That’s the measure of a startup. If you don’t know that number, you don’t even know if you’re doing well or badly.”

PG goes on to state: “During Y Combinator we measure growth rate per week” and “A good growth rate during YC is 5-7% a week. If you can hit 10% a week you’re doing exceptionally well”.  With compounding, a 10% weekly growth rate means your startup is growing at 142x annually.  This is the Hockey Stick curve every founder lusts after.  In the words of PG: “If you want to understand startups, understand growth. Growth drives everything in this world.”

If there was one take-away message from Markus last night, it was focus on growth.  If you have growth, everything else (including company culture) can be delegated.

Random Tidbits:

-When they tested flashier site designs at POF, more men signed up, which was unexpected.  In this two-sided marketplace, the men are the excess commodity, hence POF consistently rolled back to a more simplistic design.  The simple design also seemed to cross cultural and international barriers better than a more complicated and flashy design.

-Markus suggests the best opportunities in the online dating space are in markets where online dating still carries a social stigma.  Markus doesn’t recommend joining the dating market in North America but suggest going after a market like Greece or potentially the Middle East where there is not yet a dominate player.  The cost of acquisition in the local dating market is prohibitive.

-Mobile now accounts for around 70% of traffic to POF.  POF has yet to monetize on mobile and is instead currently focusing on user acquisition as this landscape unfolds.

-To overcome network effects, Markus used SEO and a fanatic attention to customer retention of his earliest users.

Score another victory for a Vancouver startup.  The talented Romanian duo from Summify and their dev crew were acquired by Twitter and relocated to the Valley.  While I couldn’t be happier for Cristian and Mircea (the stars of Startup Supernova2) there appears to be a pattern emmerging for the ‘successful’ Vancouver startup:

• Formulate and develop great product (Summify, PhoneGap etc.)
• Achieve product/market fit
• Accumulate thousands or millions of users
• Get acquired
• Relocate all or part of the team to the Valley

There are two different problems here:

1. “How do we get companies to the stage where there is interest from acquirers?”

2. “How do we get those companies to stay?”

How can we breed more Hootsuites?

You can not overestimate the challenge that Ryan at Hootsuite is taking on by being the flagship startup for Vancouver.  With Hootsuite’s level of market penetration and traction, there has likely been an acquisition offer that hurts feelings.  Yet Ryan maintains a commitment to becoming Vancouver’s first billion dollar startup and building a legacy in this community.  I sincerely hope that he suceeds and is the Don of Vancouver’s version of the ‘Pay Pal Mafia’.

But what comes next?  How can we grow beyond Mafiosa and turn:

It takes talent to grow.

Talent is the chicken that lays the product eggs.  Investment and accelerators help to incubate those eggs and hatch some into chickens that go to market for a payday and/or lay their own eggs.

In sport terms: Owners, general managers, and coaches are important, but there is not a league in the world that can exist without the talent of its players.

Why else are athletes paid such salaries?

Community is Fabric

Overly dramatic tip of the hat to Collin Vine

We are only limited by our capacity to work together and weave ourselves with the threads, strings and patches of fabric around us.

How do we get them to stay?

In 2011, I helped organize over 40 tech events in Vancouver that were attended by over 1600 people.  During those events I had a lot of conversations with a lot of entrepreneurs.  Here are a couple of ideas that are aggregations of those conversations:

1. Bridge the Gap

Not completely on topic, but…. one of the most embarrassing stories of my university career and trust me, there are plenty:

One day in my Global Business class our esteemed professor Ralph H. asked our class of 70+ students why Silicon Valley was located in the Bay Area.  As I put together my answer, my mind made several shaky leaps of logic.

Having never been to the Bay Area, I thought the primary purpose of Silicon Valley was to produce silicon chips.  I had recently read that parts of silicon chips where made of glass and I had recently seen a show about how sand could be blown into glass.  I knew there were lots of beaches (with sand!) in California.  Dot A connected to Dot B which lead me to terrible Answer C.  I put up my hand and asked “Is is because of the beaches in California?”.

I am not exactly sure how to describe the look on Ralph’s face.

Here is a man who had spent most of his professional career working at the World Bank and now was faced with my notable level of idiocracy.  Ralph cocked his head a bit in case he had misheard me, then slowly shook his head with something approaching confusion in his eyes, “Silicon Valley is there because the schools are there.  Stanford is there, Berkeley is there.  Beaches are everywhere.”

To me, the difference between Silicon Valley and the Fraser Valley is that the folks in Silicon have figured out a way to effectively bridge the gap between education and industry. The ties between the universities and tech companies are deeply rooted. Google was born at Stanford. Google hires extensively from Stanford.  Top talent is attracted to Stanford because they know the connections and opportunities that will be available to them upon graduation. Stanford and industry have figured out a way to build a symbiotic relationship that fuels the Valley.

Lots of people are trying (4D Labs, e@ programs, et al.) but its time for some fresh inputs and ideas as well.  Walkabouts (NYC Version) and more student focused events will help.  But we need original approaches on how to tighten the relationship between educational institutions and the tech community.

This is a problem and certainly not my area of expertise…  remember, I went with beaches.

2. #WeAreYVR

It still blows my mind how many people I talk to in Vancouver in the digital media space that have no idea Hootsuite is a Vancouver-based company.  This number should be 0. Most local ‘techie’ people are at a loss to name even a handful of our local startups.  Worse still, they don’t even know where to find that info.

Its time that we created a community wiki that showcased our people, companies and successes to Vancouver and the world at large a la WeAreNyTech.  I am stoked to be talking with Joyce Lam and Jon Chui about this project.  If you are interested in contributing in some way, please get in touch with any one of us.

3. Hack Hut

This is a big one.  Out of everything I learned in 2011, this is the one single thing that will have the biggest impact on building grassroots startups in Vancouver in 2012.

Let's Get the Hack Hut Off the Ground!

There are literally 10s of millions of dollars being invested every year by government agencies in the technology communities of British Columbia.  If we were to imagine ourselves as portfolio managers and approach the technology community as an investment portfolio, we would quickly realize that we have not taken the high risk/high reward ‘flyers’ that a successful technology community itself is built upon.

We openly lament that few in the community take risks and think big, and yet the programs tailored to support our local entrepreneurs are themselves structured to play it safe.  Its in the DNA.

In sport terms, it feels like we are playing not to lose.  Instead of trusting our Quarterback to risk that electrifying deep throw over the middle to break the game open, we are playing the investment equivalent of small ball.  Conservatively trying to get a runner on base and then inch them closer to home.

Moneyball dictates that focusing on on-base percentage is a prudent strategy.  That strategy has won games, even division titles for the Oakland A’s.  But that strategy has yet to win a championship. And you can’t use the 2007 Red Sox.  Their payroll was hardly prudent.

More importantly, the Moneyball strategy does not win the battle between sports. We are not just competing with other tech companies for talent…

Think back to the last 15 years in baseball.  Which memory sticks out to you personally…

Billy Beane’s Oakland A’s fielding a consistently good team?

Barry Bonds, Mark McGwire and Sammy Sosa crushing baseballs into adjacent timezones ?

Like it or not, home runs consistently lead-off sport highlight shows, put fans in seats and add zeros to the end of network tv deals.  The end result is a growth in the sport and a growth in the economy surrounding that sport.

I am not saying we should forget about batting averages and on base percentages and start recommending steroids for all.  Nor am I negating the efforts of the incredible people involved in existing programs.  What I am saying is “lets open the playbook a bit and look at some alternatives”.  Instead of launching yet another e@ program, lets take a page out of successful co-working spaces in San Francisco and New York and infuse our portfolio with a few novel investments.

I have joined with Ray Walia and Roger Patterson to help get one such alternative off the ground.  The Hack Hut is a collaborative workspace for Hackers and Founders to share knowledge, insights and connections that further the tech community in the Lower Mainland.  It is by entrepreneurs, for entrepreneurs.  With the best programming and mentors in the Vancouver tech industry.  We are going to be doing a Hack Hut info night on Feb 21st .  If you are interested, come check it out.

Enough from me… What do you see that will make Vancouver a better tech community in 2012?

When I was plummeting down Bolivia’s “Death Road” what people around me thought was the last thing on my mind.  My outer monologue went something like:

“Keep focused.  Look straight ahead.  Are those headlights? TRUCK!! That was close.  Boy, there are a lot of crosses planted on this corner, I wonder what happened.  Fuck, I am going fast… maybe I should slow down. Nope!  I’m on the hiiiiiiigh way to Hell!  Highway To Hell!…. And I’m going all the way down”

Back in April 2005, I found myself in La Paz, Bolivia as part of a five month trip riding a series of spine-warping buses from Guatemala City to Buenos Aires. This route down the western half of Latin America is a well-travelled path affectionately known as the Gringo Trail. Along the way I saw Tikal, Machu Pichu, Salar de Uyuni and was asked to push a wheel barrow filled with fresh llama parts (long story).  

But the bike ride vertical plummet from Bolivia’s Capital, La Paz down the World’s Most Dangerous Road to Corioccio in the Amazon Basin stands out not only for the jolting adrenaline shot but also for the person I had the good fortune of shooting up with.

Over the course of that April day our pack of 60 riders from Gravity Assisted Mountain Biking spread out along the jungle ‘highway’.

First, we naturally divided into two groups: fast and slow.  Then, at the front of the ‘fast’ group, a few of us separated from the pack and rode at speeds that would’ve given our parents moderate heart palpitations.  We were adrenaline-driven risk takers.

April 2005: Explaining to Kyle how you could trade a Paperclip for a House. Ok... so there is a chance that the idea came from a childhood game Kyle used to play called "Bigger and Better" but who is counting?

Kyle MacDonald led the fast group.  Kyle was in Bolivia because he had found a barrel on the Galapagos Islands that was filled with postcards from all over the world. The idea behind the barrel was that you would root through and find ones close to your home and then hand deliver them. It was a great opportunity to meet some new people in your area. Kyle had taken it one step further and was delivering postcards to people all over the world. And blogging about it.

Unfortunately, The Postcard Gig didn’t deliver for Kyle (*dry cough*). But two months after we rode the Old Yungas Road in the Bolivian Altiplano Kyle undertook a new adventure.  In his own words:

“I posted a picture of a red paperclip on my blog and in the barter section of craigslist and asked if anyone wanted to make a trade for something bigger or better.  A few days later I traded the paperclip for a pen shaped like a fish.  Then I traded the pen for a doorknob.  And so on, each time trading for something bigger or better.”

Fueled by The Internet, One Red Paperclip was born.

Yup, Kyle is *that* guy that took One Red Paperclip and traded it up 14 times to end up with a house.  The trek made Kyle famous with an appearances on dozens of tv shows (including ABC’s 20/20) and a big deal in Japan.

“”A lot of people have been asking how I’ve stirred up so much publicity around the project, and my simple answer is: ‘I have no idea,’”

Love it!

The paperclip quest also saw Kyle cross paths with rocker Alice Cooper and actor Corbin Bernsen.  This is seriously a tale of hustling at its highest form.

I want to believe that somewhere between the oxygen deprived altiplano of La Paz and the stiflling humidity of Corioccio, Kyle told me about One Red Paperclip.  I can almost guarantee my reaction would have been to nod politely and tell him it was a great idea while secretly thinking it was the most ridiculous thing I could think of.  Who would give you a house for a paperclip? Run through my recent thoughts on idea validation, 2005-me would have certainly given the paperclip a pass.  But Kyle saw funtential were so many others saw only a stationary product.  And now Kyle is a legend.

On July 12th, 2006 Kyle made the final trade of a role in TV Movie for a house on the main street in Kipling, Saskatchewan.  The rest, as they say, is history.

Looking back, I learned several lessons from Kyle:

There is no substitute for doing - I am not going to get all ‘Yoda’ on you here (ok, maybe just a little green wisdom… “Do or do not.  There is no try.”) A big reason why Kyle achieved his success is because he took the initiative and did something.  Most people thought the idea was crazy.  I think this is a good thing.  If everyone you talk to thinks your idea is ‘great’ you are probably playing it too safe.  Not everyone has the capacity to understand the potential of truly innovative ideas.  When you are talking ideas over with people, look for a good mix of loony-bin leers and knowing nods.

Here I am relaying the point that trading a paper clip for a house would make anyone a big deal in Japan. Or not.

The Jedi Mind Trick – This is conclusion of Kyle’s very first blog post:  ”I’m going to make a continuous chain of ‘up trades’ until I get a house. Or an Island. Or a house on an island. You get the idea.”  There was no island (do they have islands in Saskatchewan?) but Kyle got his house.

Do you have a goal that you want to achieve but can’t figure out how to get started?  The first step is writing it down and sharing it.  Tell the world where you are going and the world will help you get there.  This is something that was reinforced to me at the last startup I worked at in the coaching industry and is abundantly clear from the red paperclip side.

Speaking of which, I highly recommend (and own) Kyle’s book.  It is a super inspirational story, written as a friendly narrative that is loaded with tidbits to help you move towards achieving your own goals.

No Risk, No Reward – Kyle and I were on a road described as:

“extremely narrow, subject to frequent landslides and fog, and offers no protection from the sheer cliffs that drop straight down for a couple thousand feet. Before a modernized and safer route was completed in 2006, somewhere between 100-200 fatalities occurred every year, and the roadside is littered with crosses and memorials of travellers who did not arrive at their destinations. For obvious reasons, locals have given it a simple yet somber nickname – Death Road.”

As I wrote this post, I started to see parrells between the Yungas Road and Entrepreneurship.  Flanked on the left by precarious drops to failure and on the right by insurmountable cliffs of success. With random surprises waiting behind every blind corner.  All you can do is move forward.

Yet, Kyle and I arrived (at light speed).  And were rewarded with the best tasting beer of our lives.

Worth the risk?  Hell Yes.

Full disclosure before we get too far:  I have not (yet) made it down the path of enlightenment to a glorious exit or turned a product into a wild river of revenue.  But I have had some success getting funded and wanted to share what I have learned so far about idea validation in the hopes that you might gain something from my trials and errors.

One final note: Just checking the box for each of the steps below is not necessarily enough.  You also want to monitor the quality of the check.  Receiving $$ from someone with exceptional deal flow like the Vancouver 3 (Boris, Mike and Jason) or getting those precious $11,000 from Y Combinator is on a different scale than getting a cheque from someone whose main claim to fame is a whole bunch of zeros at the end of their bank balance.

Strive to get your idea in front of people that understand your space, have been pitched to hundreds of times and will ask you the uncomfortable questions that further your understanding of your hypothesis.  I enjoy talking to people that bring insight.

I arrived at this checklist by pitching dozens of ideas to hundreds of people.  After the list, are 4 ideas I have utilized this methodology with.

1. Have you validated your market with face-to-face Customer Development?

One mistake people consistently make despite volumes of people pointing this error out, is failing to get out of their cave/bubble/tower/office to talk to potential customers about their actual problems.  Are you going to revolutionize the Job Market (as is my plan) but have not talked to dozens of recruiters and HR managers about their pains? Turns out I still needed to learn this lesson.

When I shared my idea about incorporating social data into the recruiting process with Andres Glusman (Co-Organizer of the NY Lean Startup Meetup, Meetup Strategy Guy) the first question he asked was whether I had talked to anyone in the field about their pains.  My bumbling and blushing response said it all.  I should have known better.

The first step to Customer Development is to set up informational interviews and figure out that there is a pain to solve in the niche you are targeting and what your potential customers are currently doing to solve that pain.  Similar to doing usability testing, I like to do customer development interviews in pairs.  That way one of you can ask questions and keep things moving while the other is free from distraction and can actively listen to the responses.  Find 10 potential customers to talk to and make it happen.  This is literally ground zero, you need to do this before moving on to any other task on this list.

2.  Have you collected data from real target customers?

For a recent idea I had about building an app on top of Meetup’s API (more on this below), I sent out this survey to 150 warm contacts and 3 Meetup groups I help organize (total around 700 members).  I also posted the survey on the Meetup forums.  Over 100 people filled out survey responses which will help shape the MVP of this product.

I might even argue that if you can not get 100 people to fill out a survey about your potential product you do not have a deep enough understanding of your market niche to be pushing forward.  Keep your survey short (5 Qs < 1 min) there is no room for fluff, make sure every question word of your survey is necessary.  Ideally, your survey should validate the market pain plus collect info about a minimum feature set.

3.  What does the Adwords/Unbounce combo say?

This is a deadly combination to help validate the secondary market (ie. people you do not have direct contact with) plus collect email addresses to benefit your product at launch.  Grab a $75 Dollar Credit for Google AdWords, sign up for a free account at Unbounce and listen to what the internet says about your idea.

Is your click through rate abysmally low (well under 1%)?  Time to test a few different pains in the niche before you start development. An Adwords CTR of 2-4% is really solid, I have not been using Unbounce long enough to give you an indication of a successful conversion percentage.  If you are an Unbounce veteran, can you please post some numbers in the comments?

A negative result  here is not a deal breaker.  Sometimes people do not know what they want until you can put it in front of them.  Or their friends start using it.  As The Job-onian One says : “You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new”.

In addition, the Unbounce/Adwords combo can be a great tag team to discover pains in your niche you might not have previously been aware of, just make sure you listen to the data.

4.  Can you get someone to dev your product idea for free?

My developer friends are going to hate me for this… but having someone dev your initial prototype for free is a key validation point.

There is nothing developers hate more than greasy business people trying to get them working on their project while promising nothing more than future considerations.  Today’s developers are wanted like 2003 Brad Pitt at an over-40s Divorcee Luncheon.  Any half decent developer can move to the Valley, immediately start collecting 100K/year and get treated like a rock star.  Give me one good reason why should they work on your idea for free?

The answer is to put yourself in a position where people want to collaborate with you.  Jason Freedman wrote an absolutely fantastic post on How to Find Earn a Technical Co-Founder.  If you are an ‘Idea Person’ looking for dev talent, this is a must read.

If you can convince someone to turn down Rock Star status and join you on the Startup (aka. Ramen) diet, they must believe in the product just as much as you do.  Your initial team needs to have this level of buy-in if you are going to have any chance of success.

What if you can’t find anyone to join you in the poor house?  Similar to customer development, don’t stop at the first ‘no’.  But if you are repeatedly getting rejected or sense a wishy-washy level of commitment from your partner(s), it is time to reshape the plot of the project and question whether you have the right people in the right roles.

There is an incredible Paul Graham post on meta patterns he has found in successful founding teams at Y Combinator.  One of the key points of success is a pre-existing friendship.  Look around your immediate social circle for someone to partner up with and dev your MVP without laying out cash.  If there is no one there, consider growing your social circle before burning your savings on development costs.

5.  Do you have a unique competitive advantage?

What would prevent someone else from doing this exact product?  And the answer better not be “nothing”.  There are two options:

1. You have key relationships that will help with distribution channels.  aka. You can get a jumpstart on customer acquisition.  eg. Zuckerberg’s connections at Harvard
2. You have unique domain knowledge or expertise that you can turn into a piece of technology that is not easily replicated.  eg. Google Search Algorithms.

Cue Captain Obvious: ”For best results, have both!”

Update:  Tom noticed I was a little light for this section and suggested this great read on: Real Unfair Advantages by A Smart Bear

6.  Can you get someone to give you money?

Warning – Achtung! - ¡Atención, Por Favor! Not all money is equal.

There are a variety of benefits and drawbacks to taking money from Friends and Family, Angels, VCs or Government Programs.  You need to consider the terms, but perhaps just as importantly what doors can that person or group open for you.  IRAP funding can open channels into other Government departments and formal international ties through DFAIT (for us Canadians).  However, if that does not match your market, you may want to look elsewhere.

A local incubator like Grow Lab, has strong ties to the Valley and its band of VCs.  A well-connected local Angel like Mike Edwards can open doors throughout the North American Tech Community.  Mike hooked me up with Meetup Co-Founder Matt Meeker, someone who has an incredible understanding of the space I am trying to enter and a person I may have struggled to connect with on my own.  If you are going to take money, try to align it to access distribution channels or contacts in your target market.

Another note, to convince a savvy investor to cut you a cheque, you are going to have to show you understand and have validated your market.  Dozens of people like you turn to them for money each month, make sure you have a compelling argument why should they put your name on the next cheque they write.

7.  Would you use your product yourself?

To me, this is the most important point.  Look yourself in the mirror and give yourself a healthy dose of brutal honesty.  If you are not solving a pain in your life, it is going to be really hard for you to get out of bed each and every day and dedicate yourself to pushing your product forward.

Are you prepared to do that for your idea?  The path of the entrepreneur is not easy, there are pitfalls and challenges at every turn.   You will need to have a sheer, blazing and uncompromising belief in your product… and yourself.

Be honest, does your idea give you that level of confidence?  If you have a shaky response now, just think what happens when your lead dev quits days before launch or a key partner bails on you to sign with the competition.  Almost every story in Jessica Livingston’s Founders at Work has a The-World-Just-Fell-Out-From-Beneath-Us Moment.  Shit will happen.  When it does, are you going to pack it in or will you have the audacity, confidence and will power to stay the course?

Finally, the Ideas:

The 7 points above do not guarantee success, but they have helped guide my idea validations.  Lets move on and apply this framework to four ideas I have recently been involved.  These are all works in progress, I will endeavor to update the details as progress is made.

B-Liner

Update: This died.  There is nothing to see here, move along.

Idea:  Foursquare for public transport.  Users would be automatically checked in to specific bus routes, frequent riders would become ‘Kings’ of that route and unlock badges and rewards like “Carbon Saver – You Rode 30kms on the bus and saved X number of trees”.  Initial market is university students on the 99 B-Line (for out of towers, the 99 is the most heavily used bus route in Vancouver).  The goal is to get more people using public transport.

Possible revenue generation: 1.  Ultra localized deals.  If someone gets on and off at a specific bus stop everyday, the businesses in that immediate area would be interested in acquiring that customer.  2. With enough users, you could get up-to-the-minute traffic flow data and sell that back into GPS companies.

1.  Customer Development - I conducted customer interviews while riding the bus.  In general, the response was positive.  However, when we pitched the idea to people that had a good understanding of the location-based space and check-in models the response was much less receptive.  Dot in particular was a solid dose of reality.  She had previously worked at a Valley Accelerator that worked extensively with teams working on location-based checkin apps.  Her first hand knowledge that this space was:

1. It is near impossible to gain traction
2. People were not ‘checking in’ with significant volume

Her feedback helped us make the decision to pause development until we had a better understanding of our potential users.

2.  Collect Data- Not yet conducted

3.  Adwords/Unbounce – Not yet conducted

4.  Get someone to work on your product for free - This product idea has appeal as a social cause.  Two extremely talented people: Dave Emmett (UI/UX) and Vasili Sviridov (Backend) stepped up to contribute.

5.  Do you have a unique competitive advantage? No.  There is no key relationship or unique domain experience here.  The three of us take the bus, but so do hundreds of thousands of other people.  The technology itself can be replicated by any of thousands of local developers.  We could potentially build relationships with Translink, but there are no preexisting competitive advantages, they need to be built.

6.  Get someone to give you money – Not yet conducted.  This is the kind of initiative that could receive support from local, provincial or federal governments.  A key distribution channel would be Translink.  Establishing a partnership there would be key to success of the project.  I think you would be hard-pressed to raise investment on this product without widespread adoption.

7.  Would you use it yourself? I had to be honest with myself, although I felt I would use this app I was not sure I could sell it to the level that was required to make it a blazing success.  To me, this is a passion or dabbler side-project, not something that I could hustle full-time.

Result: This project is on standby.  It was clear this was a good team and we did not want to siphon off energy to push forward on a project that wasn’t fully baked.  I still think there is something in this space, and that gamification of public transport could increase ridership and have a positive social effect on the city.  I am also looking forward to working on *something* with Vasili and Dave in the future.  I think we all want to make sure whatever we choose to work on has the best chance of success.

WeAreVanTech

Idea:  A blatant rip-off of WeAreNYTech.com.  Create a story showcase of local talent in the tech industry as a focal point for people new to the city or local companies looking to connect with local talent.  The differentiator to this site is that you actually conduct interviews with every person posted to the site.  This gives you unique and interesting content that cannot be found elsewhere (great for Longtail Search of individual people).

Possible Revenue Generation: WeAreNYTech shows the way.  They released a job board that had 37 job posts on its first day.  This is a fairly recent idea, hence not a lot of data below.  I will update as progress happens.

1.  Customer Development - Not yet conducted

2.  Collect Data - Not yet conducted

3.  Adwords/Unbounce - Not yet conducted

4.  Get someone to work on your product for free - I sent out this tweet and almost immediately had responses from two top-notch developers (and people): @ujm and @harph.  That is a good sign.

5.  Do you have a unique competitive advantage? Maybe.  Successful execution of this project is going to be data dependant.  Can we get lots of local tech people to take a couple minutes for the interview to help us build a great data set?  That is the kind of networking challenge I am well suited for and really enjoy.

6.  Get someone to give you money? Not yet conducted.  I could see government funding for part or all of this project as it showcases all of our local talent. That will be the first avenue explored if this moves forward.

7.  Would you use it yourself? A talent map of the people in the local tech community is something that I would absolutely utilize.  There is also a pain point there that you are solving for others who are new to the community or are looking to fill a specific role inside their organization.

Result: I am going to meet with the people who created WeAreNYTech.  Depending on the outcome of that we will move back into the top of the customer development cycle.  But its great to know it sparked an interest amongst several key people in the community.

Wicked Awesome Meetup App

Idea:  A service that gives you information about other Meetup attendees.  Target Market:  Meetup Power Users and Organizers

1.  Customer Development - I began pitching this idea to dozens of people at various Meetups over the past several weeks and the response was mostly positive.  People at meetups are potential users of this product, so it was a nice fit.

2.  Collect Data - Survey conducted with over a hundred responses.  These results will shape the core feature set of an MVP product.

3.  Adwords/Unbounce - I have not used AdWords yet to test this idea, but the Unbounce landing page is converting at nearly 50% with highly qualified traffic from personal contacts and Meetup forum visitors.

4.  Get someone to work on your product for free - I am going to build the initial prototype myself using jQuery Mobile.  I have had offers from several developers to contribute to the project and will move with that once I hit the upper limit of my current skill set.

As a partial aside:  Nitobi’s CEO Andre Charland recently blogged about Dreamweaver 5.5 support for jQuery Mobile and PhoneGap.  That means you can use a WYSIWYG editor to write code once and release native apps for iOS, Android, Blackberry etc.  This will dramatically reduce the barriers to entry in the Native App market and allow people like me to put products in the app store by ourselves.  Kind of scary…

5.  Do you have a unique competitive advantage? I have several key relationships with Meetup that could potentially help with distribution or provide really solid feedback.  In addition as an organizer of 5 meetup groups, I have access to a pool of direct feedback and potential beta users and have a great understanding of my target audience.

6.  Get someone to give you money - I am holding off on this until I have a better understanding of the market and an MVP product in place with a solid base of users.

7.  Would you use it yourself? - I am solving several of my own pains as a power user of Meetup.  This one is a big ‘Yes’.  More importantly, I can see myself selling this product and enjoying it.

Result: The response to this product idea has been positive.  It shows promise amongst Meetup power users, especially organizers.  More importantly, organizers are already accustomed to paying for Meetup.  There are plenty of details to work out, but this is an idea I will push forward with.

TouchKeyword

Idea:  A one-touch mobile tool that would make keyword research accessible for everyone.  Pain I was trying to solve is the high cost of hiring someone to perform your keyword research ($80-100/hour) or the time costs associated with learning to do it yourself.  Target market: Mom and Pops with their own personal website or e-shop.  Secondary market: Professional Search Marketers.

1.  Customer Development - I started a Meetup group around Search Engine Marketing.  I ran two sessions about Keyword Research that each had about a dozen attendees.  The crowd was mostly noobs, which matched with the initial target market.  I showed them some of the current tools (Market Samurai, AdWords Keyword Tool etc.) and then watched where they stumbled (too much data, too much thinking).  I then partnered with The Rad Vlad and we built a tool that alleviated those stumbling points.

2.  Collect Data - As part of the ACETECH program, I conducted 10 interviews with potential customers as data points.  However, I did not collect any survey data.

3.  Adwords/Unbounce - I ran an AdWords campaign to test pricing strategies.  The click through rates were under 0.1%, which is scary low.  The TouchKeyword Unbounce landing page is currently converting at about a 10% clip.  Those numbers are both low, however we need to invest some more time to test whether it is a poor job on my part with the campaigns or the market is actually not there.

4.  Get someone to work on your product for free - Radu and I worked on TouchKeyword evenings and weekends for 3 weeks (total dev time ~40 hours) and entered it in Sencha’s Mobile App Development contest.  We split $2000 in prize money.

5.  Do you have a unique competitive advantage? – I have domain experience in Search enabling the backend algorithms and have several key distribution channels as a result of my volunteer efforts with IIMA.

6.  Get someone to give you money – I was fortunate enough to get $15,000 in funding from IRAP to continue this project.

7.  Would you use it yourself? – Doing keyword research was a part of my job.  A part of my job that I did not enjoy.  I was stoked to have a tool that fully automated that time-consuming task.  It solved a pain of mine and I would use it.

Result: This project is ongoing.  There has been a positive response from people in the search community.  We are currently testing whether our initial target market is valid before continuing to develop a feature set.

Further Reading

Wow, if you made it through the first 3800 words of this post and are still at it you must really dig idea validation! Here are some books on the topic I have found useful:

1.  Startup Lessons Learned – Eric Reis

This is a collection of Eric’s insightful blog posts.  There are several key posts that apply directly to customer and idea validation.  Eric is a talented technologist, writer and story teller.  If you are not engaged by this book, you might want to ask yourself hard questions about whether startups are really the right thing for you.

2. Start Small, Stay Small.  A Developers Guide To Launching A Startup – Rob Walling

Rob’s straightforward messages give you practical advice to identify and test ideas before you write a line of code.  I especially liked the tip of identifying an attainable market by finding a niche that has a trade magazine dedicated to it where a full page ad costs under $5000.  This book is stacked with practical tips.

3.  Crossing the Chasm – Geoffry Moore

If you are reading this post, you are mostly likely on the left side of the chasm.  You really only need to read the first couple chapters to get good insight and understanding into how your initial customers are going to approach your product and what you can do to win them over.  The remaining chapters will help you find wider-spread adoption for your product later in its life cycle.

4.  Four Steps to the Epiphany – Steven Gary Blank

First published in 2005, this is the Grandpappy of the Lean movement. Four Steps is revolutionary and was way ahead of its time.  It is more focused on customer development at the enterprise level, but you can certainly read between the lines and apply the principles to lean customer development for consumer products.  There are practical tips in this book about how to find initial customers, determine their pains and quantify how much they will pay you to solve their pain.

My pitch to IRAP was probably the 63rd pitch I did.  I stumbled through the first 10, started to hit my stride through the 20s and 30s and by the time I sat down with an ITA (Industrial Technology Advisor) I had the pitch polished like a like a banker’s first Mercedes.  The point is that if you have not started pitching your idea/project to anyone that will listen, you should start. Now.

The one page summary was the product of 6 months of hustling.  First by finishing in the Top 10 in Sencha’s mobile app development contest followed up by organizing several successful sessions of the Haskell Meetup group.  Keep in mind these are things that I enjoyed doing, but being able to point to public social proof gave significant credibility to the TouchKeyword proposal.

IRAP wants to see some forward progress before they will invest in your project.  As a general rule for a web product, you should have at least a thousand users and *something* you can demo.

When you approach IRAP, keep a clear thought in your head of their motivations.  Their goal is to increase the number of technology related jobs in Canada.  More jobs mean more tax dollars.  More ‘clean’ tech jobs also means our economy can further diversify beyond our reliance on primary industries (forestry, oil, mining etc.)  Make sure your proposal shows how their investment will grow your company and ultimately benefit the Canadian economy.

First a note: Avoid building something purely to get IRAP funding (or any other source of funding).  Build something that you love, build something that solves a pain (or is Fun), build something that people want to use.  If there is a particularly risky piece of technology you would like to add to your product that will propel it from good to great, that is the time to approach IRAP.

Here is exactly what IRAP is looking for in their words. Make sure your proposal ticks the following four boxes:

The key, as with all pursuits involving money, is to give enough time for the relationship to form.  Start talking with your ITA now.  Keep them informed of your progress and any milestones you hit.  Make sure you are on your ITA’s radar at least quarterly. List of contacts for ITAs across Canada.

Without further ado, the original unedited IRAP proposal for TouchKeyword:

Thoughts?

We are going to dive into the details below, but first, what is a clever person?

A highly talented individual with the potential to create disproportionate amounts of value from resources an organization makes available to them

Does that sound like you?  Are you clever?  Ask yourself the following questions:

• Are your skills difficult to replace?
• Is having people acknowledge your cleverness important to you?
• Do you know your worth to your organization?
• Do you ask the difficult questions at work?
• Do you know how to get things done?
• Do you hate hierarchy and the corporate ladder?
• If you have an idea, do you want immediate access to resources to act on it?
• Do you want to work with other clever people?
• Do you perform best with someone looking over your shoulder?

Ok, the last one was to make sure you were still reading.  If you answered all the others in the affirmative you can officially collect your clever badge.

Utilized effectively, clever people are the brightest spots in an organization.  They are the massive redwood trees that stand a hundred feet above the rest of the forrest.  A cautionary point as I am sure you have also heard the adage, ‘Big Tree, Fall Hard’.  Although a clever or team of clevers can add an astounding amount of value to an organization, they can also destroy at an equally astonishing rate.

Kai-Fu Lee, Former Head (2005-09) of Google’s Operations in China:

Arrogant geniuses always backfire, they become a terror to other engineers.  They may be a hundred times cleverer, but an arrogant genius can demoralize a thousand people

How do you nurture a tree to extraordinary heights and still protect the forrest if the tree topples?  Better yet, how do you grow other trees to the same height or build an entire organization that eclipses the traditional height of a forest?

Clever identifies a series of guidelines to provide an optimally clever environment:

Innovate
The most innovative work environments (Google included) have a culture of ‘adhocracy’.  Innovation is bred in every part of the company.  There is no research team that sits in an ivory tower independent from marketing and finance or ops.  In a clever organization, innovation is at the top of every person’s list of responsibilities

Synthesize
Synthesis is the process of combining multiple different ideas, products or processes into one.  The example used in Clever is the iPhone.  It combines a cell phone, touch screen, MP3 player, internet access, good software and intuitive design.  Each of those ideas independently is great, but synthesizing them together has created one of the best consumer products ever.  Clever organizations synthesize people and skills sets that create incredible products like the iPhone.

Think to Lead
As the problems that are being solved becoming increasingly complex, it is rapidly becoming more difficult to communicate effectively from within clever teams.  As a leader you should think your messages out to ensure they are clear and concise.  Once your message has been delivered, you need to trust your team and turn it over to them.

Free to do
The best example of this is Google’s 20% time, where every Google engineer can spend up to 20% of their time working on any project they think will help Google grow.  The ’20% time plus acquisition’ model is one reason that Google has been able to maintain an innovation gap over their competition and a topic I discussed in ‘Why Google Wins’.   But there is no question that the top organizations of the future will be dominated by self directed time.  100% self-directed time is coming. Once again, bring in the right people, give them what they need to perform and get out of the way.

Generate Meaning
Clevers work best in an environment that appeals to their internal authority.  They will thrive in an organization that is aligned with their moral fiber.  In fact, bringing in someone who does not align is disastrous, which is why clever organizations like Google are so rigorous in their hiring process and leave incredible numbers of overly-talented people on the outside looking in.

Care
If you take the time to understand what makes a person tick (what their motivations, goals and aspirations are) you can help align them in a project that encourages personal fulfillment.  Only by really caring and taking the time to know a person do you have a shot at achieving this.  As a side note, it does not have to be your project.  An incredibly rewarding experience is putting two people in touch who really need each other.

One final (repeat) note:  Get the F out of the way!

That is the focus of Clever, to point leaders towards an environment where clevers can deliver incredible results.  The last line of Clever says it all:

The challenge in the clever economy is unleashing the potential of clevers.

How about you? Have you read clever? Have you worked in a clever environment?  Do you wish your current work place was more clever?

There is no question that Twitter was the darling of 2009.  Whole vocabularies that could fill a Twebster Dictionary were built up as people slathered and frothed their way to a social media hyper-frenzy.

I have a personal index for determining how big a technology is.  I call it the “Mom-Crossover Effect”.  It derives from Bill Simmon‘s similar use for sports stories.  Basically, if my mom asks me about a technology, I know that is way-past early adopter stage and is right at the top or just past the peak of the customer acquisition bell curve.  For Bill Simmon’s Mom, last year’s cross-over was Tiger’s infidelities, that was enough to catch her attention.  For my mom, 2009-10 was the year of Twitter.  When my mom asked me how Twitter works, I know something is big.  (For a reference point, we had a conversation earlier this year about the iPad, although iPhone 4 drew a blank…)

While Twitter is still a site du jour, they face some serious issues going forward. Sure there are some scaling issues as the “Fail Whale” still appears a little too often. But the one thing that is going to leave Twitter on top of the dot.bomb scrap heap currently populated by altavista, excite and myspace is pure and simple data quality.

I am sure each of you has experienced this in your forages in the Twitter Twighlight… Life coaches selling webinars, elixirs that will grow various body parts and when did we get offers for 10 business gurus each?

One of the biggest complaints I run into with Twitter users is all the “crap” that is polluting their feed.  This is certainly an issue that Twitter is aware of and working on. But even if Twitter does manage to completely eliminate spammy and automated tweets, there is still a torrent of drivel that fuels the Twuniverse from regular folks who want to share their eating habits, sleep patterns or office nuisances.  And that torrent is growing.

In June, TechCrunch wrote about how Twitter has 190 million users and 65 million daily tweets.  65 million a day is a big number.  65 million is a number that many start-ups would kill to have.  But ask yourself this question:

Would you rather have 65 million McDonald’s hamburgers or 1 Kobe Steak?

I worked at start-ups in New Zealand and Canada where data quality became an issue that caused one start-up to fold and leaves another on life support.  I know from working with the leadership teams at both of those start-ups that if they had an opportunity to do it over, they would have be rigorous in their data-quality decisions early on.  A little early pain is worth avoiding the drastic repercussions down the road that poor data can cause.  Which leads us to:

Can you name one successful internet company with poor data?

I am going to guess that you struggled to come up with something here.  Google? Nope, legendary data.  Facebook? Its mostly user generated, but quality.  I can to the conclusion that poor data and being successful are mutually exclusive events in the Internet space.  Except for Twitter.  Twitter has so far maintained a growth rate that ensures new users more than make up for those failing off with the poor data.  But, how long can Twitter maintain this growth rate?  There is only so much fresh meat out there, this begs the question:

Is Twitter a Zombie?  The living dead that is perpetually one sunrise from destruction?

Late in 2009, Google, Microsoft and Facebook jockeyed for position to acquire all or part of Twitter or Twitter’s data.  There was constant speculation on what the final valuation would be and who would win the real-time search war.  Finally a deal was struck and 2010 saw tweets appearing on the first page of Google search results.

Except, Google is the master of Data-driven decision making.  If Google users did not find value in having Tweets in search results, they would disappear.  6 months later, the only searches that show Tweets are the super-top-notch trending topics.  Google users have voted against Twitter with their clicks.  Ouch!  This raises yet another important question:

If you and I don’t find Tweets to be useful information, what benefit does Twitter add?

But enough from me!  What do you think?  Is the writing on the wall for Twitter?  Or will a clean-up of the data save the day?  Or maybe Twitter is fine just the way it is! Let me know in the comments below!