By Francis Moran
If last night’s standing-room-only three hours of drinking-from-a-firehose delivery of hard-core business education was anything to go on, Ottawa’s entrepreneurs are hungry to learn from experienced veterans just how to manage, finance and market their companies.
Entrepreneur’s Edge, or e2, is a professional-development program that the Ottawa Centre for Research and Innovation has offered for four years. In an inspired cross between effective promotion and community outreach, program manager Peter Fillmore decided to offer a stripped-down version of the five-day curriculum. That gave rise to last night’s staging at TheCodeFactory of e2-Lite, an intensely concentrated introduction to the joys and perils of founding and managing a technology startup.
More than 50 people took up every available seat in the room, and all but a very few stayed right through to the end of a trio of presentations by Jim Roche, Rick O’Connor and Rick Norland. While the condensed nature of the content meant that bits of it were somewhat fractured and the presentation slides were densely packed, the staying power of the audience was testament to both the quality of the material being delivered and the ready appetite for it.
By Leo Valiquette
“Venture capital is dead. It’s gone.”
Sir Terry Matthews didn’t mince words Thursday morning as the keynote speaker at OCRI’s Technology Executive Breakfast. Not that he ever does. And while some might argue that statement about the status of Canada’s venture capital industry, or at least its level of activity in the nation’s capital, may be a bit premature, that’s not the point.
The point is, who cares?
Matthews and partner Michael Cowpland began the first incarnation of Mitel in 1972 with persistence, sweat and a $4,000 bank loan. That was enough to get their first product to market in nine months. This was followed by Mitel’s breakthrough product: a PBX phone system with a software switch. Mitel beat out about 40 larger competitors to win a watershed contract with AT&T, the first time, Matthews said, that the telecommunications giant contracted out. That deal, and a $250,000 grant through Canada’s IRAP program, took Mitel from zero to a 20-per-cent global market share in five years and made millionaires out of penny investors.
And while sheer persistence and hard work were part of the secret sauce for Mitel’s success, and for every success Matthews has had since then as the man behind the creation of more than 80 high-tech ventures, he cited an even more important ingredient: the core competency of partnerships.
Partnerships build technology clusters. Partnerships allow a company to capitalize on another’s strengths without having to carry the overhead of developing a particular area of expertise in house. Partnerships take advantage of another’s time and money invested in R&D to compliment your own.
Matthews holds Nortel’s utter aversion to partnerships to blame in no small degree for the company’s misfortunes.
And while there undoubtedly are challenges in the marketplace at present, Matthews insisted there is a resurgence at hand as ambitious and nimble entrepreneurs of the next generation make their mark. They just need a commitment of time and mentorship from those with experience and money to invest. Venture capital is irrelevant. Time is what’s important.
Matthews’ approach is to find the key contact in a post-secondary institution passionate about commercializing ideas into start-up companies to help him cherry pick the cream of the crop from among new grads. He wants to work with the handful who have the drive, ambition and adaptability critical to surviving and thriving in tough times. He puts these teams together, puts his resources behind them, and sets out to identify and develop a viable product and market niche. By engaging with the market, he will guide this team through the process of honing, refining and focusing the idea until there is a viable business ready to be formally launched.
In return for this intensive mentoring and a high-pressure work schedule that pays little attention to weekends and holidays, each team member is paid the lofty salary of $25,000. However, what they should be paid but are not is parlayed into ownership stakes in the new company.
Matthews believes there is no more effective way to quickly bring a product to market. And being first to market is the only way for North America and Europe to compete in a global economy that is now flat with few if any true trade barriers. With Asia pumping out engineering talent that works for a 10th of what ours does, trying to compete on cost is a death sentence.
So the next time you hear someone pining for the return of the good ol’ days of the telecom boom, or whining about the demise of the venture-capital industry, do as Matthews does and take a chapter from Darwin: it is not the strongest or the most intelligent that survive, but the ones most capable of adapting.
By Leo Valiquette
“Even if there’s blood on the street there’s always somebody making money. You just have to make sure you’re on the right side of it.”
The son of poor Croatian immigrants, he sold his first company for $100 million in 2000. His second company, launched in 2003, is now the largest privately held IT solutions provider and integrator in Canada. When not residing in one of his posh homes, he holds court in CBC’s Dragon’s Den.
Robert Herjavec is a living example of what hard work and vision can achieve. He took the stage to close out this week’s 2009 Ottawa Business Summit and treated his audience to his insights on what it takes to achieve business and personal success.
I scribbled furiously the entire time he spoke and have distilled his pearls of wisdom to the following:
1. There is no stereotypical external factor for success. Fame and fortune is not reserved for the beautiful people in the world, nor can a successful person be judged by appearances. One of his neighbours has a company with 12,000 staff, an original Monet on his wall and a 15-year-old car in the driveway. And, bad people do succeed. “There are people who beat their dog and run a great business.”
2. However, he has never met a successful person who didn’t have a purpose, and that purpose must be more than the accumulation of wealth. If all one pursues is money, they will hit a wall. Herjavec’s goal was to build the best company in its industry. The money followed.
3. Achieving that success requires vision. When he started his second company, the problem was too much available money and not enough vision about what it should be. Money keeps you in the game. It doesn’t make a good company.
(Geez, have we learned that lesson in Ottawa after the VC excesses of the tech boom?)
4. And on that note, with particular relevance to Ottawa: If you build a better mousetrap, the world will not beat a path to your door. There is no such thing as a good idea. It’s all about execution. Sales and marketing. And while he would hire the fellow who can sell ice to Eskimos, Herjavec would much rather have the fellow with the foresight to sell water in the desert beside a broken-down bus.
5. “Discipline is the art of doing what is necessary even when you don’t want to.” Inaction is easy. Citing his own recent experience running a marathon for the first time and the amputee with a prosthetic leg who passed him, Herjavec put it plain: “Winners find a way, losers find an excuse.” Which invariably means, “For you to win, somebody has to lose.”
6. The importance of leadership, which he defined as the ability to get people to do something they wouldn’t otherwise be able to achieve–lift them from their comfort zone.
7. It’s all about sales. “Nothing matters until you sell something.” Which also speaks to the value of branding and marketing to drive those sales. But after sales comes service – sales may sell the first night in a hotel room, but service will keep the guest coming back.
8. Business is a sprint. “You’ve got to go now.” It’s better to take action than sit around planning the next five days. Once you secure an opportunity, then it becomes a marathon.
9. Feed the whales, not the minnows. Especially in a tough economy, devote your time and effort to those prospects, those core customers, who will support your business in tough times. He didn’t cite the 80-20 rule, but it obviously applies. For example, Herjavec’s business positions itself around high value, high touch service. When faced with a customer who likes to shop around and bargain hunt just to keep his suppliers on their toes, his preference is to dump them in favour of more loyal customers who appreciate the value of what they are getting for their money.
10. And when it comes to suppliers for your business, it’s a love/hate relationship. At the end of the day, your business is your business and they’re looking out for their business, not yours.
11. Learn to focus, which he defined as the ability to make the most of the 24 hours in a day and “distinguish the truly important from the urgent that happens every day.”
12. Your business is not your family, it’s just business. Avoid emotional attachments.
13. Make it fun and be resilient. Nobody likes a negative person. What’s important is not what you say, but how you make people feel. There may be really bad days when you just want to walk away, but that just proves you care. What’s vital is having the resilience to believe that tomorrow will be a better day.
14. It’s not who you know, but how brutally honest you are with yourself. “The worst lies you tell in business are the ones you tell yourself.”
15. And lastly, business is like a game of Whac-A-Mole. Keep swinging until you hit something.
By Leo Valiquette
“What we’ve done is turn our people into raving capitalists.”
Not the label one might think to apply to the employees of Canadian airline WestJet, but that was how Duncan Bureau, WestJet’s vice president of sales, characterized the company’s singular focus on customer service while delivering the opening keynote at the 2009 Ottawa Business Summit this week.
The summit was a joint effort between the Ottawa Business Journal, The Canadian Association of Family Enterprise and the City of Ottawa to provide business owners and executives with education, information and inspiration.
In a cut-throat, commoditized business that’s seen dozens of players fold in the past couple of decades, WestJet has in 13 years grown from an upstart, with three planes serving only a handful of destinations in Western Canada, to a fleet of 76 planes, 55 destinations, $806 million in cash and one of the highest earnings before tax margins among North American carriers.
Key to WestJet’s success has been its focus on cost efficiencies and finding ways to keep its fleet flying and generating revenue, such as partnering with Transat to fly its short-haul routes when Transat’s own narrow-body aircraft fleet for that purpose grew tired.
But perhaps the greatest difference has been made by a corporate culture that makes employees owners with a vested interest in the organization’s success. At present, about 87 per cent of WestJet’s employees are shareholders in the company. The value of profit-share payments to employees to date is approaching $150 million, more money, Duncan pointed out, than many airlines have made in that same period.
While this model may not be for everyone, in an industry where service is the strongest differentiator, the WestJet example includes a number of common sense lessons to achieve top-notch employee engagement and performance.
1. As Duncan emphasized, travellers are considered guests, and this emphasis on serving the needs of guests has resulted in 90 per cent of travellers who use the airline recommending it to others.
2. Build a culture of opportunity rather than entitlement, in which employees feel confident in taking the initiative to ensure an optimal customer experience. Employees are empowered to act and think like owners. At WestJet, “great customer service comes from the heart, not from a manual.” There is no weighty policy book. Nor do executives get the kinds of perks that create a divide with the rank and file, such as reserved parking.
3. Hire for attitude and train for ability. Except for pilots, of course. As Duncan said, he can’t make someone smile and demonstrate enthusiasm for their job.
4. Celebrate success and recognize excellence frequently and loudly.
5. On the flipside of that, don’t hesitate to sack the “duds” who don’t fit in or are not performing and threaten to poison the organization.
6. Communication. Communication. Communication. Maintain an active dialogue (which means the listening is happening on both ends) with employees.
7. And lastly, imbed in your culture the lessons learned in Kindergarten — share, play fair, don’t hit people, put things back where you found them, don’t take things that don’t belong to you, say sorry when you hurt someone, look both ways before you leap, and keep the balance between work, life and play.
Tomorrow I’ll offer the Dragon’s perspective from the afternoon keynote by Robert Herjavec, one of the five dragons on the CBC television series, Dragon’s Den.
