Of bankers and boring: Sources of Canadian pride

There is quite a list that Canadian rightly feel proud about such as having better beer than the Americans; adding colour to color and bestowing honour to honor with the extra “u”; and saying the last letter in the alphabet the way the Queen wants us too.

Now we can add one more thing we Canadians will brag about endlessly… having notoriously boring (but solvent) banks.

We are in a new era indeed when bankers become a source of national pride!

What Toronto can teach New York and London

Good and Boring

Building a VC industry, the Israel example

I recently participated in a conversation with one of the original architects of the Yozma initiative, which helped build the VC industry in Israel.

Here are some bullet points from that conversation:
• In the early 1990s, Israel’s government committed $100M as an LP across 10 venture funds
• The goal was to entice foreign VC funds to Israel to invest in companies and train local VC managers (funds were from US, Europe and Asia)
• The funds had the option to buy out the Israeli share within 5 years at a low rate (there was a pre-set formula, it turned out to be ~7%)
• 8 of the 10 funds were doing so well, they exercised the option
• The foreign funds had to have a local partner; the Yozma administrators had a veto over the who would be the local partner
• In only one instance did Yozma reject a candidate; in all other instances Yozma supported whichever local partner the foreign fund found
• Low taxes on foreign investors, no capital gains tax

The result was:
• Foreign funds came in with expertise to train and mentor the next generation of VC managers (this is by far the most important result)
• With the buy-out option, funds had the potential for additional upside at low risk (there were no guarantees for downside)
• In five years, the government got back $140M from their $100M investment
• Spawned about 70 new VC companies in Israel (which has since been pared down to about 35)

What also made Yozma a success was that there was a steady pipeline of companies ready to be funded, mostly coming out of the defense industry. Also, because Israel is such a small market and has hostile neighbors, companies have to think global from day one (as opposed to regional or local). This “global from day one” is also part of the philosophy that made Indian ITS companies so successful.

Microloans need macro-mentoring

Very similar to the point I was making with C-BAM

Indeed, the nonprofit research group Innovations for Poverty Action in New Haven, Conn., published a paper in May that found that Peruvian villagers who had received microloans and had been randomly selected to receive business training performed significantly better than peers who had received loans and no financial education.

Canada and Peru are obviously two very different economies, but the point is that capital, be it microloans or big-buck Silicon Valley VC money, isn’t effective in building great businesses and fueling economic growth if there isn’t some sort of mentoring or business education to back it up.

Capital and mentoring are ying and yang, they need to work in harmony to produce a single successful business. The challenge is that while capital is relatively easy and quick to deploy in emerging markets, finding sustained, experienced, and committed mentoring on-the-ground in poor areas is very hard. People with the right knowledge and experience don’t tend to live in poverty-stricken areas. They’ve used their talents to move elsewhere in search of a better life.

In Canada, the need for mentoring is important, but less acute than in emerging markets, and C-BAM provides one easy fix. Canada is obviously a developed capitalist economy and the start-ups we’re dealing with are already staffed with highly educated and sophisticated people, so we’re starting at a huge advantage. Plus there is the benefit of being in a similar timezone as enthusiastic mentors and having ready access to technologies such as TP.

In poor rural areas, the need for mentoring is there in a big way but there is no sustainable, scalable way to provide it. I know for a fact experienced people want to help micro-enterprises and while parachuting experts in from time-to-time may be better then nothing, it isn’t a true fix.

Having spent some time bouncing around emerging markets, I can see what kind of important tool business mentoring is for development. I don’t have an answer here, maybe as internet video technology spreads farther and wider it will be easier to do C-BAM type events.

Small Business - Teaching Business Basics in the Developing World - NYTimes.com

C-BAM: Mentoring Canadian start-ups, Silicon Valley-style

I’ve written here and elsewhere that a main problem with the start-up communities in different parts of the world (both developed and emerging) isn’t the lack of capital, it is the lack of mentoring. While it may seem counter-intuitive in this age of “credit crisis”, the world is actually flush with capital opportunities if you have the right business plan.

Aye, there’s the rub, coming up with a business plan that investors will feel comfortable with. A lot of the times you come across great ideas, interesting technologies but weak companies and inexperienced (although usually very enthusiastic) management teams.

This is where mentoring comes in. An experienced mentor can help a start-up get its business plan in order and can provide an inexperienced/enthusiastic management team with the sage advice and coaching that will calm a rattled investors’ nerves.

Enter C-BAM!

C-BAM stands for Canada-Bay Area Mentoring (goofy name I know, it was the best I could come up with at the time) and the goal is to provide some Silicon Valley style advice to promising start-ups up in Canada.

The program is exciting to me because it uses technology to bring business mentoring to a whole new level. Although this is not a Cisco event, we used Cisco’s Telepresense (TP) to link up mentors in the Bay Area and start-ups in Canada (in our first instance, in Ottawa.) The start-ups pitched their companies via TP and got real-time feedback from a super group of experienced Canadian Bay Area-based executives and VCs.

(If you think there aren’t a lot of fantastically talented Canadian executives and VCs in the Bay Area, I challenge you to come down here, pick up a rock, throw it and try not to hit one. It can’t be done, I’ve tried.)

We had the first C-BAM last week and I think (hope) we were able to provide some real value to the participating start-ups. We looked at start-ups in the mobile, video conferencing and semiconductor optimization spaces. I have to say the companies were far more sophisticated than I had anticipated, so the discussions happened at a really advanced level.

We still have a few kinks to work out in the overall format but we’re continuing to plan future events, so I’m sure C-BAM will get better in each iteration.

$80-$100 m "me toos" to bring bling to Bing

I guess I don’t understand MSFT’s new push into search with Bing. Yes, I understand the importance of search and the value of search advertising, but I’ve used Bing and yes it is nice, yes it works well, yes it has a couple of nice features, but it seems to me to be at best an incremental improvement on what is currently out there from Yahoo and Google.

There is no earth-shattering innovation here. There is no new take on search. So I’m not sure what the big deal is. (The trivia-filled photos are nice, but it feels like they’re trying too hard to be “fun”)

Microsoft is going to spent $80-$100 million to say “look, we’re here also.” It looks like an $80-$100 million “me too” campaign.

I wish they would go back to Jerry Seinfeld, I found those ads super amusing (at least the first one in the shoe store.)

Evolution of the newspaper

Currently it is very trendy to talk about the "death of the media" but I think a more sophisticated discussion should rather focus on its evolution. Yes, it is painful for those involved and yes the result may be a media product that is quite different than what we've been used to in the past.

But then again, find me one industry that has essentially remained unchanged over the past 100 or so years (the auto industry immediately springs to mind.... great model they turned out to be.)

Hyper-local sites like the one starting in Seattle may very well be the next step in the evolution of the local paper. There are already some excellent models out there, most notably in San Diego.

Admittedly, these are non-profits at the moment but hopefully these will evolve into sustainable for-profit models. Whatever business models these non-profits may eventually come up with will probably be better than some of the questionable management decisions that are currently plaguing parts of the media industry.