Tech Capital Partners Blog

In a previous post I discussed why most businesses we see should probably be bootstrapped rather than venture funded. I promised to discuss a bit more about venture backed business so here it goes:

While somewhat of a self evident statement, the main reason for seeking venture funding rather than bootstrapping is to obtain capital. The key question for venture investors is why is the capital required? It is not unusual for us to receive an e-mail or call from an entrepreneur stating they have a great idea and need some money for sales and marketing. While not always the case, usually this leads to a quick decline because most often the business is one that will never generate the type of return that makes the investment worth it.

For technology investors like Tech Capital we are usually looking to invest in companies that require the capital in order to fund research and development. So how do we determine which investment opportunities to investigate and perform diligence and which ones we will pass on immediately?

We ask entrepreneurs to send us an executive summary of the business. Initially we are simply looking for information about three things:

1. Technology
2. Market
3. Team

Many people ask us what form this should take. Does it need to be a 40 page business plan? Does it need to look pretty with lots of graphs and visuals? The short answer is: No. It can simply be three paragraphs in an e-mail, as long as it covers the following:

Technology
We want to know what specific technology you are developing and what technological differences exist compared to other solutions. It is best to be as specific as possible. A generic statement such as “we have developed a better search engine” does not really provide any information and is likely to lead to a quick dismissal.

Market
We want to understand who is likely to buy the product once developed. We want to determine if this is a huge market = good or a niche market = bad. The issue is that in order for venture investment to make sense the market needs to be significant. For niche markets see my bootstrapping post. In addition to understanding the overall market, it is helpful if you can identify any early customers who are likely to participate in beta trials.

Team
Technology and Market get you in the door, then it usually comes down to team when we make an investment decision. At this point we are not expecting a company to have a full management team in place, but we do want to know a bit about the founders and any other employees. What roles have you had in the past, how long have you known each other, how long have you worked together etc. Ultimately a venture capital investment starts a partnership, so we want to know as much about our potential partners as possible. It is a bit of a cliché but we are looking to invest in people “who know what they don’t know”.  Founders who know their weaknesses and are prepared to “share the wealth” to fill in the gaps are the folks we love to partner with.

As I mentioned above, people often spend days or weeks pulling together a full business plan before we have even indicated if we want to pursue diligence. While this may have some benefit for you in the long-term the truth is we are not likely to read the full plan up front, rather we will look for the three items above in the executive summary.

The same applies to financial models. We get sent some massive spreadsheets and while we appreciate the hours (or days) that went into detailing the information, it is not something we need to evaluate an opportunity. The reality is, that with the experience we have, we can usually ballpark the financing requirements with a few simple questions. Eg Q - how many people do you plan to hire. A – 10 FTE. Q - How long do you think it will take to get to Beta. A – 12 months. Assuming you hit your plan, we know you will need approximately $1.25 million, so allowing for slippage and capital to fund the period between beta and next fundraising round we will probably assume this will be a $2 million initial investment.

Our goal is to make it easy for people to send us their opportunity so we can quickly let them know if we are interested.

I went to an interesting conference not long ago where David Foote, world-renowned demographics expert and author of Boom Bust & Echo gave a very insightful talk on changing demographics and the effect these changes will have on society’s needs.

I found the discussion particularly relevant as he made a very persuasive case for the need and importance to consider how changing demographics will affect our approach to recruitment over the next decade. Foote states that, as we know boomers today are in their 40s and 50s. We also know that according to Statistics Canada birth rates have been declining steadily for years. Both of these factors combined are good reason to consider what you will need to do to incorporate skilled immigrant talent attraction into your recruitment strategy.

If you would like to incorporate hiring skilled immigrant talent into your talent attraction strategy and aren’t sure where to start, there are some resources available to assist you:

• TRIEC – Toronto Region Immigrant Employment Council, established in 2003 by Toronto City Summit Alliance and Maytree, is working to remove the barriers immigrants face when entering the labour market, while at the same time helping organizations benefit from the talents and skills immigrants bring with them to Canada. TRIEC is a collaboration of employers, labour, occupational regulatory bodies, post-secondary institutions, assessment service providers, community organizations, and all three levels of government.TRIEC offers a number of programs and services to both newly settled Canadian’s as well as Employers in the Toronto area to facilitate the settlement of immigrants in employment within the Toronto Region. Training, mentorship, and an immigrant employment loans program are a few services offered or facilitated. hireimmigrants.ca is an excellent resource. It is a TRIEC program that provides employers with the tools needed to better recruit, retain and promote skilled immigrants.
• WRIEN – recognizing the good efforts made by TRIEC, Waterloo Region Immigrant Employment Network was established to support the successful integration of immigrant talent into the workplace within Waterloo Region. A collaboration of employers, government, educators and foreign trained professionals it also offers programs and services to both employers and newcomers to Canada to support the hiring of skilled immigrant professionals through similar training, programs and services as offered by TRIEC.
• Skills International is committed to full and relevant employment for all of Canada’s immigrants. It offers a web-enabled, searchable database of candidate profiles and is dedicated exclusively to profiling the skills of immigrant job seekers in Ontario. The first of its kind in Canada, this tool connects pre-screened, internationally trained individuals with employers who need their skills. Employers have the benefit of knowing that candidates that are involved in Skills International will have worked with a qualified employment advisor on employment preparation.
• World Education Services (WES) provides evaluation services for immigrants who wish to convert their educational credentials from any country in the world into their Canadian equivalents. It describes each certificate, diploma or degree you have earned and states its academic equivalency in Canada. From an Employers perspective, WES evaluation reports mitigate risk, and provide accurate and fair candidate screening.
• COSTI Languages Bureau a partner of WES, offers a full-services communications operation providing professional translation, interpretation, and typesetting services in over 100 languages to individuals, businesses, community based agencies, government departments, educational institutions, and regulatory bodies.

Recognizing Employers that do it well
Canada’s Top 100 Employers award sponsored by MacLean’s Magazine, last year launched the Best Employers for New Canadian’s award. This award recognizes Canadian employers with the best initiatives and programs to assist recent immigrants to Canada. The 2008 winners offer interesting programs to assist new Canadians in making the transition to the Canadian workplace.

For a complete list of the programs and services being funded visit the following - Ontario Training Programs

There are a number of resources available, within the Region and Province, to assist Employers with attracting and retaining skilled immigrant talent into your workforce. Regionally you can also consider taking advantage of The Working Centre, Focus for Ethnic Women and the New Canadian Employment Connections Program to name a few. Hopefully this will give you a snapshot of some of the resources available to you and help get you started.

Continuing on in our series of profiling Tech Capital portfolio companies, I recently spoke with Dave Bullock, President of LiveHive Systems about some of the projects they’ve been working on. We met the founders of LiveHive at a WatStart event a few years ago and invested in the company at the end of 2005. It’s been a fun (and wild) ride so far and the company is really hitting its stride, recently closing a deal with NBC for the Olympics as part of “the single most ambitious media project in history.”

1.  What does LiveHive do? And what is tvClickr?

LiveHive creates interactive experiences that are tied to TV broadcasts. Viewers play-along with whatever they’re watching and socialize with other viewers watching the same thing. All a viewer needs is a PC, laptop, or mobile phone, and they can participate in the show by predicting what happens next, answering trivia, and voicing their opinion in real-time polls.

Synchronizing and delivering the whole experience requires a lot of technology - something we’ve perfected over the last 3 years and call the NanoGaming platform. Most of our time at LiveHive is spent working with TV networks, sports teams, and major advertisers to create custom NanoGaming experiences for their TV programming. Besides being a lot of fun for the viewer at home, we create some really amazing interactive advertising opportunities that give sponsors a true dialogue with the viewers.

tvClickr is the B2C side of our business in which we create similar interactive experiences, but we do it for all the top primetime shows on TV. We do this by bringing viewers together on Facebook to connect and compete while they’re watching their favourite shows.

2.  Who are your customers and what pain are you addressing?

With NanoGaming, we’ve had the luxury of working with some of the best companies in media. Historically, we’ve spent a lot of time working with broadcasters to make their sports programming interactive, but that’s recently grown into some other categories like reality TV and awards shows. One of the favourite parts of my job is that we get the chance to produce the interactive component for some incredible TV franchises like Monday Night Football with ESPN and Hockey Night in Canada with CBC… Anytime you get the chance to work with that calibre of programming, you know you’re hitting a killer pain point for the industry.

For the broadcasters, the pain we’re solving really exists on two fronts: First, they’re losing engagement with viewers who are no longer giving 100% of their attention to the TV. Broadcasters now share their viewers’ time with gaming consoles, PCs, and mobile phones. NanoGaming gives them the chance to connect with their viewers through a true two-way channel which has a direct and measurable link to more engaged and loyal viewers. The second part of the pain we’re solving is really an economic one. Advertisers are increasingly finding that the 30-second TV spot is not reaching their consumers… people are ad-skipping, or just not paying attention… And measuring an ad’s effectiveness has a whole host of challenges.

NanoGaming lets a broadcaster’s advertisers connect in a true dialogue with consumers, in a highly measurable way, for an extended period of time. Over the last year we’ve had a chance to brand our NanoGaming offerings under the flag of some of the top advertisers in the world including Coca Cola, Shell, Lexus, and Nissan.

3.  What have you developed for NBC/The Olympics

NBC is doing some really amazing things in their coverage of the Beijing Olympics. As part of their online package, they asked us to create their interactive companion piece to complement their broadcasts each night, something that would allow fans at home to actually predict the action as it was happening and compete with friends while they watch. The offering is called the NBC Prime Time Challenge sponsored by Coca Cola. For every arm-chair athlete sitting at home, this is a really great way to get engaged with the Olympic action each day, and as per usual, there are some cool prizes on the line. But from personal experience, I think bragging rights after kicking your friends’ butts is the best prize going!

4.  Where can we play?

We’re constantly rolling out new NanoGaming offerings, but you can always get an up-to-date list from NanoGaming.com. Right now, our Olympics package can be found at http://primetime.nbcolympics.com and we’ve got a CFL Football game sponsored by Nissan available at http://cfl.nissan.ca.

The nice part about tvClickr is that it guarantees top tier content to play along with every night, all year long. We cover the best reality TV like Big Brother and Survivor, dramas like Gossip Girl or Lost, and even one-off events like award shows or elections. All this action happens inside of Facebook with the tvClickr app, which you can link to from www.tvclickr.com.

5.  What are some of the key lessons you’ve learned over the past 12 months and how are you incorporating this knowledge into your product offerings?

We’re really doing some true-blue trailblazing stuff here at LiveHive, we’re the leaders in building this new sector of the market, and we’re learning a lot of lessons along the way about the right ways and wrong ways to create these interactive experiences. It’s embarrassing to say, but I think like a lot of companies, most of the hard lessons we’ve learned could have been picked up in the first class of Marketing 101. First and foremost: Listen to your users! We hire a lot of great product designers here at LiveHive, but more often than not, the great ideas come out of our user community. That’s the nice part about having a product that people love - your community of users is always wanting to help contribute to making the product even better. tvClickr is a perfect example of users getting involved in product development. We were hearing for months from users who wanted a much wider range of programming, they wanted it every night, and wanted it to tap into their existing social networks. Eventually we figured out that our user community was right, and we created tvClickr.

6.  Broadcasters seem to be experimenting with a number of digital/interactive technology solutions these days, what are some of the best practices you’ve developed in working with your broadcaster clients?

There are so many products online nowadays competing for a user’s attention… And we always want to get more than our fair share of that attention. So a lot of our best practices are focused on how to effectively target the best candidates for a particular offering, how to let them know about it, and then how to keep them engaged beyond that first visit. This targeting is something we’ve realized isn’t a one-size-fits-all solution, and we’ve developed a set of tailored campaigns that have been really effective at keeping our community engaged over what may be many months that an offering runs with a broadcaster.

7.  Why do you think these broadcasting giants are turning to companies like LiveHive for new product offerings? Why are they not just building/deploying the products in-house?

There are a lot of moving parts in creating a synchronized interactive offering for TV broadcasts… There are really technical aspects to keep the content synchronized and timely, marketing aspects to build in the right viral mechanisms, and actual content creation challenges to match a show’s demographic to a particular mix of interactivity. Quite often, broadcasters have tried to pull together something like this on their own and the results have been pretty mediocre. Creating an interactive offering is quite different from creating TV content. Broadcasters are coming to us because they’ve witnessed our ability to pull together these complex projects, and they’re excited to leverage our expertise as part of their overall offering to viewers.

8.  What opportunities do you see on the horizon for LiveHive?

Digital media is an amazing environment to be working in right now… The landscape has changed more in the past 12 months than it has in the previous 12 years which has created an incredible number of opportunities and challenges that need to be solved. The opportunities that are most exciting to us revolve around changes on the distribution and consumption side of things.

People are more in love with media than ever, but they’re accessing it on different devices and in different ways than we were five years ago. The center of LiveHive’s mission is to make this media content more interactive, social, and ultimately more valuable. As more media viewing moves online, or onto devices like iPhones and X-Boxes, that mission doesn’t change, but the ways to make that content interactive most definitely do change. We’re spending a lot of time with our clients right now thinking about these issues. It’s a pretty exciting intersection to be at.

9.  What are some of the key hurdles you still need to overcome?

Over the past couple of years, we’ve spent more time than anyone else out there figuring out how to make TV content interactive and more social. We’ve really done a great job with sports, reality tv, and award shows - and we have the repeat business to prove it. But this type of programming is just a fraction of the content that’s on TV, and we instinctively know that viewers have the same passion and desire to socialize around other shows they’re watching, whether it’s late night TV, a primetime drama, or an afternoon soap opera. We’re still working on developing entertaining and compelling interactive elements for these show categories.

I was approaching the end of my academic career at engineering school on Black Monday (October 16, 1987), a single day when the global stock market was hit by massive selling, resulting in the instantaneous evaporation of trillions of dollars of wealth). Not surprisingly, as I attempted to enter the work force in its aftermath, on-campus recruiting was substantially diminished.

As I recall, the few jobs that were being offered were for technical sales reps. The idea of a job in sales caused in me a severe allergic reaction. After all, I thought, it is a very mundane occupation, especially for someone who had just finished stuffing all the knowledge of the universe into his brain. I had no intention of wasting. Perhaps too, I had in my head a vision of Arthur Miller’s pathetic character, Willy Loman from “Death Of A Salesman” - a broken down walrus of a man who’s sense of integrity was continually compromised by his addiction to hyperbole.  That wasn’t me.  No, I was going to use my brain!

Half a lifetime later, I have revised my view on this and many other topics. I am much more circumspect about how much knowledge was ever actually between my ears and I am becoming alarmed about the rate at which whatever was in there is disappearing. Second, I am re-thinking Willy Loman. Today I see a man who admittedly has personal character flaws but has the core redeeming qualities of courage, dedication, and the self confidence to withstand rejection.

“…he takes his valises out of the car and puts them back and takes them out and puts them back again and he’s exhausted…He drives seven hundred miles and when he gets there no one knows him any more, no one welcomes him…And you tell me he has no character?”
Linda, (wife of Loman)

Maybe my changing viewpoint came from watching my wife travel from strip mall to strip mall in the whipping winter wind in Mississauga selling photocopiers and the like…facing the elements, strangers, and her heavy pitch book with joy. Maybe it was watching my father-in-law whose company would increase his quota and decrease his territory every year, and every year he would answer the bell. Maybe it was simply that I realized how hard it was when circumstances forced me to do it myself.

Ten years ago this month, I left my nice comfortable paycheck because Tim Jackson and I were going to strike out on our own. A few weeks into the adventure, I realized that if I didn’t sell I wouldn’t be able to feed my family. The product I had to sell was an investment in a venture capital fund. That might not be what we usually think of as a product but I had to sell none the less. I was scared. Could I keep going? Could I take my “valises out of the car and put them back and take them out again”? Could I handle rejection? What would I do if no one welcomed me?

During this time of epiphany, I learned that selling is a skill. There are some who are naturally gifted. I had to work hard to gain the fundamentals. But practice is rewarded and what is difficult at first, gets easier with time. There are many styles of selling, many of which are effective. Since I needed to be comfortable in my own skin I wanted to find a style that matched my temperament.

My current view is that everyone needs to know how to sell because everyone has to sell something. The engineer on the internal design team needs to sell his ideas just as the sales rep needs to sell the company’s product. When a company approaches the venture capital community, they are selling their business plan and eventually their shares. If you have aspirations of being a founder or president you need to be the best sales person in the organization. Finally, if you can ring the cash register, you will never be out of a job.

If I have convinced you to start your journey, there are many great resources. A personal favorite is How to Become a Rainmaker by Jeffery Fox, but here are a few others:

• Jeffrey Gitomer books on Sales Techniques, Training, and Motivation
• Sandler Sales Institute
• SPIN Selling
• and in many cases a simple Google search can yield some great info

“Willy was a salesman. And for a salesman, there is no rock bottom to life. He don’t put a bolt to a nut, he don’t tell you the law or give you medicine. He’s a man way out there in the blue, riding on a smile and a shoeshine. And when they start not smiling back—that’s an earthquake…A salesman is got to dream boy.  It comes with the territory.”
Uncle Charley (brother of Loman)

In Selecting a Business Model, Part 1 I listed the Basic Business Model Archetypes of a business based on the rights being sold, the type of asset, and if applicable, how the asset is transformed. This post highlights the various business models that can be employed for each Archetype.

Keep in mind that the models are not necessarily mutually exclusive and you can apply more than one model to a particular business. Also, some of the models may seem very similar but there are usually minor differences that change things considerably from a business process perspective.

I am sure the list below is not an exhaustive one but it includes models that I’ve come across and categorized over the last six months or so. Various sources have contributed to this list, some of which I’ve listed at the end of this post.

Remember, Part 1 is identifying the Basic Business Model Archetype of your business. In Part 2, take a look at the Business Models that are commonly used for your company’s archetype.

I’ve separated the business models into 2 categories:

• Models that intrinsically generate revenue
  • For these models it is clear how you generate revenue. For example, it is obvious that a manufacturer can make money by creating and selling an asset and as such this is the suggested model for a manufacturer.
• Models that do not intrinsically generate revenue
  • For these models, revenue generation is not as straightforward. Instead a variety of “monetization” techniques must be employed in order to generate revenue from the traffic or value they create.

Models that intrinsically generate revenue

• Creator
  • Manufacturer
    • Manufacturer
      • Revenue: Create and sell a physical asset
      • Comment: One of the oldest and most basic models. Design and manufacture something and then sell it at a profit.
  • Inventor
    • Internet Inventor
      • Revenue: Create and sell an intangible asset
      • Example: Creating patents, trademarks, brands, etc. and selling them is an obvious one but also consider the creation of a web properties for the purpose of selling them.
    • Virtual Manufacturer
      • Revenue: Create and sell a virtual asset
      • Example: Facebook Gift Shop allows friends to buy and send virtual gifts at a cost of $1 and up.
      • Comment: The difference between a Virtual Manufacturer and an Internet Inventor is that an Inventor does not sell the same intangible asset more than once, while a Virtual Manufacturer does.
• Distributor
  • Wholesaler/Retailer
    • Online Retailer
      • Revenue: Buy and sell physical assets using an online storefront
      • Example: Well.ca an online health and beauty retailer
    • Catalogue Retailer
      • Revenue: Buy and sell physical assets through the use of a physical and online catalog.
      • Example: SkyMall is a catalog retailer and also uses an online storefront where consumers can purchase items.
    • Clicks & Mortar Retailer
      • Revenue: Buy and sell physical assets through retail locations in combination with an online store.
      • Example: Chapters sells books and other items at its physical retail locations and online.
  • Intellectual Property (IP) Trader
    • IP Trader
      • Revenue: Buy and sell intangible assets
      • Example: Buying and selling a web domain, a web property, or any type of IP. Demand Media, among other things is a company that has a profitable domain portfolio which includes general domain names to typo domains.
      • Comment: This model is very similar to the description of a broker but the difference is that the vendor does at one time or another have “possession” of the intangible asset.
    • Bit Vendor
      • Revenue: Facilitates the transfer of intangible assets
      • Example: Steam provides a service to download and manage video game purchases. Apple iTunes facilitates the purchasing of media such as music, tv shows etc.
      • Comment: The distinction between the Bit Vendor and an IP Trader is that for a Trader, once the asset has been sold it cannot be sold again. A Bit Vendor on the other hand can sell the same intangible asset to satisfy an unlimited amount of demand since it can simply make a copy for each buyer.
• Landlord
  • Financial Landlord
    • Lender
      • Revenue: Lenders provide cash that their customers can use for a limited time in return for a fee
    • Insurer
      • Revenue: Customers pay a premium to insure against losses.
  • Intellectual Landlord (Publisher)
    • Online Publication
      • Revenue: Create unique content, publish it to the Internet and charge users for a copy of it.
      • Example: Some online newspapers continue to charge for access to articles.
      • Comment: This can be a challenging model since there is so much free content available online, making it difficult to consistently provide unique content that users will pay for. Many publications that fall into this category are usually related to independent research findings.
    • Online Archive
      • Revenue: Archive content that is no longer current but still valuable, make it easily searchable and retrievable, and charge for access
      • Example: The NYTimes has archives for the years 1851 - 1980 that are available to be purchased in single or 10-article packages
      • Comment: Online Archive Storage could also be offered as a service to Online Publishers who do not want to invest in the infrastructure needed in order to store and deliver content from over the years
    • Knowledge Merchant
      • Revenue: Leverage existing systems and infrastructure to capture data and sell it in the form of intelligible analytics
      • Example: Before being acquired by Google, FeedBurner charged a premium for providing detailed analytics to publishers.
      • Comment: A knowledge merchant leverages an existing system/technology that serves an unrelated purpose and uses that system to collect valuable information.
    • Software Publisher
      • Revenue: License software that you have published for limited use.
      • Example: Microsoft
      • Comment: The most common business model for software.
    • Audience Measurement
      • Revenue: A market research agency measuring online audiences and consumed content.
      • Example: HitWise provides detailed statistics on Internet user behaviour
      • Comment: Unlike a Knowledge Merchant, an Audience Measurement firm usually relies on 3rd party technology or external data sources to collect valuable information.
    • Piggyback
      • Revenue: Cross-sell premium services to an existing subscriber base
      • Example: Apple exploits the opportunity to cross-sell Apple iPhoto users premium services such as Photo Books & Calendars.
      • Comment: This is a classic approach used by retail outlets that applies well for niche sites and certain subscription based services. The broader the content or service the harder it is to make the connection for a cross-sell opportunity.
    • Subscription
      • Revenue: Sell various levels of service with sliding fees, making it simple to upgrade (or downgrade) a user account as desired
      • Example: The Dogster Plus service is a subscription model that gives users more services and ad-free pages.
    • Trialware
      • Revenue: Trial the application or service for a period of time and then require payment to continue using.
      • Example: Newsgator TopStyle
      • Comment: There is also a similar approach where the software is limited in functionality and a license key must be purchased to gain access to all functions (referred to as Crippleware).
    • Content Services
      • Revenue: Deliver text, audio, or video content and charge users a subscription fee to access to the service
      • Example: Netflix
      • Comment: In many cases this involves streaming services usually with limited use of the asset.
    • Freemium
      • Revenue: Provide some services for free and charge a fee to access premium services
      • Example: Flickr provides a free account that anybody can sign up for that gives you reasonable services. Users have a choice to pay a premium and upgrade to a Pro account which offers additional functionality, storage, and bandwidth usage.
      • Comment: This is a model that is commonly employed and can work quite well if the premium services provide enough value to justify the subscription fee.
    • Trust Services
      • Revenue: Membership associations that have created a public code of conduct that they have committed to follow and uphold. Members pay a fee to be certified and included
      • Example: BBB Online has a reliability program and for a fee will provide member sites with a “Reliability Seal” that identifies sites that have met BBB standards for the web
      • Comment: This model can be very challenging because (a) you have to build up enough goodwill that organizations and consumers place trust in your evaluation and (b) you need to convince organizations that your services are needed.
    • Metered Usage
      • Revenue: Measure a subscribers usage in terms of time, data, etc. and charge them for what they use
      • Example: Amazon Simple Storage Service (S3) can be used to store and retrieve any amount of data and you only pay for what you use.
      • Comment: In this model there is no recurring revenue since users are only charged for what they use. If people are not using your services you will not make any money.
    • Metered Subscriptions
      • Revenue: Users pay a subscription fee and are given access to a limited number of actions, pageviews, etc
      • Example: Slashdot allows users to subscribe to a 1000 page subscription for $5. In return you can view 1000 articles without ads (there are other small benefits).
      • Comment: This model is similar to metered usage but in this case you receive recurring revenue since the user pays a regular subscription fee.
    • White Label
      • Revenue: Take existing systems or software, augment the service and/or provide some sort of added value built on top, apply your brand and sell it.
      • Comment: Benefits of producing a white label app can be: quicker development time since you’re simply building on top of an existing platform, the possibility of leveraging the knowledge and assistance of the original publisher, a uniquely branded product with seamless integration (theoretically).
  • Intellectual Landlord (Attractor)
    • Freemium
      • Revenue: Provide some services for free and charge a fee to access premium services.
      • Comment: See above
  • Contractor
    • Professional Services & Education
      • Revenue: Take an existing product/subject and provide services around that product such as support, training, templates, etc.
      • Example: Red Hat’s linux OS is open source and freely available software so Red Hat makes money by tweaking the kernel, providing software support, training, and other services.
    • Contractor
      • Revenue: Allow people to contract you for service at an agreed price
      • Example: A website or Graphics design firm such as Netfirms.
      • Comment: Used by many as a way to augment their revenue stream but can easily become a distraction.
• Broker
  • Financial Broker
    • Transaction Broker
      • Revenue: Facilitates the transaction between a buyer and seller and charges a fee or takes a percentage commission of the transaction.
      • Example: PayPal provides the means for users to exchange money with each other in a secure manner.
      • Comment: A very simple and traditional method of making money online. Some of the added value for buyers and sellers is the ability to use credit services, to provide some layer of protection from being defrauded, keeping history of sales/purchases, etc.
    • Financial Broker
      • Revenue: Matches buyers and sellers of financial assets such as cash, stocks, bonds, etc and facilitates the transaction.
      • Example: Microcredit services such as Prosper allow groups of people to lend money to people looking to borrow money.
  • Physical Broker
    • Buy/Sell Fulfillment
      • Revenue: Similar to an affiliate/referral model but customer orders are taken by one vendor and are fulfilled by another.
      • Example: CarsDirect allows users to browse car inventory, make a purchase through CarsDirect.com by talking to an agent who will then find the car the buyer is looking for. In the end however, the car will be bought from a dealership being represented by CarsDirect.com who will then take a commission.
      • Comment: Takes it one step further than a Metamediary by participating in the transaction but one step short of an Online Agent since only the order is taken. The real value for a user of a service like this is the time and money saved by not having to shop around, and the benefit of having someone knowledgeable to discuss the purchase with.
    • Online Agent
      • Revenue: Provides service across an entire transaction such as the initial price negotiation, fulfillment, support, etc
      • Example: Expedia negotiates prices with hotels, airlines, etc and then offers these services to customers. They also will fulfill the booking and provide support where needed.
      • Comment: In this case the Online Agent helps match the buyer and seller but takes the transaction one step further by negotiating the price and fulfilling the transaction. Unlike Buy/Sell Fulfillment, the buyer never deals with the seller when using an Online Agent.
    • Online Agent (Priceline)
      • Revenue: The “Name Your Own Price” model matches buyers and sellers, but unlike regular agents who take a flat or percentage fee, in this model the fee is the difference between the sellers asking price and buyers bidding price.
      • Example: Priceline.com created this model.
      • Comment: The acceptable price for a particular asset, during a particular time is given by the sellers but is unknown to the buyers. Buyers are able to make a single bid for the asset or use of and if the bid is within a certain threshold of the sellers asking price the transaction is fulfilled in the same manner as an Online Agent.
    • Auction Broker
      • Revenue: Matches buyers and sellers of physical assets
      • Example: eBay.com
      • Comment: A simple model made famous online by eBay. Allow sellers to post items for sale, manage the auction and charge a flat fee for certain features and a commission once the item is sold.
    • Virtual Storefront
      • Revenue: A service to host online storefronts. The service provider can charge fees such as listing, hosting and/or transaction or commission fees
      • Example: Amazon offers seller accounts where users can list their own items for sale. It gives buyers the option of purchasing goods from another supplier. Amazon charges listing fees and takes a commission once the item is sold. eBay provides a storefront service for merchants the sell products in large volumes.
      • Comment: There aren’t many pure play virtual storefront providers that have the ability to compete with the likes of eBay and Amazon. What is most important with virtual stores (as with real stores) is the amount of traffic you receive.
    • Classifieds
      • Revenue: Provide a place where sellers can list items and buyers can browse listings. Generate revenue by charging a listing or membership fee.
      • Example: Craigslist is the largest classified site but does not charge listing fees except for job postings in specific geographic areas.
  • Intellectual Property Broker
    • Advertising Networks
      • Revenue: Build up a large pool of member sites, attract advertisers and feed ads to member sites.
      • Example: AdBrite has over 32,000 member sites delivering about 760 million impressions a day. Advertisers can choose which types of ads they want to run on which types of sites and then bid on how much they’re willing to pay for clicks.
      • Comment: The larger the member pool along with the quality and # of page views the more that can be charged to advertisers to display their ads.
    • Niche Advertising Network
      • Revenue: The same model as the Advertising Network but dedicated to a niche market. The aim is to provide a quality group of member sites for potential advertisers.
      • Example: DogTime Media is an ad network dedicated to pet-related sites
      • Comment: The benefit of the niche network is the possibility of having a concentrated network of quality member sites that have commonality between them. The network may provide for a better opportunity to target ads.
    • Search Agent
      • Revenue: An automated software agent (usually some proprietary algorithm) that searches on behalf of a ‘interested party’ for goods and/or services to find the price, availability, ratings, etc. If the buyer search is converted into a sale, the agent receives a commission.
      • Example: ePinions.com, Kayak.com all provide product information along with locations on where you can purchase the product.
      • Comment: This model closely resembles a Metamediary but is different in that it is more focused on the job of aggregating information about products and providing a single view for the end user to help them make a decisions. Since its focus is on retail products, it aims to make money by connecting the purchaser with a retailer and taking a commission.
  • Human Resources Broker
    • Human Resources
      • Revenue: Matches buyers and sellers of human services
      • Example: Elance brings together professionals looking to get a job done with those looking for work on a job-to-job basis.
      • Comment: Outsourcing
    • Classifieds
      • Revenue: Match employers with potential employees
      • Example: Monster, Workopolis

Models that do not intrinsically generate revenue

• Creator
  • Inventor
    • Brand Integrated Content
      • Description: This isn’t as much about direct revenue generation as it is about PR and generating buzz
      • Example: BMW Films - A highly successful film series “starring” different BMW models receiving over 100 million film views and numerous awards.
      • Comment: If successful, the buzz that is generated can be used to drive traffic to other web properties like the Buy/Sell Attention model or can be Monetized
• Landlord
  • Intellectual Landlord (Attractor)
    • Portal
      • Description: A web site that usually combines a variety of content and services and in most cases has a search engine.
      • Example: Yahoo!
      • Comment: In the case of Yahoo! they offer many portals such as Travel, Finance, Autos, etc. which all roll-up into their main portal page.
    • Free Registration
      • Description: A site that provides free content but collects usage and demographic data through required registration.
      • Example: NYTimes.com requires users to register in order to get access to their free content.
      • Comment: This information can be used to serve highly targeted ads to the each individual user when they visit the site and log in.
    • Buy/Sell Attention
      • Description: Not a revenue generator but a way to jump start or increase traffic to a related web property by using one property that is performing well to promote the other.
      • Example: Dogster.com launched in January 2004 and was able to use its popularity to help promote a new site it launched in August 2004 called Catster.com.
      • Comment: There are two ways this model tends to manifest itself. Case 1: A site is launched and becomes successful, the authors launch another site to promote the new one and drive traffic to it. Case 2: A site is launched with the sole intention of creating buzz in order to launch another site. The second site is the real target and the first site is only a means to drive traffic.
    • Open/Free Content
      • Description: A group of volunteers work collaboratively to support and create peer-reviewed publications. The content they produce is free and openly available to the world.
      • Example: Wikipedia
      • Comment: In many cases it can be difficult to monetize these sites for any purpose other than site maintenance. There is considerable debate once a site reaches the size of wikipedia on whether it can be monetized without somehow compensating contributors for their time. Wikipedia’s approach has been to collect private donations and hold fund raisers.
    • Social Networks
      • Description: A place where people can come together and share experiences under a common connection such as friendship, business, pets, etc. Some sites are broad in nature while others choose to be niche sites.
      • Example: Facebook is based on Friend connections, LinkedIn is based on Business connections, Dogster is based on Pet connections.
      • Comment: Most social networking sites monetize through contextual advertising or charge for premium services. For a broadly based social site like Facebook or Myspace there is a greater opportunity to grow the user base but it is a challenge to contextually target such a large and diverse group. On the other hand, niche sites like Dogster may have a smaller user base but advertising can be focused on the common interest all users have (in this case Dogs).
    • Loyalty Program
      • Description: Create a loyalty program by providing redeemable points or discounts to users who purchase merchandise from selected retailers.
      • Example: At Airmilesshops.ca you can collect airmiles by shopping at over 90 retailers.
      • Comment: The loyalty program provides users with an incentive to visit the loyalty site first before making purchases to ensure they receive extra benefits such as points and discounts. In return the loyalty program can display highly targeted ads based on the demographic data they collect on the member.
    • Metamediary
      • Description: Provide detailed information/reviews and possibly other services for products but do not actually sell anything.
      • Example: CNET Reviews provides comprehensive information on tech products including performance, value, pricing, etc. and publishes this information on their site. PowerReviews provides the “engine” for retailers to include review capabilities in their online stores.
      • Comment: The examples highlight two different approaches. In one case the products are chosen, reviewed, and the results are published on the respective site. In the second case, technology to facilitate user generated reviews is provided and implemented on a retailers online site.
• Broker
  • Intellectual Property Broker
    • Labour Exchange
      • Description: A service which indirectly provides human intensive labour which would otherwise require a company to pay wages in order to accomplish the same task. This model can be effective only if the cost to run the service is less than the combination of:
        1. The value of the information/data collected and/or the task being carried out and
        2. The savings in wages that are realized by implementing this model.
      • Example: 1-800-GOOG-411 Google provides free directory assistance via the 1-800-GOOG-411 service but in return they are able to train their speech-to-text engine and improve their voice recognition capabilities. Gwap Users play fun games for free but in reality what they are doing is teaching computers and hopefully improve such things as image search, audio search, object recognition, and information for artificial intelligence.

Methods to Monetize

For models that do not intrinsically generate revenue some of the common Monetization Methods employed are:

• Affiliates
  • Pay Per Click (PPC) and Pay Per Action (PPA)
    • Description: Get paid for each click through to an affiliate site or for users that perform an action on an affiliate site.
    • Example:
      • PPC: Shopping.com gets paid for each click through to a merchants site.
      • PPA: PartyPoker will pay on a scale per each user you refer that signs up.
    • Comment: In most cases affiliate programs will pay a set rate for a number of completed actions and/or click throughs and unless you drive a significant amount of traffic to their site this will be non-negotiable.
  • Revenue Share
    • Description: Receive a commission for each user click through and conversion that originates from your site. The commission is usually a percentage of the sale price.
    • Example: The Amazon.com Associate program offers up to 10% in referral fees on all qualifying revenue made through affiliate links links. There are many ways to be creative with this model. For example, Overlay.TV provides an online video platform which allows users to overlay “clickable” information directly onto video, which then ties into a large affiliate network.
• Advertising
  • Search Paid Placement (Keywords/Categories)
    • Description: On a high traffic site offer to sell link space based on keywords and/or categories.
    • Example: Google Adwords will place paid links along with search results based on keywords.
  • Contextual Advertising
    • Description: Advertising related to and placed alongside page content.
    • Example: Google Adsense ads are related to the content on the page. Websiter operators get paid per thousand impressions (CPM) and per click (CPC).
    • Comment: This is the most popular choice to monetize web properties and is often the only source of income. If a site has a large amount of traffic, the simplicity of generating revenue through the placement of contextual ads is what makes this a popular choice.
      • It is worth commenting specifically on the traffic problem. If you are using Contextual Advertising as the only means of generating revenue, then you need to have a very large amount of traffic to drive the number impressions. If this is not the case then hopefully you have a high click through rate (CTR) to compensate. Obviously one would prefer to have a huge amount of traffic and a high CTR but this is not an easy task, and many companies fail to generate any significant revenue this way.
  • Behavioral Targeting
    • Description: Takes contextual advertising one step further by identifying the person viewing the page (usually in a non-personal manner), their preferences, behavior, etc and presenting Ads targeted directly at the unique characteristics of the individual.
    • Example: Blue Lithium, Tacoda
  • Intromercials
    • Description: Users are directed to a landing page where they must watch a Video/Animated Ad before proceeding to the desired content. In most cases users are able to skip the ad and go directly to the content.
    • Example: Forbes employs this method
  • Traditional Ads
    • Description: Traditional Ads such as banner ads that are not contextually targeted, but just served “blindly” from an ad network.
    • Example: Banner ads such as those found on sites like BusinessWeek, eWeek, etc.
  • Watch an Ad (Ultramercials)
    • Description: Require a user to watch a video Ad before providing access to premium content.
    • Example: Salon DayPass gives access to all of Salon.com premium content from 1-8 hours after viewing and clicking through an Ad.
  • Sponsors
    • Description: Set aside “visual real estate” on a site and then sell a portion of that space.
    • Example: TechCrunch charges per month for a 125×125 pixel area
    • Comment: This model works well if (a) you have a site with a high number of unique visitors and a large number of page views and (b) the site is dedicated or limited to a few topics and has a fairly consistent user profile.
• Data Collection
  • Intelligence Vendor
    • Description: Collect demographic information on a user base, create actionable intelligence about users and sell this information.
    • Comment: This type of information is valuable to market research firms, analysts, advertisers, academics and in most cases the information is unique and cannot be copied by competitors.
• Donations
  • Donations, Fundraiser, Grants
    • Description: Provide a valued service (often based on crowdsourcing) that appeals to a large audience and then accept voluntary donations in return for the value created.
    • Example: Wikipedia is funded through donations, fund raisers, grants, etc. and managed to generate over $1.4m in revenue for 2006
    • Comment: This is a model most often employed with the intention of simply maintaining a site. Even a highly trafficked site like Wikipedia (which receives over 40 million unique visitors a month) is only able to generate an ARPU of about $0.003 per month

What Did I Miss? If you know of any other models that aren’t listed above, please share them in the comments section. Can you identify which archetype you think the model belongs to?

Sources
There are a lot of great articles, posts on the web about business models. One site in particular, Business Models on the Web by Michael Rappa was a great resource. Quite a few of the models listed above are from Michael Rappa’s site. Other Notables: The Long Tail Of Business Models and Alternative Online Business Models.

One final note….yes, I do realize that this may be the longest 2 part blog post ever!

Many before me have written about Business Models (in fact the reason I decided to write this is because of David Crow’s blog post last month titled Business Models) but in many cases the focus has been on specific business models and not necessarily on the subject of how to classify and select which models make sense for a particular business. I’ve gathered and organized a variety of information on this particular subject and it will hopefully be useful for some of you out there and provide more context around the various models. This post has been split into two parts: Part 1 describes an approach to determine the business model archetype of any business and Part 2 will outline the various descendant models of each Business Model Archetype.

Background
Early on in my research I compiled a list of the business models employed by a variety of companies operating online in some way or another. It was apparent that certain models worked well for some companies and others not so well. Shortly after I started to compile this list I discovered a paper written by researchers belonging to the SeeIT Project at the MIT Sloan School of Management. The paper describes a Business Model Classification framework and the differences in financial performance of various business models. The classification framework assisted me in creating — in combination with the list of business models I’d been aggregating — a systematic approach to identify the most appropriate models for a particular business.

Purpose
For some of you, what follows may seem like an academic exercise that doesn’t add any real world value because what you really want to know is “what model is going to make me money?”. If that is the case then maybe you’ll be more interested in Part 2, but do me a favor and keep reading the rest of this paragraph before you decide if you want to continue. When a business is struggling to “find” the best business model, in many cases management tends to review the various models that are out there and then try to apply them to their business to see what fits. It’s akin to people building a product and then trying to figure out the problem it solves after the fact. In many cases this is the wrong approach because you’re starting at the end point. You shouldn’t first identify a business model and then see if it fits to your business. Instead, try to identify exactly what the business does, and then apply that knowledge to the various models that are out there. This may seem like a trivial exercise when your business is, for example, wholesale/retail but what you may not realize is that you’ve probably already done this exercise intuitively. The choice of business model for a wholesaler/retailer is in most cases an obvious one so you don’t consciously think about it. In one quick thought you jump right to the end of the process and determine the model should be a pure play online retailer, or a catalogue retailer, etc. For some businesses however, the path from “My company does X” to “The business models that work for my business are Y” is not that easy or intuitive. The purpose of this post is to assist anyone out there who is having this problem and is struggling to figure out which models are applicable. It will hopefully allow a company to say “This is what we do, this is where we fit, and the models that can work for us are…”. Let’s get started…

Defining Business Model Archetypes

Step 1: What rights are being sold?

The first thing we need to do is identify the type of rights you are selling. The options are:

• Ownership of an asset
• Use of an asset
• Matching of a buyer and seller

Step 2: What is the transformation of the asset?

Secondly we need to determine how much the business transforms the asset. In most cases this only applies if you are selling the ownership of an asset. Options are:

• Significant
  • Purchase an asset, make considerable changes/additions and then sell
• Limited
  • Purchase an asset, sell with no or minor changes/additions

The steps above can be summarized in the following selection table:

Based on the table above you can determine if a business’ basic archetype is Creator, Distributor, Landlord, Broker.

Definition of Basic Archetypes

• Creator: A Creator designs the product, procures the materials/resources needed and transforms these elements into a finished product. Even if the entire manufacturing process is outsourced, one is still a Creator so long as the majority of the design was their doing.
  • Example: Dell Computer designs the computer, buys the required components and assembles the computer according to the customers customizations.
• Distributor: A Distributor buys a product and in most cases resells the identical product to someone else. They can sell through the wholesale or retail channel. In some cases the identical product isn’t sold but it may be packaged differently or value-added services may be offered in conjunction with the product.
  • Example: Future Shop buys merchandise and resells through their retail stores. On certain products they provide extra services such as extended warranty or bundling for additional value.
• Landlord: A Landlord sells the right to use an asset but ownership of the asset remains with the landlord. The right to use the asset can be indefinite or for a specified period of time. The asset does not need to be a physical asset but can also include intangible assets or any other asset that has value and can be “lent out” in exchange for something.
  • Example: Microsoft - People who purchase Windows for their computer are actually purchasing the right to use the software (a license in this case). Ownership remains with Microsoft.
• Broker: A Broker in its simplest form assists in matching potential buyers and sellers. A broker at no point takes ownership of the asset, instead they connect the interested parties and make money through fees charged to either or both sides of the transaction.
  • Example: eBay allows sellers to post assets and buyers to bid on those assets. eBay never takes possession of the asset but receives a commission for the sale and charges a listing fee.

Step 3: What type of asset is it?

For the third step we dig a bit further and take the framework to the next level. We now need to identify the Type of Asset that is being sold. The options are:

• Financial assets
  • Includes cash and other financial instruments like like stocks, bonds, insurance policies, etc.
• Physical assets
  • Includes durable items (computers, cars) as well as non-durable items (food, clothes).
• Intangible assets
  • Includes legally protected IP (patents, copyrights, trademarks, and trade secrets), as well as other intangible assets like the organizations knowledge, goodwill, and brand image.
• Human assets
  • Includes people’s time and effort. People are not “assets” in an accounting sense but their time (and knowledge) can be “rented out” for a fee.

Examples

• Amazon Books (Distributor/Physical Asset):
  1. Amazon is selling the ownership of an asset
  2. Amazon does not transform the asset, therefore asset transformation is Limited
  3. The asset is a Physical Asset
• Google Search (Landlord/Intangible Asset):
  1. Google is “selling” the use of an asset. Their search engine service.
  2. Step 2 is N/A because Google is selling the use of an asset
  3. The asset is an Intangible Asset
• eBay (Broker/Physical Asset):
  1. eBay matches buyers and sellers of physical assets.
  2. Step 2 is N/A
  3. The asset is a Physical Asset
     • not everything on eBay is a physical asset but for the purposes of this example we’ll assume this is the case.

Basic Business Model Archetypes

The following table is the combination of determining the type of asset being sold and identifying which rights are being sold. The result is sixteen detailed business models. I left out models that don’t apply to the Internet (Entrepreneur, Physical Landlord, Financial Trader) and others that are illegal activities (Human Creator, Human Distributor).

Definitions:

• Manufacturer
  • Creates and sells physical assets
  • Example: Dell Computers designs/assembles computers and sells them online.
• Inventor
  • Creates and then sells intangible assets
  • Example: This model is rarely used but an example would be developing patents and selling them outright. The creation of a web properties with the sole intention of selling them could fit into this category.
• Wholesaler/Retailer
  • Buys and sells physical assets
  • Example: Well.ca, an online retailer of health & beauty products.
• Intellectual Property Trader
  • Buys and sells intangible assets
  • Example: The practice of buying/selling web domains. The purchase of business.com by RH Donnely is a good example of this.
• Financial Landlord
  • Lets others use cash (or other financial assets) with certain conditions. There are 2 types of Financial Landlords:
    • Lenders provide cash to clients for a limited time and receive a fee in return usually in the form of interest.
    • Insurers provide clients with the option to access financial reserves if they experience losses and receive a fee in return usually called premium.
• Intellectual Landlord
  • Licenses or otherwise gets paid for limited use of intangible assets. There are 2 types of Intellectual Landlords:
    • Publisher provides limited use of information assets
      • Example: Licensing software (Microsoft).
    • Attractor attracts people’s attention using content and then “sells” that attention to advertisers
      • Example: Many web sites “attract” users with original content and then place ads on their web site to generate revenue.
• Contractor
  • Sells a service provided primarily by people, such as consulting, education, etc.
  • Example: UPS
• Financial Broker
  • Matches buyers and sellers of financial assets
  • Example: Microlending - Prosper matches and consolidates people who are willing to lend money with people who need a small loan and charges a fee to facilitate this.
• Physical Broker
  • Matches buyers and sellers of physical assets
  • Example: eBay
• Intellectual Property Broker
  • Matches buyers and sellers of intangible assets.
  • Example: Ad networks such as AdBrite. Publishers are looking to sell space on their web site and advertisers are looking to buy advertising space. Ad Networks facilitate this transaction and take a share of the money.
• Human Resources Broker
  • Matches buyers and sellers of human services
  • Example: Workopolis and Monster.

Examples

Continuing the example from above with the new information we have on the Basic Business Model Archetypes gives us the following:

• Amazon Books is a Wholesaler/Retailer because
  1. Amazon is Distributor
  2. The asset is a Physical Asset
• Google Search is an Intellectual Landlord because
  1. Google is a Landlord
  2. The asset is an Intangible Asset
• eBay is a Physical Broker because because
  1. eBay is a Broker
  2. The asset is a Physical Asset

Onward

Part 1 only gives us half of the picture. In Part 2 we will explore the various models that can be employed for each Archetype and discuss the models that intrinsically generate revenue and the options available for the monetization of models that do not intrinsically generate revenue.

I realize that without Part 2 I’m leaving you hanging but in the meantime I would love to hear your thoughts on this approach, some of your own examples, differing opinions, disagreements etc.

If you’re interested in reading the complete paper on which this post is based it can be found on the SeeIT Project website.

At Tech Capital the investment team looks at three main things when evaluating potential opportunities – team, technology and market opportunity. It seems obvious that team is important because even smart strategy can be replicated. For companies this means that people are the prime source of competitive advantage. Given people provide companies with competitive advantage, I think it makes sense to stop and consider employee engagement for a minute.

Employee Engagement in Growth Technology Companies

Thousands of dollars are being spent by corporations annually to define employee engagement strategies, measure engagement through employee surveys and other methods, and track how successful engagement programs are at achieving desired results.  It’s understandable given the positive impact an engaged workforce has on both productivity and financial results. Watson Wyatt’s Global WorkAttitudes research, confirms that “when engagement is high, so is financial performance”.

I was surprised when I read the results of a Towers Perrin Global Workforce Study that found, “just 21% of the employees surveyed around the world are engaged in their work, meaning they’re willing to go the extra mile to help their companies succeed”. All this said, one of the things I love about working with early stage or growth technology companies is the passion of the individuals that I have the opportunity to work with. Without spending money defining an engagement strategy, employees are committed, passionate, and engaged.

Engagement to me means employees are committed. They understand how their contribution has a positive impact on the organization, and they feel a real sense of making a difference in helping to build a successful organization.

My thoughts on some engagement ingredients:

• Exceptional Leadership – engagement is driven from the top down. Great leaders have the power to both empower and engage their employees. Enough said.
  
• Collaboration – there are many things that can help facilitate an environment of teamwork and collaboration. Considering things like ideal team size, ensuring teams don’t get too large and become counter productive. Facilitating good working relationships between team members and across work groups is important. Finally, trust is key – of course something that can only be nurtured, not demanded.
  
• Empowerment - fostering an environment that encourages team members to share ideas and come up with creative solutions to unique problems. It’s important to ensure that the sense of empowerment is real. If employees are given a false sense of empowerment, they will soon realize their ability to elicit change is not backed by the organization and they will be less likely to push to drive the organization forward.
• Tools / Resources – hire smart people that have passion for what you are trying to accomplish and fit within the culture of the organization, then give them the tools they need to accomplish the task at hand.

Then stand back!

Those of you who know me well know I’m passionate about people, always willing to meet new folks and figure out how they fit into my world. I’m sure this passion stems from a traumatic experience I had during one of my first “real” job interviews (age 25). I was asked “Who do you know?” My response was, “Well nobody… I’m pretty much fresh out of school.” The interview went downhill from there and, needless to say, I didn’t get the job…*

From that point on I vowed to make meeting people, getting to know them, and building relationships a big part of my life. I remember being incredibly frustrated with the whole “networking” process early on in my career. Nobody really wanted to meet with me… What value could I bring to the table? Who else did I know? Who could I connect them to? What could I do for them? My networking activities centred around going to Communitech events and peer2peer groups, getting a group of people together to play poker, volunteering — every opportunity seemed to be “event” driven. Over time, these group activities morphed to coffees and lunches and discussions became more intimate, focusing on mutual interests and how we could each benefit from working together.

I wish someone had suggested early on (while I was still in school) that I keep in touch with my friends from university. Thanks to Facebook and LinkedIn I’ve managed to reconnect with a bunch of these folks and have reached out to some of them who are working in related industries. It’s amazing to see where your friends end up 10 years after graduation. What an amazing group of people. I would highly recommend pulling out your old yearbooks and reconnecting with old friends.

Social networking technologies have revolutionized my ability to reconnect with old colleagues and build new relationships with people (yes “relationships”, not superficial meaningless contact databases). I’m straddling two worlds at the moment (as I’m sure many of you are). One world that has embraced these new technologies, understands their impact, and is using them to effectively build networks and companies, and the other that doesn’t quite understand what all the fuss is about. It’s difficult to comprehend the impact “online social networks” can have before you’ve developed your network and it takes time to build your network (although not as much time as it would if you were to go for coffee or lunch with each person).

Here are a few concrete examples of how these technologies have helped me connect over the past few days:

1. I twittered that we are pulling together a list of “strategic partner” type companies to invite to this year’s Entrepreneur Week. I received a bunch of suggestions from my friends on Twitter. Some of these people work at startup technology companies and have identified specific companies they’d like to meet; while others work at larger technology companies, want to get some exposure, and peek under the covers to see what’s being developed here.

2. A local technology company, High Jump, announced cuts to its Waterloo workforce due to a change in corporate strategy. I did a search on LinkedIn for High Jump employees based in Waterloo Region and reached out to them directly and through my LinkedIn network (because Tech Capital portfolio companies are hiring as I’m sure you all know: http://www.techcapital.com/careers.asp). I also “tweeted” that I was looking to connect with employees from High Jump and several folks passed my message along.

3. I reconnected with Marcel LeBrun and David Alston of Radian6 (formerly of iMagicTV) who I haven’t seen since my days at PixStream.

4. I gathered some information: David Crow on StartupNorth: “Ten Web Startups to Watch” (he forgot a few…) and Michael Hiemstra posted a link on Facebook that Open Text has acquired a division of Spicer.

5. I tweeted that Andrew Abouchar had posted to the Tech Capital blog: So you are looking for the next RIM are you?

I also use Twitter, LinkedIn and Facebook regularly (and now FriendFeed although I’m just getting started there) to build and maintain relationships with people who are geographically challenged (you know… folks in the Valley, Boston area). And I recognize that I need expand these networks beyond Canada and the US to other places where our portfolio companies are doing — or want to do — business.

I’m having a blast meeting and working with really interesting people from all over.

[*Note: 5 years after the job interview, the same guy who didn't offer me the job emailed me to go for coffee... He was looking for a new job and a number of people had suggested he speak with me. Sweet.]

“So you are looking for the next RIM are you?” is the most frequent question I get when I tell people what I do. My response is usually some flip comment like “Wouldn’t that be nice!” because I suspect the inquirer doesn’t really want to hear what I think. So the conversation moves on to kids, the weather and how bad the Leafs are. But blogs are what they are and here is what I think.

What RIM has been able to accomplish in its 20+ years of existence is truly stunning. It