1. Philanthropic giving is much like venture capital investing. When we invest in a company we make sure the business has enough money to cover its basic operating costs but also ensure it has some extra funds in order to try new initiatives. I think you should take the same approach to your charitable contributions. A percentage of your giving should be done with no strings attached and should be to allow organizations to cover their basic overhead costs. If a charity can’t pay the rent, pay its staff and turn on the lights it can’t do its basic job.  On the other hand, we also need to ensure charitable organizations have adequate funds to be able to try new innovative ideas. Again, this is not unlike venture investing. In a recent transaction a company came to us looking for $1 million in financing we decided to invest $2 million because we knew giving the company $1 million meant they would not have the ability to take risks and make mistakes. Shouldn’t we take the same approach to philanthropic investing? It is impossible to innovate without making mistakes and taking risks. This is clearly acknowledged in the business world yet we don’t give our non-profit leaders the same flexibility. Far too often CEOs and Executive Directors of charitable organizations live in fear of making mistakes because they simply don’t have the financial resources to take risks. I encourage you to allocate some portion of your charitable giving to funding innovative ideas. In some cases the ideas won’t pan out but unless we invest in these opportunities we will not give the leadership at our non-profit organizations the resources to “change the world”.
2. Tied to idea #1 is the notion of supporting strong leadership teams at organizations you are assisting financially. In the venture world we know that most management teams are prepared to trade off some cash compensation for equity but we never go out looking to hire the most inexpensive management team we can find. Often this is not the case in the non-profit world. Too many boards pride themselves on keeping CEO and ED salaries very low. I am an adamant opponent of this strategy and truly believe “you get what you pay for”. This doesn’t mean that organizations have to pay through the nose but it does mean that minimizing management salaries shouldn’t be a goal. Several of the charitable organizations where I have been board chair have significantly increased compensation for the head staff person and in all cases the organization has moved to the “next level” as they have been able to attract outstanding candidates. I encourage you to get involved with the organizations you are supporting financially by letting them know it is okay to use your contributions to compensate the staff team appropriately.

We all want to live and work in a healthy vibrant community. In order for this to occur we all have a role to play in supporting our non-profit and charitable entities. As we approach a new year, I hope you will take some time to think strategically about what role you will play in supporting these organizations in 2010.

1. Charitable giving is about more than writing cheques. The gifts we can contribute are often described as the “three Ts” being Time, Treasure and Talent. In thinking about your contributions I think you should be giving all three. That doesn’t mean you have to do all for each entity you support. In some cases I am very involved with organizations, sitting on the board, volunteering time at events and providing financial support. In some instances I just provide financial assistance or in other cases will provide a skill set to help with an issue without  providing financial assistance. Evaluate how much you think you can give for each of the Ts and allocate accordingly.
2. When it comes to financial contributions I am often asked “how much should I be giving”? There is no easy answer to this question but I do think a general guideline should be that your giving should “hurt” a bit. What I mean by that is I encourage you to give to the point where you have to make a small sacrifice personally in order to make your financial contributions. This will be a different level for everyone. For some it will be $100 a year for others $50,000 a year. My point is that while it is different for everyone you should know when you hit it.
3. Be strategic about your giving – balancing ongoing support with being able to respond to new requests. I have several core organizations I support each year because I believe in their mandate but I leave some room each year for “one off” situations that come up.
4. If you are unsure where to start, you may want to chat with some friends and decide collectively to support a charity or project. This is the way groups like SVPI work (www.svpi.org). Jacqui Murphy and I attended the SVPI annual conference this year and hope to have a Waterloo Region branch approved at their 2010 annual conference.

Stay tuned for some thoughts on how you can approach charitable giving in the same way we approach venture capital investing…

This may be obvious to many of you, but I was also struck by how isolated the teens seemed from all the cool new tech that Silicon Valley nerds are excited about. None of them owned an iPhone, or any of the newer smartphones. They still used Google for all their web searches and only seemed vaguely aware of Microsoft’s search engine Bing. And while almost everyone I know uses Gmail for their personal email, one teen (a boy) declared, “Hot girls use Hotmail.”

At least the author starts off by saying “this may be obvious to many of you” so he’s at least aware that the bubble he lives in may be relatively small. When I first read the paragraph above I thought to myself: You’ve just described 90% of the world population.

The Bubble Calculator
I think it is important to step back once in a while and make sure you’re still aware of what’s going on outside of the bubble you live in. Sometimes it’s easy to get caught up in all the hype and forget that the world does not consist solely of the 100 km² around your home. That being said I think most would agree that all of us live in a bubble of some size (some larger than others) but I’ve come up with a scientific approach that is 100% accurate to determine the size of your tech bubble based on your answers to a few simple questions and a complex scoring system. Note that this has nothing to do with speculative bubbles…this is about the bubbles people live in that prevent them from seeing beyond what they’re comfortable or accustomed to. A small bubble means you don’t get out much.

I’ve just picked up Creative Capital: Georges Doriot and the Birth of Venture Capital by Spencer E. Ante and my favourite (note the Canadian spelling) book for entrepreneurs these days is One Hen by Katie Smith Milway. You might sense a “back to basics” theme in these two books… Enjoy.

The consensus appears to be that yes, we do have great entrepreneurs and great innovation in this country. I for one believe this is true and have worked with a good number of entrepreneurs who have built (with their teams of course) very successful companies.

Lately, I’ve been spending a ton of time thinking about what we as a venture capital community and the broader technology industry can do to support these entrepreneurs. When I look around at the venture capital ecosystem in Canada (and elsewhere) most VCs are either out of cash or have very little cash left to invest (there are obviously exceptions and some VCs have raised funds in the last couple of years). I’m not sure that the majority of entrepreneurs have heard this message. When I look at the amount of time and effort that Canadian entrepreneurs invest in pitching their companies to VCs (here and elsewhere), it makes me want to scream. If we could harness this time and effort and direct it towards selling products and services to real customers, imagine how much revenue all of these companies could generate.

Looking at the funding process today, entrepreneurs pitch their companies to VCs who pitch to LPs. Wouldn’t it be great if entrepreneurs never had to pitch VCs? What if we turned the process on its head and built such great companies that entrepreneurs could choose whether or not to fund their companies with venture capital? And what if VCs had to demonstrate value beyond money for entrepreneurs to want them to invest in their companies…? And wouldn’t it be great if VCs never had to pitch LPs to raise new funds because of off the chart returns?

So how can we help entrepreneurs beyond providing capital?

* By helping them generate revenue more quickly *

Here’s what I’m proposing:

1. Entrepreneurs/companies:

• Map out your industry ecosystem: a) Types of companies you sell to (e.g. carriers) b) Types of companies you would partner with in order to sell (e.g. network equipment vendors)
• Identify the specific companies that fall into this ecosystem: a) Potential customers b) Potential partners
• Identify the specific person/people at each of these companies that you need to get in front of in order to sell your products (great tools for this include LinkedIn and Jigsaw). Figure out where these people are located. Group by geography. Plan trips to visit these regions.
• Search on LinkedIn to identify “connectors” who can introduce you to these potential customers/partners so that you can set up initial calls and then face-to-face meetings with them.
• Commit to building out your LinkedIn rolodex and sharing the connections you make with other entrepreneurs.

Now, these first few steps can be difficult and will take a significant amount of time. If anyone can come up with a cost effective way to help entrepreneurs work through this process, please weigh in below in the comments…

Communitech is one organization that has been supportive in finding creative ways to help entrepreneurs work through this process.

2. VCs and other supporters of entrepreneurs:

• Spend some time building out our LinkedIn rolodexes (many of us know many more people than the ones we currently have listed in LinkedIn).
• Highlight the market sectors where we have experience on our LinkedIn profiles.
• Respond to entrepreneurs who reach out to us for introductions. Go for coffee to learn more about them and their businesses. Introduce them to potential customers/partners and others who can help them generate revenue more quickly.

I spoke with a group of entrepreneurs last week on this topic — “Leveraging Non-Existing Networks Into Guerrilla Revenue Generating Strategies”. Many were skeptical at the beginning of the discussion but by the end, there was a real energy in the room.

I understand why people might hesitate to open up their rolodexes and connect people.

My response:

1. I am not proposing that we destroy our reputations by spamming our rolodexes with Canadian content . I am proposing that we spend a bit of quality time, interacting with entrepreneurs in our sectors and connecting them with potential customers/partners when/where we feel comfortable doing so.

2. We would be connecting our contacts with entrepreneurs who have developed products and services that have real value propositions. Our contacts may well benefit from being introduced to these entrepreneurs.

3. What good are our relationships if we don’t leverage them? We become more powerful and influential by sharing and connecting.

“He who receives ideas from me, receives instruction himself without lessening mine; as he who lights his taper at mine receives light without darkening me” – Thomas Jefferson (tip of the hat to Michael Masnick)

Some ideas to get started:

1. I’ve been told that there are about 300,000 expat Canadians living in Silicon Valley (yes, 300,000). Have you reached out to a Canadian expat today?

2. There’s a small but mighty group called Canada Connects on LinkedIn. Same objective as this post. Please join to help get our Canadian entrepreneurs on steroids.

I’ll be the first to admit this plan is not perfect. Constructive criticism with suggestions for improvement are absolutely appreciated.

It has never been more apparent to me that entrepreneurs and people who choose to work for emerging technology companies thrive in challenging situations, and they do not frighten easily.

Entrepreneurs are going to build Canada out of this recession and they are using everything they can as ammunition.

I thought I’d start a list of “weapons” available to Canadian entrepreneurs:

1. There is amazing talent on the street right now. Many of these folks have received severance packages and are approaching the job market with “flexibility” in mind. Reach out to these people and engage with them as advisors, employees who are interested in working for equity, and/or potential co-founders/partners.
2. Map your industry ecosystem, identify strategic partners and customers, prioritize them, and use FREE social media tools (LinkedIn, Twitter) to reach out, ask for introductions, and ask for help — shorten your path to market any way you can.
3. Attend the “unconferences” (StartupCamp, BarCamp, DemoCamp, mesh) to meet people like you who are wanting to roll up their sleeves and help others (and themselves) build companies with limited resources. These entrepreneurs are not waiting around for venture capital, they are building in the absence of financing with customers, value propositions, revenue and profits in mind.
4. Look to existing government programs for support. Make sure you are filing for SR&ED Credits and applying for the Ontario Interactive Digital Media Tax Credit. Introduce yourself to your local IRAP and OCE representatives to see if they have any programs you might qualify for.
5. Reach out to MaRS, Communitech, and OCRI and hook in to their Entrepreneur-In-Residence programs. These organizations are very knowledgeable about tools that are available to entrepreneurs and they know how to efficiently access a number of government programs.
6. Check out the Microsoft BizSpark program for free development resources and support.

I will be adding to this list as I come across other resources — please do the same.

“Never underestimate the disparity between developer excitement and user apathy” Ted Dziuba, 2008

It isn’t just developers, we’re all guilty of being sucked into the ‘coolness’ of something without questioning the utility or business impact of implementing such an idea. It is very easy to get caught up in the excitement of “cool” new features and fail to ask the simple questions that can keep us on task:

1. Does the target user care about the idea? Or for that matter, does anyone care?
2. Did we make life easier for the user? – we’re talking about a noticeable impact
3. Does this directly contribute to solving the problem the company is focused on?
X. If you’re in business — Will someone pay for this?

*It is important you not only ask yourself these questions but also ask someone outside of the project to answer these questions, preferably someone who isn’t afraid of being blunt and honest… how about potential users/customers?

Yes, this is a simple concept and these are simple questions, but there is no shortage of real-world examples where these questions would’ve come in handy and possibly saved a lot of time and money. There is a reason we have terms like Feature Creep, Second-System Effect, Bloatware, etc. Here are some classic examples of failures and really annoying products that stick in my mind:

• RealNetworks RealPlayer circa 2000
  • Man I hated that thing and the .rm format
• Norton and McAfee AV
  • I remember when Norton was my favourite AV program…10 years ago. Now every new machine seems to come with this Bloatware pre-installed. 3-page tutorials are necessary to explain how to purge your system of these programs.
• Microsoft Bob
  • Did anyone actually use this thing?
• OpenID
  • I think the answer is a “yes” for questions #1 and #3 but to me it seems #2 is an utter failure at this point and is an extremely large hurdle to overcome. Piggybacking on existing services is a great idea but a large percentage of Internet users just don’t get it and probably never will.
• Google Lively
  • It launched in July 2008 and shutdown in December 2008

I’ll stop there but I’d love to hear some of your own experiences…

1. Recognize that it takes a team to build a successful company. Companies typically start out with one or two founders, and no founding team is “complete”. We like to work with founders who recognize where they are strong and where they could use some help. As the team grows, management needs to focus on where the team is strong and capitalize on these strengths. At the same time, management needs to identify where the team is weak and hire to fill these gaps. A rapidly growing company doesn’t have time to try to strengthen or hide weaknesses.

2. Hire top talent. Of course. Easier said than done. How do you identify top talent? Are you willing to hire someone who is more accomplished than you? How do you convince these people to join your company? How do you make sure they stick around? We’ve invested a significant amount of Tech Capital’s resources to make sure our portfolio companies have access to and retain the best talent (80% of the money we invest in companies ultimately goes to the employees). We have two full-time employees at Tech Capital who focus on human resources programs and support at portfolio companies. From the get go, we help our companies establish HR management principles to ensure they are ready for rapid expansion and growth. Programs include: recruitment and retention of talent, development of talent, compensation strategies, management of organizational change, and general systems and processes.

3. Share the wealth. We encourage our portfolio companies to issue stock options to all employees. By giving employees a share of the company’s upside, employees have a vested interest in the success of the company. Everyone celebrates when the company is successful. Some of our companies also use variable compensation to reward employees for success on specific initiatives. For example, additional stock option grants for successful customer deployments or cash compensation for growing the company’s user base by a certain percentage. We do not subscribe to a “standard” compensation formula but we believe that employee ownership should be included in whatever form of compensation management chooses to adopt.

4. Spend money but make sure you spend it on things that matter and don’t waste it. We invest money in our portfolio companies knowing that they are going to spend it, and we want them to spend it to grow the company. The key is to use money as efficiently as possible so that the company gets to cash flow positive as soon as possible. Don’t waste money on fancy office space or expensive furniture and shop around for the best deals on travel etc. so you can pay your employees well, give them the tools they need to be successful, and have more runway.

5. Identify, focus on, and track metrics in all key areas of the business. The old adage “What gets measured is what gets managed” is certainly true. Metrics give all employees a clear view of what matters to the company and tangibly shows the progress the company is making. One of our portfolio companies has a large monitor in its development area that tracks one of its key metrics. Everyone in the company can see the impact of new product releases and the growth of the company — in real time. This type of visible metric is incredibly powerful for team motivation (and impressive when investors stop by…).

6. Focus on the “right” revenues. Generating revenue is very important but it is equally, if not more, important to make sure that the revenue you generate comes from your target market. Referenceable and relevant customers play a big part in technology sales cycles and are key for driving revenue growth, especially in the early stages of a company’s development. Having these referenceable customers also helps validate your business value proposition when you are speaking with potential partners and investors. Chasing revenue wherever you can find it may help keep the lights on but it can keep you from building your core business. If you are unable to secure revenue from your target market, you might want to reevaluate your value proposition and target market.

7. Move quickly but maintain a strong balance between planning and execution. One of our CEOs suggests setting annual goals and then working backwards to determine what the company needs to do each 30 days to ensure it meets these goals. The company executes over the 30 days, measures the results, adjusts the plan if required and then executes for the next 30 days. Monthly company update meetings provide a good “deliverable point” to keep everyone accountable (including the CEO). He also suggests having no more than four key, well-defined deliverables (three is best, easy to remember, no confusion) and that nothing else should be started until these four are completed. Along with this point, do what you say you are going to do, when you say you will do it. Or, “Underpromise and Overdeliver”. Clearly understand the abilities of your team and set realistic expectations about timelines on deliverables.

8. Communicate effectively with employees on a regular and scheduled basis. Continuing on with my last point, every employee in the company has a role to play in ensuring the company executes on its strategy. Communicate regularly with employees both informally and through scheduled company meetings (we recommend at least monthly) in which management clearly articulates the company’s annual goals, results from the prior month, and where everyone should be focused for the current month.

9. Knowing when to say “no”. There are so many paths for companies and employees to take in building a business but financial and human capital resources are always limited. How do you figure out which paths to pursue and which to say no to? Ask yourself these simple questions: “Does this [opportunity / feature / tool / resource / project / information / etc.] help us deliver on our key deliverables?” and “Does it provide a return on investment within [timeframe]?” Keeping people accountable for their actions and rewarding them for achieving goals makes answering these questions somewhat easier.

10. Encouraging innovation. A difficult challenge is finding the balance between focusing on the execution of a plan vs. innovation and new ideas, which always creates a pull in a different direction… One portfolio company maintains a constant dialogue so that every new idea that pops up is put on the table for consideration and evaluated along with everything else. Another company gets ideas and buy-in on product design from everyone in the company, not just the engineering and product teams. Their process includes full, company-wide, design reviews and prioritization sessions on each product release. A third company considers every new idea and rapid prototypes whenever possible. To support and encourage idea exchange, they have a 4′ x 8′ whiteboard for every developer.

11. Develop a culture of empowerment and decision making. Employees need to feel comfortable making decisions — taking risks / trying new things / experimentation is good. If an employee makes four decisions and one of these decisions turns out to be wrong, three were right! (and the company moves forward!) If employees are scared to make decisions, the company stands still. Trust your team and encourage them to make decisions.

12. Participate in community. When I speak about community, I’m referring to the community in which the company chooses to do business. I recognize that this is a vague definition but community is different for each company. Our companies participate in their industry communities — For example, contributing to standards bodies, joining trade associations, and speaking at industry events. They also participate in their local communities and believe that building a reputation locally is important for recruiting the best local talent. A company needs to be engaged with its community on many fronts to develop its reputation, get feedback on its products, cultivate relationships, build its team, etc.

This list is obviously not exhaustive, would love you to post your own best practices in the comments.

Jennifer Brooy, Vice President of EDC Equity talked about the shift to the “communication age” and our use of the internet to interact and communicate — how markets are now telling us exactly what they want. She suggested that we look and listen to the large and rapidly growing markets like China, India, Brazil, Russia and Southeast Asia. A couple of years ago there were a flurry of “India/China” events… I wonder how many Canadian companies have explored opportunities in either of these countries. Looking at the chart below, at a macro level, the US is still a huge market. Looking at growth of GDP: China, India, Russia, Southeast Asia… all growing at a more rapid pace than the US. And the population bases and export growth — China and India — huge. And import growth — Brazil and Russia.

But what do these types of charts mean to individual Canadian companies? I think the question each company needs to think about is: Where is your market? Where is your biggest and best opportunity? Not necessarily in your own backyard. And not necessarily in the country with the largest GDP. Think about the specific segment of the market you should be addressing and think about it in a global context. Now where is your biggest and best opportunity?

Jennifer spoke about the strengths of our country:

• We have a strong fiscal discipline.
• We have a solid economic base not withstanding what’s going on right now.
• We have a sound banking system — some of the soundest banks in the world.
• We have water and energy resources.
• We have diverse and talented human resources — multi cultured, multi language, multi coloured.
• We have the highest educated population base in the world. We have the highest per capita of post secondary graduates.
• We have proven ourselves as technology leaders and we are innovative and adaptive.

We have some amazing resources we can capitalize on. Jennifer spoke about the reverse brain drain phenomenon where people have come from China, India, Brazil, and Mexico to North America, Britain, and France. These talented people have been educated in our best universities, have worked here, and have learned our culture, our ways of doing business, and our approaches to innovation. She suggested that Silicon Valley might not always lead the pack in terms of innovation due to this reverse brain drain. These educated and experienced people are going back to their roots and exporting this intelligence back home. How do we encourage these people (both Canadians and non-Canadians) to work for our companies? How do we make sure they are aware of the opportunities? How do we incent them to stay once they’re here? We need to make sure we are providing challenging, fulfilling career opportunities and compensating fairly. We need to make sure our companies have the financial resources and market opportunities to thrive. Jennifer expressed concern about our floundering venture capital industry and its impact on our tech industry. And the impact of globalization on our small and medium sized enterprises that make up the lion’s share of our economy.

EDC has developed a number of programs to help Canadian companies address these concerns and take advantage of these opportunities. Some of these programs, like the equity/investment side of EDC, are not well known. EDC invests directly in Canadian companies that are born global or that want to grow and go global. EDC also invests internationally in funds (one more disclosure, EDC is one of Tech Capital’s LPs) and now has several fund investments in China, India, Southeast Asia, Turkey, a pan European investment, a fund in Israel, a couple of funds in the US, a Caribbean fund, a Mexican fund and is starting to roll out into Latin America and next year Africa. They are actively building a network of people and companies in other countries that Canadian companies (venture capital firms included) can reach out to, learn from, and work with. I would suggest that companies look to EDC for assistance in building relationships with companies in other countries. “EDC Equity is your investment partner with global reach. We’re here to help. Going global is not easy but we’re here to demystify, to de-risk, and to get you connected.”

Rajiv Pancholy, Chairman and CEO of TenXC Wireless challenged startup companies to think about going global as a strategic imperative, rather than an afterthought. He broke his presentation down into three segments: (1) reasons for going global, (2) what you need to do to go global, (3) the challenges you will face in going global and who you can turn to for help.

Rajiv made an interesting point that in the technology business, there is now clear evidence that the adoption cycle for new ideas and new technologies is significantly shorter in many other parts of the world vs. the more entrenched conservative thinking that permeates through the big customers in North America and Western Europe. “Customers in Asia and the emerging economies will pull you along faster than you ever thought possible.” In a world where there is less and less capital available for technology companies, a quicker path to market and revenue certainly sounds attractive…

Rajiv made it very clear though that “going global” should not be an afterthought. Most startup companies don’t have the human capital and resources to go after multiple markets at the same time so companies should pick and choose carefully. “Going global requires a lot of effort, focus, and staying power. You must have right resources in place. Going global requires a lot of long journeys, a lot of long stays in foreign countries, and dealing with different cultures. You must have people on your team who are willing to pay the price on a sustained basis.” I certainly remember my time as Director of Marketing at a startup technology company — supporting sales teams in Asia Pacific, Europe and North America. Almost all of our resources were devoted to the North American market… I’m amazed at what our remote teams were able to accomplish on their own.  Certainly not an ideal situation… 

You also need to rethink your business model. Rajiv referenced management guru C. K. Prahalad and his big warning to North American businesses. To go global, companies need to completely change their business models to properly address the target market. Work from the market backwards rather than relying on your traditional ways of doing business.

Some additional tidbits from Rajiv’s presentation:

• As a young company, you need to understand that when selling to companies in developing countries it is not just your product they are buying. Yes, they want your product and they understand your value proposition but they see you as representative of your company and they are attempting to build a relationship with you. They are hungry for the knowledge behind the company and want to discuss the thought process that went into the product. Reps and agents typically fail in these early stages although they can be helpful later on.
• Patience is a bad word and breeds a sense of complacency. Do not be “patient” to develop your business in another country. If you put in a sustained effort anywhere in the world you will get to your goal sooner rather than later.
• There are obviously some local complexities and it can be hard to know who and what to trust. There are many rumours, assertions, and stereotypes and you need to learn to navigate them. Doing business in other countries is not necessarily that different at the end of the day. Beware of falsehoods, rumours, and innuendos.
• Getting to meet the decision makers is a big issue. When you are representing a small company you typically struggle to get an appointment. You need people who can open doors for you. You also need to project an image to convince customers to trust you with a significant piece of business. TenXC has used what Rajiv calls “force multipliers”: Canadian Trade Commissioners and EDC to help broker introductions. EDC has helped TenXC by “opening doors, giving introductions, speaking on our behalf, facilitating meetings, to extending to us certain financial tools and capabilities to be able to handle that level of business.” EDC invests in organizations and companies so when they make a phone call, they are not making it on behalf of a supplier, they are making it as an investor to the group CFO. EDC can also introduce you to an ecosystem of people who have been part of major transactions and have been vetted.
• Other groups that can help: the Canadian expatriate community all over the world, networking organizations like The Indus Entrepreneurs (TiE), and the ethnic communities here in Canada.

“Don’t be afraid of going global. Yes you’ll have to pay the price, yes it will be arduous, yes it will be physically draining, but it can also be extremely exhilarating and can make success happen a lot faster than you think.”

There were a number of other interesting speakers who also spoke at the event including:

Scott Aldsworth, Vice President and East Coast Regional Director, High Street Partners, Inc.
Peter Crombie, Partner, Emerald Technology Ventures
Robert Genieser, Managing Partner, Vertex Venture Capital
Ajoy Mallik, Global Head, Venture Capital for the Co-Innovation Ecosystem (COIN), TATA Consultancy Services
Jevon Macdonald, Founder, Firestoker.com, (co-Founder of StartupNorth.ca, WirelessNorth.ca, CommunityNorth.ca and StartupIndex.ca)
Rob Lane, CEO, Co-Founder, Overlay.TV
Maggie Fox, CEO, Social Media Group

Hold the date for the next CVCA PD session on “Deal Trends” taking place on February 26th, 2009.

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!

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