Posted by: Peter Carrescia | 03-11-2010

Approaching Monopoly Power

This is what happens when you approach monopoly power in a market.  So much for negotiations…



Posted by: Peter Carrescia | 07-10-2010

Turning Founders into Employees

Last night I saw the movie The Social Network, based loosely on the story of Mark Zuckerberg and Facebook.  Watching the movie made me feel the way I did in the early 1990’s when I was young and believed that with technology, anything was possible.  On my drive home I thought about the very early stages of a company and how critical the Founder is at that stage.  It is only through intense personal drive that a Founder, against all odds, can be successful.  When many around that Founder tells them why it won’t work, they work endless hours and inspire those around them, to do what is necessary to make it work.  The Founder’s passion and excitement for what they’re doing often is the key ingredient in capturing early customers, and is the best (and often only) marketing the company needs at that point.

With the knowledge of just how critical a Founder is in early stage companies, I thought I’d share a thought or two that I’ve learned along the way (unfortunately the hard way).  It is already too hard to be successful with an early stage company than to try to do it without the Founder at the lead.  No “professional” manager will care as much or be as passionate or work as hard as a Founder.  No sales person will be better at closing those first sales than a Founder.  And nobody will be better at recruiting great talent to come and work at an improbable startup than the Founder.

But beyond having the Founder in charge of their early stage company, they must truly be in charge.  So often, VC investments in early stage companies come with extensive controls and protective provisions that give investors complete control of the business.  The negotiation of these terms can often beat the Founder into thinking they’re an employee, and they then ultimately act like one too.  That, in my experience, is the kiss of death at an early stage company.

When I’ve looked at early stage investments in the past, I used to think that the Founder could work alongside a professional CEO or ultimately be replaced.  I’ve learned though that no matter how good the idea, and no matter how great the opportunity, that if the Founder truly has issues that do not allow them to run the business from the outset, that it then becomes necessary to decline the opportunity and not invest.  What issues rise to this level?  The two that immediately come to mind are the openness of the Founder to take guidance and be mentored, and the second is trust.

It’s already too hard for an early-stage company to be successful.  No amount of professional management or contractual legalese can replace the necessary qualities that a Founder brings to an early-stage company.

So my strong recommendation is don’t even try.

Posted by: Peter Carrescia | 06-10-2010

Entrepreneurship in Canada

Interesting article in the Globe & Mail today highlighting a study by Rebecca Reuber, a professor at University of Toronto showing encouraging signs regarding entrepreneurship in Canada. See Entrepreneurial signs across Canada show improvement.

I’ve written about entrepreneurship before (see Entrepreneurship, Universities and Venture Capital).   As a VC, I have an obvious self-interest in this issue:

Today, there are simply not enough people catching the entrepreneurial bug and starting their own companies.  It really is a numbers game – increase the supply of new companies, and there will be a proportionate increase in the number of successful companies.

But government too should be very interested in this issue, particularly now.  As I continued in my prior blog posting:

Educate someone to be an employee, and they will fill a job. Educate them to be an entrepreneur and they will create many jobs.

Fittingly, today is DemoCamp Toronto (for a description of what DemoCamp is, see here).

Hope to see you there.

Posted by: Peter Carrescia | 28-09-2010

RIM Playbook

Last night I reviewed the announcement of the upcoming Blackberry Playbook and went to bed confident that RIM had found its way.  I was quite certain the stock would trade up 5-8% today.  Instead, I was surprised to see RIM’s stock trade down by about 3%.

The overwhelming press and analyst coverage was focused on the late delivery date (estimated to be Q1 2011) and its competitive positioning against the Apple iPad.  I believe that entirely misses the point as to what was important in yesterday’s announcement.

From my perspective there are two important takeaways from the Playbook announcement that have nothing to do with how it competes with the iPad or how many they will sell in the next year.

The first is that from a hardware perspective, RIM still knows how and more importantly is willing to build a leading edge device.  In most ways, the Playbook technology is ahead of all other tablets, available or announced (see comparison of feature set here).  There has been strong criticism of RIM that it was not keeping up with its competitors from a technology perspective (processor, memory, screen, etc).  The company that used to be a leader in implementing new technology had slowly become a follower.  That’s something you would expect from an enterprise focused IT vendor (it’s what the enterprise wants!), but with increasing competition from consumer-focused competitors, it was not something it could continue to do.  The Playbook shows that they are able and willing to use new technologies aggressively.  The important and I believe correct assumption to make is that this re-found leading-edge philosophy will quickly permeate the entire Blackberry smartphone lineup.

The second is that the Playbook operating system (from recently acquired QNX Software) clearly makes up a lot of lost ground the Blackberry OS has ceded to iOS, Android and webOS.  At least from the demo videos (see here for one), it is on par from a user experience perspective to these competitive OSs.  It is clear that RIM did not pay $200 million for QNX just to put the OS on a tablet.  And they’re not looking to complicate things by having two OS products to support.  This OS will certainly make its way into their smartphone lineup too.

With these two takeways, it is quite certain that RIM’s hold on the enterprise will continue without question for years.  And with good developer support (and a bit of innovation – see Advice to RIM: Think Differently), they will get their fair share of the consumer market.  Layer on top of that ancillary products like an enterprise-focused tablet, and there’s a lot to be excited about with RIM.

Yes, I am a biased Canadian!

Posted by: Peter Carrescia | 28-09-2010

National Encryption Key Registry?

In light of yesterdays post, I thought this was interesting:

BlackBerry CEO suggests route to eavesdropping

In a recent interview, RIM co-CEO Jim Balsillie said he could envision countries that want access to BlackBerry e-mails setting up a kind of national registry where companies doing business within their borders would have to provide government officials with the ability to peek at encrypted messages.  “We would support that if it’s applied equitably to everyone,” Balsillie said, while warning that governments that use too heavy of a hand on the issue risk scaring away businesses.

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