Albert, Albert, Albert. What would a day be without having to respond an Albert quote. Joe Castaldo has an article in Canadian Business magazine entitled: "The Venture Gap". You can read the full article here but before you scoot off to read it, stay with me for a few moments.
The article leads off with a re-affirmation of Canadian Business's anointment of Albert "whiz kid" Lai. That's fine, mazel-tov.
Here's the fun quote:
"As a purely business decision, you'd be an idiot to start a company in Canada, he says, unless you can get some capital from the U.S."
Yep. This is what's sitting on my desk at 6:45a after the San Francisco redeye.
So, here's my executive summary and analysis of the whiz kid's business advice for those of you in a hurray:
"As a purely business decision, you'd be an idiot to listen to Albert Lai when it comes to where to start up a company."
The article is focused on the problems young start ups have getting capital and Joe's article, for the most part, was accurate and pretty good.
Back to the whiz kid, emphasizing the kid part only because I've just stepped off a redeye.
Albert's chief complaint centers around how "it's been very challenging to get the level of support from the venture community." He describes his experience as "deflating."
I'm sorry to have to let the facts get in the way of a good Albert story but here goes:
The article mentions Albert's starting of BuyBuddy. Fact: He didn't, two other smart entrepreneurs started a company of which BuyBuddy was part. There is a longer story which isn't relevant but the article's point here is factually in error. You can read about the BuyBuddy and MyDesktop story here. The whiz kid is at the bottom of the page. They liked em as do I.
Albert's tale of woe to Mr. Castaldo makes for good reading. Poor smart whiz kid can't get any of the dumb ADD suffering VC suits to pay attention.
Great stuff except it isn't true, Albert had multiple offers for funding, including, surprise, from my firm.
Actually, from me personally. In writing. In the FIRST meeting when I saw Bubbleshare. It was all Sand Hill Road like. He comes in with the pitch and on the spot gets an offer of funding. Right out of central casting; young whiz kid makes good.
Oh, and for bonus points, Scott Pelton (Growthworks) my good friend and investing partner who was, at the time, working for one of the Canadian banks also was keen on going into an Albert Lai science experiment with JLA.
Here's the dirty little secret: Albert turned the Canadian VC money down.
It turned out to be a smart move because had he taken the equity investment he would have been giving up some of that U.S.$3 million to me. $3 million is a great exit when you pocket virtually all of it and a crappy exit when you give a hunk to a bunch of suits, I suppose.
In one of the 9 (I love Outlook's archiving) meetings I had with Albert, he had a concern about if he got what I termed a 'flip' offer, he wanted to be able to take it. Make a quick million or so an move on was the basic point. What I told Albert was on an IRR basis, I'd be fine, it would be meaningless absolute dollar return but it would put a successful Canadian entrepreneur into the system which the eco-system could certainly use. So, in general, I was fine with it.
But let's all be clear: Albert turned Canadian VC money down. Maybe because my terms were bad, maybe because I wanted a board seat, maybe because I wouldn't let him spent more that $150k for any one hire without sign off, or maybe because he didn't like my asking pesky questions about the actual business model.
Or, maybe he figured out how to scrape by and get Bubbleshare over the finish line without having to put up with me or anybody like me. This turned out to be a smart, non-idiot, move.
Well done, Albert, you made some good money, now STFU as it is disingenuous (at best) to be complaining about your "deflating" funding problems when you had the opportunity to take VC money and turned it down. You could have at least mentioned this to the reporter, said you were lucky, and bitched on behalf of everybody else. That would have been fine and I would have gone home to sleep.
Let's turn the All about Albert knob down from a 10 to, well, to a 8, okay? But running out of Canada because you got "deflated" and no offers of funding? Makes for good reading but is complete nonsense.
Let us not spend our time pounding on Albert's embellishments and complaints, rather let me give you some actual Pro-Canada facts that I hope give you pause with respect to as our whiz kid puts it "being an idiot."
Fact: The SRED claims and other federal and various provincial benefits are superior to those of the United States. The programs of pay subsidies regarding the hiring of tech grads from University's can get you a development team for less than half of what it would cost you in the cheapest corner of the U S of A. And that's just one of many programs that make Canada an amazing place to start a company.
Fact: In terms of government support of business, no country does more then Canada when it comes to export help, worldwide promotion, use of little things like Embassies for hosting business meetings, etc. The country is off the charts amazing when it comes to support her business community from the smallest one person start up to the multi-million dollar enterprises.
Fact: Canada has a superior work force. Memo to the whiz kid: The U. S. companies line up around the block when it comes to university recruitment. Waterloo grads, to name one, is responsible hundreds of technical innovation inside companies large and small. My start up company in Seattle (HealthUnity) grabbed some great people from Canada. And superior people are everywhere in this country. From Labrador all the way over to Victoria, British Columbia. Solid people, super brains, hard working, non-idiots, Albert.
Fact: There are dedicated programs in Canada specifically designed for start ups. Get to know Maxx Hollott at Growthworks. He works on the Growthworks commercialization fund which is targeted at, surprise, whiz kid like start up projects. Maxx is a great guy and the program works. Paymentus, a JLA portfolio company, started life in that fund and is now rocking along. Canadian program, Albert, run by non-idiots trying to help the Canadian non-idiot entrepreneurial scene.
Fact: There are Venture Capital firms in Canada that would love to hear from you. RHO-Canada, Garage Canada, Growthworks, Celtic House, Ventures West, and yours truly are all talking to entrepreneurs about start ups, medium, and large companies. Non-idiots, Albert, as are the entrepreneurs.
Fact: There are amazing companies run by amazing people all over Canada. They are not idiots. Leila Boujnane, CEO of IDEE, is one such a non-idiot and a women I adore. She, along with her co-founder Paul Bloore, have done a fantastic job of building IDEE into one of best visual search and advanced image recognition companies on the planet. As they will attest to, I've been after them for years to make an investment. They are not idiots. They are making it without VC money and will probably get an amazing offer one of these days and be yet another non-idiot Canadian success story. Too bad for me, great for them as they work hard, have great products, and deserve all the success that comes their way. Oh, did I mention they aren't idiots, Albert? Then there are the brothers running Net Shelter, Jeremy Wright running B5, Alec Saunders running Iotum, the super brains at Truition, PlanetEye, Shoplogix, Overlay.TV, Maximum Throughput, VoIPshield, AudienceView, Dabble DB, etc, etc. Hmm, this paragraph is just bursting with non-idiots, Albert. I'd keep going but the Starbucks triple whatever is starting to wear off.
Joe Castaldo's article's theme, leaving Albert aside, is unfortunately correct. There isn't enough VC money in Canada. I could easily deploy more capital in many of the great companies that we see. It is hugely unfortunate and bad for Canada when great ideas have to go south because our investment community and fund sizes are too small. All of us from pension funds to private equity players have to find ways to fix this situation as the eroding start up market hurts Canada in the long term.
I like Albert. I'm delighted a Canadian Start Up (Bubbleshare) got bought by a Canadian public company (Kaboose).
Albert is not an idiot. Hopefully, he can learn to stop sounding like one.
[Cranky Rick Bonus: Memo to Canadian Business Magazine. Geez, folks how hard is it to get the table of contents right? The article is on page 83 not page 70 like the TOC says. Hire Albert, it will give him something productive to do.]