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.]
Well Said!
Posted by: AT | March 14, 2008 at 08:40
I remember the guys over at desktop.com before they sold the URL. I was at a Rogers event when most of the same team (now buybuddy) announced a partnership. I'm not sure I ever met Albert but its a bit disingenuous at best. Seems to be a trend with Tech Whiz kids from Canada.
Thanks for setting the record straight.
Posted by: matt roberts | March 14, 2008 at 08:54
this is was fascinating read Rick, 1) for the simple fact that I have never seen you so 'mad' before an (2) for atually pointing out some interesting facts within the Canadian VC market.
Posted by: /pd | March 14, 2008 at 10:05
Cranky, Peter, cranky. Different then mad. (sorrta)
Thanks for stopping by.
>R<
Posted by: Rick Segal | March 14, 2008 at 10:10
As a guy based in the Southeastern US out looking for venture funding, I would be blown away to have the kind of suppport I hear about (and you reiterate) that's available in Canada.
It's basically tough to raise money anywhere and it drives me crazy when entrepreneurs perpetuate existing myths that they know are simply not true.
Well done calling him out. If we all were a little more forthright, the whole process would be easier...
Posted by: fewquid | March 14, 2008 at 11:58
Ahhhh...that fire reminds me of the good ol' days.
Posted by: Keith Glover | March 14, 2008 at 19:01
Rick, love the post! When in the comment above "for the simple fact that I have never seen you so 'mad' before" I immediately flashed back to when we were doing the initial Chapters build...remembering ATT Canada...remembering SecureBuy...remembering launch week and having to have you almost focibly removed at 2am from the data centre in order to prevent me from, well, killing you with my bare hands.
For the clarity of all your adoring readers...Rick can get mad and when he gets really mad, and hasn't slept for oh say 84 hours...it is a sight to behold!
You should do some reminicing for these young punks (er turks). You have walked many miles in their shoes. Here's one that should jog your memory...about 45 days after launch you asked me for a list of emails for customers who hadn't received their orders after 30 or so days. You got the list late one night, fired up Outlook's mail merge, sent off 3000 emails, got almost 3000 angry responses by the next morning AND then answered ALL of them in less than 48 hours (I know this because I got copied on almost all the responses).
Ah the memories!
Rob
Posted by: Rob | March 14, 2008 at 20:30
Couple of things I just wanted to clarify for the record:
I was one of 3 (super talented) founders of mydesktop as a company/commercial entity. Prior to my involvement, it was a loose group of web sites/hobbyist. Secondly, I was involved in cofounding, and spinning out of buybuddy from its parent company, and raised its first round of seed financing.
As for the article, my quote "you'd be an idiot to start a company in Canada" is meant to convey the lack of sufficient risk capital in Canada to fully support all the opportunities and talented entrepreneurs in Canada.
As an entrepreneur here in Canada, we need more help from all fronts to compete globally. It was not meant to convey that VCs themselves aren't doing their job, but rather we need to have more support and capital.
I have been very lucky, and I'm grateful for the support that I've received from the community -- which is why I've invested the time that I have in supporting events and young entrepreneurs in Canada.
Its unfortunate that some might have interrupted the article to think I was bashing the VC community or being anti-Canadian, when it was meant to be a rallying call to action to support young entrepreneurs (i.e. grass roots and student efforts) and innovators in Canada.
While I agree there are great reasons to start a company in Canada for the reasons you cited, esp. the SR&ED tax credits (which are amazingly helpful, and I evangelize to folks south of the boarder to invest in Canada for those reasons) -- there is an increasing number of folks that I've been meeting that is having a hard time finding the support that they are looking for from here and being sucked down south of the border.
As you may or may not know, I actually happen to be a fan of what you do in Canada. You are one of three VCs in Canada that I reference as the default go-to-people for new startups/entrepreneurs. I wish there were more VCs that is as aggressive about reaching out and engaging the startup community as you have. Your no-harm-no fowl offers, presence at events, and the JLA logo at the various startup events events do not go unnoticed.
Like you, I was trying to stick my neck out (risk) to push/provoke the community forward (reward) -- and rally the community around us to further support risk taking, innovation, and young people.
Just like you Rick. ;)
Posted by: Albert Lai | March 14, 2008 at 21:03
I remember that, Rob. While @ Chapters, I had to tell Rick that we were sending out credit card lists to customers and our Director of I.T. was quitting at the time. Thats probability the maddest I had ever seen Rick.
Posted by: Keith Glover | March 15, 2008 at 00:24
Albert,
I spoke to the founders and know the founders. I know Butch as well. I also know XDL capital people. You were not, have not, and never will be consider a co-founder of MyDesktop. You word spinning about roles takes your otherwise talented personality and lowers everyone's view of your results. Your embellishments of what you did aren't required. You should simply state the facts of what you did and not ego grab founder title.
Posted by: Rick Segal | March 15, 2008 at 05:21
Thank you for finally calling mr whiz kid web 3.0 out. I think he has the gift of BS. Finally someone willing to call it like it is.
He is what he is ....liar liar pants on fire.
scott
Posted by: scott | March 15, 2008 at 05:27
Posted by: Varun Mathur | March 15, 2008 at 14:37
Good for you, Rick. We need to keep this liar and naysayer honest. If he can't keep his facts straight and support the community that supported him, then he should at the very least keep his mouth shut (or better yet, get the hell out of town).
Posted by: LG | March 16, 2008 at 10:54
Rick,
This is an appalling and disgraceful post. It's one thing to challenge, rebut or denounce Albert's comments in the Canadian Business article. It's quite another to focus this post and some of your comments as a personal attack on Albert who, I should point out, has done more for raising the profile and funding opportunities for Canadian Web start-ups in the US than practically anyone in this country, including you (gasp!).
You have definitely caused both harm and foul with this post. In fact, the whole post borders on the...."idiotic"!
Posted by: Mark Z | March 17, 2008 at 05:30
Mark,
Naturally, I disagree. This isn't an attack on Albert, I happen to like the guy. I take offense at the Idiot comment, his words, not mine and I take offense at the notion that Albert was the founder of two companies when he clearly wasn't. Even Albert is now spining how we define "founder" as you can see in his comments. You'll note he is not disputing my commentary with respect to his turning down funding, etc.
Also, if Albert is out telling the U.S. funding community to come invest in Canadian companies, good on him and, you are correct, it is not something I spend time doing as a separate act rather I help the portfolio companies when they raise U.S. capital. I'm sorry you believe it was a personal attack. Albert has been in this office enough times and knows me well enough to know that I can verbally take em out to the woodshed and still like the guy. He does "harm" with idiot comments and it is 'foul' to embellish ones work when it isn't required.
Posted by: Rick Segal | March 17, 2008 at 05:38
Yikes! Controversy. Not used to seeing colourful debate like this in our little community!
Don't mean to douse the fire, but I can agree with some of each. Rick's been very supportive of Malgosia and I, repeatedly; while Albert is right, we could use more venture capital in Canada.
Now back to the debate: somebody call somebody an a-hole!
Posted by: John Philip Green | March 17, 2008 at 17:49
Hi John,
Albert is certainly not an A-Hole. He has a certain way of making his points. Somewhat like moi except without the gray hair.
My best to your better half, thanks for stopping by.
>R<
Posted by: Rick Segal | March 17, 2008 at 18:12
Hehehehe.
Thanks for the drama.
Posted by: John Philip Green | March 18, 2008 at 06:37
@Albert
Your follow up is disingenuous. Backpedaling is boring. Good luck in launching yet another social networking service.
@Mark Z
This is not Rick on the war path against Albert directly but against distortions about the truth of Canadian entrepreneurship. If you are new to this blog, you'll see this is a subject Rick is deeply passionate towards expanding.
@Rick
I've done the walk up and down Bay St and picked up a few bucks along the way. There is investment money in Canada. But there has to be a real business there. Buzzwords and hand waving doesn't get you as far as it does south of the border.
Maybe you could do a few more posts on success stories. Especially at the angel level.
Posted by: Chris S | March 23, 2008 at 13:09
I'm a little late to this, and I'm not sure anyone's reading anymore, but this is damn fine reading.
Peter Evans at MarsDD put me on to it - thanks, Peter!
This is fun because Rick and Albert are both slightly warped in that way that makes great reading. The fact that Albert got so deep under Rick's skin is only testimony to how successful Albert's been - certainly in profile, and more than most in dollars.
Rick, you're the absolute face of Canadian VCs these days (I'll bet very few of your readers even know John), and thanks for having what it takes to pour your words into a blog so often, and for so long. After just a few years in the business (2001?), I'll bet you're the single best known Canadian VC. Good hire, John!
Albert's a stud - no one has his unbridled enthusiasm for technology start-ups and ability to say controversial things with just the right ring of truth to get people going. His MyDesktop guys shared an office with me at one point, and I can't tell you who started what, but I can tell you that no one would have bought that thing without Albert. Believe it or not, he was by far the most mature member of that cast - remember they were all in their TEENS.
Anyone else here sell a company to a huge US firm before they hit 20?
Didn't think so.
Took me until 40, and even then I had to stick to Canada.
Ironic, given that I'm American, but whatever.
Rick - love the blog, love the spirit.
And love the links to Canadian Business!
(I run interactive at Rogers Media now, which owns CB)
Posted by: Kevin Bartus | April 05, 2008 at 09:16
WOW! :-)
Posted by: jeneane | April 10, 2008 at 08:46