The Locker Room Theory

(This is cross-posted from the BBPF Blog. Written by Pierre Donaldson, partner at JLA and my only and favorite Montreal colleague. I helped write the post and I tend to share his views).

THE LOCKER ROOM THEORY

(Warning: May contain traces of sports analogies applied to business)

For this, my first and long overdue post on the BBPF Blog, please allow me to momentarily and respectfully step aside from the excitement surrounding the launch of BlackBerry App World and the ever expanding smart phone eco-system, to briefly focus on one controversial aspect of our role as VCs.

Perhaps the most important aspect of our jobs is selecting the teams of individuals we want to back with our investments, and then working with them to build the best management team; a team that can take a fledgling tech start-up to the Promised Land of 10X returns and $100M+ exits. In my career, I have built, backed, led, and been part of some of these teams, and of many more that never quite reached the Promised Land, despite showing great potential. After a while, grey hair starts to appear and you also start to notice patterns in what works and what doesn't.

So I would like to quickly share with you my Locker Room Theory. As mentioned, this can be seen as controversial. So many management teams today are dispersed. R&D team and the CFO in Montreal. CEO in Sillicon Valley. VP Sales in NYC ("oh yeah, all the big decision makers are there!") with three sales people located in different cities in the US and working from their home office.

Of course, we live in a world where we are always connected and available. That's expected from us. Always on. We all love our BlackBerry, iPhone and the silly Bluetooth earpiece that makes sure we don't even have to take them out of our pocket to take your call. We're always only one quick Skype high definition surround sound video-call away from one another, right? We can e-mail, IM, SMS, blog, tweet... you name it. It is exactly as if we are constantly sitting right next to each other, right? Plus, how many times have we heard the following statement: "we don't care where you live because you will travel 50%, no, 80% of the time". Or: "Oh, I'm based in San Diego but I travel to our Toronto HQ at least 2 times a month. That's more than enough".

I'm sorry, but I don't buy that at all. As far as I am concerned, business is all about people. Building a winning tech company is mostly about people and having a strong team dedicated to a strategy and executing it together. Being a hockey fan, I will use a hockey team as the analogy for a portfolio company. Being on the road is like being on the ice. That's where you score goals. That's where you win that big contract. That's where you build momentum; grow a sales pipeline, forge partnerships, hurt your opponent, drop the gloves if needed, etc.

But, when players are not on the ice, they are in the locker room. The locker room is where it's hot and where it stinks of hard work and empty cups of coffee. It's where you regroup in between periods, look your teammates in the eyes, listen to your coach and team captain, get ice for that bloody bruise, adjust your strategy and tactics. It's also where you celebrate after a game. Open that case of cold beers every Friday at 4PM. Get back to the whiteboard to figure out what went wrong on that goal against or sale lost to a competitor.

When not grinding away on the road, your executives need to be at Headquarters. You want them to live within driving distance of HQ. Until the company has reached a critical mass and absolutely needs to branch out new locker rooms (new teams), the executives and the sales team should all be under one roof. You don't build team spirit and a company culture through e-mails, video-calls and IM. It is all about people working together and making things happen. It's about staying late when needed, or coming in on a week-end when the servers give up. It's about the water cooler conversations and finding out that your sysadmin's favourite uncle has a golf buddy who is CIO at that large corporation you've been trying partner with. It's about decisions made in the restroom. It's about knowing all the details about key prospects in the pipeline because you ask your salespeople for an update 3 times a week while looking them in the eye. It's about buying all of them lunch to celebrate a big win. I could go on.

Of course there are exceptions of dispersed teams that did very well. But, while this is not a religion at our firm (not yet!), by experience it is a principle I have grown very strongly attached to, and on which I will always vigorously challenge our CEOs or my partners when they think they can do without it.

If you follow hockey at all, how many times have we seen a team that didn't look like much on paper get to the playoffs and suddenly play like bulldozers and unshaved gods and go on to win the Stanley Cup? Ask them about the locker room.

picture by monojussi

Quick update !

OK, so after, what, 7 months, I feel some blog posts slowly forming in my big hairy head, and thus, the urge to freshen up and possibly even resuscitate (once more) this one corner of my ever-more fragmented web presence.

So, as my last post from last summer hinted at, I joined the JLA Ventures team as an associate in late June. It's been exciting times since then, with my time spread between portfolio companies and considering new deals in JLA's Fund IV and looking at hundreds of business plans and working on the first few deals closed with the BlackBerry Partners Fund. BBPF is a $150 M fund that we co-manage with the fine folks at RBC Venture Partners and which was conveniently raised just before I joined. I am still based in Montreal, working out of an small 2-guy office that I share with Pierre Donaldson (JLA partner) and one brand new coffee machine (it's a very cheap one, but, hey, RIP Good Times, right ?).

We spend pretty much every Monday in Toronto, in partner meetings where we mostly argue with Rick about which city has the best bagels (hint: not Toronto), sometimes with samples provided.

So that's the important stuff. More to come on the rest of it.
I am speaking tomorrow on a panel at the Canada-France VC Forum, on the lengthy topic of "How to get returns given the current economic situation and exit context?". I'll try to make a not-too-lengthy blog post out of it.

Cheers.

(oh, I didn't get the Voodoo, I went for the Dell Latitude XT. I really, really don't love Vista, but I'm enjoying working with a tablet and I am as close as you can get to being paperless).

Muxtape 2.0

I made another one http://davduf2.muxtape.com/

In other news, I'm leaving Desjardins Venture Capital next week to join the JLA Ventures team as an associate. More on this - and an overhaul of this blog, including, hopefully, actual blogging - very soon.

Also, in the last few days I have lost my spot as the #1 Tungle Space creator and intend to win it back. That is, unless I follow Rick's advice and get a Mac laptop and then have to wait for Tungle's complete Mac and Google integration. But, right now sitting here, I'm having Voodoo Envy envy.

Muxtape

Muxtapes are the new Scrabulous. So I made one. davduf.muxtape.com

I love the minimalist, clean, easy, no frills interface. A breath of fresh air in these days of functions-overload, social-everything and ads-everywhere.

A few thoughts on last night's Startup Camp

Thanks to Embrase for organizing this. Great crowd. Lots of young entrepreneurs. Awesome. Not enough angels (unless they all kept very quiet and/or are wealthy at a surprisingly young age). Probably just the right number of VCs, although there's a bunch of early-stage investors I would've expected to see there and didn't. (Forget Réseau Capital for a while, guys... your next 10X deal was in the room last night).

Format was a bit too strict and people couldn't keep from loudly networking during some of the presentations, which I think is natural and expected. Cool by me. Startups are chaotic, so I can't see why startup events shouldn't be.

Sylvain Carle live-blogged Graham Hill's (TreeHugger dude) talk. Check it out, good simple, advice.

I've seen two other good posts about last night:
Mike L
Quebec Valley

Quick thoughts on the presenters (check out their websites):

Cozimo: Looks very promising, very user-friendly. Not sure how much value they add to what's out there already (not a space I know very well). If I were them I'd go after very specific market niches, tailor a solution for each of them and focus. If you're a startup and your addressable market is over 1 B $ at Day 1 there's usually a problem.

Tungle: I'm totally biased, of course, but I believe these guys are going to be huge. (But 1st they have to LAUNCH, goddammit). One thing's for sure, Google and Mac support has to be early in the roadmap, since they seem to be the calendars of choice for a lot of the evangelists and early adopters out there.

Streametrics: Makes a lot of sense. Not sure anyone really understood how it works (only through their own player ??! website doesn't really clarify this for me). But timing could be perfect if they get any kind of traction and beat the dozens that are probably developing something similar.

I Gotcha Media: Lots of progress since their "wi-fi pad" days. Definitely cool integration of technologies. They look like they're onto something but I've always had huge concerns about "signage" technologies, whether it'd be for retail stores, malls, airports, elevators. At the end of the day, however cool and useful your displays are, you never "own" the real estate; shop windows, airport pillars, bathroom stalls, etc. So you're always easy to replace by the next hot new holographic displays, or, see your margins constantly re-negotiated enough to give your investors major headaches. So these guys have to find a way to "lock-in" their customers (long term deals, if they can pull it off...) or, maybe, find a strategic investor, some major real estate group maybe.

YourTeleDoctor.com (no website yet): If there is one industry that is "broken" right now and in dire needs for possibly incredibly lucrative solutions, it's the health care industry. So, guys, great job on finding a true problem to solve and try to make a difference. That said, good luck.

Albert Lai closed the evening by taking the self-deprecating-presentation art form to a whole new level and honestly did a great job at conveying insightful lessons from his hyperactive entrepreneurial experience. Hadn't heard of him before. I'm adding his blog to my Google Reader. I'm curious as to what else he has to say.

I'm late for my soccer game so I'm cutting this short. Can't wait for the next Startup Camp. And I really wanted to win the XBox 360. Next time.

Startup Camp Montreal

Wow, this little "blog" of mine has been pretty quiet lately, eh ?

I consider it worthy of reactivating this page that the 1st Startup Camp to be held in Montreal is happenening this Wednesday evening, at the SAT. Check out the wiki page. It's organized by a handfull of upstanding tech citizens and by the fine folks at Embrase.

It'll be my 1st time at a ___camp event, so I'm excited. There are a very interesting things happening in the Montreal tech startup community right and I know a lot of the main actors of this general goodness are going to be there, as well as a lot of the people that can help make things happen.

I'd like to point out that, as an event Guru (so they say...) I did not vote for my portfolio company... would've been tacky, no ?. Also, by now, I've heard the pitch numerous times and will only be satisfied once everyone I know uses the product.

That said, they still got in.

See you there...

Beirut

Awesome show at Sala Rossa last night. Extra points to Zach for holding most of the on-stage banter in very acceptable French. The boy's got raw talent oozing from his trumpet. Their new album is also slowly making its way into my list of favorites and might end up sitting up there with the first one.

BEIRUT - Nantes - from The Flying Club Cup
envoyé par flyingclubcup

Slip me a little Tungle (and flirt with the DEMOgods)

It would be easy to explain the fact that Tungle yesterday were named DEMOgods at the DEMOfall conference by Marc's natural good looks and contagious charisma, or by Jacou's infectious smile and lightning-quick demo clicking...

But I'd rather believe that the crowd were convinced by the innovation and functionality of a technology they feel will make their professional (and personal) lives a bit easier, and help solve the problem of wasted time and effort trying to coordinate meetings.

Congratulations to the whole team !

Check it out for yourselves (6 min. demo). The free Outlook plug-in and Tungle Spaces (web service) will launch as soon as some minor bugs are ironed out, with Google Calendar, iCal, and Lotus Notes integration coming soon, as well as some very reasonably priced premium features.



By the way, the Tungle Blog is also quite worthy of your attention and RSS aggregation. Good stuff. Exciting times.

More videogame excitement

This time from my A2M buddies...



The song used in the trailer has an interesting story - Link to the Johnny Cash version

Excited about a video game again

Yeah... seems like forever that I've been excited about a game coming up... Things have been pretty quiet on the video gaming side for the last 2 years at Dav's, except for a short-lived DanceDanceRevolution craze and some Katamari Damacy action, plus the occasional NHL2K5 game (still...) ...and I don't even own any of the new generation consoles. But now it looks like it's all about to change :



My favorite toys growing up. I know there's a movie coming out soon. Should be quite the CGI orgy... Hope it's good !

Travel pics from the Western Balkans

Hey all, just a quick word to tell anyone intersted (ie. my dad !) that I've started to upload pictures from my trip to France-Albania-Montenegro-Bosnia-Serbia on my Flickr page, with some comments and a bit of bilingual storytelling thrown in. Latest pics are from Tirana, the colourful, smelly and beautifully chaotic capital of Albania.

Loli is still backpacking in Serbia and regularly updating her own Flickr page. Latest include a quick visit to Kosovo, of all places...

Now... back to board meeting agendas, cap tables and freemium revenue models...

and, why not, a Monday AM song ! (some awesome klezmer...)
Cracow Klezmer Band - Ets Hayyim (The Tree Of Life).mp3

Albania & Montenegro

Dobar Dan everyone !

So here I am blogging from some basement in Mostar, in Hercegovina, a few yards away from the legendary old bridge that was destroyed during the war 14 years ago... only to be beautifully rebuilt. The Sarajevsko pivo i'm holding is cold and refreshing. So far the trip has been a blast. Upon returning I will post a whole lot of pictures on my Flickr page and try to give more details on the whole trip, but I promised my mom I would give a quick update... so here goes...

After a quick week-end in Paris where I met up with Loli (who I now lovingly call Ljolja) and had a nice dinner on the Seine with our hosts Fannie and François, we caught a flight for Bari, Italy, where we had some tasty red wine and then immediately embarked on a ferry for Durres, Albania. Albania is still very much off the beaten path as far as tourism is concerned and during our time there we had the very pleasant feeling of being the only non-locals roaming the streets.

The country struggled out of a very closed-off 45 year dictatorship in the early 90s and still today is the second poorest country in Europe (Moldavia... oh dear...) and apparently the least visited. It was still relatively easy for us to travel between cities and find nice, cheap accomodation and meals. And friendly people, except for very mean barber. By the way, the LEK is one currency that trades favorably for our Canadian $, but their bankomats are confusing. After Durres we took a slow train to the capital Tirana, a dusty, smelly, noisy but very colorful and overall fascinating city.

We then took a bus to Shkoder in the North of the country, a nice, mid-size town with a great antique citadel. I will definitely give more details on our days in Albania and urge everyone to read up on the country and visit some day. Tell Afrim, at the bleak, grey, Hotel Rozafa in Shkoder that David and Loli sent you. We had to promise. He'll make sure you have electricity in your room and shower you with raki, cigarettes and, honestly, some damn excellent espresso.

From Shkoder we had our own personal furgon to Montenegro, possibly the newest country on Earth. Montenegro is small and beautiful. We spent 2 lazy days in Budva in some post-communist all-included resort called the Slovenska Plaža. Worst. Food. Ever. But the beaches were superb and the walled old town is very pretty and made a nice backdrop for us to watch the Champions League Final. The Italians got lucky. Again. After Budva we rented a trusty Fiat Punto and took the amazing, twisty moutain roads to Zabljak and the Nacionalni Park of Durmitor for one of the most amazing hikes I've ever done. After Durmitor we spent a day and night in Kotor, another ancient fortified town, this one settled on the banks of a spectacular fjord, surrounded by mountains.

More later on Dubrovnik, Croatia and Bosnia. After Mostar, we're moving on to Sarajevo and then Belgrade in Serbia, from which I leave next Tuesday. Now, some pictures... also check out Loli's flickr page, she has nice pics, including a bunch of yours truly:

Loli, Fannie and François, on the banks of the Seine, where we had cheese, saucisson, red wine and chocolate.

Loli on the Durres waterfront, moments after we set foot in Albania.

One of the many colourful buildings of Tirana, where the artistically inclined mayor subsidized paint for everyone to brighten the post-communist concrete block landscape of the city, with wonderful results.

In Skhoder, where streets have no name (or they have 3...), and, so, no use for street signs, we asked directions to a restaurant to the man on the right. He instead invited us back to his appartment to meet his kid, mother and wife, who served us very potent shots of raki and deliciously thick albanian coffee. We felt like receiving Quebecois travellers in their home was the greatest honour ever for them. We felt it, since dialogue was very patchy... I think they plan on immigrating to Sweden. Falemendereit, folks !

Loli in the mountains of Durmitor in Montenegro.

Ice formations in the cave of Ledena in Durmitor, which we reached after a long climb through fiels of snow and a very inapropriate hailstorm.

Internet caffe time is running out... sorry for the spelling mistakes and typoes and bad html... check back the Flickr page next week for a lot more. Take care everyone ! Dav xx

Off to the Western Balkans

I leave tomorrow for 2½ weeks of backpacking through Albania, Montenegro and Serbia, perhaps with tiny slices of Croatia and Bosnia thrown in, accompanying a delightfully charming ¼Serbian princess in her Balkanic adventures. So I figured now could be as good a time as any to resurrect this page that I have so badly neglected lately that I'm not even convinced it deserves to be called a blog anymore...


Highlights of the last few weeks definitely include closing the deal with Tungle, a very promising Montreal start-up that I've mentioned more than once and for which I personnally have very high hopes.

Great product, one that will finally solve the pain of scheduling meetings... huge potential, unique technology, brilliant founder, fantastic team, great set of investors... the challenges ahead are very real but the foundations are solid and I'm proud and excited to be part of the adventure.

They are going to expand the limited beta very soon, so if you're an Outlook Calendar user, make sure you sign-up here. If you use another calendar, desktop or on-line, compatibility will come shortly.

Press relase is here.

Great post by Rick Segal, a partner at our co-investors JLA Ventures (and a true VC blogger, no wannabe, like me)

Coverage on the Red Herring website

More coverage...

Alright, so maybe this here blog will be converted to a travel/photo blog for the next weeks. In the meantime let me link you to a sample of the kind of music we're going to be looking for, in the obscure, smoky basement bars of Belgrade (Serbs are pretty intense about their brass...) :
Boban Markovic Orkestar - Grom cocek

Trying a new widget... + Tungle beta

I've put a jaxtr thingy in my blog's template (right side-bar). If you can find a reason to text (one-liner jokes, anyone ?) or call me, please do try it, I'm curious to see how well this works.

I other news, I invite you all to have a look at the Tungle website here and sign-up for their limited beta. I'll write more, and in glowing terms, about the product and the team very soon, but you should all get on the test-drive, and don't hesitate to give feed-back. Tungle hopes to offer a tool that will solve the very real and frustrating problem of easily scheduling meetings with different people, across organizations. Could be a real time-saver for a whole lot of people.

... and Joyeuse Pâques !

Tungle Under the Radar

I will once again be travelling later this week to (hopefully) sunny California, this time to attend the Under the Radar conference. The theme for this one is Office 2.0, or the gradual adoption by us working folks of the web services we so enjoy in the comfort of our homes. I think this particular topic is fascinating, both as an investor and as a user, and now is a good time to place your bets on which 2.0 type services will be able to penetrate Microsoft and IBM's fortress, and perhaps achieve a monetization that is hard to accomplish with the MySpace and Facebook crowds.

(In other words, if Debbie, from accounting, starts podcasting from her cubicle anytime soon, the possibilities are endless.)

The phenomenon is also having a deep impact on how users relate to the IT-powers-that-be of their organizations. Check out this editorial from CIO Mag on users that know too much, and the shadow IT department.

I'll be at the conference with hot new company Tungle, who are coming out of stealth mode and hopefully will get ON the radar with the launch of their beta. I'll write more about Tungle later but for now let me say that I am very excited by what they have developed, a solution to a very common problem that most of us live with every day, which they want to make better in a very creative, efficient and user-friendly way. Can't wait to use it.

Finally, if anyone reading this happens to also attend the UTR conference, don't hesitate to come and say hi, for I don't get to mingle with Valley folks too often and enjoy every opportunity to do so.

Constellation Software Acquires PG Govern for $25 Million

Link to the press release

A nice exit for a Desjardins portfolio company that started out in Rimouski (a small town in Eastern Quebec) and has quickly grown to become a leader in the goverment management systems space. Congrats to all involved !

Quebec, # 4 in worldwide VC rankings...

... behind California, Massachusetts and the UK. That's according to the Worldwide VC Rankings recently published by consulting firm Library House. Link to the complete table.

This ranking is certainly something I'll slip into cocktail conversations for a while, even though the methodology behind the rankings seems almost as debatable as the one behind the dreaded FIFA rankings.

Still, Venture Capital in Quebec is indeed an industry (more than just a community) and there's lots of deals made annually. Réseau Capital, Quebec's VC Association, has an ulgy-ass website and all the stats if you want to find out more (and if you can read numbers in French).

But, in general, the Quebec VC industry does a lot of deals, but with typically much smaller amounts invested than in the U.S. Lots of IT, lots of biotech and pharma, not enough cleantech, but also a large number of institutional VC investments in more traditional industries, including more and more sub-debt financings... deals that might not get categorized as venture capital in other countries/states.

I'll definitely write more about VC in la Belle Province in the near future, especially the IT side of it. In the meantime, let me stick out my tongue to Texas, New York, Washington State, Ontario, Israel, France and Germany. #4, baby.

APEX tradeshow feedback

I spent Tuesday and Wednesday of last week at the "IPC Printed Circuits Expo, APEX and the Designers Summit" with the fine young gentlemen of Cogiscan, one of our portfolio companies. I spent most of the 2 days on the APEX / electronics manufacturing side of the Expo, where Cogiscan's booth was neatly located between Siemens' and Panasonic's, two of our major OEM partners. Cogiscan's smart feeder RFID technology was also displayed in Juki's booth, giving them great visibility.

Some thoughts:

• It was my first time attending, but everyone says the show is getting smaller every year, becoming more of a regional affair. A lot of the decision making still happens in North America, but the bulk of the production is now in China and a handfull of other developing countries. Asian and European tradeshows are getting more traffic. Productronica seems to be growing fast.
• China has most of the high volume / low mix production, but the EMS there are also starting to offer more flexible, limited run, production.
  
• North American (and Mexican, even, it seems) EMS plants are more and more focussed on highly specialized, verticalized, more complex, low volume / high mix, higher margins manufacturing.
• Walt Custer's conference on industry trends and macro-data was a powerpoint slidefest like I hadn't seen in a while and if you e-mail him, you can probably get them. Bottom line: a small lull in growth this year, back at higher levels in 2008-9.
• The tradeshow moved from Anaheim to L.A. and apparently this negatively affected attendance. From Cogiscan's booth, though, I have a feeling that attendance (and sales leads) was of better quality than before... less people in town to just browse and kick the tires before taking the kids to Disneyland. I saw a lot of people from EMS and OEMs looking for solutions to specific problems and they seemed to have budgets for new technology.
  
• The area around the L.A. Convention Center is incedibly bland and boring. I guess I can recommend the Figueroa Hotel, 3 blocks away. Interesting decor and very affordable, but don't expect either luxury or friendly staff.
  
• I am pretty much an outsider to the industry and don't get some of the subtleties in the different tech offerings but it looks to me like a lot small and larger guys offer very comparable products. There's probably going to be a wave of consolidation and acquisitions in the next few years, where the major players (Siemens, Panasonic, Fuji, Juki, Yamaha) acquire technologies left and right to try and give themselves an edge.
• Finally, I didn't see one other VC in attendance. Low margin industries usually don't attract much VC money.

IPC Printed Circuits Expo, APEX and the Designers Summit

I'm leaving on Monday to spend a couple of days in L.A. at the APEX Expo with DVC portfolio company Cogiscan. Should be a good opportunity to get a feel of the industry, see the trends and observe the buzz around Cogiscan's booth. It'll be nice to take a brake from software and Web 2.0 business plans and spend a few hours gazing at actual machinery and learn about manufacturing innovations.

I'll try to update my blog from there and give my impressions.

A2M named one of Canada's 50 Best Managed Companies

Artificial Mind & Movement, one of our portfolio companies, and one of the first deals I got involved with when I came on board, was just named one the country's 50 best managed companies. Like founder and CEO Rémi Racine says in the press release, the A2M team have succeeded in creating and implementing a very structured approach within a usually chaotic industry. In other words, they're really good at what they do and they make a profit doing it. And they have been managing their fast-paced growth very well, consolidating Montreal's position as major hub in the video game development scene.
(Now, let's see the spectacular exit they're going to create for their investors)
Congratulations guys !