Why is venture capital so rare outside a few key cities like Silicon Valley, Boston, New York? Why is business success so rare? To understand the dynamics of success at a company, city or country level you must avoid the trite, simplistic or single threaded answers. Business and regional Venture Capital success are highly complex systems which are based on probability and statistics more than science and determinism. While you can improve your odds by being regionally focused and following the highest probability patterns it does not assure success. Success is a rich fabric of ideas, insights, behaviors, circumstances, economic and technical tipping points combined with just shear luck or fortune.

1. Puzzles in
Growth Businesses
Growth
How to find growth in all the tough places.
Presented by Andrew Waitman
Tuesday, December 16, 2014

2. In life,
always
be
starting
nneeww
things.

3. MMyy PPaasstt AAtttteennttiioonn……
SW
Engineer
5 Years
I-Banking/
Analyst
4 Years
Managing
Partner
12 Years
CEO
6 Years

4. MMyy CCuurrrreenntt AAtttteennttiioonn……
Investor
Co-Founder
Board Member
FFIIDDUUSS
TTEECCHHNNOOLLOOGGYY
Investor
CEO
AASSSSEENNTT
CCOOMMPPLLIIAANNCCEE
Investor
Co-Founder
Board
Member
NNeeccttaarr
FFlloowweerrss
Investor
Board
Member
PPYYTTHHIIAANN

5. BBrreeaakkffaasstt TTaallkk
• The answer to the city’s/country’s venture paucity
• Lessons learned in growing Pythian

6. VVeennttuurree IInnvveessttmmeennttss ––
FFoollllooww ((nnoott lleeaadd)) WWiinnnneerrss
BUILD
WINNERS
…that
provide
liquidity.

7. VVeennttuurree IInnvveessttmmeennttss ––
FFoollllooww ((nnoott lleeaadd)) WWiinnnneerrss
BUILD
WINNERS
…that exit.

8. SSeeqquuooiiaa VVeennttuurree IInnvveessttmmeennttss ––
EExxiittss MMaatttteerrss

9. Think
OOttttaawwaa
(circa 1998-2002)
and
SSiilliiccoonn VVaalllleeyy
(circa 1970-2015)
…and the money, investors,
angels, VCs, entrepreneurs with
crazy ideas and no mortgages,
everyone with envy, many with
ambition, drive, risk taking,
initiative, people with good
ideas, those who can work for
free, lawyers, real estate, lots of
failures, and more winners,
bankers, accountants, advisors,
gov’t program wannabes,
advisor wannabes, tons of
customers, expertise, many
start-ups, fantastic
entrepreneurial culture……
wwiillll ffoollllooww…

10. VVeennttuurree EEccoossyysstteemm CCoommppoonneennttss
Recipe for a vibrant technology city…
(Scale of 1 to 10) Silicon Valley NY/ Boston Toronto Ottawa
1.Money 10 8 7 ?
2.Talent 10 8 7 ?
3.Risk Appetite 10 7 6 ?
4.Distribution Proximity 10 9 8 ?
5.Culture/Encourage 10 8 6 ?
6.Volume/Probability 10 8 7 ?
7.Repeat Success 10 8 6 ?
8.Clusters/Networks 10 9 6 ?
9.Ambition 10 7 7 ?
10. Inspiration / Hero's 10 7 6 ?

11. TThheenn tthheerree aarree tthhee oouuttlliieerrss……

12. MMoosstt uunniinnssppiirreedd VVCC qquueessttiioonnss aanndd
hhooww ttoo rreessppoonndd::
Q. Why will ______ giant company not copy and crush your idea/start-up?
A. Did Google kill Youtube? Did Blockbuster kill Netflix? Did Ebay kill Paypal?
Did Kodak kill Instagram? Did Blackberry kill WhatsApp? Did Microsoft kill
Google? Did GM kill Tesla.
Q. Show us the growth numbers and data/evidence to support your thesis?
A. Dude (and please do reply ‘Dude’ to the VC) if I had that data, I would not
be sitting here responding to your uninspired inquiry.
Q. What is your financial forecast for the next five years?
A. Dude in the start-up world ‘pivot’ is not a dance move, it’s a way of life…
anything I project will be wrong in the next 10 minutes or major business
decision which ever comes first!

13. SSeettttiinngg tthhee MMaaccrroo CCoonntteexxtt
Smart Mobile
Cloud
Big Data
Social
Analytics
Internet of Things

14. TThhrreeee Types of Business

15. KKnnooww YYoouurr MMaarrkkeett CCoonntteexxtt
Black
Swan
Fashion Grinder
Market Size Large Any Any
Market Adoption Rapid Rapid Modest
Cost of Acquiring Customer Very Low Lower High
Margins High Any Any
Barriers to Entry High Medium Low
Competition / Subst. Low High High

16. AAIIDDAA

18. Why Do CCoonnssuummeerr MMaarrkkeettss MMaatttteerr??
It is noteworthy that the vast majority of outlier companies in the past decade (see slide
below) have been consumer and not enterprise businesses. There are important
insights even here. Consumer businesses (Apple, Google, Amazon, Twitter, Facebook,
PayPal, Twitter, Pinterest) are less regulated by government and can bypass corporate
inertia, status quo laziness and risk aversion.
Remember Microsoft, DELL, Salesforce started off selling to consumers (or small
business) and then moved into the Enterprise. Enterprise are laggard adopters due to
business and decision inertia. This point—business inertia-- has to do with risk
aversion, regulation, status-quo and laziness. Large segments of consumers are on the
other hand quick to adopt new technology and new and better ideas and improved ways
of doing things.

19. WWhhyy cceerrttaaiinn tthhiinnggss ssuucccceeeedd
1. They are just better. Think Google!
2. They make things easier/convenient Think iPAD
3. They are cheaper. Think Dollarama
4. They get exposure. Think WhatsApp
5. People share if they care Think Pintrest
6. Social Influence. Think Justin Bieber
• Highly influential people.
• Highly connected people.
7. Ease of transmission. Think TXT, Email, Facebook, YouTube
8. Some stories more contagious. Think Susan Boyle
9. Mavens, Connectors, Salespeople Think Elon Musk/Peter Theil
10. THE CONTENT IS THE VIRALITY Think Youtube/GoPro

20. The Science ttoo VViirraall:: SSTTEEPPPPSS
1. Social Currency : cool, smart,
remarkable, clever
2. Triggers: Remind people to talk
about.
3. Emotion: When we care, we
share.
4. Public: Social Proof. What is
everyone saying/doing.
5. Practical Value: People like to
help people.
6. Stories: Message fits neatly into
narrative.

21. SSCCRREEAAMM to DREAM
SSttrraatteeggyy
CCuullttuurree
RRiisskk TTaakkiinngg
EExxeeccuuttiioonn
AAddaappttaattiioonn
MMeettrriiccss
FABRIC
OF SUCCESS

22. SSeettttiinngg tthhee CCoonntteexxtt
Left
Celtic
House
End of
July 08
Joined
Pythian
End of
Sept 08

23. CCoonntteexxtt JJaann--DDeecc 22000099
• …..a first time CEO…
• …with 2007 LBO puts $2.7 Million of Debt @ 10+% coupon on
Balance Sheet…
• …and modest size company requires investment in a growth
leadership/management team…
• ….and HQ Office needs to move--lease up—the move will cost
money…
• ….Clients losses/reductions are accelerating throughout 2009
as recession bites…
• ….just when you thought it could not get any crazier…

24. C$ Appreciation reduces RReevveennuuee rreessuullttss……
C$ 30% Appreciation against US$ in 12 months

25. So wwhhaatt do you do?

26. DDoonn’’tt PPaanniicc..
1. Win the crowd / Gather greatness.

27. 2. First things first. What’s important now? What’s
important never?
Establish cclleeaarr PPrriioorriittiieess,,
OOwwnneerrsshhiipp,, DDeelliivveerraabblleess..

28. 3. Who do you sell to and why? Be clear about what
problem you are solving.
BBee cclleeaarr aabboouutt yyoouurr ssttrraatteeggyy..

29. 4. Life time value (LTV) vs Cost acquiring customers (CAC)
LLTTVV –– CCAACC mmuusstt bbee ++VVEE

30. 5. The Leadership Team sets the tone/culture.
PPeeooppllee MMaatttteerr

31. TThhee NNaattuurraall SSttaattee ooff BBuussiinneessss
“The only things that evolve by themselves in an organization are
disorder, friction and mal-performance”
-Peter F. Drucker

32. CCoommmmuunniiccaattiioonn
CCoollllaabboorraattiioonn
CCoo--ooppeerraattiioonn
CCoohheerreennccee
CCrreeaattiivvee SSoolluuttiioonnss
CCoonnddiittiioonnss ffoorr SSuucccceessss
FFaabbrriicc ooff CCuullttuurree

33. WWhheerree HHaavvee AAllll tthhee GGrreeaatt LLeeaaddeerrss GGoonnee??
RReecciippee ffoorr aa WWOOWW eeaarrllyy ssttaaggee CCEEOO……
1.Cares about people and inspires as a leader-leader.
2.Self-aware. Emotionally stable. ‘Keeps calm and carries on’.
3.Core competency somewhere e.g. Business Strategy, Execution.
4.Risk/resource judgment comfortable/capable.
5.Adaptable/compatible with Founder(s).
6.Understands all Functions and particular HR.
7.Confident proactive decision maker (with humility).
8.Strategy, Culture, Risk, Execution, Adaptation, Metrics.
9.Equal parts Tireless, Energy, Enthusiastic, Encouraging.
10. There is no ‘i’ in Team. An ‘i’ in Run the company is Ruin the
company.

34. 6. Timely, data driven decisions…& judgment does matter.
WWhhoo ddoo yyoouu lliisstteenn ttoo aanndd wwhhyy??

35. DDeecciissiioonnss DDrriivveenn bbyy DDaattaa MMaatttteerrss

36. 7. Deliverables, Dashboards, Metrics.
FFeeeeddbbaacckk LLooooppss MMaatttteerr..

37. WWhhaatt hhaappppeennss ttoo FFeeeeddbbaacckk LLooooppss WWhheenn
TTiimmee →→ LLaarrggee
T>> Days
How can we learn with feedback loops that are
polluted over time or if causality is confusing?

38. 8. Sales, Marketing, Business Development Recipe
Smart Experiments uunnttiill EEvviiddeennccee..

39. 9. Insights  Adaptation Matters
FFiinndd tthhee PPaatttteerrnnss..

40. Observation Insight Decision/
Action
10. Perpetual Learning Organization

41. SSuummmmaarryy -- TTeenn SStteeppss ttoo GGrroowwtthh
1. Stay calm!
2. Establish clear Priorities, Ownership, Deliverables.
3. Be clear about and communicate your strategy and goals.
4. TAM++, Success = LTV - CAC
5. The leadership team sets the tone, culture and dynamics.
6. Timely, data driven, risk judgment decisions taken daily.
7. Deliverables, Dashboards, Metrics matter.
8. Sales/Marketing/Business Development recipe matters.
9. Insights  adaptation matters.
10. Perpetual learning organization.

42. BE AN OPTIMIST PRAGMATIST