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Scaling Success Lazaridis Institute Whitepaper
March 2016

Building a prosperous Canadian knowledge-economy depends in no small part on the creation of
a next generation of high-growth, globally competitive Canadian technology companies. These
high-growth companies contribute disproportionately to the creation of employment and economic
growth. However, compared to other mature economies, Canada has so far underperformed on the
creation of these firms.
As part of the development of the Lazaridis Institute at Wilfrid Laurier University, this white paper
is designed to shed light on the relative scarcity of high-growth Canadian technology firms. We
began by asking 125 of Canada’s most well-informed and best-placed industry stakeholders—in
particular the founders of, and investors in, high-growth technology firms—to talk about the major
impediments facing these firms. Their comments indicated a significant knowledge gap related
to the role management and executive skills play among these growth challenges. Their feedback
also demonstrated a shared understanding that scaling a technology company in today’s global
marketplace is radically different than in previous eras.
The analysis of this data reveals the following key findings:
• While science, technology, engineering and mathematics-related (STEM) talent is
abundant, the talent pool in general lacks business and management knowledge.
• Shortages of experienced management and/or executive talent are the primary inhibitors
to scaling up.
• Canadian technology firms lack key management competencies in specific areas including
sales, marketing, organizational design and product management.
• The talent shortage is linked to the lack of existing and/or exited growth firms in
Canada’s technology sector.
These findings underscore the importance of building a well-rounded cadre of managers and
executives in Canada’s technology sector. Doing so must take into consideration the fact that
today’s technology markets are distinguished by far shorter time-to-market and product life cycles,
as well as a generally more complex global operating environment.
This white paper presents an in-depth review of the challenges facing Canadian high-tech firms and
develops a strong evidence base upon which to build future initiatives designed to address them.
The work represents an important first step by the Lazaridis Institute to help a next generation of
Canadian technology companies scale into global leaders.
Canada  Canadian  gazelles  high-growth  investors  scaling  start_ups  talent  technology  Colleges_&_Universities  Kitchener-Waterloo  knowledge_economy  WLU  Mike_Lazaridis  team_risk 
11 weeks ago by jerryking
What are the first three questions you should ask before investing in a private company? - Institute for Individual Investors
February 22, 2008

1) What is the background of the key people in this business and what have they each accomplished in this type of business in the past? As part of that question, what is their best accomplishment and what is the worst mistake they have made in business?
2)What competitive advantages does the business have? The competitive advantages should be laid out in the business plan.
3)What could go wrong and prevent the start-up from achieving its goals? If the key people do not have a list of what could go wrong, you should not invest in the start-up, because they have not done a thorough job of planning to make the start-up successful.
angels  due_diligence  privately_held_companies  thinking_tragically  think_threes  team_risk  investing  investors  questions  competitive_advantage 
march 2013 by jerryking
Direct Investment in Emerging Companies -- A Different Game
Direct Investment in Emerging Companies -- A Different Game
Dawson, David CView Profile; Collons, Rodger DView Profile. Journal of the American Society of CLU & ChFC40. 6 (Nov 1986):

Successful venture-capital investing demands expertise in assessing business plans and especially the ability of the management team to execute them. To participate in quality deals, the investor must have a plan, a clear commitment, and a high level of credibility. A successful investment plan should focus on 3 or 4 broad investment areas. Prospective investors usually communicate their plans to the venture capital community by publishing their screening and investment criteria. Typical screening criteria relate to: 1. technical investment areas, 2. geography, 3. resource requirements, and 4. size of business. Investment criteria may relate to the total amount to commit, the timing of investments, and the amount to invest in each situation. Once the investment plan and program have been developed, investment selection, management, and monitoring begin. There must be procedures in place to perform the following functions on an ongoing basis: 1. investment evaluation, 2. assessment of co-investors, 3. follow up on investment, and 4. board representation.
ProQuest  start_ups  private_equity  privately_held_companies  quality  venture_capital  vc  investors  team_risk  co-investing  screening  criteria  boards_&_directors_&_governance 
october 2012 by jerryking
Ten Commandments of Raising Money
(1) Assume the $ is available.
(2)Know you lending/investing options.
(3)Know your lends/investors.
(4) Make sure s/he knows you.
(5) Ask before you need the money.
(6) Follow the principles of salesmanship.
(7) Ask for more than you need.
(8) Business plan of course.
(9) Make his/her job easier.
(10) Maintain the relationship.

"It's really important to think about what risk you are trying to reduce when you raise money - is it product risk, team risk, market risk or something else? Investors really want to know what milestone you are trying to reach with the money. "
funding  financing  banks  pitches  business_planning  investors  risk-management  product_risk  team_risk  market_risk 
july 2012 by jerryking
Giving Great Advice
Janaury 2008 | HBR | Interview of Bruce Wasserstein by Tom Stewart and Gardiner More.

HBR’s editor, Thomas A. Stewart, and senior editor Gardiner Morse
spent many hours at Lazard and interviewed Wasserstein, setting out to understand how he creates value as a manager, as a deal maker, and as a counselor to CEOs. How does he attract and
manage talent, build and sustain knowledge businesses, size up companies and industries, and craft advice?

Wasserstein describes his approach as discovering whether a deal or strategy “makes sense.” Such sensemaking seems to underlie every move he makes, and it has paid off handsomely. Following is an edited presentation of HBR’s conversations with Wasserstein...first to execute deals really well and then to market that track record.

How do you develop individual talent? The idea is to create a hothouse where young talent is nourished by our culture and people are encouraged to think creatively, think deeply,
think about the long-term client relationship—but above all, think. I want them to reflect on what they are doing and why, and then wonder,“Can we do better?”

Talk about the advice business. What are CEOs looking for as you’re helping them understand the landscape? What do they
need that you’ve got? The point of advice is to create value. The
first thing in that effort is not to assume the banker knows more than the client. The second thing is to remind the CEO that corporations have to change in order to prosper and that inaction isn’t prudent—it’s radical. What we can do is help the CEO think through an array of options, partly by asking
the necessary questions, but also by inserting some very practical observations about the effects of specific decisions.
Good advice is at least as qualitative as it is quantitative....On the other hand, there’s the more qualitative part of the advice. This strikes me as being an underdeveloped side of most investment-banking relationships. Knowing the characteristics of the industry and possible consequences of a deal comes from having seen what’s happened in many companies and industries over time. So, for example, you might say, “Look, you need a very different mentality to manage this type of business than your other businesses. You have a process-oriented mentality, but you need a more market-oriented approach. Are you confident that you’re going to be able to keep the number two guy in the company you’re acquiring? Because the number-one guy will probably leave.”

Deals that make sense. Can you elaborate on that? Law school taught me to focus on dissecting premises. Anyone who’s a good logician can build an argument on just about any premises.
The argument may be taut, but the premises may be faulty. When we do deals, I always ask, “Are the premises sound? Is the risk exposure worth it for this particular company, and have
I protected my client’s back?” We proceed by identifying and evaluating qualitatively and quantitatively the key elements of risk in the transaction—overall economy risk, strategic
risk, operating business risk, financing risk, people risk. Similarly, you need to fully understand the upsides. What are the opportunities in cost cuts, synergies, internal development,
additional investments, or revenue enhancement? It’s useful to apply all the paraphernalia of mathematical science in an analysis, but focusing on the sense of things is a much better use of time. Part of determining the sense of a deal involves understanding the macroclimate, the broader context, which I think gets too little attention.

...We think of each deal in terms of a flow chart with a series of black boxes. Each box represents a facet of the deal—for example, valuation, financing structure, approach to the other party, negotiating tactics and deal process, taxes, legal structure, contracts, market reaction, and regulatory hurdles.
advice  argumentation  Bruce_Wasserstein  contracts  cost_of_inaction  dealmakers  deal-making  downside_risks  financial_advisors  financial_risk  howto  investment_banking  J.D.-M.B.A.  Lazard  logic_&_reasoning  M&A  market_risk  mergers_&_acquisitions  operating_risk  problem_solving  product_risk  risk-assessment  synergies  team_risk  upside 
july 2012 by jerryking
The Young & Restless of Technology Finance
November 1993| The Red Herring | Anthony B. Perkins.

We think that marketing is everything. We try to help our companies figure out what is going to set them apart. We encourage companies to define their biggest risks-up front, work hard to put the risks behind them, and then move forward with very innovative marketing...During the interview process, you see whether entrepreneurs have passion and tenacity. The hardest thing to determine is their ability to stick-to-it. Entrepreneurs need to be very dynamic, wi11ing to adjust. And that's why an important part of our process is checking references, we have to be convinced the entrepreneur has never give up, even when things get tough. In other words, when Plan A work, because Plan A never works, we like to hear entrepreneurs say "That's O.K.,Plan B is on its way. I've twisted this valve and turned this knob and I really think we've figured it out." What we don't like to hear is "Well,it didn't work out...sorry." We also like to see entrepreneurs who are singularly focused on building -great products that fill distinct market needs. We are less interested in people who like nice digs, hype,and PR.

Moritz: ‘We have a very tight on making sure there is a sizable market opportunity in front. of us before we make an investment. We are much more focused on market growth potential and the ability for a company to reach a market successfully and profitably. We have also demonstrated as a firm and individually the ability to get companies off the ground with a small amount of fuel. We like to start wicked infernos with a single match rather than two million gallons of kerosene. This is clearly a differentiated way of getting a company put together. This approach has terrific benefits for the people who start the companies and for all our limited partners. You might say that we have a morbid fascination with our ROI, as opposed no the amount of dollars we put to work. And this is a very different message than you get from a lot of other venture firms.
The: HERRING: How often does a Sequoia partner actually go in and help operate a company?

Moritz: Pierre is the great unsung hero of Cisco Systems. He spent a tremendous amount of time at the company. working behind the scenes helping to make sure the engineering department was designing and getting new products to market. People don't realize the significant contribution Pierre made to Cisco because Don's name is on the hubcaps as the chairman of the company. The ability we have to help operate companies is a useful tool in our arsenal.

The HERRING: Sequoia's image on the streets of Silicon Valley is that you are the Los Angeles Raiders of venture capital--the tough guys who are quicker than the other firms to boot the CEO or pull the financial plug.
Moritz: We are congenitally incapable of pouring good money after bad. Some people. for their own will thrust us into a position to be harbingers of bad new to management, which is all right. But we do not want to continue propping up a company if we think its chances for success have evaporated. We would be wasting our money as individuals and wasting the money of our limited partners. There have been very few instances where we decided to stop funding a company and have regretted it.
The HERRING: What ’s the hardest part of your job?
Moritz: We usually don't make mistakes when it comes to assessing market opportunity. And we are reasonably accurate in predicting how long it will take to bring a product to market. The great imponderable is to judge accurately and predict how well a president is going to be able to run the business. It is easy to mistake the facade for reality
The HERRING: ‘What characteristics does Sequoia look for in a company president?
Moritz: Frugality, competitiveness. confidence, and paranoia.
venture_capital  vc  howto  Kleiner_Perkins  Sequoia  career_paths  Michael_Moritz  no_regrets  endurance  frugality  competitiveness  paranoia  self-confidence  market_sizing  market_windows  team_risk  market_opportunities  ambitions  large_markets  sticktoitiveness  entrepreneur  perseverance  indispensable  Plan_B  off-plan  champions  reference-checking  unknowns  assessments_&_evaluations  opportunities  unsentimental  wishful_thinking  illusions  overambitious 
july 2012 by jerryking
Starting Up in High Gear
July-August 2000 | HBR |An Interview with Vinod Khosla by David Champion and Nicholas G. Carr.

To create the kind of new wealth you’re talking about, we’re going to have to see massive investments in information technology. Where’s the money going to come from?

It’s going to come out of corporate budgets. Companies invest wherever they’re going to get the biggest returns, and right now that’s IT. Look at the trend in capital expenditures. Twenty years ago, information technology accounted for about 10% of capital expenditures in the United States. ...
Today, if you have a plan for a new business, you circulate it in the venture community and you get funded in a week. What you don’t get is an honest, painstaking critique. What are the downsides in your plan? What are the shortcomings? What are the weak links? The strengths of your idea get a lot of attention, but the weaknesses get ignored—and ultimately it’s the weaknesses of your plan that will kill you. A start-up is only as strong as its weakest link....
The first thing we focused on was getting the right set of people for the company—the right gene pool. We started out on the technical end. Pradeep had helped architect the Ultrasparc processor at Sun, so he had strong skills in building technical architectures and could apply those skills to routers. But he needed somebody with experience in building and operating an IP network, and he needed somebody who’d done operating systems software for routers and somebody who’d done protocols for routers. So we drew out a map that said, “Here are the ten different areas of expertise we need.” Then we made a list of the companies doing the best work in each area, and we listed the five people in each company who would make good targets. We went after those people, and piece by piece we assembled a multidisciplinary team that could make Juniper a leader.
IT  interviews  HBR  Kleiner_Perkins  start_ups  large_companies  management_consulting  Vinod_Khosla  executive_search  shortcomings  weaknesses  new_businesses  CAPEX  weak_links  Nicholas_Carr  talent_acquisition  gene_pool  expertise  team_risk  wealth_creation  cross-pollination  interdisciplinary  teams  protocols 
june 2012 by jerryking
Bootstrap Finance: The Art of Start-ups
November-December 1992 | HBR | Amar Bhidé.

(1) get operational fast;
(2) look for quick break-even, cash-generating projects;
(3) offer high-value products or services that can sustain direct personal selling;
(4) don't try to hire the crack team;
(5) keep growth in check;
(6) focus on cash; and
(7) cultivate banks early.
HBR  bootstrapping  hustle  finance  funding  good_enough  start_ups  Amar_Bhidé  fast_followers  copycats  financing  entrepreneur  venture_capital  vc  execution  advice  capital_efficiency  team_risk  market_risk  technology_risk 
june 2012 by jerryking
"The bruises of the bandwagon: ENTREPRENEURSHIP: Reality television is revealing how desperately some people want to break into business. But many fail to analyse their ideas,
Apr. 25, 2005 | Financial Times pg 16.| by Paul Tyrrell

Everyone wants to run their own business. But many fail to prepare thoroughly before scrambling on to the bandwagon. Among the television hopefuls, the most widespread and humiliating trait is a failure to appreciate that an entrepreneur's personal qualities are just as important as their ideas.

It is a salutary warning. Venture capitalists and business angels have always been more inclined to back a great team with a mediocre idea than a mediocre team with a great idea. They attach a lot of importance to what they term "scar tissue" - evidence that the person has learned from experience.

"People who are enamoured of their own idea can be great, but only if they listen really hard,"... "Nothing goes to plan, so you're looking for people you can trust off-plan." ...Entrepreneurs are more likely to succeed if they can come up with an idea that exploits their experience. This is particularly clear in product development situations - for example, where an engineer takes the knowledge he gains at a large company and uses it to set up a rival.

Research suggests that "spin-outs have a survival edge in the market over other entrants as the result of a combination of entrepreneurial flexibility and inherited knowledge"....what distinguishes successful entrepreneurs is their ability to spot commercially exploitable patterns where others cannot. Herbert Simon, winner of the 1978 Nobel Prize in economic sciences, suggests this process is intuitive: a good business idea stems from the creative linking, or cross-association of two or more in-depth "chunks" of experience - know-how and contacts.
Infotrac_Newsstand  entrepreneurship  entrepreneur  pattern_recognition  personality_types/traits  television  spin-offs  entertainment  venture_capital  angels  cross-pollination  tacit_data  knowledge_intensive  scar_tissue  teams  team_risk  off-plan  Plan_B  tacit_knowledge  nimbleness  combinations 
november 2011 by jerryking

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