As a native Canadian, Howard Lindzon comes across in some respects as, well, un-Canadian…but I mean that in a good way. Unlike the typical meek Canadian demeanor, Howard is brash, confident, opinionated and, as important, not afraid to invest in startups with good ideas.
If we could figure out a way to repatriate him, Canada’s startup and venture capital communities would be a lot better off and a lot more interesting.
Last week, Lindzon unveiled his latest investment, Toronto-based ECHOage, which runs an online children’s invitation service. The premise is pretty simple: rather than having a guest bring a birthday gift, they contribute money online, which is divided between “one meaningful” gift and a charity. It’s the digital offshoot of a birthday idea in which a child brings two loonies to a party – one for a gift and one for charity.
With a lot of the go, I managed to get Howard on the phone last week to ask a few questions.
How did your investment in ECHOage come about?
HL: I was shown by idea, and introduced to [ECHOage co-founder] Alison Smith. I wanted to see if they could prove it out a little bit, it was pre-party. They came back a couple months later with some money raised, and 300 to 400 parties they had thrown – all viral through the Web site. That is when I decided they were on to something – a micro-giving idea for birthday parties.
It resonated with me because I’ve been looking at female-owned and operated businesses on the Web. Women surf the Web so differently than men do. It is the same Web but females and males have completely different surfing behavior. I have been looking to back some female entrepreneurs so this idea seemed simple enough to expand, and it already had some success. I tend not to worry about ideas that can be duplicated as long as they are executing on their plan, and building their brand. It was a real simple business, and we have some ideas to be launched on micro-giving and social network.
The startup investment is volatile these days, isn’t it?
HL: The Sequoia letter, the stock smarket are real events. You can ignore it or try to understand what the new landscape will be like. One advantage is low valuations but at the same time you have to balance low valuations with making sure your CEO has enough skin in the game and motivated in tough times. I think people are acting panicked. I am now saying it is not called for; a lot of people have lost 30% to 40%. That said, there is a lot of deflation in business with laptops, wireless and you don’t need office space. But when you tap into peoples’ nest eggs, it makes for a different world. I am being more careful; not because I like being careful but I don’t want to be the only dumb guy saying things are great.
Have you talked to companies in your portfolio?
HL: I have done that round of calls asking what can I do. I have spread myself pretty thin because I like making a lot of investments. That’s why I gave up stock traing for the headache of sitting in front of a screen. I recently launched a new startup – StockTwits. We just did a small round, and I am 24 hours a day on that. I like to diversify my own things, between running a company, helping with PR and marketing at other companies, adding capital into rounds that want marketing experience, and running my hedge fund.
Talk about Stocktwits. What’s going on there?
StockTwits has had a great reception. We built it on top of Twitter. We can say that is good or bad but I feel like it is all about building a reputation platform because stock message boards that are just broke: all noise, no signal. I am all or saying what you want but let everyone see exactly what you said all the time. People can filter out your noise. I can pick and follow who I want to choose based on your reputation.
I think it is the best idea I’ve ever had. I am really excited. We had 3000 Twitter users the first couple of days, and they all are contributing. We are not supporting bulletin board stocks so you’ve got 7,000 real traded securities so it keeps away the penny stock people.
What’s the business model?
There’s a premium service that we are developing and a tipjoy service where you can give ot people with good ideas. The idea is just find new talent and help it rise to the top – it’s Digg using Twitter with some editors – a group of 10 of us looking for new talent. It is really open Street.com. StockTwits is that everyone sees the news so let’s create something that is what is everyone saying about the news. This is a Twitter-ized Digg version; If it really grows, it is really the Facebook for finance. In two clicks, you can get to someone’s profile, and see who he is. If I like Fred Wilson, I can click on some of the 50 people on his front page.
Here’s a video in which Howard talks about StockTwits:
What is StockTwits? from Jon Labes on Vimeo.
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