Who Wants a Canadian Start-Up? Buy Now, They’re Going Fast!

ZiteAnyone want to buy a Canadian start-up? You better act fast because they’re selling like hotcakes!

The latest deal is CNN’s purchase of Vancouver-based Zite, which offers a popular tablet application to read content.

Zite was in the midst of raising venture capital that apparently valued the eight-person company at $200-million so it will be interesting to see if CNN had to cough up some serious coin. (Note: AllThingsD reports CNN paid $20-million to $25-million.)

Zite’s acquisition comes on the heels of a flurry of other deals this year. The list includes:

- Five Mobile (Zynga)
- BackType (Twitter)
- PostRank (Google)
- Tungle (RIM)
- PushLife (Google)
- Radian6 (Salesforce.com)
- Tiny Hippos (RIM)

While it’s a little disappointing to see fast-growing start-ups get snapped up, the upside is that success will hopefully provide entrepreneurs and investors with a stronger appetite to start and support more start-ups. Who knows, maybe Canada’s cautious, reluctant, recalcitrant venture capitalists will be emboldened enough to get in the game rather than watching from the sidelines.

As I have mentioned on this blog and my Globe & Mail column, I believe this is the most exciting time for Canadian start-ups in the 15 years that I have been involved as a reporter, start-up founder/employee and consultant. By much-needed emergence of buyers for Canadian start-ups just makes the landscape even that much more exciting.

More: TechVibes has a running list of Canadian start-ups that have been acquired.

The Bottom Line for Startups: Delight or Die

ImagesI spend a lot of time working with start-ups, particularly helping them with content, communications and, increasingly, their Web site usability needs. It involves a lot of focus on making sure they are telling the right stories to the right audiences, their messaging is clearly articulated and users quick “get” what they do, and their Web sites are accessible and easy to navigate.

But, in many ways, this work is irrelevant if the underlying service doesn’t delight the user. I like the word “delight” because it succinctly captures the essence of whether a start-up will “do or die”. We live in a multi-tasking, attention-deficit world so if a service fails to quickly strike someone as useful, valuable or compelling, it’s game over.

This may seem overly dramatic but, frankly, this is the challenging landscape in which start-ups operate. Most people don’t give themselves enough time to truly evaluate whether a service has merit or not. They want immediate gratification so it’s crucial for a start-up to provide users with a service that is easy to understand and does the job well.

If a start-up doesn’t delight, they’re dead in the water because a user will dismiss them in a heartbeat, and move on to the next service.

Now, delight consists of different components.

There’s the messaging that surrounds a service, providing users with information about the features and benefits, and answering the crucial question: what’s in it for me? There’s good design and a navigation structure that needs to be intuitive and dead simple to use – everything from the home page messaging and the FAQ to the About Us page and the registration process.

And then there’s the service itself, which has to meet a need or a perceived need the user may not think they have until someone points it out to them. The service doesn’t have to be complicated or particularly feature-rich, it just has to delight. A good example is Dropbox, which makes it easy to share files online. Dropbox isn’t oozing with features but it is useful and easy to use.

One of the biggest mistakes made by start-ups – aside from unclear messaging, bad story telling and incomplete business models – is the belief that more (features) is better. Rather than making their service useful, they make it so complicated that users don’t know where to start or they get so frustrated trying to figure out what they’re supposed to do, they walk away.

A key part of the problem is when a start-up has developers, creating more new features is seen as the obvious way to keep them busy. As a result, the feature line-up continues expand rather than ensuring that users enjoy, leverage and make better use of the existing features.

In other words, the service becomes un-delightful.

It means the focus must be on meeting the needs of the user in a way that’s accessible, easy to understand and a breeze to use. In other words, you need to delight them.

Of course, it’s easier said than done but if a start-up can crack this nut, their chances of success are greatly enhanced and you might even convince them to pay for the service, which is another tale for another day.

Canadian Startups Need a Paul Graham

GrahamIn addition to Steve Jobs, there are other bigger-than-life technology players in Silicon Valley. One of them is Paul Graham, who is creating – or has created – an aura as a startup guru with the amazing things happening at his YCombinator incubator.

It’s a brilliant model in which aspiring entrepreneurs receive $15,000 to $25,000 in seed funding and about 12 weeks of mentorship and product development help. In return, YCombinator takes about a 6% stake in each company. It’s a volume-based business model that has generated a tremendous return on investment.

One of its success stories is BackType, which was started by two Canadian entrepreneurs, Christopher Golda and Mike Montano. In July, BackType was acquired by Twitter.

For anyone not convinced about what YCombinator is doing, the evidence was on full display earlier this month when it held a demo day featuring 63 start-ups and about 200 drooling investors chomping at the bit for new opportunities.

Who know how many of these start-ups will be even modestly successful but they’re getting an opportunity to be successful by getting a little bit of money and a lot of valuable mentorship and support. For many start-ups, this may be all they need to take an idea from the back of a napkin or their parent’s basement into a company with a shot at getting some traction. Then, anything can happen.

In Canada, the incubator model is starting to gain a some traction with new funds emerging that operate along the lines of YCombinator by providing a modest amount of financial support and other supports such as office space and advisors.

It’s definitely encouraging but it’s just a start for a sector that needs a lot of support for Canada to become a start-up hotbed. In many respects, Canada needs a Paul Graham who can lead the charge with a combination of personality, money and influence.

We need someone who can champion Canada’s thriving start-up landscape that is teeming with entrepreneurs doing all kinds of interesting things. Without being too dramatic, I can honestly say this is the most exciting time I have seen since I have been involved with start-ups as a reporter, founder/employee and consultant over the past 15 years.

Given this landscape, a Paul Graham or someone like Paul Graham could do wonders for Canadian start-ups that need a small amount of support to go from good to great.

 

Steve Jobs Picks Perfect Time to Leave

Steve jobsAn adage that I’ve tried to live by is “always leave a good time” based on the idea that exiting on a positive note is better than skulking out the door. It’s like leaving a party when it’s still raging as opposed to leaving when there’s only a few people sticking around, the music has been turned off and there’s no beer left in the fridge.

In many respects, Steve Jobs has picked the perfect time to leave Apple. The company has become a cultural, technological and business monster with an aura hand-crafted by Jobs over the past decade. Apple is firing on all cylinders, seemingly unable to do anything wrong. The iMac, MacBook, iPad and iPad have established Apple as the world’s coolest brand and a design titan.

But where does Apple go from here?

When you’re at the top of your game, it can be a huge challenge to keep getting better. Arguably, the only place for Apple to go may be down given the competition over the horizon from players such as Google and Samsung.

On one hand, it would be probably be pretty cool to be Tim Cook, who is replacing Jobs as Apple’s CEO. On the other hand, Cook may have the world’s toughest job. Every move he makes, every new product and every quarterly result will be scrutinized and compared against the Steve-o-Meter. No matter how well Cook performs, it may never be good enough.

But that’s the reality of replacing an icon. There is no way you can compete so Cook needs to put his head down and let Apple continue to be Apple.

One thing that will be interesting is whether Apple employees, including Cook, will be allowed to enjoy the spotlight. During Jobs’ reign, he was the centre of attention, and it was rare to read about some of the other uber-talented people who were driving the company’s product development and marketing. Maybe Jobs’ departure will give them a chance to shine.

Jobs will be missed, although it doesn’t look like he’s disappearing. That said, no one is irreplaceable, even Steve Jobs. Apple will continue to roll along but it may never enjoy the same kind of amazing momentum it has seen over the past five – with or without Jobs as CEO.

For some more thoughts on what Apple means without Steve Jobs, check out this good piece of analysis by Econsultancy. Wired has a story on why Cook is the best choice to lead Apple.

Why Blogging is Social Media’s VIP

BlogAs an enthusiastic blogger, it is somewhat discouraging to see blogs lose some of their lustre amid the fascination (obsession?) with Facebook and Twitter.

As someone who has been consistently blogging here and other places for the past seven years, I have always argued that blogs are the most powerful social media medium because they offer a way for people to provide insight, perspective and information. In a fast-paced, multi-tasking world, it takes time to create and read blog posts but they offer tremendous value for bloggers and readers.

That said, I’m probably biased because I’m a writer by profession, having spent more than 10 years as a newspaper reporter. As a result, writing a blog seems natural and the posts tend to flow. For many people, however, writing can be time-consuming and laborious, making it challenging to consistently write blog posts.

Nevertheless, I believe the ROI of blogs makes them compelling. They provide an opportunity to build a personal or corporate brand, establish domain expertise, showcase insight and thoughts, participate in the conversations of the day, and boost your SEO.

In the wake of my blog bullishness, it was heartening to see Hugh MacLeod declare in a recent blog post that he was giving up Facebook and Twitter to “reclaim” blogging. Here’s how Hugh explained his decision:

“Because Facebook and Twitter are too easy. Keeping up a decent blog that people actually want to take the time to read, that’s much harder. And it’s the hard stuff that pays off in the end. Besides, even if they’re very good at hiding the fact, over on Twitter and Facebook, it’s not your content, it’s their content.”

MacLeod is making a fairly radical move given how Facebook and Twitter have become integral parts of our digital activity, particularly for an entrepreneur such as MacLeod who could benefit by having a presence in the biggest social markets. But I think MacLeod’s motivations have much to do with the fact that blogs are an opportunity to stand out from the crowd given it’s so easy for post an update or tweet. Sure, blogs take more work but for anyone willing to commit themselves to blogging, there are a variety of benefits.

My belief in the value and power of blogging makes writing posts a joy – at least most of the time. It’s an investment and it takes time but it is also tremendously rewarding. Unlike MacLeod, I’m not going to give up Twitter or Facebook, although blogging is where most of my social energy goes. At the end of the day, it’s the most satisfying and fun, and it’s the perfect vehicle to show potential clients what and how I think.

Can Low Prices Save the Tablet Market from Apple?

Update: All Things D has interesting post looking at how much money Hewlett-Packard might have lost on the TouchPad.

Steve jobs ipadSo let’s get this straight: Hewlett-Packard spends $1.2-billion to acquire Palm so it can move into the tablet computing business. It then launches the TouchPad (creative name, by the way!) with a marketing blitz, only to see sales go nowhere, leaving retailers such as Best Buy with loads of unsold inventory.

Then, HP shocks the world by announcing it’s going to abandon the tablet and PC markets to focus on software. Fascinating….except the story gets better.

After HP makes its decision, Best Buy goes back on its original decision not to sell its stash of 245,000 TouchPads by blowing them out at discount prices – $99 for the 16GB model and $149 for the 32GB model. (betanews has some colour on the TouchPad buying frenzy.)

People who would have never considered buying a TouchPad are now drooling about picking up a cheap unit, even though it’s built on an OS that could be orphaned.

If anything, it just goes to show that everyone likes a deal, even if it involves a product that is being discontinued.

At the same time, it does put a intriguing issue into the spotlight: could low-price tablets keep the marketplace from being dominated by Apple’s iPad?

There are some great tablets from companies such as Samsung and Motorola (I’m really enjoying my Xoom) but the iPad’s appeal and Apple’s brand mean the default choice for most consumers is an iPad.

Many people suggest the iPad is so compelling because of the 100K+ apps but truth be told, Android has an apps portfolio that is more than good enough. Heck, even the much-maligned Blackberry World probably has enough apps to do the trick.

So the iPad has the marketing aura and the apps but what it doesn’t have is a low price, although there’s rumbling Apple could introduce less-expensive models. This leaves a window of opportunity for someone to step up with a low-cost, user-friendly tablet likely built on Android that would have mass market appeal.

As much as overall sales are soaring, a cheap tablet would push the tablet into the mainstream, making it available to just about everyone, including people who look at them as a nice to have as opposed to a must-have. And the nice thing about playing in the low-price market is there’s little chance Apple will join the fray.

Of course, the key consideration for a supplier who decides to make low-cost tablets is having low enough costs and high enough sales volume to have decent profit margins. It would also help if there were add-on services available (storage, security, etc.) that would generate additional sales to support the low-cost model.

Given the strong sales of the TouchPad, there’s clearly a market for a cheap tablet backed by a reputable brand. Either that or people love a deal or they’re looking for a souvenir to sell later on eBay.

More: Daring Fireball offers a “simple explanation” about why HP abandoned Palm and decided to exit the PC business.Update

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