There’s a lot of media of how Canadian startups are having money injected into the ecosystem. The Harper Government (shocker) even relatively recently injected $400 million - or at least part of the ecosystem. The problem is that money isn’t efficiently making it to where it needs.
All of the pieces the ecosystem haven’t had enough time to evolve enough. We haven’t spent enough money yet - there hasn’t been that initial cost of education, or rather the cost of gaining experience that the U.S. has already had many cycles of. This isn’t to say money can’t be made during educational or more experimental periods, and certainly this money wouldn’t be wasted if structured properly.
We may have to be willing to lose more money than normal in order to compete with the higher amount of money VCs in the US are willing to spend - because they’re already in higher competition there so they’re used to it, plus there’s more money and they need places to put it.
We need to do this so we build the talent pool of people who have experience in growing companies, so they can then start more here - and so then there are more places to invest locally when more money becomes available. Not just so founders and engineers can learn and grow but also investors and management, people for every stage of growth.
Sure, we’re getting more incubators and co-working spaces but without all of the other pieces the money put into incubators will show as extremely inefficient and you won’t see the value that can only come when all the pieces of the ecosystem are in place.
Also, if there aren’t enough angels and VC firms that understand and follow specific theory of what kinds of investments they will put money into, to guide them, then the ecosystem will fail. This is not only about having an advantage in deal flow and pricing for investments, but it also is inherently in risk reduction - relating to the efficiencies that come with specialization.
And these VCs/angels need to be vocal about what they look for, and they need to regularly reach out to the local community and help teach us, and tell us what they’re looking for.
Canadian investors currently also perhaps need to have more tolerance than VCs in the US because we don’t have the same support or resources (advice and network wise, etc) as companies in the US.
That doesn’t mean we’re not as good and not as capable, it means we’re having to struggle more and that costs might be slightly higher to reach the same success level as a company — mainly because we’ll need a longer runway to get everything into place - to find talent and management, to prepare and find the next round, etc.. Maybe that’s needing 20% more of what U.S. companies are willing to invest. And to note, having more money doesn’t mean operating in a less lean way.
I’m starting to look for funding and I can work with anything from $120k to $500k or at this point I know I could even allocate $1.5 - $2.5 million properly, of course how far along I can reach and what scale I can reach and how quickly I will reach large growth will be in part determined by the resources available. If I had $120k then I have to keep very lean and cut corners, whereas if I had $1.5 - $2.5 million then I could hire the best designer(s) and other management that would be required to organize the systems to test and ready everything for scaling.
I might not even be able to find $120k in Canada though, and so then the likelihood future money after the $120k diminishes greatly - especially say if I apply and get accepted into YCombinator for $120k USD, then I have to become a U.S.-based company, and then taxes go there - just as one of the positive impacts of a company starting that would leak out of the Canadian ecosystem.
Possibilities are usually only a hop, skip, and jump away from becoming a reality, a real option.
If you follow the white rabbit far enough down the rabbit hole you’ll discover efficiencies, the nuances, that you and perhaps no one else has ever perceived before - you’ll gain insight, and then you can leverage this insight - hopefully to helping improve the world to the fullest; Replace white rabbit as meaning a leading metric, something that grabs your attention and helps drive your passions.
Facebook’s goal, as is many others, is to keep the user on their website as long as possible. It looks like Twitter just started rolling out a new design to essentially compete in this same method.
It sounds nice to keep the user on your website for as long as possible. You have more opportunity to monetize them then right? And if they’re on your website then they’re not on a competitor’s website! Awesome - right?
As wonderful as this sounds to shareholders, this is generally done and decided upon by completely ignoring all other leading metrics - so it’s really not awesome at all.
You know what Google’s original leading metric was? Getting people off of their website as quickly as possible. E.g. Search box front and centre, enter keywords, top results come in — user clicks to leave Google and Google hopes that result is what the user needed so they don’t need Google anymore.
But guess what? Google too fell into the “Keeping The User” leading metric trap too with their more recent integrating everything into Google+ and trying to build as much into Google websites as possible.
Is it greed related? Maybe. It might more be laziness, or a lack of understanding. It’s easy for a group of people, say a board of directors or founding team, to come to a consensus on a simple idea of “keeping the user on our website longer is good” vs. not ignoring the nuances of every situation.
I do wonder if the people in the lead understand these nuanced things. I’ve not had the opportunity to talk to them, nor will I likely ever, so I’m going to continue to do my part and move my vision forward of how I see a better, easier to use, and more organized internet.
I had read it prior to and one of the statements that had stuck out to me, and apparently Fred too, was this:
Apps have a rich-get-richer dynamic that favors the status quo over new innovations.
This mechanism is purely related to the inherent nature of the value and efficiencies that fluidity and frictionless brings relating to accessibility.
Accessibility is relating to organization, full accessibility means fully organized (as best possible) - where there is as little to no friction as possible, much like how universal law functions in the physical and energy realm - our society would best mimic or follow that leading metric as a guide.
Google’s mission is “Organizing the world’s information.” I’ve come to realize recently that my mission is “Organizing the world.”
My Nightmare - a defining post title - shares a story of where Fred felt betrayed in a situation.
In this instance it seems that he’s taking it personally - but it’s really about them. And in that scenario you will have learned something about them. Inherently there is nothing wrong with a person making a decision solely based on money and valuation - and so now you know you wouldn’t be investing in them.
As Fred points out a decision based solely on money and valuation definitely ignores the nuances and value inherent in relationships. What if this company truly could have a pre-money valuation of $140mm - but it’s just outside your price and/or risk range? There are other ways to view that dream to make it not feel like a nightmare.
There are also other forms of investment that could probably keep everyone happy enough - mainly convertible notes - though you may not get the % equity you prefer, though if the company does as successfully as someone reasonable seeking such an amount, then you likely would have done quite well return wise — maybe just not an automatic 100x on your money.
I think this is why convertible notes are nice, and more fair - because honestly it’s dishonest to plop all investment opportunities into the same pile, to group all of entrepreneurs together with the same rules; Yes, I’m sure many investors do make adjustments for this scenario - though probably not as specially for as many as one would think.
What if it was Elon Musk saying “I have an idea, I need $140mm for it.” You’d probably be ecstatic and doing a happy dance internally at having that opportunity. And based on Elon’s character I don’t think he’d take money he’d waste - though he certainly knows the poker hand he’s holding now and knows he has lots of options for money - and with his $5 billion battery factory play - he’s going to very rapidly continue on a hockey stick growth curve to start rapidly improving all of humanity; A prediction I made earlier is Tesla will be worth $200 billion in 5-10 years - market cap might reach that sooner though if the markets wise up to understand everything he’s doing though.
Most investors seem to stick to similar rules and boundaries for investing money because they know options for most companies looking for funds are limited, though that’s an fabricated constraint and might prevent one from the seeing the real value of a situation.
The best way to view any situation is to eliminate internal belief that you’re owed anything, which will lead you to better seeing the real value of a situation; This is a practice, it takes time to learn to stay in the present moment to realize and process every in-the-moment situation to check with yourself if you’re acting out of a feeling of being owed — or one form of attachment.
If someone was super successful before and you’d like to invest in anything they do in the future, that’s a pretty strong signal - the strongest you’re going to get.
It’s possible valuation won’t be reasonable based on all factors, though that’s how a convertible note can help create a buffer to bring two parties together.
Pravin J commented that Fred needed a vacation, to which Fred responded he just had had one.
The vacation would have created space, which allowed new space to be filled -
"You must let go of the old to be able to grasp the new."
The dream was just processing the brain needed to do but wouldn’t have been able while constantly firing the same neural pathways regularly, e.g. day to day tasks and routine, patterns; Vacations and change give those pathways a longer break.
A regular yoga and meditation practice is a practical alternative as you get as many mini-vacations as you want.
Profit should be seen as a sign of success that the structures and processes and systems overall are functioning well and in fact are functioning better than other-differently structured systems.
Here’s an exercise: If everyone in the world was part of an organization and that organization generated $100 trillion annually in profits, where would we spend those profits?
What profit shows is success and what success means is productivity - people doing things, people getting things done. In a sense then we could see profit as an excess of productivity - unneeded to sustain our current state or quality of life and being.
The transition to an environment where we all see profit as a whole of us generating excess value or productivity is the challenging part. Part of it is educating the necessary audience to reach a tipping point, which then includes reaching said audience as another challenge on its own.
Maslow’s hierarchy of needs does a good job of giving an overview guide. Fear of survival first must be taken care of but before that there is a foundation of systems that exists. One of those current systems is capitalism. Capitalism has allowed those who are smart enough to find a way to be able to pool resources and become “rich,” or they are “lucky” enough to have been born into a situation. The problem is we need to be investing in everyone, equally, until they prove they can use resources better than others and then allot them more resources. The first trick is doing it in a way that is fair, and the second trick is doing this while in transition from the old systems.
So where could we spend this excess productivity? Perhaps on other things like space exploration, more going into research and development, education, much more into deeper sciences. This is where I want to be, living in this environment - and I can see the start of path. It’s a different way to govern than we currently do and luckily as everything in some sense acts as a platform and platforms can co-exist and integrate, the governance I see can exist and grow while in transition using current systems. Will this system become how our governments run? In my mind it feels intuitive that they would eventually. The goal then becomes proving it is the correct model, the correct structures that outperform the status quo of existing systems.
Back to my title.
Profit has no inherent value, it only has value because of the scarcity created in our current structure of a capitalistic system.
In a previous post entitled Capitalism And Its Current Disease I state in brief why we have scarcity in our current system and part of what I see as the solution to it.