B.C. Tech Startup Mania

Now is the time to jump aboard the B.C. tech startup train.

Now is the time to jump aboard the B.C. tech startup train.

From one of my favourite movies comes the iconic quote, “Get busy living or get busy dying.” In The Shawshank Redemption, Andy Dufresne (Tim Robbins) says this to Red (Morgan Freeman) after telling him it comes down to a single choice about life in the prison. Most interpret the line as a life message or motto about hope. Another possible meaning, one that is more “in the moment,” is that Andy is telling Red if he doesn’t move now and escape, he might as well hurry up and die.

What’s this got to do with tech industries in B.C.? In case you haven’t noticed, it’s that time in the technology cycle again. Money is flowing, people are getting rich, there is talk of a bubble in Internet media, the Harvard MBAs are leaving to form companies . . . it’s startup mania all over again. Are you going to jump into the game and get involved in a startup? Are you going to get busy living the dream, or get busy dying in your institutional job?

Having been through a similar mania in 1998, I am not recommending either option. I am just observing that CAs at big-four firms are jumping into startups. I am hearing more and more willingness to live off credit cards to try to get a new thing to market. I see record attendance at Vancouver Enterprise Forum and angel events. The accelerators and incubators are full, so much so that I heard about an accelerator for incubators.

For those of you enthused enough (and just a bit naive enough) to go out and build the new, new thing, congratulations. The rationale for a startup today is enticing. Last time around, it was simply a new thing called the Internet. We didn’t know how it would make money, but if we ran fast and built an audience, we were going to figure it out someday. Today, the Internet (again) and smart phones are the rage. Here is how most convince themselves that now is the right time to start something:

• Costs of storage and computing power are very, very low

• Bandwidth, even to smart phones, is very high

• Open-source tools make producing applications, web and mobile sites and games very affordable

• The business models are proven: Look at how much money Zynga, Groupon, Facebook and LinkedIn make!

• A massive user base within the social network infrastructure is making sign-on and word-of-mouth marketing simple and low-cost

These facts combine to make the ugliest part of starting a company easier to handle – you don’t need to raise five million dollars to get there. A few thousand bucks and you can get to a minimum viable product that customers can start using. If you get any traction then you can raise a small angel round to add people and marketing. Seems easy, right? Better get busy living, people. Better move now.

Of course there will be doubts. How many new companies are in the space? How many daily deals do we all need anyway? Using Andy Dufresne’s wisdom once again, the whole theory of operating a startup is based on the hope that you will succeed. But if you don’t succeed, then fail fast. Go hard, but if it isn’t working, cut it off and move on to something new. Failing fast is easier now that the capital raised is not as significant and there aren’t layers and layers of VCs to deal with. 

We should not mock those who try and fail. It is too Canadian to be afraid of failure. By failing fast and moving on, we create new opportunities and the stench of failure doesn’t linger. There is no doubt that the current mania will result in many, many failures. And investors will lose some money. But they won’t be as grumpy as last time because you did them a favour and got busy dying.

Brent Holliday heads the technology practice for Capital West Partners, a Vancouver-based investment bank.