Why SUVs deserve no love

Which would Ms. T choose?

Whether you’re talking about making, fueling, or maintaining, sport utility vehicles (SUVs) spew at least 50% more carbon than cars. This is comparing apples to apples, i.e. compact SUVs vs compact cars, midsize SUVs vs midsize cars, full size SUVs vs full size cars.

Let’s start where the rubber meets the road. A tire is a tire is a tire, right? Wrong. Drive a heavier vehicle and you need a (much) heavier tire. SUVs weigh more than cars. Compact SUVs weigh over 20% more than compact cars, full-size SUVs weigh over 40% more than full-size cars. To carry the extra mass, SUV tires weigh about twice as much as car tires.

Then there’s the carbon produced when you operate the vehicle.

To get you to your destination SUVs typically burn twice as much gas as a car. It takes more energy to move all that mass around. If SUV gas tanks were the same size as car gas tanks SUV drivers would have to fill up twice a week, instead of once a week as is typical for car drivers. And so people are fooled into thinking SUV mileage is kinda sorta comparable to car mileage. However, burn more gas, generate more carbon. Burn twice as much gas, generate twice as much carbon. Nature cannot be fooled.

Which brings us to maintenance, and back to tires. The greater weight of SUVs also means they wear out tires faster than cars. A typical SUV wears out a set of tires in less than half the time it takes a car to wear out its set of tires. Those heavier SUV replacement tires generate twice as much carbon in the manufacturing process too.

It all adds up, The carbon footprint of SUVs is much bigger. And so, they deserve no love.

The sound of change

In 2016, two thirds of what the world spent on new electricity generators went to renewable energy instead of coal, natural gas and nuclear power plants.

Why? Part of the answer is that innovation and economies of scale are driving down the costs of solar and wind tech. So renewables are now the cheapest option even without subsidies.

This has pushed us over another tipping point – the FUD factor. That is fear, uncertainty and doubt. Pension funds underwrite most electricity developments. The fund managers who make the investment decisions are very sensitive to risk. The one thing fund managers fear more than anything is that an investment they make doesn’t pay back what they thought it would. Any uncertainty in terms of payback leads to a lot of doubt. The FUD factor forces fund managers to lean towards the projects that are the cheapest. Now renewables are the cheapest solution.


Fear Uncertainty and Doubt play a huge role in financial decisions – photo credit iStock.

So now, pension fund managers view coal and natural gas as the highest-risk second choice. It has nothing to do with climate concerns. Nor is there any consideration given to respiratory health. All of those risks are secondary to the financial risk. Renewables are now the least expensive, which makes renewables the lowest risk. And there is a huge amount of pension fund capital that managers are looking to invest.

Do these numbers only work in places like India and China and Chile, where labor and lives are cheap and they have hand-me-down coal fired tech that it is not state of the art? No.
Even in high-labor-cost Canada, in the Albertan heart of coal-fired electricity, renewables are now the cheapest solution according to the Wall Street Journal.

“An auction in Alberta in December (2017) awarded four wind contracts for an average of $37 a megawatt hour, subsidy-free.” Big deal, except that the report goes on to say that “the Albertan government planned to award contracts for only 400 megawatts, but bumped it up to 600 megawatts when it saw the prices offered, which were below the average price for electricity on the province’s grid in 2018.”

That muffled thud you hear is the sound of change. It’s the sound of the financial FUD factor kicking coal out and renewables in.

Time to change strategy: the focus on evidence of climate change fuels apathy

Time for a new perspective on climate change.

Time for a new perspective on climate change.

The world owes Tyler Hamilton a huge thank you. He reports on the good news on climate change. Do you scoff that it doesn’t matter? You’re in good company — many feel like you. It’s why I believe that the strategy of reasoning with deniers is a failure.

The web is full of images that document the retreat of glaciers around the world. Even tech geek sites like sploid-gizmodo show these photos. It’s powerful proof of climate change. But does this motivate people to change their behavior?

People Who Want to Cut GHGs Are Demotivated by Powerful Evidence of Climate Change.

In the comments on the Gizmodo photo essay on glacial retreat, Jesus Diaz wrote: “I watched Chasing Ice on Netflix a few days ago (about a large scale photography project to document this stuff) and it was so damn depressing.”

Mr. Diaz’ response is normal. When you get a steady diet of really bad news it depresses you. What mental state follows depression? Apathy. That’s when you lack emotion, interest and concern.

Powerful Evidence of Climate Change Hardens the Resistance of Deniers

NASA’s web sites have arguably the best photo evidence of glacial retreat all over the planet. It still wasn’t enough to convince deniers. They commented that the photos meant nothing, only showed variation from winter to summer. NASA did more research. It documented the time of year the mages were captured at. I’m sure you’ll be shocked to learn that the photos were in fact taken at the same time of year, decades apart. NASA added this information to the photos on the web site. Pretty air tight, no?

Deniers in the U.S. House of Representatives responded by cutting NASA’s earth science budget.

Although the majority accept that climate change is happening they believe they can’t scrape together the money to live cleaner when they can barely make rent and put food on the table.

A New Approach is Needed

That’s why Hamilton’s stories are so important. He has consistently covered the evidence of progress toward solutions for climate change. In a recent Toronto Star article Hamilton wrote that Obama, when he refused the Keystone XL pipeline, said that “the transition to a clean energy economy… is… going more quickly than many anticipated.”

Mr. Hamilton needs to explain why Obama said that, instead of devoting most of the article to an attack on the International Energy Agency (IEA). Pointing out that the IEA has a history of underestimating how fast the world will move to renewables reinforces the “it’s hopeless” perspective.

So, why did Obama say the U.S. is changing toward renewables faster than expected?

Solar Electricity Costs Reach Grid Parity in 2016 in Most U.S. States

Blue lines above the zero line are states where electricity is cheaper to generate from solar cells than coal.

Blue bars above the zero line are US States where, in 2016, electricity will be cheaper to generate from solar cells than from coal.

Grid parity is when the cost of generating electricity from solar cells is as low as the cost of generating it from the cheapest fossil fuel, coal.

This year electricity from solar is cheaper than coal in 10 US States. By the end of 2016 Bloomberg reports that electricity from solar will be cheaper than coal in most US States.

It’s also vital to remind people of what a game changer solar electricity is. For years the big fear of most people was that the only way to cut greenhouse gas emissions was to live like a cave man. It seemed like the only way for the average person to cut their carbon footprint was to turn off their furnace and air conditioner and starve. If that seems extreme, consider this: GDP growth and oil consumption move in lock step for decades.

The fear of getting poorer is what has paralyzed public action.

We Can Have Our Cake and Eat it Too

But there is big change happening here too. The International Energy Agency states that “the global economy grew by around 3% in 2014 but energy-related carbon dioxide (CO2) emissions stayed flat, the first time in at least 40 years that such an outcome has occurred.

I would go further: 2014 is the first year of growth without more CO2 emissions, ever.

Think: more prosperity without more carbon dioxide.

Economies of scale will increase. So we will soon have more prosperity with less carbon dioxide.

If you own stocks in oil companies, sell them now while they’re still worth something. I have.

What Happens When Unlimited Clean Power Is Free?

Everybody is cool when mashing plastic moles.

People all over the world really like to hammer rascally plastic rodents with a mallet. The Japanese call it Mogura Taiji, we call it Whack-a-Mole. Both were invented in the mid-1970s by two different inventors unknown to each other tinkering away half a world apart. Since then we have found a dark side to all this mole mashing mayhem. “Whack a mole” is now a figure of speech for futility.

It’s all James Watt’s fault. When he fixed the steam engine in the mid-1700s, far more energy could be extracted from every lump of coal. Since there was a lot of coal industrial quantities of energy became available at bargain prices. That combination powered the industrial revolution. It set off a global whack a mole game of higher and higher stakes.

  • The industrial revolution made quality goods available to all – but it over crowded cities and spawned epidemics.
  • Public sanitation and transit helped us spread out and ease disease – but horse-drawn buses, trams and taxis buried cities in manure.
  • As manure mounted electricity and oil matured in the nick of time to power public transit and new-fangled private cars – but their fumes poisoned the air.
  • Emission controls cut poisons spewed by each vehicle and chimney – but global growth wiped out the gains.

And no emission control can cut carbon dioxide. It goes with burning a tank of gas the way a hangover  goes with the wild party the night before.

Today the stakes have never been higher.  It’s do or die. There is an undeniable connection between plentiful cheap energy and rising living standards. There is an undeniable connection between all that energy and the droughts, starvation and killer storms that are already scourging the face of the earth. Both climate change deniers and climate change believers are gripped by fear… fear of losing what they have, or fear of what their children will lose.

It’s a stalemate. Many fear this round of whack-a-mole can’t be won. Hopelessness is rampant.

What if both sides are wrong? What if there is a third way?

Solar PV is on par with fossil fueled electricity.


Price per watt. Many thanks to Ramez Naam for the data on solar electricity price trends. If you think electricity from solar cells is crazy expensive think again.

  • Today, electricity from solar is cheaper than that from natural gas in sunny parts of the world, without subsidies.
  • In five years, electricity from solar panels will be cheaper than burning coal.

Why is this happening? We are seeing steady improvements in materials and manufacturing technique. As a result, the cost per watt from a solar cell has dropped 80% in the past 5 years. That price plummet shows no signs of stopping.

Solar energy supply. The supply of solar power is pretty much limitless. In under 15 seconds the sun provides as much energy as humanity uses in an entire day. In less than 2 days the sun sends us as much energy as we use in a year. In less than five days the sun beams as much energy to the Earth’s surface as exists in all reserves of oil, coal and natural gas. Astronomers estimate it will be 5 billion years before the sun exhausts its fuel.

Source: European Photovoltaic Industry Association

Installed solar cells. The chart shows the installed base is doubling every 2-3 years. At this rate, in 20 years electricity from solar cells will provide all our energy needs.

And then the real benefits kick in. Unlike oil and coal, which you have to keep paying for every time you fill up, the cost to use electricity from sunlight is zero. Are there signs that we are well on the way to this future? Yes:

The third way is not only possible, it’s here. Solar is cheaper than oil where it’s sunny. In less than 5 years solar will be cheaper than coal, the cheapest fossil fuel, throughout the world. We are on our way to a world where we have the energy we need to keep raising living standards without the nasty side effects.


Modern humans appeared on Earth about 200,000 years ago. Not much changed for a very, very long time. Since Watt changed the game we have seen more change in the past 300 years than in the preceding 199,700 years of human existence.

Our inner world has not changed. A belief in scarcity is bred in our bones. Our cells still crave fat because famine has always followed feast, for millennia. Belief in scarcity is burned into our brains. Our thinking patterns continue to overvalue what we have and undervalue alternatives… even when those are clearly better.

Now that true abundance is within our grasp, can we let our belief in scarcity go?



It’s Time To Burn Down The Tech Incubators and Start Again

Wattpad is an amazing success story with a shocking secret. Company founders Allen Lau and Ivan Yuen never made use of any incubator services or funding.

Lau told a Toronto Startup Grind audience that he and Yuen began work on the Wattpad e-reading app in 2002 funded with their own money. By 2006 there was little traction. They formed an internet ad company to pay the bills and put Wattpad on the back burner. In 2008 they sold the ad company and used the profits to restart Wattpad. It wasn’t until 2010 that Wattpad raised its first round of external investment. An Angel wrote a check for $600k.

Wattpad was in gestation for 8 years before its first funding round.

Founders prep for their Y Combinator intake interviews. Many imitators have coped Silicon Valley's Y Combinator. That model, says Steve Blank, needs to be adapted to work in other geos.

Founders prep for their intake interviews at Silicon Valley’s Y Combinator. Many have imitated this incubator, expecting a slew of successful companies. That model, Steve Blank now says, only works in Silicon Valley.

Oops. In the Y Combinator model that inspires many incubators the first funding round is coincident with the exit from the incubator, about 3 months after entering. One quarter of intensive development under the watchful eyes of experienced advisors is thought to be enough to get decent ideas funded. Is Paul Graham wrong?

No. Y Combinator works in the Valley ecosystem. But the Valley is unlike pretty much everywhere else. Steve Blank blogged about this.

A big shout out to Rick Spence. Rick wrote to Blank and suggested that Canadian communities needed to crowdsource their own playbooks. Develop strategies to adapt the Lean Startup model to the peculiarities of the Canadian context. Blank thought it was a great idea.

And so, after Lau finished his fireside chat, Spence took the floor. He facilitated the world’s first crowd sourcing session for a local Lean Startup playbook.

A second big shout out to Mark Bailey at Jobhubble, who shared his financing story. When Bailey started approaching Angels and VCs he had already developed an MVP for his HR recruiting app with love money. When he talked to Valley investors they told him “we don’t care if 95 out of 100 of our deals crater as long as we find the 5% that don’t.” But GTA investors told Bailey that they were proud that 95% of their investments hadn’t gone bankrupt.

It points to fundamental differences in approach, and expectations about outcomes.

For the incubator model to deliver the results in the GTA, the Toronto community must make some changes:

  • Play to win. Stop playing not to lose.
  • The world is awash in cash. Invest from abundance, not scarcity.

Silicon Valley angels and VCs know that huge home runs are very improbable but believe they are worth the risk. To increase the odds that they will hit monster home runs they make larger investments in early-stage companies than others are comfortable with.

Incubators also need to adjust their approach. Lau believes that with Toronto-area incubators “it’s harder to get in if your product doesn’t work.” This is the opposite of the YCombinator approach. In my experience, YC believes that a working MVP is what you exit the program with.

Weak Performance of Golden Horseshoe Startups. It’s Not What You Think

When Jordan Levy demanded that Toronto Startup Grinders explain why the track record of success for Toronto startups is so dismal he touched a nerve. There was a lot of passion but typical answers: too much regulation, too high taxes, ignorant investors, etc. Levy sees a different problem. He claims there is a soft skills gap. Is he right?

Expectations are good; expecting to get there in one go might be expecting too much.

Low expectations plus low promotion… the spray-and-pray strategy.

It’s hard not to like Levy even when he’s giving you a slap upside the head. Sure, he’s cocky and abrasive but he’s smart, experienced and is the first to poke fun at himself. He told this story. People were thinking up a name to brand Buffalo’s push to become a tech hub. Like Silicon Valley, only different. Levy, who is from Buffalo, proposed Silicon Snowbank.

My experience with startups goes back to the early 90s. I’ve been twice a principal and twice a spear carrier. In between there was a middle management role with a turnaround of a Toronto tech company, which included me advising startups that wanted to work with us. In that up-close-and-personal journey I’ve seen chronic structural challenges.

Canada is the biggest capital market for resource extraction but that scales poorly to the tech industry. The basics of mining don’t change much whether it’s a gold, rare earths, oil and gas, whatever. But that’s not true of tech. Look at computer graphics. In this small slice of ICT there are enormous opportunities in hardware and in software. Unlike mining, new tech changes the basics of each of these industries all the time – and the opportunities are where the changes are.

Valley investors aren’t smarter. High deal flow drives deeper insight.

Then there’s sales and distribution. It’s a particular challenge when your product or service is sold into enterprise-scale customers. The up-front investment makes it a big risk. It’s an especially big issue for Canadian startups. Our market is too small to achieve critical mass at home. From Day One we have to compete on the global stage. In hockey terms, our first match is game 7 of the Stanley Cup final and our side is a teenage AAA team.

But Levy claims there is a hidden, deeper problem. He compares Israel to the Golden Horseshoe and sees many similarities. Starting from a tiny base in the early 1990s Israel VCs last year invested 5 times as much in startups as Golden Horseshoe investors did. And Israel has grown a long list of companies to global scale.

Levy argues that Toronto’s problem is in soft skills.

Expectations. Levy says that growing up Jewish he knew he had to go to university and get a high-paying job. In business terms, US investors expect tech startups to grow to enterprise scale. And, that they need to invest alot to get there.

What is the Canadian expectation of early-stage companies? “Poor returns on investment, leading to a lack of investor confidence.” What Levy is saying is that people who think this way have it backwards. You get poor returns because you expect poor returns.

Promotion. Levy asked “Why doesn’t Stephen Harper regularly tour the Valley with Toronto tech companies and promote the GTA? Wynn won’t cut it. Nobody knows who she is.” I explained that Toronto voted Liberal and NDP in the last election, so the Prime Minister ignores Toronto. Levy looked shocked, started to talk, then stopped. For just that once, I stumped him. But what could he say, given the state of US politics?

Do Canadian Startups Call it Quits Too Early?

The path to success is anything but straight.

The path to success is anything but straight.

“Most overnight successes take a long time. And in most cases it’s not this big vision from the beginning it’s just an evolution of the idea,” said angel investor Ariel Poler to the Startup Grind Toronto gathering on July 9.

When it comes to deals, Poler is in a position to know. Out of more than 20,000 investors tracked by Cdling in terms of network and capital employed, Poler is ranked number 16. And with characteristic humility, Poler talked of his own experience with Odeo. It eventually led to Twitter, but only after the founder and the board gave up on it.

Odeo raised $5m from angels to develop a business around podcasting. To put that $5m angel round in perspective, that’s nearly 20% of total 2013 ICT angel investment in Canada, according to the National Angel Capital Organization. Median angel deal sizes range from $135,000 in eastern Canada, to $215,000 in central Canada.

Back to Odeo and Poler, who says “I thought podcasting was really great. I reached out to Evan Williams when he was doing Odeo, and we worked together on it.”

There was just one little problem. Podcasting began looking like a dead end. “Evan was the founder and CEO, and was about to get married, he was not having a good time. He came to the board and said ‘I don’t want to do this anymore.’

“So the board decided to sell the company. ‘We have a company that doesn’t have traction with a founder-CEO who doesn’t want to move forward.’ Evan agreed.”

Poler and the other board members knew it would be a struggle to find a buyer, but believed there was solid value there. “Odeo had raised $5m, 3 was still in the bank.” And Odeo had a promising project.

“A little before then, because podcasting wasn’t doing so well, Evan had asked the team to come up with other ideas. Twitter had come up.

“We thought at the very most we could get $10m for the whole thing (Odeo) if we were lucky.” They were dead wrong. “Nobody would buy Odeo even with Twitter. Nobody would take it for free. No takers at any price.”

It’s pretty extraordinary that a founder feels he can tell his board that his fire has gone out. The board’s response was also pretty extraordinary. And even when the founder’s lost passion rendered worthless the millions invested, the board was still willing to deal.

At the board meeting to decide what to do, Williams announced that he had a new passion, Poler says. “What he did want to do was an incubator. ‘So I’m (Williams) going to buy everyone out and I’m going to start an incubator called Obvious. Twitter will be the first project inside the incubator. Jack Dorsey, the person who had the idea, is going to run it.’”

While Poler didn’t say what buyout terms Williams offered, the board accepted.

Williams might have been in a stronger position than some first-time founders. Before Williams started Odeo he co-founded Pyra, a blogging software company. He sold that to Google for an undisclosed sum.

Still, more time passed before Twitter took wing. “Twitter was just one of the projects inside Obvious,” says Poler. “It was 3-6 months before Twitter started to get some traction. And then it was still more time before it became obvious that this is huge, and they should get rid of the other incubator projects and just focus on Twitter.

Since this sequence of events is the norm, what do we have to do to ensure that it happens regularly in Vancouver, Montreal, Toronto, and Halifax?

Should Canadian Startups Move to Silicon Valley?

Does a Silicon Valley insider think it’s best to relocate to the Bay Area? Not always, says Ariel Poler.

Poler, one of the most connected and prolific Angel investors in the world, was Michael Cayley’s virtual fireside chat guest at Startup Grind Toronto’s July 9 event. A big thank you to Pivotal Labs for providing the space. Pivotal’s leadership in agile development of highly-scalable mobile and web software was evident in the superb meeting room.

“Re-locating to San Francisco could be the wrong thing if you don’t have your core team,” says Poler. “I’ve seen single entrepreneurs who come here and try to build a team from scratch and that’s really tough.”

Silivon Valley talent competition is so ferocious it can stall startups.

Only start ups that have the core team in place, should move to Silicon Valley.

Says Poler, “some companies might be better off moving here, but not right away.”

To illustrate, Poler points to StumbleUpon. “Their product was getting traction, they had 100s of 1,000s of users. The product demoed really well. The business model was clear.” Not only was the core team was in place, “the team was ready to move.”

If you’re at that point, dithering over the move can be deadly.

You get a strong sense of just how intimate Poler expects the connection between himself and entrepreneurs he backs will be. “As an investor, I only deal with entrepreneurs I’d have dinner with… It’s difficult for me to add value for remote workers. And I don’t like airplanes and long telephone calls.”

And one last point. Poler encourages people to be skeptics when it comes to myths propagated and promoted by the tech press. One popular notion, is that when you have an opportunity that could be huge, speed is of the essence to capture it. Poler disagrees.

“Speed is over rated,” says Poler, “it’s more important to be going in the right direction. I’m not sure I’ve seen a startup that failed by going too slow.”

Why Can’t Canada Have A Facebook-Scale Going Public Event?

Big IPO valuations don’t sneak up on small companies.

The idea that any startup could IPO valued at a $100 billion was ludicrous, until Facebook. Several other IPOs and buyouts followed at similar eye-watering valuations. Skeptics, and I started out in this camp, see these events as symptoms of a dangerous bubble.

Then you hear Jos Schmitt, CEO of Aequitas, make a sound argument for Facebook’s extraordinary valuation.

Even more surprising, Schmitt makes a compelling case for why Canadian startups are chronically undervalued, and how to change that.

Schmitt was Michael Cayely’s guest for an April 14 2014, Startup Grind Toronto fireside chat. Once again Willdeboer Dellelce hosted in fine style. The Toronto-based law firm is a specialist in startups.

Schmitt has a unique perspective. His bio says “25 years of experience in the financial services industry with expertise in market infrastructure, across asset classes and across geographies.”

In concrete terms, Schmitt knows stocks, bonds, and other interest-paying investments. He has developed deep insight into why people trade them, how the trading markets work and what tools they use to do it – wherever in the world that people trade.

In June of 2013 Schmitt took on the role of CEO of Aequitas, a company dedicated to creating a new Canadian stock exchange. More importantly, Aequitas is creating a new platform for trading private securities focused on improving the liquidity of small- and mid-cap companies.

Ask Schmitt what holds back Canadian tech startups and he acknowledges the usual suspects. Talent-finance-revenue are indeed problems, well documented by IT Business Canada in its ongoing coverage of PWCs annual Report on Emerging Canadian Technology Companies.

But Schmitt sees a systemic root cause. “The ecosystem is not working well. It’s not a lack of smart people, good education or people with good ideas. We don’t lack capital in Canada. There’s a lot of it. It’s that it keeps going to other places and not into the world of entrepreneurs.”

Schmitt says there are two important gaps for small- and mid-cap companies. The gaps are in mentoring and liquidity.

“There is still a lack of mentorship, people helping entrepreneurs to find their way in a world which is quite complex. It’s great to be a champion in a certain area (of tech). But how do you fund it? How do you take it to market? How do you develop a distribution channel? How do you acquire clients? How do you manage a company? Lots of items of that type are still missing.”

Schmitt believes there are now a lot of initiatives to address the mentorship gap. Time and persistent execution should close the mentorship gap.

Lack of liquidity, says Schmitt, is still a problem. “There is an enormous funding gap as soon as you get above $2m to $3m. To look at companies in a simple way, you have starting it, building it and growing it. ‘Starting’ is when you define it. ‘Building’ is when you really develop your product and find your first clients. Once you get to ‘grow it’ there is no money in Canada.”

This stunts the growth of companies. That harms entrepreneurs and employees. Governments fail to get a decent return from their investments in education and early-stage tech company supports. It hurts the Canadian economy as a whole.

So, says Schmitt, entrepreneurs are faced with three alternatives. Many choose to “exit very early. Yes, you get a little bit of money out of it. But you miss the enormous opportunity to build a really great company. With all the opportunities it could represent for you as a founder and also for the entire economy in Canada and for employment.

“The second alternative is that people just go to the US and find an investor there. The ecosystem there is much better.” An extreme example is Facebook. Instead of jumping from Series B to IPO, Facebook traded on private markets, and maintained focus and control while building up its valuation.

“The third one (alternative) is that people go public far too early in their life cycle. You should still be focused on growing. Developing your business. Making sure your products are working well.”

When you go public too early, “suddenly you’re exposed to a world where you face quarterly results, enormous reporting needs.”

Companies pay penalties in both the short and long term. Publicly listed small- and mid-caps, says Schmitt, “are probably spending 20% – 30% of their time and cash (on reporting), which is enormous.” If such companies could trade on private markets these costs would plummet to just “a few percentage points.”

In the long term, “you are publicly traded and you don’t have that many investors who are that interested in you,” says Schmitt. “You become a company that trades 500,000 shares a week. No liquidity. No liquidity becomes an orphan company. You need funding afterwards, people will say ‘wait a minute – this is not a liquid company, I’m going to want a discount.’ ”

How does your experience compare with the picture painted by Jos Schmitt?

CTO’s Ambivalent Attitude To Tech Works Awfully Well

“It’s a little weird but I have an ambivalent attitude about tech.”

Deciding to build your cool new tech with immature tools can lead to problems.

Deciding to build your cool new tech with immature tools can lead to self-inflicted wounds.

This was one of several surprising insights from Bohdan Zabawskyj, serial startup CTO. He was Michael Cayley’s guest for a March 27 2014 Startup Grind Toronto fireside chat. Willdeboer Dellelce and Shopify – both startups once upon a time – sponsored.

Zabawskyj deflects praise. “I characterize myself as an entrepreneur helper, I’ve never made the leap and started a company on my own.” But his track record as serial CTO speaks for itself. He played a key role in shaping the success of Clearnet, Rypple and Redknee. He’s at it again with Mercatus. And he still finds time to advise half a dozen more startups.

So how does Zabawskyj employ his tech ambivalence? In his experience, a high level of risk is inherent in a startup. So, “if you’re trying something new, stay away from the bleeding edge.”

Startups need to build, test and iterate on the core value generator ideas as fast and often as possible. It’s an inherently high-risk activity. Why add to the risk by using new development tools? It makes finding talent, which is already hard, much harder. Mature software development tools come with much larger communities of experienced developers startups can draw on.

“I’ve never seen perfect technology, architecture or code,” says Zabawskyj. “Chances are you’ll re-code half a dozen times before you achieve product-market fit.” It’s key insight into how he manages the tension within the Agile methodology. Re-writing code to improve functionality or boost performance is not waste. It’s refactoring.

Another lesson Zabawskyj learned in the startup grind is deep respect for soft skills. “I often think the ‘T’ in CTO stands for ‘therapy.’ A lot of it (the CTO role) is human and process issues. How to find people and build culture.”

Zabawskyj warned Startup Grind-ers to build their plan around the strengths of their people, and to protect them from their weaknesses. For example, there’s one of the biggest headaches of software development: scheduling. Even among the best coders, their ability to predict how long it will take is limited. “Human estimation falls apart after two to three days,” says Zabawskyj.

In a follow up interview I asked Zabawskyj to reflect on his career in light of the Fraser Institute’s recent proposal to replace lost Ontario manufacturing jobs with resource extraction jobs.

The Huffington Post challenged the Institute’s claim that that solution is “to unleash [Ontario’s] private sector on its northern resource frontier.” The Post notes that 5,100 jobs might be created by one of the Ring of Fire mining projects 500 km northeast of Thunder Bay. And those jobs are “two per cent of the 255,000 jobs lost in Ontario manufacturing in the decade between 2002 and 2012.”

Because tech tends to create more employment and value from less capital, Zabawskyj sees tech as a better job creating strategy.

He said that when Salesforce.com bought Rypple it was valued at about $60 million. That’s more than four times the $14 million in capital invested by Angels and VCs.

At a capital cost of $2.25 billion for the Ring of Fire chromite mining project, each job it creates will need $440,000 of capital. That, Zabawskyj notes, “is a pretty big angel investment round for a startup”.

“Look at Redknee. It was started with a $70,000 investment by the four founders. It’s now valued at north of $500 million and employed 500 people worldwide when I left in 2010, half of those in Canada.”

The value tends to stay in Canada. Even when Canadian tech companies are acquired, the jobs tend to stay here. So do the taxes paid by these employees. The main market for the chromite mined in the Ring of Fire is Chinese steel mills.

And tech is creating far more opportunity than existed when Zabawskyj was a newly-graduated engineer just a few decades ago. “Back then the only choices available were telecom, manufacturing and resources. If you wanted to do something interesting you had to leave. That’s not the case anymore.”