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