“We’re rooting for BlackBerry”
Iain Klugman, the CEO of the Waterloo-based incubator Communitech, bears a striking resemblance to the Jean-Luc Picard figurine on his desk. Klugman’s buzzing incubator, with its 120 start-ups, occupies 44,000 square feet in a former tannery. He knows just about everyone on the scene, including Litt, and he points out some aspects of Litt’s story that make him typical of this generation. “He had other employment options,” says Klugman. “He’s also one of six Waterloo-area entrepreneurs in the last three years to get into Y Combinator and come back with solid funding and a new, more global perspective.” (They include Stephen Lake, a fresh-faced 23-year-old whose Thalmic Labs recently raised $14.5 million to make the MYO armband, which helps users control almost anything remotely; and Mike McCauley, who last year sold Bufferbox—which allows customers to ship their courier deliveries to secure boxes in public places—to Google for a reported $17 million.)
There is something else that makes Litt typical of area entrepreneurs: He once worked at RIM, developing tools for small and mid-sized businesses. “We’re rooting for BlackBerry, of course,” says Klugman, whose building is jammed with RIM vets. “And we’re seeing a huge infusion of talent from it into the local community.”
For a long time, Klugman continues, when people thought of Waterloo, they thought of RIM and maybe OpenText. “But in 2013 alone, we’ll have had 520 companies start up here. They’re drawing investors, getting traction. There’s a generation of founders, aged mainly from 23 to 35, who are exciting; they remind many people of the founders of the big tech businesses that grew up here in the last generation.”
The University of Waterloo’s internationally renowned, co-op-driven engineering program, with its emphasis on entrepreneurship, also has a lot to do with the start-up boom here. That, and the influence of renowned economics professor Larry Smith, whom I met for a drink at the pub attached to the tannery. “I am an adjunct professor, by choice,” says Smith. “How can I tell these kids to go out and risk everything if I have a cushy tenured position? I tell all of them they need to be entrepreneurial, even as employees.”
Smith’s TED talk on entrepreneurship (“Why You Will Fail to Have a Great Career”) has been viewed more than 2.5 million times, and many of his 20,000 former students have gone on to apply his precepts as entrepreneurs. (He famously mentored Mike Lazaridis when the RIM co-founder was at Waterloo.) “Suddenly, everyone’s enthusiastic about entrepreneurship, but it’s not new,” this precise-to-the-point-of-fussy man says. “I’m a farm kid from the Ottawa Valley—all the farmers, my uncles, they were all entrepreneurs. Entrepreneurship is all about, in simple terms, freedom.”
Get ’em while they’re young
If the Valley has its PG and Waterloo has Larry Smith, Toronto has Reza Satchu, founder of the Next 36 program, which is run partly out of the innovation palace that is the MaRS Discovery District (a pioneer in public-private tech commercialization created in 2005). Satchu and his brother—whose Ismaili family moved to Canada from Kenya when they were kids—built a supply-chain software company, backed by heavyweights like KKR, Onex and Sequoia, that was bought for nearly $1 billion in 1999. Since then, the Harvard Business School grad (and onetime U of T entrepreneurship prof) has spent his time searching for investments for his Alignvest Capital Management and helping to run the Next 36.
When I mention the similarities be-
tween his program and Y Combinator,
with its 3% admission rate, Satchu bristles: “Ours is 4%—of the nearly 1,000 applicants from across the country, we admit, well, 36. So it’s almost as selective.”
The nine-month program, geared to undergrads, feels a bit like a reality show. Participants work in teams of three to create and refine a business plan, with help from mentors and patrons like W. Galen Weston and Paul Desmarais Sr. After working remotely for six months, they all bunk together for another three at U of T. Tempers can fray—including Satchu’s, whose tongue-lashings are infamous among survivors of the program.
Why so much competition for these slightly sadistic boot camps? “For this generation, being an entrepreneur has gone from a slightly disreputable, second-tier choice to people’s top career choice,” says Satchu, who spent 12 years at New York private equity firm Fenway Partners. “Of course, there are also so few real jobs with benefits and prospects of advancement. But people in this program have other options. They’re kids with some moxie, some work ethic. They’re in it because they want to build something themselves.”