Canada is an increasingly barren landscape for building technology companies, telecommunication billionaire Sir Terence Matthews warned this week.
He clearly wasn't describing the state of his own garden - the 30 companies in various stages of development where Sir Terence acts as co-founder, mentor, and venture capitalist.
"My ecosystem is different because I'm pretty much able to fund it myself," he pointed out in an interview.
Indeed, Sir Terence's financing and mentorship have seeded a network of companies that, at a time of soul-searching about our high-tech future, offer a model of how to build winners and create serial entrepreneurs.
In his ecosystem, the delicate flowers are the startup companies that he is constantly creating in league with recent university grads who are poorly paid but given large equity stakes. These startups are nurtured by his more seasoned telecom suppliers, Ottawa-based Mitel Networks Corp. and March Networks Corp., which provide marketing channels and connections.
Each year, Sir Terence hand-picks about a dozen bright graduates from selected technology-oriented universities - in Europe, Canada and the United States - where he relies on campus informants to pinpoint promising candidates.
He woos them with a laughable starting salary of about $25,000, but a large minority stake, possibly more than 10 per cent each, in a new company, for which Sir Terence's venture capital arm, Wesley Clover, provides funding up to $1.5-million for the first few years. Sir Terence pays for the recruits' apartments for the first six months, underwrites food bills, and gives them a car. Then he gives them a lot of room to sink or swim.
He guides each team of typically three or four grads toward a new technology, which occupies a "white space" where there is little competition and a growth opportunity with a targeted customer segment. "We don't have them conduct speculative R&D in an ivory tower, that they then go out and try to sell. We plug them immediately into customers," he said.
His startups go through mergers, initial public offerings and technology transfers among members of the family. Some evolve from startup to up-and-comer, such as Bridgewater Systems Corp. or DragonWave Inc. Some become a Mitel or Newbridge Networks, the telecom equipment company Sir Terence sold to Alcatel for $7-billion (U.S.) in 2000.
The 65-year-old Sir Terence estimates he has been involved in 80 startups since co-founding Mitel in 1972 - and only two have bitten the dust.
Long hours, a paltry $24,000 salary, are worth it for a stake
Ronald Richardson had the world by the tail when, at 24, he graduated last year with a coveted software engineering degree from the University of Waterloo. As recruiters from icons like Microsoft, Google and RIM swarmed around, one headhunter came up with a $100,000 pay package complete with an overseas posting.
Mr. Richardson turned it down in favour of a measly $24,000.
It sounds like an act of a deranged person, but Mr. Richardson's faculties are far from impaired. He traded a generous employee's salary for a chance to ride on an entrepreneurial growth machine - and to work with a force of nature named Sir Terence Matthews.
Ten months later, Mr. Richardson, along with two other newly minted Waterloo grads, is working round-the-clock as a large minority stakeholder in a high-tech Ottawa startup called Benbria Corp.
"There are no hours-worked-per-week because the weeks kind of blend together," Mr. Richardson laughs.
The not-so-silent partner is Sir Terence, who provides space in the Ottawa offices of Wesley Clover, his venture capital company, which is physically connected to Mitel Networks Corp., "the mother ship" of his corporate constellation.
Benbria's business is automated systems that broadcast emergency messages, and the market is schools and other institutions. A slightly older startup, Isca Networks, whose home base is in Sir Terence's native Wales, has zeroed in on smart interactive touch-tone kiosks to guide shoppers through a complex array of retail options.
Isca is about to launch consumer trials in the United States, says Joanne Coates, 23, one of Isca's six partners, who was plucked last year out of the University of Wales Swansea - Sir Terence's alma mater - where she earned a marketing degree.
"We have a lot of control, we have a lot of input and we never know what we are doing from one day to the next," says Ms. Coates, whose duties including running Isca's office in the Ottawa suburb of Kanata.
It is up to team members to figure out how hard they work and how much salary they ultimately draw. Although the starting pay at Benbria is $24,000, Mr. Richardson and his partners decide on progressive levels of compensation. "You figure out what you need, because every dollar you pull is a dollar out of your own pocket," he says.
The three partners collectively own just under 50 per cent, while Sir Terence and Wesley Clover hold the rest. But as the company grows, and goes through new rounds of financing, everyone's interest will be diluted.
But the partners could get very rich in the process, Sir Terence says. He says he has made a lot of people wealthy, including early Mitel investors and those who joined Newbridge Networks Corp. as a startup in 1986, 14 years before it was sold.
Sir Terence says his role is that of mentor and guide, not someone who will carry the new companies on his back. As a result, he looks for people with a certain fearlessness. He tries to teach his protégés the art of selling themselves to customers and venture capitalists. "There is a show on, and they have to be good enough to take centre stage."
He says venture capitalists are most demanding because "they want to know if you're confident." Their attitude, he says, is: "Don't you come to me if you want my cash and be weak. Don't you dare come to me and be weak, or you'll be ripped to rat shit."
The young entrepreneurs say the insights from Sir Terence are one of the big pluses of the ecosystem. So is the ability to tap into Mitel's network. "We're right in the Mitel wave," says Ms. Coates, explaining that the connection provides Isca with access to customers and gives Mitel a potential new product on its platform.
But what happens if the ventures don't work out? Sir Terence says he expects two of his 30 companies may disappear this year, but it will be the individual teams' decisions on whether to pull the plug. And he has five new ventures waiting in the wings.
Whether or not Benbria makes it, Mr. Richardson believes he is on a path to a lifetime of entrepreneurial ventures. "The art of doing it, and the process, is something that I will keep with me," he says