Monday, December 16, 2013

Leamington`s challenge: bouncing back despite low educational attainment

There have been a lot of plant closures announced lately, including several in the food processing sector, which municipalities across Southwestern Ontario promote as one of their strengths.

Leamington was particularly hard hit by news that Heinz is shutting down its plant there, where it is both the largest employer and taxpayer. Although there are many places in Ontario that have more people working in the food processing/manufacturing sector, Leamington has—by far— the highest concentration of those workers (NHS 2011) and Heinz was the foundation of the local industry.

Leamington is also notable for having Ontario's lowest percentage of residents with any university or college degree, diploma or certificate, at least among the more populated parts of the province. And, again, it's by a noticeably wide margin:

(On the chart, "SSPerth" is the combined Stratford-St. Marys-Perth County area, "Big26" is the 26 most populated municipalities in Ontario, "SWO" is Southwestern Ontario, from Wellington County west, not including the Hamilton-Niagara region, "SCOR" is the South Central Ontario Region, comprised of Norfolk, Brant, Oxford, Middlesex and Elgin, "NotTorontoCMA" is all of Ontario outside of the Toronto CMA, "MiddlesexNR" and "LambtonNR" include the Native reserves in the areas. I think the rest are all clear.)

As the chart shows, while the City of Waterloo scores very well for post-secondary educational achievement, and Guelph and London/Middlesex Centre do okay, as do LaSalle and Tecumseh in the Windsor metro area, the other parts of Southwestern Ontario fall below the provincial average, and in many cases well below. My municipality—Strathroy-Caradoc—just misses the bottom ten (or the top 10, as shown in reverse order above).

But even among Southwestern Ontario municipalities, Leamington is at the bottom of the list, which will present some special challenges as the community rebounds from the Heinz closure.

Friday, November 29, 2013

Rebellion Media tops IRAP Q2 contributions in SWOntario

Waterloo's Rebellion Media was awarded the largest IRAP contribution in the country—$500,000 —in the quarter ended September 30 (Q2 1014), according to NRC's disclosures. Other companies in Southwestern Ontario that received IRAP funding included London's Big Blue Bubble and Kitchener's Miovision. Contributions were awarded to organizations in Waterloo Region, London, Middlesex, Windsor, Essex, Guelph, Chatham-Kent, Grey, Bruce, Norfolk, and Brant.

Among organizations in Ontario supporting innovation, MaRS, Invest Ottawa, VentureLab, Communitech and OCE all were awarded contributions of $250,000 or more.

Q2 IRAP contributions to Southwestern Ontario-based organizations:

Rebellion MediaWaterloo$500,000
Whitfield WeldingOldcastle$312,000
Concours MoldLakeshore$150,000
Eclipse AutomationCambridge$99,999
Sport Systems UnlimitedWaterloo$99,000
HNH MachineLondon$98,393
Pavaco PlasticsGuelph$80,857
WEtech AllianceWindsor$70,000
Big Blue BubbleLondon$54,620
Miovision TechnologiesKitchener$50,000
Ontario Aerospace Council (OAC)Kitchener$50,000
Excellence In Manufacturing Consortium  Owen Sound  $50,000
Bluewater Wood AllianceWalkerton$50,000
Southern Ontario Water ConsortiumWaterloo$50,000
Advanced Machining ServicesWindsor$49,000
Great Lakes GreenhousesLeamington$48,990
Bluewater Wood AllianceWalkerton$47,927
Canadian Tooling And Machining AssocCambridge$44,000
The Sanderson Harold CompanyParis$34,200
Bluestreak EquipmentDelhi$30,000
21310439 Ontario Leamington$29,232

Some notable contributions to organizations across the province supporting innovation:

MaRS Discovery DistrictToronto$400,000
Invest OttawaOttawa$350,000
Ontario Centres Of ExcellenceToronto$250,000
Canadian Youth Business FoundationToronto$248,000
Northwestern Ontario Innovation CentreThunder Bay$150,000
Niagara CollegeNiagara-OTL$100,000
Sault Ste. Marie Innovation CentreSault Ste. Marie  $100,000
George Brown CollegeToronto$100,000
Mohawk College InstituteHamilton$85,000
RIC CentreMississauga$80,000
Innovation FactoryHamilton$75,000
University Of Toronto - RotmanToronto$75,000
Spark CentreWhitby$75,000
WEtech AllianceWindsor$70,000
Angel One NetworkOakville$60,000
Southern Ontario Water ConsortiumWaterloo$50,000
Innovation Initiatives Ontario NorthNorth Bay$49,048
Launch LabKingston$40,000
Maple Leaf AngelsToronto$35,000
Biomass Innovation Centre (NipissingU)  North Bay$30,000

Wednesday, September 18, 2013

RIM was the Beatles of Waterloo's tech sector, but not its foundation

A few weeks ago, I mentioned that—according to the recently-released 2011 National Household Survey—the Kitchener-Cambridge-Waterloo census metro area (CMA) had passed the Ottawa CMA for percentage of residents working in software & IT & computer and communications manufacturing. I noted that a lot of that was due to RIM/BlackBerry, and that becomes clear if you back out the communications equipment manufacturing component.

According to the NHS, KCW (not exactly the same as Waterloo Region, but close) had 40% of all communications equipment manufacturing workers in Ontario—that is, people working in any role for companies in the communications equipment manufacturing sector.

That's really an amazing number. There are very few sectors where the Toronto CMA wasn't in top place for total numbers, which is what you'd expect from a region that comprises 44% of Ontario's population. It was even number one among CMAs and CAs for farm workers. But not only was communications equipment manufacturing an exception, KCW dominated the category, far ahead of Toronto's 29% and Ottawa's 13%.

Not only did the number dominate other regions, it also dominated KCW's tech sector. NHS figures showed KCW with nearly 50% more people working in communications equipment manufacturing than in the software/IT sector. Not all of that was due to RIM (these are 2011 numbers, remember), but that was by far the biggest chunk.

At the most granular, four-digit NAICS level of analysis, communications equipment manufacturing was the second biggest employer in all KCW in 2011, behind only elementary and secondary schools and ahead of insurance, universities, and grocery stores (the next three on the list).

When you look just at software and IT companies, KCW drops to third place behind the Ottawa CMA and the Toronto CMA for percentage of the workforce in those industries. It was also third in total numbers, with the Toronto CMA home to more than three-fifths of all people working for software/IT companies in Ontario.

Third isn't as nice as first, but when you consider that this is discounting any contribution from RIM, that's not too bad. KCW runs well ahead of the larger Hamilton CMA and has double the numbers of the similarly-sized London CMA.

These numbers provide some perspective on recent discussions around BlackBerry and its place in the Waterloo tech sector.

For years, Waterloo's tech rep was built around UW. Then RIM became the standard bearer and Waterloo's rep soared to new heights. RIM's success created a halo effect around the entire region's tech sector and, as I wrote last year, "thanks to RIM, people were ready to believe that a lot more was going on in Waterloo than was really the case for many years. We put that belief to good use, attracting the resources needed to help the reality catch up to the belief."

But it was only Waterloo's rep that was build around RIM, not its tech sector. I spent years working in the Waterloo startup community and hardly had any contact with RIM and very limited contact with ex-RIMers doing startups (there was Ali Asaria, Dave Kruis, Ian Russell, and undoubtedly some others I no longer think of as RIM guys, but it wasn't many). There's more of them now, but RIM wasn't a feeder system for Waterloo tech companies and was only a major customer or partner for a tiny number of the area's tech companies. Waterloo Region's tech community wasn't built upon RIM and RIM was certainly not the foundation of the startup community.

We may now be in the homestretch of BlackBerry's run as a standalone company. That's led to a lot of things being written about Waterloo Region over the last year, ranging from is-Waterloo-the-next-Detroit (no) to pfft, we've-got-hundreds-of-tech-companies. And Waterloo Region does have hundreds of tech companies—and the regional tech sector is one of the biggest in Ontario (and Canada) even with NO contribution from RIM. At the same time, there's only been one RIM and we may never see another one in our lifetime.

For years, I said that people in Waterloo asking who their next RIM was going to be was like people in Liverpool asking who their next Beatles were going to be. I think it's okay to acknowledge that RIM was the Beatles of Waterloo's tech scene, while accepting that this doesn't mean that Waterloo's tech sector is on the verge of collapse or that there will be any fewer companies launching and growing in the years ahead.

We've already seen evidence of how strong and diverse the Waterloo Region tech community is. According to the National Angel Capital Organization, GTAN was the most active angel group in Canada last year (by dollars invested). When FedDev Ontario ran its Investing in Business Innovation program in 2011-12, it placed more than $16 million in 20 high-potential companies in the area in just a 15-month period. I believe that only the Toronto area had more companies funded, and most other comparable communities didn't come close (Ottawa did well too, Hamilton had one company receive IBI funding, London had none). None of the funded companies was related to RIM and this level of activity suggests that Waterloo Region's tech sector will continue to be strong, with or without RIM.

It's highly unlikely that any of them will ever be what RIM was, and it was good for Waterloo's tech rep to be able to cycle in the draft created by RIM. But the community used that time well and is well-positioned for whatever comes next.

Monday, September 16, 2013

Highlights of Ontario innovation payments, FY2013

The Public Accounts of Ontario for fiscal year 2013 (ended March 31) were released last week, giving us our only detailed breakdown of the money spent by the government over the last year. Federal disclosures are more timely and thorough than provincial, with federal ministries and agencies required to disclose transfer payments of $25,000 or more every quarter. The cutoff for Ontario's public accounts is $120,000, so any payments by the provincial government below that amount aren't specified.

Some of the disclosed transfer payments to organizations supporting innovation (these are all from the Ministry of Research and Innovation—which was part of the Ministry of Economic Development and Innovation at the time—unless otherwise noted):

Ontario Centres Of Excellence (OCE)$34,063,733
Ontario Capital Growth Corporation $18,000,000
MaRS Discovery District$17,584,660
Communitech $10,441,690
MaRS Discovery District [MCYS]$10,000,000
MaRS Investment Accelerator Fund $8,375,000
Vineland Research & Innovation Centre [OMAFRA]  $3,666,460 The Health Technology Exchange$3,583,128
Coral CEA $2,010,032
GreenCentre Canada$1,592,563
Bioenterprise [OMAFRA]$1,480,000
Network Of Angel Organizations Ontario $611,914
Invest Ottawa$581,715
Ontario Agri-Food Technologies [OMAFRA]$553,500
Innovation Factory (Hamilton)$473,721
VentureLab (York Region)$469,853
NORCAT (Sudbury)$426,825
Bloom Centre For Sustainability [OMAFRA]$410,000
Bloom Centre For Sustainability $351,065
Communitech [MTCU]$329,838
Spark Centre (Durham/Northumberland)$312,312
TechAlliance Of Southwestern Ontario (London)$285,963
Innovation Guelph$228,959
Launch Lab (Kingston)$212,470
MaRS Discovery District [Energy]$193,680
WEtech Alliance (Windsor)$150,972
HalTech (Halton Region)$141,227

Some of these dollars are passed through to other organizations, but that level of detail isn't provided. Many of these fundings were through the Ontario Network of Entrepreneurs (ONE) program, which was renewed for another three years this year.

Overall, the top recipients as shown in the public accounts for the research and commercialization sector were the Ontario Institute For Cancer Research ($89.8 million), and the University of Toronto ($39.0 million). OCE was third.

Thursday, September 05, 2013

Big Viking, Fongo, Aeryon, Rebellion among IRAP Q1 contributions

IRAP-backed projects have traditionally been a great way to find companies doing innovative things across a wide range of sectors—and in big urban, small urban, and rural areas. In the first quarter of the current fiscal year, Ontario Drive and Gear and Biorem received the largest IRAP contributions among Southwestern Ontario companies. Both have a track record of working with IRAP, as does Aeryon Labs, which received the third-largest contribution across the region.

London's Big Viking Games, Waterloo's Fongo, and Waterloo's Rebellion Media Group all received their first disclosed IRAP contributions in the quarter. Veteran Waterloo Region tech companies Campana Systems, Virtek, and Huron Technologies (formerly Biomedical Photometrics) were also among Q1 recipients.

Disclosed IRAP contributions in Southwestern Ontario, Q1 FY2014:

Ontario Drive And Gear (ODG)  New Hamburg$249,565
Biorem TechnologiesGuelph$202,500
Aeryon LabsWaterloo$149,993
Hauser IndustriesWaterloo$99,900
Forest City CastingsSt. Thomas$54,263
Digital Boundary GroupLondon$50,000
Big Viking GamesLondon$50,000
Rebellion Media GroupWaterloo$50,000
Campana SystemsWaterloo$50,000
Huron TechnologiesWaterloo$50,000
ProQuip InternationalBrantford$50,000
CSL SiliconesGuelph$50,000
Great Lakes CopperLondon$50,000
SP Stalls & StorageMount Brydges  $50,000
Autoliv CanadaTilbury$50,000
Brunato FarmsLeamington$49,950
Rapid EDMTecumseh$49,280
Edge AutomationLondon$44,000
Crate DesignsChesley$34,999
Cervini FarmsLeamington$27,100

The largest contribution in the province was $700,000 for Canadian Manufacturers & Exporters (CME).

$12.6M for Windsor airport tops Q1 FedDev contributions

Southwestern Ontario received the biggest FedDev contribution in the first quarter of the 2014 fiscal year, with $12.6 million awarded to the Windsor airport—Your Quick Gateway (Windsor) Inc.—through the Prosperity Initiative program. The funding closed in April.

Across the region, most of the FedDev fundings in the quarter were for municipal infrastructure and the annual funding for the regional CFDC offices. There was no direct funding for any other businesses.

The other funding of note was $367,500 to Guelph-based Bioenterprise through the Scientists and Engineers in Business program, which has now committed all of its funds. That program helps STEM grads build business skills and launch startups.

Thursday, August 08, 2013

For university degrees in Ontario, Waterloo has two peers ...

When I looked at the National Household Survey numbers a few weeks ago and saw that 47% of the population of the City of Waterloo in the 25-64 age range had a university degree, I tweeted that this was a number that would be hard to beat. You aren't going to find many cities with a population just under 100,000 (using census numbers) and two universities, so it seemed like a number that other communities wouldn't be able to match.

It turns out that there are two other towns in Ontario that are right up there with Waterloo. Richmond Hill actually comes out slightly on top using the NHS figures (47.3% vs Waterloo's 46.8%), although I suspect that's within the sampling error. Oakville is also in the top group with 46.1% of its population with university degrees. There's then a noticable drop to Ottawa in fourth place (42.8%).

So, Waterloo is at the high end of the scale—and in an elite group—but a group with a couple of other members.

The Waterloo ranking is for the City of Waterloo. The numbers for Waterloo Region aren't as high, with Kitchener ranking 44th and Cambridge 116th in Ontario. London ranks 29th.

Monday, July 15, 2013

Waterloo area leaps past Ottawa

According to the recently released National Household Survey 2011, the Kitchener-Cambridge-Waterloo census metropolitan area (CMA) has leaped past the Ottawa CMA to have Ontario's highest concentration of people working in the software, IT and computer/communications manufacturing sectors (combining NAICS categories 5112, 5415, 3341, 3342).

I haven't checked historical census data, but I'd have to think that's the first time that's happened. A lot of that was due to RIM/BlackBerry, and the numbers there aren't as rosy today as they were when the survey was conducted, but the Kitchener-Cambridge-Waterloo numbers were up by almost 70% since 2006, while Ottawa's were down by about 20%.

Guelph and Centre Wellington also showed significant growth in the combined sectors since 2006. The London CMA—where I live—was down almost 9%, with most of the decline coming from the manufacturing side.

UPDATE: Since this was retweeted outside of Southwestern Ontario, I swapped the original graphic for one that includes the CMAs and CAs across the province. The top 15 are listed. I also slightly narrowed the scope to include only computer and communications manufacturing.

Monday, June 03, 2013

FedDev Q4: TribeHR, big contributions in Woodstock and Brampton ... and a lot of community infrastructure

After spending the last year focused on helping businesses, FedDev turned its attention back to infrastructure for its new contributions in the period ended March 31.

With the rollout of the Community Infrastructure Improvement Fund, there was a ton of activity disclosed in the quarter, with over 100 projects funded in Southwestern Ontario alone. The largest was a $775,224 toward the City of Waterloo's upgrade of Waterloo Park. You can see the full list of funded projects.

There were only three new disclosed repayable contributions for Southwestern Ontario businesses in the quarter.

First, there was the $542,399 in Investing in Business Innovation funding for Kitchener's TribeHR that was announced not long after it happened (still a rarity with government funding of all kinds).

The other two were large contributions under FedDev's Prosperity Initiative—$2.5 million to Woodstock's NASG Canada (North American Stamping Group) and another $2.5 million for a company in Brantford listed as 1818155 Ontario Inc. (a Google search only turned up sketchy details and no operating name).

And that was it for the quarter.

Across the province, the largest new contribution was $2.7 million for the Ontario Chamber of Commerce, also through the Prosperity Initiative program. That funding was announced a couple of weeks ago.

Thursday, May 16, 2013

Strawman arguments against government support for startups still leave tough questions to answer

Last July, I mentioned that "there is increasingly a mood in Canada that we've been wasting too many resources on small startups that will never become large firms." In the months since, there's been a lot more written on that theme, much of it aimed at government policymakers.

There can be more than a touch of theatrical performance in these pieces. Often, the intended-but-not-explicit message is "why government needs to provide more funding for things we do ... and less for things those guys are doing"  (or, "why government should have funded what we do and not that tripe they chose to fund instead").

But, motivations aside, the ideas will stand or fall on their own. The pieces I've read have largely been rebuttals of strawman arguments for why startups are supported in the first place and come from a highly hands-on view of government's role in building businesses.

It's not unreasonable to question whether we should skew our limited resources toward startups per se. Most new businesses in Canada are in such sectors as local services, real estate, retail, and so on—many started by people who want to generate an income and run their own show (which is great—I've done it a few times myself) but aren't really looking to grow a business. They often don't sell to customers outside of their local region, let alone the province or the country. And they never will, and they have no plans to get much bigger than they are now.

In our little tech bubble, we hear "startups" and have in mind innovation-based companies like those at the Communitech Hub or the Accelerator Centre, but those kinds of startups are far from representative of new businesses in general. Tech startups don't even comprise 5% of business startups in Canada (that partly depends on how you define "tech", but by any common definition it's a small number).

In a report last year, the Toronto-based Institute for Competitiveness & Prosperity bemoaned that much public policy was based on "an exaggerated sense of the importance of all smaller businesses" and suggested a distinction between small businesses and "entrepreneurial businesses," which it defined as ones with an "ambition to grow." Y Combinator co-founder Paul Graham even tried to define "startup" as "a company designed to grow fast," saying that "being newly founded does not in itself make a company a startup." I can't go along with that, but within the tech field, the difference between new and growth-oriented is going to be less than in most sectors.

There are exceptions, but most tech startups at least have ambitions to grow, and—even better from an economic development perspective—hope to do so through sales in international markets. Other than some service businesses, it's difficult to sustain a tech business by selling only within your local area.

But that doesn't let tech startups off the hook. You could say that ambitions are nice, but as things turn out, many tech startups won't grow or will quickly plateau. These days, we tend to find that out more quickly and inexpensively than before, but it is usually the case that startups don't grow to be very big.

Daniel Isenberg, writing on the Harvard Business Review website, ("Focus Entrepreneurship Policy on Scale-Up, Not Start-Up," November 30) claimed that pro-startup policies are based on "a narrow conception of entrepreneurship as consisting primarily in the starting-up of an enterprise."

According to Isenberg, government has supported starups because they "equat[e] entrepreneurship with start-up"—something I don't think has actually been done by anyone anywhere. It's true that you'll hear the word "entrepreneur" tossed around a lot in discussions of startups, and there's no question that one way to support entrepreneurship is to encourage more people to choose that path—which begins with a startup. But no one equates the two. Governmement provides far more funding for established companies with growth plans than it does to startups—it's not even close.

Look at the Public Accounts of Ontario for the 2012 fiscal year and you'll see dozens of established companies receiving millions of dollars each (sometimes tens of millions). It's the same story at the federal level. Startups don't get that kind of funding—and they shouldn't and don't need it. When you look at the numbers, it's hard to see how anyone could reasonably conclude that government is equating entrepreneurship with startups. If anything, it's the long list of established companies receiving government funding that brings out the cries of "corporate welfare"—or corporate extortion as companies threaten to move jobs to whichever jurisdiction agrees to pay them.

It's an issue where different people will come to different, reasonable conclusions. Some will oppose direct government support of businesses of any size. I don't go that far down the hands-off path, but I have a much easier time justifying the relatively small amounts spent to support startups than the millions given directly to well-established businesses.

Most startups don't have cash and can't pay for expertise or hire a full management team. They may have nothing on the balance sheet other than goodwill and a few thousand dollars in computers and furniture, which makes borrowing money very difficult. They have ideas, but those aren't worth much in themselves.

Established companies don't have any of those excuses. We've seen companies with billions in the bank get millions from the government. Companies that could raise millions more if they needed to, but—understandably—would prefer the cheap money that government is willing to provide.

It doesn't take millions to help startups. The entire government budget to support the startup ecosystem is far less than many of the payments made to single established companies. A bit of coaching and networking through the early market validation stages can go a long way, especially with tech startups where the founders often have technical skills and a vision of a product but no experience in testing their ideas through interaction with their target market. The marginal cost per startup is very low. A little help goes a long way, which isn't true for established companies.

Returning to Isenberg for another strawman argument, he says that funding for programs to help startups is based on the common fallacy that "the most difficult and important task of the entrepreneur is launching." And again, I've never heard anyone say this—not even startup entrepreneurs, who would be the most likely suspects. I'm pretty sure we all realize that becoming BlackBerry (or your nearest 75-employee company, for that matter) is a lot more difficult than launching a startup.

One of the suggestions has been that, when it comes to early-stage companies, we should only support the ones that will grow to be big. That sounds good, but in some ways it's like saying we should only buy winning lottery tickets. That sounds good too.

Startups give you much better than 14 million-to-one odds, but in the early stages, it's not possible to know which will be big and which won't (some that won't may be fairly clear). You could always wait until companies are well on their way to growing big and then support them, but by then they will already had to have cleared lots of hurdles—including some that are much easier to navigate with a bit of mentoring and feedback. The longer you wait, the more likely you'll be "helping" companies that either don't need your help or shouldn't need it, if our expectation is that companies need to stand on their own two feet at some point.

The Institute for Competitiveness & Prosperity says people defending support for startups evoke "information asymmetry" as an argument (which it then tears down), but that's yet another strawman. The issue isn't that someone has better information than someone else, it's that nobody knows, and nobody can know at that point which startups will succeed and which won't. You can do all the "due dilligence" you want, and while you will be able to filter out some companies, it's still going to be a gamble. Too much of a gamble for banks or other sources of support that established companies can turn to. Those options aren't available to most startups.

So there seems to be no shortage of folks eager to misrepresent the reason for supporting startups—people who create simple-minded justifications that are easy to attack. Unfortunately, the pro-startup responses also tend to be simple-minded and easy to ignore. Some of the biggest offenders are those that talk about how "small businesses" (most of which are not startups) account for some very impressive percentage of something-government-cares-about. That may be a useful sentence, but now you have to fill up the rest of the page, and it's those other paragraphs that are going to make the difference in your argument.

In that blog post last summer I wrote that "the task ahead is to explain to policymakers and Canadians in general why having a thousand microbusinesses that few people outside of our little enclave have ever heard of is a sign of a healthy industry that is worthy of support and investment." That's still the big challenge.

Startup communities in Canada and around the world are full of tiny businesses that hardly anyone outside of that community has heard of. And there's dozens more with every graduating cohort of any of the who-knows-how-many Y Combinator-ish accelerator programs now operating. They'll all have cool names and logos and hardly any revenue. The majority of them will never have 10 employees, let alone 50 (which would still be considered a small business). Should we be concerned that only a tiny percentage of our startups ever grow to be even a larger small business?

I've seen hundreds of startups over the last 10 years—in one of the best startup communities in the world—and many of them are doing very well, but I'd guess that I could count on my fingers the ones that have more than 50 employees today. Is that a problem? There could be another 20 new startups in the next month. That's seems pretty good. Is it? Even if none of them grow to any significant size? Are we only supporting startups to catch the ones that will grow to 50+ or 100+ employees, or if we constantly have hundreds of microbusinesses, is that okay too?

These are the tough questions for startup supporters—at least for those relying on government funding (there are some trying to avoid that, but government-funded initiatives are a big part of the current ecosystem in Ontario). Without good answers, we may leave our fate in the hands of those who will come up with poor answers ... just so they can show how poor they are.

Thursday, April 25, 2013

My lean (ugh) startup guru

I had my introduction to management consulting in the 1990s—the peak of the management fad era that had begun the previous decade. One of the biggest fads was "reengineering"—so popular that it became the euphemism of choice for "layoffs" which, in practice, was already a euphemism for job cuts. There were a lot of those in the 90s, and you couldn't go long without hearing about some company's new "reengineering" strategy.

Veteran consultants told me there really wasn't much that was new about reengineering other than the label—which they would often roll their eyes at. But it was new to me (just about everything was), and became one of the many management philosophies and methodologies I immersed myself in through the decade.

Somehow, I've now become one of the experienced guys, and today I think back to those times whenever I hear "lean" around startups. Eye rolling is often involved.

I'm a big supporter of many of the core concepts that now fall under the "lean" banner—they've been fundamental to much of the work I've done with startups over the last 10 years—but the label itself always grates.

Much like those veteran consultants from 20 years ago, I think the problems I have are that too much credit goes to the person who came up with the label and that the newness of the label can lead people to believe that the concepts are much newer than they really are.

I'd probably be fine if the bulk of the credit went to Steve Blank. And much of it does. Though many of the concepts didn't start with him, he was the one who brought them together and synthesized them in a modern tech startup context. His "customer development" (never roll my eyes at that one) approach is not only the foundation of lean, but its four walls as well. Maybe the ceiling too. When tech people talk about "lean" not only should Blank's name come first, there shouldn't be anyone else mentioned in the same sentence or even paragraph. But he isn't the one who came up with the "lean" label, so that often isn't the case. In some circles, derivative and often dumbed-down versions of Blank get more recognition than the original.

But Blank wasn't my lean (ugh) guru. For years, from the time I started working with startups in the late 1990s, the voice I could often feel myself channelling belonged to Joe Cossman. If you're old enough to remember Cossman at all, it's likely from his 1980s infomercials. That's where I came across him, when I was either a high school student or undergrad. The big winners that he talked about from his career included the ant farm and the spud gun. He wasn't exactly launching or running Fortune 500 businesses with products that change the world, but then that's true for most startup entrepreneurs.

Cossman lived to see the web—he died in 2002—but his biggest business successes, and certainly his infomercials, were pre-web. If he'd been born later, I think he would have loved the Internet. He would say that all you need to start a business is a typewriter, stationery, postage and perseverance. The Internet has since replaced the first three, so today you could translate his requirements as the Internet and perseverance, which is the foundation for a lot of startups.

But Cossman wasn't encouraging blind perseverance. One of his key points—and one that stuck with me for years to come—was that entrepreneurs too often wasted money building products without putting them to the test of the marketplace first—and that this was something they could have done inexpensively, and should have done early on.

I don't have much from Cossman to pull quotes from, other than memories (possibly misty, water-coloured ones), but this brief excerpt from one of his infomercials—recorded with my first VCR—is definitely proto-customer-development:

"This is where most people go astray. Unfortunately, someone will design or create a product and they become emotionally involved over that product. It's almost like it's one of their children. And that traffic light is flashing red, red, red and all they see is green. And before you turn around, they've hocked the family jewels, they've made inventory, they've made tools and molds and then they're looking for a way of selling it.

Only a week ago, a man came to me and he had a good product, but he had put $300,000 into that product and ran out of money. Yet, when he came to me a week ago, truthfully, I could have showed him where to be at the same position he is today for less than $2,000. Because I won't allow a man or woman to make more than one of anything. Don't make 10,000, don't make 5,000. One sample—I call it a prototype—can give you the same answers as a large inventory. Because, when you have a good sample, you can photograph it, you can put out a publicity release, you can take it to department store buyers and get an opinion on it, you can show it to mail order houses, and that's all you need is one sample."

He's not talking about software and someone who doesn't easily see the view from 10,000 feet may not spot it at first, but the key concepts at the heart of "customer development" are in there and in many other things Cossman said. He was talking lean (blech) 30 years ago, and there were no doubt many others before him.

I'm not suggesting that anyone today needs to read Cossman or seek out his infomercials. The world has changed. I've had decades to let Cossman's ideas evolve in my head with the times and seeing them now for the first time would be jarring. There's more than enough resources available from a current perspective (Blank's Four Steps to the Epiphany is still the best place to start).

But Joe Cossman was the one who put these thoughts in my head all those years ago and someone whose ideas I've remembered every year since.

Yes, the ant farm guy from the infomercials. He was my lean (eyeroll) guru.

Saturday, April 20, 2013

Spinning the unemployment numbers

Statistics Canada releases its Labour Force Information report every month, and while each edition contains many new numbers, almost all of them play a barely-audible second-fiddle to the unemployment rate.

I live in part of Middlesex County that falls within the London census metropolitan area (CMA). This area had a panic attack when the March figures were released a couple of weeks ago. You'll quickly see why when you scan the unemployment rates of the 15 CMAs in Ontario covered in the report:

Thunder Bay6.3
Kitchener-Cambridge-Waterloo  7.2  
Greater Sudbury7.8
St. Catharines-Niagara7.9

You might think it would be hard to put out a positive spin when your number is second from the bottom (and as close to the bottom as it is to the one ahead of you). But when you look at the numbers—all of the numbers—it turns out that it's not so difficult to find a silver lining.

And that got me wondering how hard it would be to find something strongly positive to say about each of the 15 CMAs—based solely on their Labour Force Information stats—no matter how bad their unemployment rate is. I was particularly thinking of what municipal politicians might say to put the best spin on their local numbers.

Obviously, the ones with the lowest unemployment rates are a piece of cake:
  1. Guelph: We have the lowest uemployment rate of any CMA in Ontario.
  2. Ottawa: We're neck-and-neck with Guelph for the lowest unemployment rate in Ontario. The 22,400 net new jobs we created last year was second only to Toronto.
  3. Hamilton: We're neck-and-neck with Guelph for the lowest unemployment rate in Ontario.
  4. Thunder Bay: We have one of the lowest unemployment rates in Ontario.
  5. Kingston: We have one of the lowest unemployment rates in Ontario and are second among all CMAs in Ontario in net new jobs created per capita since the last municipal election.
Let's see what we can come up with for the 10 remaining CMAs that won't be able to brag about their current unemployment rates.
  1. Barrie: We've created more jobs per capita than any CMA in the province since the last election and have seen the largest drop in unemployment rate among all Ontario CMAs. (I like that one.)
  2. Kitchener-Cambridge-Waterloo: Among the CMAs with a population over 200,000, no one has created more jobs per capita than we have since the last election—nearly 15,000 net new jobs.
  3. London: Outside of the huge urban areas of Toronto and Ottawa, no CMA in the province created as many jobs as we did last year. (See! We got something.)
  4. Toronto: Since the last election, we've created more new jobs than all the other 14 CMAs in Ontario combined, and are in the top four even on a per capita basis.
  5. Windsor: Since the last election, we've had the second biggest drop in unemployment rate among the 15 CMAs in Ontario.
  6. Greater Sudbury: Since the last election, we've created the third most jobs per capita among the 15 CMAs in Ontario and have the third highest drop in unemployment rate.
  7. Brantford: Among the less urban CMAs in Ontario—the seven with a population under 200,000—only Barrie created more jobs than we did last year.
  8. St. Catharines-Niagara: Since the last election, we've created a net 12,300 new jobs— only two CMAs in Ontario have created more jobs per capita than we have. Our drop in unemployment rate makes us one of the top four performers in the province.
  9. Oshawa: Since the last election, our unemployment rate has dropped from 10.1% to 8.6%—a performance that puts us in the top third of all CMAs in the province. (Showing some stretch marks but still okay.)
  10. Peterborough: You know, these labour force numbers aren't the be-all and end-all.

Monday, March 04, 2013

Cyborg Trading receives largest IRAP contribution in Canada in Q3 disclosures

Just a few weeks after Cyborg Trading received $381,500 through FedDev's Prosperity Initiative, the company got another big boost, this time from IRAP—a long-time supporter of the company. Cyborg has received $842,000, the largest contribution made by IRAP anywhere in Canada in the quarter (it actually happened late in IRAP's Q2, but was disclosed with the Q3 contributions).

Also receiving six-figure contributions (or thereabouts) were Pyramid Farms in Leamington and Waterloo Region's Accelerator Centre, Clearpath Robotics, and Miovision Technologies.

Disclosed IRAP contributions, Q3 FY2013:

Cyborg Trading SystemsLondon$842,000
Pyramid FarmsLeamington$203,265
Accelerator CentreWaterloo$125,000
Clearpath RoboticsKitchener$103,000
Miovision TechnologiesKitchener$99,999
Innovation GuelphGuelph$80,000
Sarnia-Lambton Economic Partnership  Sarnia$80,000
Guelph Chamber Of CommerceGuelph$65,000
Ball MediaBrantford$50,000
Applied Comfort ProductsCambridge$50,000
Intelligent Health SolutionsFergus$50,000
West Furniture Co.Hanover$50,000
Horizon Furniture DistributorsKitchener$50,000
London Economic Development Corp.London$50,000
Nexus SolutionsLondon$50,000
Trac RailLondon$50,000
SP Stalls & StorageMount Brydges  $50,000
System-On-Chip TechnologiesWaterloo$50,000
Sport Systems UnlimitedWaterloo$50,000
Bioinformatics SolutionsWaterloo$50,000
Virtek Vision InternationalWaterloo$50,000
Avenir MedicalWaterloo$50,000
WEtech AllianceWindsor$49,750
Essex Weld SolutionsEssex$49,000
Aeryon LabsWaterloo$49,000
Digital Boundary GroupLondon$48,400
Cennatek Bioanalytical ServicesSarnia$48,000
Cedarline GreenhousesDresden$47,517
Integra MedicalLondon$46,500
Windsor Machine & StampingWindsor$41,800
Mahle Filter Systems CanadaTilbury$40,050
Sparkmatrix TechnologiesWaterloo$40,013
Karos HealthWaterloo$40,000
Brunato FarmsLeamington$39,965
Six S PartnersWaterloo$33,892
City Media NetworkLondon$30,000
Lamko Tool & MoldLondon$28,772
Tesla DigitalWindsor$28,000

Lots of familiar names on the list. The economic development groups for London (LEDC) and Sarnia (SLEP) both received funding, as did the regional innovation centres for Guelph (Innovation Guelph) and Windsor (WEtech Alliance). I don't include them in the Southwestern Ontario group, but Hamilton's Innovation Factory received one of the larger contributions in the quarter—$100,000.

Also see FedDev Q3 fundings.

Thursday, February 28, 2013

FedDev Q3: Big contributions for Southwestern Ontario topped by Western's $13.7M

FedDev has disclosed its contributions for the period ended December 31 and it was a strong quarter for Southwestern Ontario, which accounted for five of the top seven new fundings.

The largest contribution in the province was the $13.7 million for Western University to go toward the Fraunhofer Project Centre and a new centre for commercialization of advanced manufacturing technology. That funding, under FedDev's Prosperity Initiative, was announced in November.

FedDev's second largest funding in the quarter also went to Southwestern Ontario—$7.3 million to the University of Windsor, also under the Prosperity Initiative program. I haven't seen an announcement for that one yet. Windsor had been looking for FedDev funding for its new Institute for Border Logistics and Security, but I don't know if this is related to that or something else. [UPDATE: That's what it was. It wasn't announced until October ... seven months after I posted this.]

Disclosed FedDev fundings in Southwestern Ontario:

University of Western OntarioLondon$13,700,000
University of WindsorWindsor$7,291,785
Lambton ConveyorChatham-Kent  $3,111,667
Waterloo Accelerator CentreWaterloo$945,000
Wilfrid Laurier UniversityWaterloo$216,842
Southwestern Ontario Angel Group  London$100,000

The third largest contribution was announced last week: Communitech receiving $6.4 million under the Technology Development Program to go toward the development of two new satellites. Cambridge's exactEarth is receiving a $2.5 million repayable contribution for a related project (last week's news release has the details).

The $3.1 million repayable contribution to Lambton Conveyor to help it set up a new facility in the Wallaceburg area of Chatham-Kent was announced in December. That was also under the Prosperity Initiative.

The other big contribution in Southwestern Ontario in the quarter was $945,000 given to the Accelerator Centre in November as part of FedDev's Scientists and Engineers in Business program, which helps STEM grads and grad students launch startups. Under the same program, Mississauga's RIC Centre received an additional $2.5 million in the quarter, which is on top of the $5 million it was given just over a year ago. The RIC Centre has worked with startups in Waterloo Region and across Ontario through its VentureStart program, and Waterloo's Canadian Innovation Centre has also been involved in the delivery of that FedDev-funded program. Also falling under the Scientists and Engineers in Business program was an additional $500,000 in the quarter for OCE. It was originally allocated up to $1.1 million a year ago.

Under FedDev's Applied Research and Commercialization program, which provides funding to universities and colleges to do research-related work on behalf of companies, the University of Windsor saw its funding bumped by $250,000 in the quarter, which means that its total funding under the program ($1.5 million) is now on par with that provided to UW, Conestoga College, and University of Guelph (which received an additional $50,000 in the quarter)—and well above that received by Western University. That's particularly impressive given that Western initially received 55% more funding than Windsor, but while Western had the biggest drop between initial and extended funding among all ARC-funded universities in Ontario, Windsor clearly made the program work and had the biggest gain.

The $216,842 received by Laurier in the quarter was under FedDev's Graduate Enterprise Internship program, which helps companies hire recent STEM graduates. There was some rejigging of the amounts allocated under that program in the quarter, with the Research Park in London (-6.2%) and the University of Waterloo (-9.5%) both showing small reductions to their funding, but with the new money provided to Laurier.

Bolton-based PerspecSys ($742,500) and Toronto's TopHatMonocle ($750,000), which both have Waterloo connections, received funding under FedDev's Investing in Business Innovation program, which partially matches angel group/VC investment in companies. The same program provides funding to angel groups, and London's SWOAG got its $100,000 during the quarter.

Thursday, January 31, 2013

Population densities in Southwestern Ontario and the urban/rural divide

It's municipal budget season again, which brings a slew of reports and presentations related to short-term and long-term funding needs.

Earlier this week, Chatham-Kent council received a consultant's report comparing population densities among various Ontario municipalities. Population density can be a significant factor in municipal expenses and tax rates as low-density areas have to figure out how to provide services to a population spread out over a wider area.

The report showed Chatham-Kent at the bottom end of the density chart, completely dwarfed by every other municipality shown. I expect Chatham-Kent to have a low density, but having spent the last couple of years living and working in low-density areas, it wasn't clear to me that it was really that much of an outlier.

It turns out that it isn't. When you look at population density figures for all top-tier municipalities in Southwestern Ontario, Chatham-Kent's is comparable to that of surrounding small urban and rural areas (and higher than Middlesex County, where I live, although I live in a denser-than-average part). Whatever challenges come from low density, there are a lot of us in Southwestern Ontario in the same boat. Obviously, cities are more dense, but the graph really shows the urban/rural divide.

The cities of Kitchener and Waterloo aren't on the graph, since they're part of Waterloo Region. If they were, they'd take the top two spots. The City of Waterloo is hardly the densest place in the world, but it still has more than 35 times as many people per square kilometre as Chatham-Kent and more than 60 times as many as Middlesex County.

Low density is another of the challenges faced by small urban and rural Ontario that I hadn't been accustomed to, coming from Toronto and Waterloo. Although, having said that, looking at the graph it seems pretty clear that the magnitude of the challenge doesn't correlate (inversely) with the height of the bars.

(Statistics Canada population density numbers are essentially an average across a municipality. As with any averages, they have the potential to be misleading. For example, a municipality could cover a wide area but have most of its population packed into one or two small parts. That's often the case. There's typically a lot of intra-municipality deviation from the average. What Statistics Canada calls the "population centre" of London—which excludes much of the area near the 401—has nearly twice the density of what's shown above. The population centre of Chatham has more than 30 times the density of Chatham-Kent.)

Can Windsor use a non-snub to energize a focus on innovation?

OMG, did you hear? There's a new $100 million "Innovation SuperCorridor" initiative from the province introduced in the budget...