Guardblog

On the eve of the biggest event in the industry, Toronto’s bootstrapping, game-changing digital-startup rockstars prepare to demo

BY EDWARD KEENAN February 24, 2011 00:02
So this one time, Josh Sookman is in Kansas City for a tech conference. He gets off the plane wearing jeans, a grey blazer and his blue “I’m huge on Twitter” t-shirt. And, as a guy does when he finds himself in an airport terminal, he hits up Starbucks for a coffee.

So he’s standing there, waiting for his drink, when a stranger comes up to him and says, “Are you here for the startup weekend?” This guy is from Colorado—the two have never seen each other before. Sookman looks at him and says, “Are you kidding me? Out of a whole airport full of people, you pick out one of 100 guys who are in town for this event? How did you know?”

And the guy says, like it’s the most obvious thing in the world, “The t-shirt and the blazer, man.” Sookman laughs. “I guess there is a style,” he tells me now, in a conference room at the Ontario College of Art & Design’s Richmond Street Mobile Experience Innovation Centre. “There is a look. And I had nailed it for that event.”

As he relates this story to me, Sookman is actually wearing a brown collared shirt open at the neck with jeans—no blazer—but he still somehow nails it, the look of the digital-culture dude.

Sookman is the 27-year-old founder and CEO of a startup called Guardly, now in the process of creating something he described to me as “OnStar for smartphones.” His product will essentially give users a panic button on their phone: tapping it instantly alerts a network of friends of an emergency through email, social media and text message. It will send out the user’s location and photos of whatever threat he or she is facing, and allow that person to make a one-touch call to 911.

It’s been in development for about six months, and this week, Guardly will officially launch at the elite DEMO conference in Palm Desert, California—one of the software industry’s most celebrated international stages. Only a few dozen companies are hand-picked, via an intensive, top-secret process, to launch products at DEMO every year. In the past, the conference gave the world its first look at Adobe Acrobat, Netscape Navigator, Java, TiVo, E-Trade, Palm Computing, Picasa and mobile Skype. You could think of it as a kind of Digital Startup Olympics. And this year Josh Sookman and Guardly have been granted the extreme privilege of representing Team Toronto.
If you read the business press at all, you’ll know that something of an app-development gold rush has been taking place in Toronto over the past few years. The emergence of smartphones, and the exponentially exploding market for apps to run on them, has not only changed the way people live (we all now travel with GPS locators, cameras, email accounts and the accumulated knowledge of the world in our pockets), it’s changed the entire business climate.

Today, in a matter of months and with next to no capital, a software developer can create an application, sell it in the iTunes App Store or Android Market or BlackBerry App World and get rich (or at least comfortable) overnight. The small price of entry, and the potentially huge payoff, is attracting wannabe entrepreneurs by the truckload. Of course, the odds of success are stacked high against them: tens of thousands of new apps are flooding into the market every quarter, and only a handful will attract the kind of sustained attention necessary to generate real profit at a buck or two per download. Still, Toronto has jumped into this digital Klondike with both feet.

From the trivial to the useful to the potentially life-saving, there are, conservatively, 300 to 400 funded tech startups active in Toronto right now, most of which are headquartered in Liberty Village or the Financial District. And startup culture is quickly becoming institutional: U of T has set up a giant business innovation incubator, MaRS, that gives a lot of attention and advice to tech companies. Ryerson has its Digital Media Zone and OCADU has set up its Mobile Experience Innovation Centre incubator. The federal government, through its economic development ministry, FedDev Ontario, and the provincial government, through its Ministry of Research and Innovation, have been showering billions of dollars over the industry to help drive innovation and keep talent here in the city. At a big funding event at MaRS earlier this month, Ontario Minister of Research and Innovation Glen Murray described one new initiative—an open-data project—as being among “the most important things I’ve ever been involved in in my life.” Murray claimed his government was building “the first truly wiki-mobile-digital economy,” right here in Ontario.

For many, of course, this Wild West atmosphere and overblown rhetoric will recall the initial dot-com bubble. And while there are many similarities between the digital cultures of 1999 and 2011, there are key differences too. In the 1990s, huge amounts of money were being thrown at companies that were little more than a registered URL and an idea—paging Pets.com—and eventually a lot of that money came through public investment on the NASDAQ stock exchange. Today, the ease of building an app and the existence of a ready-made retail market in which to sell it (Apple’s App Store and others like it) changes the whole landscape.

Almost all the investment now comes from angel funders and venture capitalists, and initial investments are often tiny—$5,000 or $10,000. This level of financing is enough to let entrepreneurs actually build a product and prove its financial viability. Big-time investments are reserved for companies that prove they can be successful. From the investor’s point of view, you can put a tiny amount of money into a few dozen companies and you only need one or two to hit it big for your bet to pay off.

App developers themselves, meanwhile, inhabit that romantic area of the creative economy in which actors, novelists and musicians traditionally live: all their sweat and intellectual energy amounts to something like a lottery ticket—a small chance at very large rewards. And like those artists—and unlike the dot-com CEOs—it will be the public’s reaction to their efforts that make or break their success. No amount of high-concept snowjobbery will attract millions, but if people actually respond to what you do, glory and wealth await.
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Josh Sookman’s resumé says Wiki-Mobile-Digital Rockstar all over it. Not literally, though in this industry, developers do actually tend to go by job titles like “iPhone Rockstar” and “Android Ninja.” (“It sounds a little juvenile, but it’s also fun,” Sookman says. “Those titles are just cool ways of recognizing people and driving talent.”) But if one dude’s business history can take you on a whirlwind tour of Toronto’s tech culture, Sookman’s stops at most of the major landmarks.

He actually started his first company as a zygote during the original, pre-NASDAQ-crash dot-com bubble. He was in high school in 1999 when he and two classmates launched Shopstix.com, a site designed to aggregate only those online shopping sites that shipped to Canada. He founded his second company as a second-year genetics student at the University of Western Ontario in 2003, when he and a classmate turned a business-class feasibility study into an actual enterprise called CampusTutors, which matched students with a curated, approved list of more than 125 tutors.

His experience in those early businesses taught him enough to know that he had a lot to learn before he could launch a “venture scale” business, so while he was working on his master’s degree in biotechnology at U of T, he spent a co-op term working at the Business Development Bank of Canada in venture capital.

The Toronto tech startup world—like those in other cities—revolves to a large extent around attracting venture capital investment. One of the largest players in the mobile market is the BlackBerry Partners Fund, managed by RBC and JLA Ventures, which has $150 million in its pool to sink into companies developing mobile apps. When Sookman completed his master’s degree, he signed on as an analyst.

“From day one, I had always intended to use that as a springboard to launch my own company,” he says, “but it was a real opportunity to learn about what venture capitalists look for in a good deal, what they are looking for in a presentation.”

Ah, presentation. Nailing the perfect pitch is something of an obsession in the local tech community. You need a short sell for potential investors, and then another for customers (Sookman points out that, in commercials for Apple’s App Store, each app is given less than four seconds to sell itself.) As priorities go, refining the pitch comes second, perhaps, only to networking. Pretty much every night of the week, you can find a networking event of some kind hosted in a bar or lecture hall: Sprout Up at the Courthouse on Adelaide, MobileMondays at MaRS on College, Startup Drinks at Grace O’Malley’s on Duncan Street, Lean Coffee TO, DemoCamp, Ignite TO, and so on.

The scene feels a bit like Alcoholics Anonymous, both in that there’s almost always a meeting going on somewhere, and in that the focus of the meetings is community support offered through scheduled speakers or through scheduled fellowship—or networking—time. Most of these events feature a format in which a slate of presenters either pitches their business concepts to the attendees or gives a talk about the business skills needed to launch a startup.

Here, a small list of barely comprehensible buzzwords plays in heavy rotation—there’s talk of the need for constant iteration when you’re bootstrapping a lean startup. It’s not uncommon—as was the case at a recent Sprout Up meeting—for there to be 400 rockstars and ninjas out sharing a drink and curating eyeballs for their game-changing and disruptive new platforms. There’s plenty of agreement that once they all get outside the building, they’ll be able to pivot into whole new areas of customer discovery. These events are places where people actually also meet investors, and onboard potential team members. Unlike Alcoholics Anonymous, there’s plenty of booze on hand. (“Beer and developers go together like hamburgers and cheese,” says Sookman.)

There’s something heartwarming and creepy in equal measures about the social calendar. As in, say, the indie-rock scene or the amateur-sports world, you get the sense that there’s a community of people who could be competing against each other, but who are instead rooting for each other to succeed. Perhaps it’s the long odds of rockstar-scale success that inspires a culture of sharing. At the same time, the bright-eyed, almost cult-like dedication to constant networking—socializing for professional gain, if you will—and the laser-like emphasis on The Pitch display a naked ambition in the community that can be off-putting to an outsider.

Sookman acknowledges that the lines between business and social lives almost disappear when you’re living in startup culture. His three team members, he says, are not just employees, but friends. They’ll put in a full day at the office together, working until 7pm or 8pm, and then head out together for dinner and to grab a beer.

He invited his entire team, for example, to his recent engagement party. And his fiancée knows what she’s getting into. He’s already registered a domain for a blog called StartupWife.ca as a counterpoint to his own, StartupLifeBlog.com.
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Extreme Venture Partners is the hub, the Mecca, the pulsing heart of the app development community in Toronto. Started by Amar Varma and Sundeep Madra, and operated out of an office at Yonge and King, Extreme is a venture-capital firm that offers small investments—often just $5,000—to promising startups. The companies it invests in get a desk at Extreme headquarters, where they work side-by-side with over 250 other developers, some just starting out and some seasoned veterans, who are preparing their products for market.

The two biggest success stories out of Extreme are BumpTop, a 3-D desktop graphic application that sold to Google for a reported $35 million, and J2Play, a game framework that sold to Electronic Arts for $2 million. Just this month, Extreme startup Chango—a web and mobile advertising tool—attracted $4.25 million in financing. Everyone knows these stories and everyone hopes to be the next breakout from the Extreme portfolio.

Of course, Sookman knew the partners in Extreme from his work in venture capital—by then he had become something of a celebrity in the community—so when he struck out to start Guardly, he told them about it and they offered him a space in the office to get off the ground.

Sookman says that getting to squat at Extreme, “the epicentre of high technology in Canada,” was a big leg-up. “Everyone you speak with there is intelligent, you learn something with every conversation, they have all the toys there to make it a fun environment—foosball and ping-pong and Xbox—but they also have a group meetings every morning, a stand-up, where everybody will share the big news that’s happening…. Just the ability to share knowledge quickly with a network of people who are tied into the cutting edge is invaluable.”

After hiring a staff of three to work with him, Guardly was taken under the wing of the Mobile Experience Innovation Centre incubator established by OCADU. They moved into the Richmond Street office to begin hardcore preparations to launch.

Early next week, with the world’s most deep-pocketed investors and its heaviest-hitting technology press in attendance, Sookman will get six minutes to demonstrate Guardly at the DEMO conference. PowerPoint presentations are not allowed, just the product itself on the big screen and Sookman onstage explaining how it works.

To qualify, Sookman already jumped the hurdle of a regional DEMO event in Toronto, where he and nine other local startup founders had the chance to showcase their products onstage for a travelling panel of judges. Success there came with its own challenges: namely the $18,500 cost of a slot at the big conference and the time pressure to redo their branding, fine tune their product and ensure the technology would be running smoothly in time for a Feb. 27 launch.

It almost seems too cinematic, the months of buildup and preparation and cost leading to the moment in the global spotlight—a moment that could be worth many millions of dollars, if the past investment drawn by DEMO success stories is any guideline.

Up there on the stage, Sookman will know quickly whether he’s achieved a successful iteration—that is, whether he’s managed to convince enough of the heavyweights in the crowd that Guardly is something they need to have on their phones.

Glory and wealth await. And if the crowd isn’t buying his act, there are dozens—no, thousands—of other rockstars waiting for their moment in the spotlight.

Source: Eye Weekly (Toronto).

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• Amid mobile boom, Toronto and its environs glitter
• Guardly and OCAD awarded grant from FedDev Ontario