Sandvine CEO Dave Caputo

It’s a rare day when a Waterloo Region startup sells for more than half a billion dollars.

Then again, 2000 was a rarefied time in the tech world, as twin bubbles in the internet and telecom sectors ballooned inevitably toward bursting.

That summer, California-based giant Cisco Systems snapped up PixStream Inc., a Waterloo-based upstart that made hardware and software to move video across then-new broadband networks. The stock-swap deal was worth $554 million in Canadian dollars.

The euphoria was blunted four months later when Cisco announced a major downsizing, including the shutdown of its video networking business unit, and by extension, PixStream.

When the axe fell, Dave Caputo, who had joined the company as marketing VP in 1998, wasted no time in moving on. Within 12 hours of the shutdown announcement, he and three PixStream colleagues – Brad Siim, Tom Donnelly and Don Bowman – got to work on building a new company called Sandvine.

Their new venture quickly became a global leader in a field that has become ever more central to modern life over the past decade: management of network traffic on the internet.

Today, Sandvine has customers in 85-plus countries, representing hundreds of millions of broadband internet users. Its shares are traded on the London and Toronto stock exchanges, and the company employs more than 350 people.

As CEO, Caputo has overseen tremendous growth and faced the challenges that come with being a publicly traded, globally oriented technology company.

We sat down for an interview on a recent snowy morning at Sandvine’s Waterloo headquarters.

Q – Bring me up to speed on where Sandvine is now, and what we can expect for 2012.

A – Sandvine got started back in 2001, so we’re entering our 11^th year.

I often joke that there’s really no word in English that describes the feeling of, “It feels like yesterday, yet it feels like a lifetime ago.”

That word might be “Sandvine.”

I’m extremely proud that the initial premise that we founded Sandvine on is one that we’ve stuck to, from the sense that back in 2001, when you looked at your phone bill, you spent more on call waiting, call display and voicemail than you did on just dial tone access.

And we thought, “Why wouldn’t broadband and the internet evolve the same way?”

If you fast forward to 11 years later, I think we’ve never been closer to that reality of having many different ways to consume and pay for bandwidth. That is the intelligence layer that we are trying to build across the consumer internet.

So what does that mean, practically speaking?

In the not-so-distant future, you’re going to have tens, if not hundreds, of devices connected to the internet, but you’re not going to be expecting to pay a $40-a-month subscription for them.

Some you’ll buy on a transaction basis, like the Amazon Kindle; you buy a book and pay for the bandwidth right then. Some of them you will pay for through ancillary services; you’ll buy a camera that is a 4G device, take a picture, it stores on the cloud, and when you print the picture or store the pictures beyond five years, you’ll pay for the bandwidth that way.

Maybe it’ll be monetized with advertising beside the photos that you have there.

And so, there are going to be many, many different ways to consume bandwidth in the future, and there are going to be many different ways of monetizing that bandwidth.

That is the initial, central and continuing premise of Sandvine.

Q – Are you saying things have developed the way you predicted they would in 2001?

A – Certainly we were ahead of our time back in 2001, and I think there were around 16 million broadband subscribers, wireline subscribers, back at the end of 2001.

There’ll be 600 to 800 million by the end of this year, so the concept of broadband becoming ubiquitous was a good bet in the beginning, and as subscriber growth slows, but subscriber consumption of bandwidth grows unabated, there are some economics that need to be fixed in the service providers,’ or ISPs,’ business model.

Those unstoppable economics of subscriber growth, bandwidth growth and average revenue per subscriber being flattish have to be fixed moving forward, and Sandvine plays a central role there. That’s our bet, anyway.

Q – Speaking of economics, there was some receding in Sandvine’s revenue in 2011. Is that a symptom of these economics that you’re talking about?

A – There are a lot of dynamics that have conspired against us over the past year, largely around our shift to resellers; around shifting resellers to existing customers. It really slowed our ability to develop those customers.

And so, if you look at our growth over the past five or six years, it’s been incredible. Over the past year, we didn’t have the growth that we needed and expected to have.

Q – Do you see that as a temporary thing until other issues get sorted out?

A – Let me ask you: Do you think broadband’s going away? Do you think broken business models are fixed? We don’t think so.

We’ve taken the path that we truly believe the technology we’re working on is trying to solve some of the most difficult problems on the planet – I shouldn’t say that; that sounds a little bit presumptuous – some of the most difficult problems in networking.

And that is, to look at every packet in real time and apply a policy on those packets in real time.

We can’t think of a more difficult problem that needs to be solved in networking.

Q – Waterloo has a reputation for taking on these kinds of difficult problems. What is it about Waterloo Region, and tech people here, that makes them want to engage with these heavy-duty, core issues in technology?

A – I think it has to do with not shirking away from the most difficult problems out there. Life is short and you might as well make a difference while you’re trying to make the technology world better.

I think people in the Waterloo tech community want to make a difference with their technologies, and making a difference usually means tackling the most difficult technology problems.

Q – There are a lot of places around the world that have tech clusters now, and incubators are popping up all over the place. What do you think sets Waterloo apart from other places like Silicon Valley or Boston?

A – My sense is that the tech community in Waterloo is a real community, where we feel that we’re in it together, and that’s likely in no small part due to Communitech.

That facilitation of technology companies working together, being informed about each other and having a true willingness to help each other out really has created this community, and my sense is that it’s one of the best-developed technology communities on the planet.

Q – What kinds of things do you hear about Waterloo when you’re travelling? How would you gauge the general awareness in the tech world about what we’re doing here?

A – It doesn’t matter where I go in the world; everybody has heard of the University of Waterloo and everybody has heard of Research In Motion.

Those two stalwarts have put us on the technology map.

Q – Take me back to when PixStream was sold. How old were you when that happened?

A – That’s a good question. It was 2000 and I was born in ’67, so I guess I was 33 when that happened.

When PixStream was sold to Cisco, it seemed like a great day for the technology community here in Waterloo, bringing a great company like Cisco here.

When they decided to shut their video networking business unit down [and thus close PixStream] just a scant eight months later, it seemed like the worst day, but I now look back and think it was a great day, because there was a team ready, willing and able to start a technology company with some pretty good scale 12 hours later, and that was Sandvine.

Q – 12 hours later?

A – 12 hours later.

Q – What do you remember about that 12-hour period?

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Tues Mar 13th from 12:00 – 1:30 – Hub for Grub: Expanding Your Business To The U.S.

Join Phillips Lytle LLP for this important session on launching and expanding your business in the U.S.   This presentation will explore typical labor and employment and immigration issues that Canadian companies face when expanding their businesses into the U.S.  Topics will include:

•           Immigration Issues – How to cross the border to make sales and conduct other permitted activities;

•           Contractors – Avoiding the trap of contractors being deemed employees of your company;

•           Hiring your First U.S. Employee – What you need to know; and

•           Relocation – How to relocate employees/owners of the Canadian company to the U.S. to launch a U.S. subsidiary.  Register here.

Keep an eye out here for what’s coming up next at the Hub.

CANARIE launched the DAIR pilot program in April 2011.  DAIR provides small and medium-sized high-tech companies with an opportunity to speed time to market by offering an advanced R & D environment for product design, prototyping, validation and demonstration.   DAIR  was a great success and the results of the program are available in this press release at http://canarie.ca/templates/news/releases/2012-02-15_DAIR_Survey_en.pdf.

CANARIE intends to expand the program, and has incorporated this proposal into its mandate renewal request to the Government of Canada.   In order to build the most beneficial program for SMEs, CANARIE is looking for feedback from digital entrepreneurs across the country on how best to meet their cloud-computing needs.

Tell us what’s important to you by taking this survey and provide feedback on your needs.  By participating in the survey, you can win a $250 ITunes gift card!

English: https://www.surveymonkey.com/s/DAIR_Survey

French:  https://www.surveymonkey.com/s/Sondage_ATIR

For more info, here are the links to the recent press release and the video that includes DAIR participants.

DAIR Video  http://www.youtube.com/watch?v=PI-aa21UCbQ&feature=youtu.be

For more information on DAIR, including a way to indicate your interest to participate in the next phase of the program, visit the CANARIE website  http://canarie.ca/en/dair-program/about

Registration will open soon. For up to the minute updates, follow us on Twitter: @communitech

Waterloo Region, ON – Feb. 14, 2012 – When the American Association for the Advancement of Science (AAAS) convenes its first Annual Meeting outside the U.S. since 1981 in Vancouver February 16-20, Waterloo Region will be featured as Canada’s premier hub for innovation. The Region will have a strong presence in everything from pavilion displays to panel discussions and presenters, to a major media reception for as many as 600 science communicators.

The AAAS Annual Meeting is the world’s largest yearly gathering of researchers, policy makers, educators and journalists throughout science and technology – with participants from approximately 60 countries worldwide who will share their interests, innovations and ideas for the future.

“AAAS presents an opportunity for Waterloo Region – the location Ontario Premier Dalton McGuinty recently described as Canada’s most important tech cluster – to showcase the breadth and depth of the innovation ecosystem here,” said Iain Klugman, CEO of Communitech. “This is a tech cluster ripe for investment, infusion of talent, and even more innovation.”

There are currently 1,300 open tech jobs in Waterloo Region, and attracting talent from around the world is one objective of participating in AAAS. Communitech and its partners in promotion – the Canadian Digital Media Network (CDMN), the University of Waterloo, Wilfrid Laurier University, Perimeter Institute for Theoretical Physics, the Institute for Quantum Computing, and the Waterloo Institute for Nanotechnology – came together to present a united profile of Waterloo Region.

Some of the highlights of Waterloo Region’s AAAS presence include:

-       A digital media kiosk within the Canadian Pavilion at AAAS, featuring the Canadian Digital Media Network (CDMN) and its partners to showcase Canadian innovation through partnerships and a global perspective in digital media;

-       Opening session remarks from AAAS Annual Meeting co-Chairs, including Neil Turok of Perimeter Institute for Theoretical Physics;

-       Plenary session on the role of science and education with Mike Lazaridis, Vice-Chair RIM Board of Directors, Founder and Board Chair of Perimeter Institute, and Founder of the Institute for Quantum Computing;

-       Presentation on quantum information technologies with Raymond Laflamme, Director of the Institute for Quantum Computing, along with Canadian and international colleagues;

-       A panel discussion on approaches to energy issues with an introduction by Feridun Hamdullahpur, President and Vice-Chancellor of the University of Waterloo, and featuring key members of the Waterloo Global Science Initiative: Jatin Nathwani, Executive Director of the Waterloo Institute for Sustainable Energy; and Jason Blackstock, Senior Fellow, Centre for International Governance Innovation;

-       Presentation on research into possible links between climate change and lightning-caused forest fires by Wilfrid Laurier University mathematics professor Dr. Douglas Woolford; Dr. Woolford will also participate in an AAAS news briefing;

-       A science writers’ reception with opportunity to share insights on Waterloo Region, Canada’s hub for innovation.

“Waterloo Region thrives on collaboration, and the community-wide participation in AAAS says as much about that cooperative spirit as it does about the innovation ecosystem that’s driving cutting-edge research, advanced education, growth in companies and jobs,” said Klugman.

About Communitech

Founded by a group of dedicated entrepreneurs in 1997, Communitech www.communitech.ca is the regional hub for the commercialization of innovative technologies supporting and building a Southwestern Ontario tech cluster of more than 800 companies that now generates more than $25B in revenue.  Communitech supports tech companies at all stages of their growth and development – from startup companies, to rapidly growing SMEs, to large global players – to create greater numbers of successful global businesses for Ontario and for Canada.

John Baker’s high noon arrived on Feb. 22, 2008, in the United States District Court for the Eastern District of Texas, Lufkin division.

Baker, CEO of an upstart Canadian learning-management software firm called Desire2Learn, was staring down the barrel of a $17-million patent infringement suit filed by Blackboard, a billion-dollar U.S. behemoth.

Texas juries don’t often take kindly to defendants in patent cases, and this time was no different.

Baker lost that day, and the court ordered D2L to pay $3.1 million to Blackboard.

Two years after the suit was launched, it was the end – but only of Round 1.

Undaunted, Baker took the case to the U.S. Court of Appeals for the Federal Circuit in Washington.

He won in July of 2009.

Three years of costly litigation could well have sunk a lesser company, but Baker’s confidence – in his product, his people and his clients – never wavered.

A willingness to go with his gut and adopt total transparency throughout the case, against the advice of his lawyers, also helped to distinguish the young executive as a true entrepreneur.

“I think when you’re backed into a corner, you sort of resort to your core values,” Baker, 35, told me at D2L’s Waterloo Region headquarters in downtown Kitchener recently.

Those values have propelled the company, which Baker started in 1999 as a third-year University of Waterloo student, from a one-man startup to a fast-growing multinational with 376 employees and plans to add 200 more in 2012.

Our full conversation follows here:

Q – How many people work for Desire2Learn?

A – We’re just around 375 people; I think it might have been 376 today.

A year ago today we had 200, and a year prior to that we were around 140, so we’ve been going through a very significant amount of growth in just the past two years.

Obviously we started off very small and grew pretty steadily over the last number of years.

Q – You founded the company in ’99?

A – Yes, in ’99, as a third-year student from Waterloo, back when there wasn’t a lot of support for enterprising co-operative education students.

I think they now have a program called enterprise co-op, but in those days I think they expected you to get a job.

Q – What were you studying?

A – Systems design engineering. [Finishing] was a struggle, but I managed to hang in there for my last year, and I graduated with honours.

Q – How did you start your company?

A – At university, I had worked on a project prior to starting the company. It was an open-ended project that allowed us to pick any problem and we had to go and find a solution to it.

That sparked a passion in me; ‘Okay, what else is out there that needs to be addressed, or how could I help society out?’

I decided to take a semester off and pursue one of those ideas, which was helping to improve the learning experience.

I knocked on a few professors’ doors and received some interest in pursuing the development of some online courses, and just went after it.

Q – Where did that idea come from?

A – At that time, when I was in university, instructors would write down their notes on the chalkboard and you would basically copy those notes, and you would try to learn from that experience.

I thought, ‘There must be a better way to do this.’

At the University of Waterloo at that time, they were also transitioning from cassette tapes, and from mailing in forms for assignments, so I thought maybe, by leveraging the power of the internet, we could really do a big transformation on the educational experience here at the university.

I was thinking very myopically around me and my university, versus the bigger-picture vision.

And then, after a few interactions with clients, I saw the huge opportunity that it was and decided to make it a full-time venture.

Q – Was that a key lesson, that if you have a problem in your own life that needs solving, it can lead to a business opportunity?

A – I think even in education, where we spend a lot of our time, people talk about problem-solving skills as being a critical thing that you need to develop in learners, but for me, it was problem-finding. That was the skill that I needed to learn to spark my entrepreneurial journey.

It just struck me one day, that I need to go out and find some problem that can have a big impact on people, and even if it doesn’t become a success, at least I will have tried, just to stretch myself.

Q – So, when did you know that you wanted to be an entrepreneur?

A – I never really thought of it as going off to work for somebody else versus being an entrepreneur. I just thought, ‘Let’s just go and try and do something different’.

I’ve always had that drive to make an impact, to really make a difference in people’s lives.

It doesn’t matter whether it was as a co-op student working at a company, or doing this; I was really passionate about making a difference, whatever I was doing.

Prior to starting the company, as a co-op student, I would be working long hours solving tough problems for somebody else.

Q – You’re from eastern Canada, correct?

A – Originally, yes; I grew up in a small fishing outport village called Wesleyville, Newfoundland until I was in Grade 5, and then from Grade 6 onwards I was in a small hamlet called Holmesville, Ontario.

It’s near Goderich, and before we moved to Holmesville I spent a year in Goderich, living with my grandmother.  After graduating from Holmesville Public School I attended Central Huron Secondary School.

Q – What was it like being a kid there?

A – It was great. You’re always outside; I was always playing with friends or competing in sports whether it was skiing, soccer, baseball, basketball, volleyball, swimming or hockey. There wasn’t a tremendous amount to do during the evenings, but you still got up to fun with your friends.

Q – What influenced your decision to go into systems design engineering?

A – As a student in high school, I did very well in all the different subject areas, so it wasn’t a situation where, ‘I’m really strong in this one area, so I’ll focus on that.’ So, I never really knew what I wanted to do when I went to university.

My initial thought was to become a doctor, and I think my parents were trying to guide me towards something a little more applied or hands-on for my first degree, before I went off to med school.

They were suggesting maybe engineering, and I thought, ‘Okay, I’ll take a look.’ And systems design really appealed to me, because it actually taught you broad-based engineering. It wasn’t civil, it wasn’t computer science, it wasn’t software, it was across all kinds of different disciplines and integrating that knowledge, but yet going deep on every one of those pieces.

The design projects were an incredible part of the program. We even built a bridge out of a sheet of cardboard, and even though it spanned a metre, it was one piece of cardboard and a ball of glue; that’s all your components were, and it could hold over 700 pounds.

So you got to apply really good engineering skills to solve really tough problems, and it gave you good diversity. I thought, what a great topic for someone who doesn’t really know what they want to do, to go out and explore a whole bunch of areas.

It’s a great program.

Q – How quickly did your company become a functioning enterprise, where you could make a living from it?

A – Well, I had to make a living right away, because I was a student and I had no other job. So I started generating revenue within the first few weeks of getting started.

It wasn’t a lot of profit in the first few years, but it was enough to just keep on doing what I was doing, and to keep growing.

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Q – What exactly were you selling?

A – At that time, it was more of a services business, so it was helping instructors or professors build online courses.

At that time, I was taking my old course notes and putting them online, and putting interactive activities like assessments or quizzes into the online offering.

And then it very quickly transitioned at the University of Guelph, our first big client, where we were helping to build the tools that actually built the courses.

So, instead of building courses as a service, it was now building the tools and the platform to build the courses. It was a big transition.

Q – So were you cash-positive from the start? Did you have to seek investment?

A – We were kind of cash-neutral; I wouldn’t really say positive, but neutral for the first few years. I paid the bills and occasionally I would dip into my own savings, or friends would chip in, or my parents.

But overall, it was very much the hard way, of going out and winning clients and then building the business off the revenue that was coming in the door.

It wasn’t easy, that’s for sure.

Q – How old were you when you first started knocking on doors to sell?

A – I would have been 22.

Q – Was the reception you got affected by your youth?

A – Oh yeah, it was tough. I remember someone at the University of Guelph said, ‘John, your competitors were willing to do this for free but yet we still selected you.’ And I’m like, ‘Why did you select me?’ And he’s like, ‘Well, 98 per cent is based on my belief that you can do a better job and deliver, and two per cent is on what you’ve done before.’

And that was not easy, convincing someone that you could not only tell him what was needed but also go out and build it, and they could base their decision on a little bit of evidence that you had built up in your past history.

But luckily we found a few early adopters who were willing to take a bit of a risk, and they invested, for sure.

Q – Did anyone turn you away because you were too young?

A – Oh yeah, that would happen from time to time.

However, there were some funny stories. One client introduced me to his staff by saying, ‘When he first showed up at my office, I was expecting John to look a little bit more like me, with some grey hair. But don’t worry, everybody; he’s grown on me, he’s not as bad as he looks.’

You’d get ‘no’ all the time.

Q – Did that get better, or were there enough yeses to mitigate the nos?

A – I think you just have to learn to be persistent. There were a lot of nos; don’t get me wrong, but the occasional yes certainly made up for it.

You also learn to focus on the advantages. In my case, I knew internet technology inside and out, and I could help them make the transition to that platform better than anyone else could.

So an ability to play up our strengths allowed us to get an initial client base built up, and then it was just ‘deliver’.

Then you just keep on doing it, cycle after cycle after cycle, eventually you’ll have built up a great reference base of clients.

Q – And wind up with 376 employees?

A – Yeah, and wind up with 376 employees. We’re looking to hire another 200, by the way, if you can help us. I think one in 10 tech jobs on the job posting board in Waterloo right now are with Desire2Learn, so if you could find some more that would be great.

Last year, we started the year with 65 job openings and we wound up the year with 160 hired, so I anticipate this year will be a good growth year, too, if the market demand is any indication.

The openings are in all areas – sales, marketing, communications, PR, everything. R and D, service, support – there’s not an area where we’re not hiring.

We’ve got opportunities opening up across Canada, the U.S., Brazil, Australia, Singapore, China, the U.K., and others worldwide.

Q – How many countries are you in now?

A – Our products are used by clients in about 20 countries, and users are pretty much scattered across the entire globe.

Q – What about operations?

A – We’ve got a U.K. sub, an Australian sub, a U.S. sub and a Singapore sub, and have contractors in Brazil and other locations.  We’ll see that scale this year, too, hopefully.

Q – The litigation against you launched by Blackboard in 2006 was significant. What was the first sign of trouble?

A – It was basically a phone call, followed a few seconds later with a piece of paper that was served to us. So it came without any warning.

We were sued in the Eastern District Court of Texas, over a patent. We investigated and believed the patent should not have been issued; it’s not a valid patent; we’re going to fight this vigorously and we’re going to persist.

Q – How big were you at the time?

A – Less than 65 employees full-time; 65 total if you counted co-ops and contractors.

Q – Were you intimidated, knowing how big they were and how small you were?

A – I think there was a bit of shock and a bit of disbelief, but we were confident. I don’t know if that was us being naïve or a strong belief that we were in the right.

It’s not an easy decision to make, but we believed it was the right one to fight, and it was the one we made.

Q – How taxing was it on the company to hire lawyers and fend off such a well-funded adversary?

A – It was a hard battle. There’s no question that we lost a few potential clients over it, but we did our best to keep growing.

Even during the litigation phase we still managed to grow from 65 equivalent people to 140. We still managed to triple to quadruple our client base during the litigation phase, and a lot of that had to do with how we approached it, I think.

We were transparent on everything. We set out a simple rule: We’re going to tell our staff, we’re going to tell our clients and then we’re going to tell the world, and we’re going to do that in very quick succession, and we’re going to tell them the good, the bad, the ugly. We’re not going to hide anything; we’re just going to share our journey along the way, which was not a common practice to do.

Q – How did you decide on that approach?

A – We were in a room much smaller than this room (the D2L board room), and within 30 minutes we’d decided, basically, that this was the only way we could do it.

That simple little communication strategy helped us so much, no question.

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Q – Where did the impulse come from to do it that way?

A – I think when you’re backed into a corner, you sort of resort to your core values. And when we looked at our core values, we were open: ‘Hey, you know what? If we had a hosting problem, we would tell people about it; we wouldn’t hide from the issue; we wouldn’t sweep it under the rug; we’d identify the issue and get it resolved. It’s who we are.’

So we anchored on those core values, and those core values told us, ‘Be open and transparent and share.’ So we did.

It was very risky, for sure. Our lawyer at the time was not sure of the strategy of sharing, but we proceeded nonetheless.

Q – Did defending against the litigation put you in real financial jeopardy?

A – It was far more expensive than we ever thought, no question. And it was far harder to afford it financially, but we kept the team focused. We had a small team focused on the litigation piece and everybody else was focused on delivering.

They had to make sure clients were happy, make sure new clients were coming on board, make sure we were communicating, make sure we were building the right products that the client wants. And so, we just kept focused on the execution piece and that carried us through.

We were really fortunate. We had an industry that rallied behind us. We had marquee clients, whether it was big corporate clients or education clients, who heard about it, who believed in us and who came to support us by still buying our technology during the litigation phase.

We had others who felt ‘you’re a little too risky for us so we’re not going to purchase’, but we retained 100 per cent of our core client base during the phase, and a lot of that, I think, comes back to that strategy, which was, ‘Here’s what’s going on; we’re not hiding anything from you.’

So you get rid of some of that fear, uncertainty and doubt that the competition is sure to be spreading.

Q – How did your competition respond to your strategy?

A – I can’t comment on how our competitors responded but we would hear rumours of many of them trying to take advantage of the situation. Others were supportive.

But we tried to take the high road and said, ‘Okay, we’re just going to compete on our merits and go out and win this business.’ We just had to dispel the rumours that were being spread.

Q – If you had to list the qualities that saw you through that period, what would they be?

A – Integrity, openness, hard work, dedication, persistence, passion about what we were doing. Those were all some of the key things.

One of the things that drove us through a lot of the ups and downs was the team that we’d built. The fact that we were developing leaders within the company, so that everyone wasn’t relying on me.

Through that, a number of our key team members became real strong leaders. We saw them step up, and that to me was probably the most impressive part of that whole period.

We were able to keep the clients happy, but at the same time we did build a much stronger company, even in the face of pretty major obstacles.

Q – When did everything get resolved?

A – At the end of 2009 and the beginning of 2010, so just about two years ago.

Q – Are you willing to say how much it cost you?

A – Oh, many millions. But it was the right thing for us to do.

Even though the system has major flaws, the patent eventually was overturned. Hopefully the system gets better as time goes on, because the way it was when we went through it was very broken.

Q – What are you looking forward to in the coming year?

A – We are excited about a number of initiatives this year which will have a big impact on our clients and help transform the way the world learns. It is going to be an exciting year for our company.

I also hope we fill 92 current empty positions and create another 92 or more.

Talent development and talent hiring is probably our Number 1 concern right now for the next year as we continue to grow.

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Q – On that subject, you’ve clearly made a commitment to Waterloo Region, even though some argue that it’s wiser, from a talent perspective, to locate in a larger centre. Why are you here?

A – We do have staff around the world; we are approaching 40 staff in the U.S., we’re approaching a dozen staff in Australia, we’re adding more staff in Asia, in Latin America, in Europe, and we’ll probably have staff in other parts of the world soon.

So, looking for talent globally.

What’s exciting about Waterloo Region is that is has top universities, easy access to good transit, and you’ve got great talent in the region.

And it is great that I can work here in this office, and my house is on the other side of another city nearby, and it still only takes me 20 minutes to get home at night in rush hour. Not that I ever leave at rush hour..

You get the advantages of being close to a big city such as Toronto, but not necessarily being in it.

That said, we’re looking at all options for how we grow globally. But I can’t think of a better region to set up a business and start growing. There is great space available, you’ve got great talent, you have an amazing, supportive community behind you.

If I look back to when we were two people, we were already being put in front of the whole community to give a five-minute pitch on what we were up to – and this was before there was the massive startup support that exists in the community today.

So the whole community has a long history of supporting great companies, even the small ones.

Q – Some people in Canada’s tech community still measure success by the number of companies that exit through acquisition, while others say we should be digging in and building our companies. Why have you chosen to build rather than sell?

A – Even in our space, we see most of our competitors build and then sell.

There’s nothing wrong with building a business and seeing an exit, but that’s not what we’re doing. We’re trying to execute on a vision that we have, and we think we can do that far better than anyone else who we’ve run across.

So, we’re committed to the market for the long term. We really, truly believe that learning, life-long learning, really needs a great company and a great platform to do that, and we’re really just getting started.

That said, we’re buying companies, too, these days, so we’re focused on bringing in great talent and great people, but we’re also retaining and growing the people in those organizations to continue to build out a bigger vision.

We’re looking to build something really big here, and that’s not easy.

A lot of companies exit probably far too fast, far too early.

Q – Why do you think that is?

A – Sometimes they just need help getting to the next level, so joining some bigger entity makes a lot of sense. There’s no harm in that.

In other cases, they may have picked a market that was really small and found it tough to jump from that market into a bigger one.

In other cases, their investors want a return on their investment and they don’t want the risk, so they look for an exit.

Those are all valid reasons.

Q – Have you had trouble scaling up in that way, or have you been able to retain that early success at funding your own growth?

A – We haven’t been looking for outside capital because we have good cash flow and good capital in the organization already.

We’re not against it; we just haven’t done it and haven’t had a need for it.

Q – I guess inviting outside capital could also mean surrendering some control, too, right?

A – Control is not the main issue but it could hinder us from executing on our vision. We’re really interested in building a great, lasting, durable company.

Building a durable company is a really good challenge. It’s not easy.

Q – Who are your role models for building a great company?

A – Oh, there are lots of people who have done great things.

I would say, as much bad press as they’ve gotten in the last little while, Jim [Balsille] and Mike [Lazaridis] have done an amazing job of building a company in a very short time frame – and in a very tough market, crossing the enterprise as well as the consumer space with a device, in probably the hardest market to do it in, which is the smartphone segment right now.

There are other good companies, like Microsoft, IBM, Google, Apple; there’s all kinds of great companies you can learn from.

There are also great companies that have learned a few lessons over the years, and you can take some of those learnings away.

We also try to learn from clients.

But to answer your specific question on mentors, my mentors so far have largely been business leaders in the Waterloo and Toronto communities and within our client base.

Q – What can the rest of Canada’s tech community learn from what we’ve done in Waterloo Region?

A – One of the strengths of this region has been the community aspect, the willingness to sort of help each other out, solving problems, co-ordinating shared best practices, sharing ideas, the peer-to-peer groups, the community building, the barn raising, all those concepts are really impressive.

I was in a peer-to-peer group when there were four people in the company, and I was in the CEO peer-to-peer group, learning from other CEOs. Then I got into a more advanced peer-to-peer group when there were 20 people in the company. So there was a progression of learning and sharing ideas back and forth.

Even our developers, designers, and sales team members are in peer-to-peer groups.

So that willingness to share and break down company barriers to learning is important.

Q – You don’t see that everywhere.

A – I’ve seen it in Silicon Valley and Boston, and I’m sure there are many other communities. Especially in the early days, you had it with the chip manufacturers in the valley, where people who were struggling would talk to each other over a lunch somewhere else outside their main campus, and things would get solved.

That sort of culture is here, too. There’s no question.

Q – Who is the biggest player in your space?

A – Blackboard is the biggest player in our space. They just went private; a private equity group bought them for about $1.6 billion. But we’re slowly growing our market share, more and more every year.

We’re also diversifying our product suite from just the traditional what would be called a learning management system or learning environment to a more complete set of products. One example is our Capture product where we can do live webcasting of events that could also be archived.

So you could be late for a meeting and you’re walking to the meeting and watching what’s going on in the meeting or class on your BlackBerry or iPhone. So there are other competitors for some of our point solutions, too.

On the e-portfolio side of the house, which is more like a social learning network, we see a pretty diverse competitor set these days. But we have some distinct advantages that we can offer with a complete solution for clients and even go head-to-head on the point solutions.

And that is the way we think now. We don’t think, ‘How do we compete against Blackboard for this one product or this one feature’; we think, ‘How does every one of our features, or every one of our services or products, stack up against the best in the entire industry?’

We’re pretty ambitious when it comes to how we build things.

Which is not easy either, but it’s a good challenge.

Q – How old are you now?

A – I just turned 35 two weeks ago.

Q – How has it been personally to preside over the growth of a company from you to 376 people?

A – I think it’s been very rewarding.

For me, it’s never really been about myself; it’s been about the impact we’re having on people’s lives around the world.

To get feedback from clients who are just so excited about how we changed someone’s life, or how they’ve gone from 50 per cent of students graduating to 100 per cent and they say it’s all because of your software, it’s incredible.

There’s a school we’re working with in Alabama, and in the 2010 school year, they had 100 per cent of their students graduate. Previously they had maybe half of the students who started the school year finish the school year.

It’s touching to be just a part of that amazing transformation.

And if you look at Ontario, when we first started working with Ontario, the K-12 schools in this province, two in three students would graduate, so one in three would not. Last year it was one in five, and we’re hoping to support their goal to get it down to one in 10.

So if we can help improve graduation rates in high school, and if we can improve the outcomes in university, and if we can help people make the leap into the workforce and do workforce development so that they’re always learning and maturing, that’s going to be really exciting.

We’re already starting to do that. We’ve won some really leading-edge clients in the corporate space; NASA is a client, the Coast Guard is a client, the Workforce Development Agency in Singapore just came on as a client. At some point, we see a world where everybody has the ability to get access to the highest quality educational resources, and break down all the barriers that exist in getting them access.

And hopefully they can achieve the results that they want to set out for themselves personally.

And this is not a little problem.

There are some countries where one in three will graduate high school, and even fewer will graduate from university.

I believe the quality and productivity of our society depends on the education and learning done by each citizen– it’s critical to invest in our people to improve our society and increase productivity.

I look at the investments governments are making in terms of helping to fix their productivity gap, and I question, why aren’t they investing more in the single biggest thing that could actually have the biggest productivity improvement, which is people?

If you look at where the money’s going, it’s to capital projects to improve equipment, which is great; I think that will have an impact. But if you can improve your human capital, and how you do that is through better learning, then that’s going to be a huge impact on society.

We’re at the core of all of that transformation, but we still have a lot of education to do to help people realize the potential.

There is lots of great information in financial statements that can help a startup with its sales strategy for that account.  Some of the highlights from Don included:

Health of a business: The balance sheet an income statement can tell a great deal about the financial strength of an organization.  What does there debt to cash ratio and are they continuously making or losing money.  If the company is very tight with cash and is losing money they may not have the funds to spend on your solution.  Even worse they could become a risk for your business if you start to do business with them.

Internal rate of Return:  This is the internal rate that many businesses will have to determine if they should decide on a new project.  While it is not possible to get the exact number, you can look at the details on their debt and the interest they are paying.  If there top interest rate is 15% you can assume that their internal rate of return is likely higher than that.  If your solution has a Return on Investment that is higher it may be a good fit.

Look into the notes:  There can be nuggets on information in the notes.  This can relate to more detail on purchases, legal actions, and other information that does not make it into annual reports or onto a company’s website.

Financial information on Private companies is hard to find: Private companies are not required to report and so the information is often estimated.  You may be able to find Revenue and employee numbers on Hoovers, Jigsaw, or on their Linkedin company profile.

The session with Don was interesting and helped the group make sense of Financial Statements. For more information about Venture Accelerator Partners, please visit our website and contact a member of our team for answers to your sales, marketing and social media questions.

On the second of February, Communitech expanded the Hub. Here is a short video with CEO Iain Klugman talking about Communitech and our beautiful new space.

Tues Feb 14th 11:00-12:00 – Communitech’s Hidden Gems Program

Looking for funding to explore value and development of intellectual property (IP)? Communitech’s Hidden Gems Program is intended to help you advance IP development by supporting and leveraging engagement with complementary funding programs.   To kick things off, we want you to invite you to join Jennifer Tedman-Jones (MITACS Director, Business Development) and Emily Moore (Hatch Ltd. Director of Technology Development) as they present how Hatch leveraged the MITACS Accelerate program to explore the financial attractiveness of specific HATCH intellectual property in support of their commercialization strategy. For those companies wishing to explore application of the Communitech Hidden Gems and MITACS Accelerate program for their own IP advancement, Jennifer and Glenn Smith (Communitech) will be available from 1-4pm for up to 6 one-on-one discussions.  Please register here.

Thurs Feb 16th from 12:00 – 1:30 – Hub for Grub: Government Support for Your Development

The OIDMTC (Ontario Interactive Digital Media Tax Credit) and SR&ED (Scientific Research and Experimental Development) are two advantageous tax incentive programs for innovative companies in Ontario.  The OIDMTC can reduce the cost of digital media product development and marketing, while SRED can significantly reduce the cost of developing new or improving existing products and processes.  However, the government has quite specific requirements surrounding the administration, eligibility and documentation surrounding these credits so it’s important to know these rules before considering a claim.  Join KPMG for this session where topics will include credit eligibility, filing requirements, utilizing the benefits of both programs as well as potential changes for 2012 and beyond.  This event is currently sold out.

Keep an eye out here for what’s coming up next at the Hub.

 Beijing, China – February 9, 2012 -  China Unicom Beijing and ClevrU Corporation signed a Memorandum of Understanding today in Beijing China witnessed by the Prime Minister of Canada, Stephen Harper, to work together on a field trial to offer subscribers access to on-demand educational content using ClevrU’s intelligent and adaptive delivery platform.

It is the intention of ClevrU and China Unicom Beijing to develop a long-term strategic partnership under China Unicom Beijing’s WO+ Project to develop the mobile on-line teaching market.  China Unicom Beijing will provide marketing and service launch assistance, system and client feedback, and business model development.

Dana Fox President and CEO ClevrU Corporation said “ClevrU is excited to work with China Unicom Beijing on the opportunity to jointly launch ClevrU’s educational platform into the mobile online education market.” Fox went on to say that, “the need to provide greater access to quality education services in the Chinese consumer education market is great and our strategic partners like China Unicom Beijing make it possible.”

About ClevrU Corporation

ClevrU is focused on WEB 3.0 applications that intelligently leverage Cloud Computing in a mobile environment. ClevrU has developed an e-teaching content delivery platform with advanced tools to assist in interactive teaching and student/instructor collaboration. This application uses an intelligent engine to adapt course content to users personal needs in a mobile environment. ClevrU is initially focused on international education markets. ClevrU’s technology combines video e-teaching with semantic based intelligent social network tools for educational institutions universities and colleges, cellular phone/ tablet computer manufacturers and cellular carriers to deliver course content to students anywhere, anytime. ClevrU branded the platform ClevrU EDU and registered a patent pending on its Intelligent Collaborative Platform Technology.

About China Unicom Beijing

China Unicom Beijing is a subsidiary of China Unicom. By the end of 2008, China Unicom had 273 million subscribers, among which the broadband subscribers totaled 30.16 million, GSM subscribers 133 million and fixed-line (including PHS) subscribers 109 million. China Unicom was among the Top 500 in the world in terms of its revenue, and ranked in the top of the world leading telecom operators in terms of its customer base and market capitalization of its listed company.

Aiming at providing comprehensive and high-quality broadband communications and information services for customers, China Unicom has been speeding up the construction of mobile communications network, strengthening the development of fixed broadband network, and promoting broadband-based fixed and mobile networks. Committed to raising its overall competitiveness and sustainable development capacity and becoming a world leading provider of broadband communications and information services, China Unicom will further enhance the development of its services, expand its business scope and improve the quality of service while adhering to the market-oriented and customer-focused principle and emphasizing the development of mobile broadband Internet services.