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A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
April 4th, 2008


By Brent Holliday
Greenstone Venture Partners

Thirty Six Hundred Days of Tech

 

I was down on a frown
When the messenger brought me a letter.
I was raised by the praise
Of a fan who said I upset her.
Any girl in the world could
Have easily known me better.
She said, You're strange, but don't change, and I let her.” – Neil Young, Mr. Soul

You know you have been around too long when...  How should I finish that line?  Let’s see.  When you have 250 columns still posted on the Internet for any search engine to find...  When your wife has stopped complaining about the very late Thursday nights or very early Friday mornings every couple of weeks...  When the Premier of the province was Glen Clark and Priceline.com went public the same day as your first column... When the Canucks used to miss the playoffs with regularity (oh, sorry... that’s quite current!)...

So here we are.  Thanks for coming.  Hands up any of you that read my April 6th, 1998 column... on April 6th, 1998. OK, none of you.  Well if you had, among the many pearls of wisdom my 31 year old brain had contrived was the fact that BC’s technology industry needed big anchor companies to thrive. Duh. What penetrating insight I had. My favourite part of that first column was that I thought, at the time, we should bet big on hydrogen as the next gold rush.  That Ballard Power was the next Intel. Ummm. With apologies to the many fine engineers and staff at Ballard, it didn’t quite turn out that way.  Hydrogen is still a peripheral green technology 10 years hence.  Other clean technology has leapt to the fore.

Now you know why my venture capital career veered away from clean technologies soon thereafter.

Ten years went by in a flash, it seems.  Or did it.  Think about what you were doing in the spring of 1998.  The dot com explosion was on.  Bill Clinton was humping interns. Downtown Vancouver’s skyline was missing a thousand condos or so.  It was a LONG time ago in some respects.  In the technology universe we hadn’t even heard of Google, 360 Networks, Infowave or Worldcom and no one was paying attention to PMC-Sierra, JDS Fitel or our current largest technology company MDA (possibly because it had been tucked under a US company called Orbital Sciences).

In 1998, BC’s technology industry represented just under 3% of the provincial GDP.  It was an impressive step up from 1.3% in 1984.  Despite the total meltdown of technology in 2001, the dramatic reduction in jobs in the sector in the following years and the drying up of capital, the sector is now at 5.3% (2006) and growing.  That’s 75% up, despite swinging way down for a few years.  Nice job entrepreneurs.

Over the years I have made predictions that, well, frankly were wrong (I called the end to the dotcom bubble... a year and a half early. I wrote a very bullish column in July of 2000 saying that the best was yet to come... what I should have said was five years from now).  But those were mere timing issues, really.  Some of the columns are downright funny in their complete miss of what really transpired.  For instance, in early 2000 I told you about new business models on the Internet and totally dismissed advertising as a business model...  I’m glad the guys at Google listened!  At the time everyone wanted to be an intermediary.  Remember the mad rush to create on-line marketplaces for business to business transactions? We should all be slapped for that craziness...

But my worst timing for a prediction, as it turned out, was 10 days before September 11th, 2001. None of us could have known, but it was odd and coincidental that I picked an end of summer time to make predictions about how we would pull out of what was already a disastrous year for technology.  The most difficult column I wrote was the next one on September 14th.  What the hell could you talk about?  As I said in that column, talking business seemed a bit insensitive and trite at that moment.

My favourite columns, without a doubt, are the stories of the successes and the people.  Writing about Cecil Green, founder of Texas Instruments and his connections to Vancouver was special. From Radical Entertainment, HotHaus, Abatis, Creo, Active State, Class Software, Convedia and Club Penguin, I was able to give you a little more insight into what happened at these companies to become as successful as they did.  I enjoy that part of the writing immensely.  If I was to become a writer full time, it would be the non-fiction war stories and personal stories that I would find easiest to write.

I would like to thank Mike Boeur, owner of this fine web site, for his patience with me missing deadlines, having typos in my “finished” work and for giving me the opportunity to hone my craft on an unsuspecting crowd of people looking for information about BC’s technology industry.  I guess we can tell them now Mike... I had never published any writing before that first column in 1998. And it still shows!

I thought I would celebrate this milestone by picking a few of my favourite moments that occurred on my watch over the past decade in BC’s tech industry...

Biggest $$$ Win In Technology – HotHaus – In the immediate moments after a successful M&A announcement or IPO, people look really wealthy on paper.  But over time, the actual dollars that came out of some of the bigger tech deals (Abatis, Sierra Wireless, 360 Networks, Octiga Bay) were much smaller due to the downturn in the tech stocks.  Hothaus sold to Broadcom in the summer of 1999.  Its split adjusted price in June of 1999 was $37 a share.  It’s $21 a share today, but was as high as $40 just 8 months ago.  It didn’t drop below $37 for almost two years after the Hothaus acquisition.  Plenty of time for the VCs and founders to sell their stock.  I think that the shareholders made at least the $415M in announced deal value...

Honorable mention goes to Club Penguin at $350M in cash.  In time, they may pull $700M out of Disney and would top my list.

Best Product of the Decade – Crystal Reports – This product preceded my decade by almost another decade and will probably go on in its new incarnations with SAP.  Without a doubt, it is the biggest, most well known technology product to be “Made In BC” over this time frame. 

Honorable mention goes to MPR Teltech’s ATM Access switch which was bought by Newbridge and went on to make hundreds of millions of dollars of sales for Newbridge over many years.  One of the alumni can correct me here, but I believe it was unloaded in 1997 for about $5M.  Nice deal BC Tel!

Forrest Gump Award for the Company that just keeps on running – This has to go to MDA.  Over the last decade, they have steadily grown up and to the right.  They have not had spectacular gains or spectacular crashes.  They just kept going until suddenly they are the biggest technology company in the land, leaving such high fliers as Ballard, Angiotech, QLT and Sierra Wireless sick from the roller coaster ride they have been on.

Honorable mention to Electronic Arts Canada, the mother ship of game development studios.  Through the entire decade they have been there, churning out great games, great earnings and great people.

Those are my choices.  I’m sure yours may be different.  There are plenty of other successes and even more failures.  But that’s life in the technology business.  It has been a great ride, despite the sickening drop in the middle.  I look forward to another decade in the technology business and hopefully another significant gain in the industry’s share of the provincial GDP.  Excuse me now, I have to go blow out some candles...

What Do You Think? Talk Back To Brent Holliday



Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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