Something Ventured:
July 11th, 2002
By Brent
Holliday
Greenstone
Venture Partners
"Oh
when I look back now,
That summer seemed to last forever.
And if I had the choice,
Ya - I'd always wanna be there,
Those were the best days of my life."
- Bryan Adams,
Summer of '69
In
hockey, for instance, the appropriate reaction is a
clenched fist, turned skyward being thrust back and
forth around the hip level. Clenched teeth and some
bending at the waist are options to add a more
determined look to your celebration. The "fist
pump" is one of many ways to mark an important
milestone, like, say, a timely goal or perhaps the most
memorable instant in the history of your fair city: the
occasion when it is awarded the Olympic Winter Games.
To
be fair to the droll, stuffy International Olympic
Committee, they certainly know how to make an
announcement like the one on July 2nd feel like an
actual sporting event with all of the stomach churning
anticipation and absolute thrill of victory and agony of
defeat. That was fun wasn't it?
So
now Vancouver and Whistler are "Olympic"
cities. The feeling of pride will last for seven years
and beyond. The build up to the actual event will have
its ups and downs to be sure. And the actual 2 weeks for
the Games and following 10 days for the Paralympics will
be a blur compared to all of the preparation. But the
comfort I take away from this momentus event is that the
world is just becoming aware of something that we
already know about Vancouver and Whistler: this place is
and its people are world class.
As
a start-up in technology this summer, the successful
Olympic bid is just one part of a slate of positive
news. SARS is disappearing from Canada. The US economy
is showing signs of a better second half with all of the
stimulus applied by their government. Early indicators
of that positive growth came in this week. For instance,
temporary hiring has spiked in the past month south of
the border. As any entrepreneur going through a downturn
will tell you, hiring temps is the first step towards
more permanent hiring. The NASDAQ finished up 21% for
the first half of the year and the first technology IPO
in a very long time, Form Factor, gained 26% over its
opening price last week. Most of the publicly traded
companies in technology have shown returns to
profitability or are approaching it before year end.
Even companies selling to industries with very sick
value chains, like our own PMC-Sierra, are seeing the
light and return to growth. The consensus estimate for
PMCS is for 20% growth in revenue in 2004 and
profitability versus the flat revenue through 2003.
In
a nutshell, the summer of '03 should see the beginning
of better days for the technology industry as a whole.
On
the negative side, the amount of investment in early
stage companies continues to decline in the US and
Canada through the second quarter. However, the
"right-sizing" of the venture capital industry
is almost complete. Ridiculous amounts of available
capital in the US helped create unsustainable
expectations three years ago. Nowhere was that more
evident than in California. In fact, if there is one
very dark spot in the US right now, it is California.
They are in a heap of trouble. I mean, how bad does it
have to get before you actually consider the Terminator
for governor? They have deficit levels in the state that
are starting to rival Canada's worst days. They have
collected nearly zero capital gains tax in two years and
the decline in profitability of the technology sector
hurt their corporate tax revenues. So now they will
consider tossing their governor and bringing in Arnold
to "pump up" the economy.
Getting
back to the Olympics, the increased exposure will lift
tourism and the jobs created by the infrastructure
build-out will be welcome here. But given this shot in
the arm, how can we take advantage of our new found
confidence and awareness and drive people, ideas and
capital our way? You might think that the link to the
technology industry is tenuous, but I think it is
stronger than you think
There
has been some anecdotal evidence of the movement of
people out of California and into Vancouver. Most are
Canadian ex-pats, but some are Americans looking for a
new opportunity. I am golfing with a telecom executive
this week, who happens to be interested in a move here.
A start-up that we are working with has some Cisco
people returning from the "dead" Valley.
Silicon Valley VCs are doing deals here (D-Wave) and
looking for deals more seriously than they ever have.
We
need to tell a better story about doing business here,
particularly in technology, to counter some of the
lingering stereotypes that are out there. Just this past
week, Greenstone had its Silicon Valley partners up to a
conference and the issue arose as to what makes BC so
compelling. The anecdotal feedback from these
individuals was that Californians think that the work
ethic is low here and that there are very few successful
technology companies. These are old issues that are not
effectively countered unless you show them home grown
success stories, newer success stories (like the Crystal
Decisions IPO) and point them to fellow Californians,
like the VCs investing here or the CEOs of companies
that have operations here. Sanjay Dhawan, CEO of Fremont
CA based Inkra, is one potential weapon for us to
counter some of these claims with his team in Burnaby
performing so well. There are many others.
We
are a very proud group in Vancouver. I have seen the
personal interaction of BC entrepreneurs, salespeople,
government workers and financiers with their brethren
south of the border and elsewhere. At the grass roots
level we are proud of our industry and do a reasonable
job of promoting it. Now, we have the world's attention
for the next seven years. We were front page news this
week. We are not some tiny alpine village hosting the
games. We are a city/region of two million people, one
of the largest cities to ever host a winter Games. Some
folks might wonder what sustains a city this big other
than the obvious beauty and quality of life. They need
to learn about the people and the companies that make
this an emerging and sustainable technology center. They
need to get the impression that this city is on the cusp
of something great built on a foundation of hard work
and success.
The
eyes of the world are on us. Let's make sure we put on a
great show.
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).
Something Ventured Archive
Online Venture Capital Guide
Printable
edition
