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Something Ventured: October 9th

Insight For BC Technology Entrepreneurs

By Brent Holliday

Rising Above The Noise, Part 2: How Some BC Tech Companies Fare

"You made me promises, promises
Knowing I'd believe
Promises, promises
You knew you'd never keep"
- Naked Eyes - Promises, Promises

As promised, I will try and emphasize the points I made in the last column (Sep 25th, Rising Above The Noise, Part 1) using BC tech companies as examples. To summarize, PR, or communications as it is sometimes called, is an extension of the overall marketing strategy. It can be more effective at creating perception about a company and its products than advertising and it's always less expensive. But, the delivery of a company's key messages is an artful arrangement of timing, proper connections and creativity. It can be a complete disaster if not executed just right.

As a technology company, effective PR can lead to more than just increased sales. PR is critical for hiring good people and for raising money, either private or public. I have seen a feeding frenzy of venture capital and obscene valuations (from the investor point of view, of course) created largely from press clippings and/or a charismatic leader.

The biggest buzz in the Valley in 1998 was/is a company called Crossworlds (You have to see their site to begin to understand the magnitude of their hype machine at http://www.crossworlds.com/). The company (and its CEO) was on the lips of the entire "in" crowd of industry pundits and financiers. A wildly successful IPO was predicted for early 1999. The hype had lead to $40 million raised from the likes of Compaq, SAP, JD Edwards, many top VC's and industry leaders like Michael Dell. I fell for it too. If you had asked me what the next big thing was 6 months ago, I would have said application integration and Crossworld's CEO, Katrina Garnett. But, if you fail to deliver on the hype, the PR can turn into damage control. The company hasn't shipped a final product and the buzz now is that it can't deliver. The star is falling fast. We'll see how it turns out, but this example is instructive for any technology company looking to "go big". You have to deliver on your promises. Period.

Most of us in BC are aware of the successful technology companies here. We can look back five years and see no $100 million (revenue) technology companies in BC. Now there are half a dozen. We may have our first quarter billion-dollar company soon, in Creo Products or Electronic Arts (Canada). When I ask people in the technology communities in Toronto, Calgary, Seattle or San Francisco if they are aware of any of these companies, the results are always interesting. (I am NOT saying that Joe Q. Public has to know your company in order to be successful, but people in technology are a more selective market segment) Almost no one has heard of Creo. Many have heard of Ballard, but they are publicly traded and have a few strategic partners you may have heard of. The most recognized company these days is Pivotal Software. Why? They have an excellent PR campaign going that is aimed at huge corporations and the technology financing community.

Two technology magazines have risen to the top of the pile for general company PR targeting. Upside and Red Herring have wide circulation amongst corporate technology buyers, private and public financiers, technology CEOs and most technology analysts. Pivotal has made the Top 100 list of private companies in each of these magazines. It's the only Canadian company in either list. (Sierra Wireless didn't make the top 100 but did get an entire article in the July edition)

I don't know who Pivotal's internal communications person is, nor do I know their PR firm. But it's safe to say that Norm Francis must be very pleased with the awareness and recognition of his company, especially south of the border. Having Kleiner, Perkins, Caufield and Byers and Oak Investments as some of your investors doesn't hurt your reputation in the U.S. Many technology entrepreneurs would kill to have a top tier VC firm from the Valley invest in them. (I should mention that Ventures West is the local VC that stands to well as an investor in Pivotal)

Just to illustrate to you that having your name in lights is not necessarily the key to success as a company, I want to compare two companies in the Intranet software business, one local and one in the US. Three years ago, I had the pleasure of doing some business with the ExCITE Lab at SFU and Gerri Sinclair. At the same time two of her employees (students actually) had developed a very cool extension of the then extremely nascent World Wide Web. They had enabled Microsoft's OLE technology (the stuff that lets you put an Excel spreadsheet into a Word document) for a browser, before even Microsoft had thought of it. They announced this to the world via press release and the world came calling. A man named David Pool, fresh from a small killing selling Spry Net and its browser technology, wooed Gerri and tried to convince her to let him take her newly formed company, NCompass Labs, to the big time. David is apparently quite a character. He is an afficianado of PR. The man leaks press releases as he walks. He is well-connected, which is critical to finding financing and selling product. But Gerri declined.

Fast forward two years to last July. David Pool had started his new press release factory called Datachannel. His company apparently was to deliver information management products for the Intranet. He liberally used the buzzwords of the day, including (gasp) push technology. Gerri's NCompass Labs had just closed an $11 million round of financing, including the likes of Intel, all the big local VCs, including yours truly. NCompass Labs was making a content management tool for the Intranet. I had a conversation with Gerri about PR. I told her that David was getting all sorts of press and the Datachannel, which at the time seemed competitive, was getting all the attention. Gerri calmly told me that David was spouting vapourware. He had just hired 14 people the month before to get started. There was no way he had a product or was even close. She said her philosophy was to build the product and announce as she shipped.

It used to be a David Pool kind of world. I told you last time about Microsoft and the famous Windows pillowcases. In the 80's you could announce a product and ship two years later. In the 90's you can only do that if you are Microsoft. NCompass Labs has been very quiet. They have finished and shipped product and have a grand total of two press releases in the past 6 months. Datachannel had that many this week. But there is always a right time for hype. Hopefully, NCompass and its new PR machine can crank it up when the timing is right. I believe Datachannel has made people weary. They have changed their positioning of the product, RIO, to match and deliver the latest Internet buzz, XML. Example quote: Stephen Sigmond of the investment bank Dain Rauscher Wessels fairly crows over Extensible Markup Language (XML) application vendor DataChannel: "It could be the Netscape of the XML market!" Faint praise indeed.

I guess the PR and the general market perception can be crafted using two methods that are not necessarily mutually exclusive. There is the targeted and subtle approach and the sledgehammer. In my estimation, you get one chance using the sledgehammer. If you blow it, well...

Most of the local BC PR flameouts that I can recall have been heavily promoted public companies. That is a completely different game than the PR I have been referring to. Stock promotion is a grey area that I know little about and don't care to comment much on.

There have been many miserable PR pushes by private BC tech companies. The reason they must have been miserable is that we don't remember the company or the product, even though they tried to announce it. I have a list of these stinkers, but I think I'll save them the embarrassment and save me the libel suits.

I have a question for the readers. I have read or heard of many of the classic technology marketing books. None of them explicitly discusses PR and its effects on the success and failure of tech companies. Do any of you know of such a book that I can post here next time? I think that PR strategy is too important to not understand.



Random Thoughts

- Just this week, the rather blunt, sarcastic writers at Upside pointed fingers at themselves (meaning the media) for creating the latest inane hype about Linux, the shareware operating system that might topple Windows (uh-huh). The article is very funny and fits well with my articles about PR. Have a look.

- HOT OF THE PRESSES - My immigration expert friend, Ron McKay, has passed me information regarding foreign spouses' ability to work in Canada. According to changes to the immigration rules, effective October 15th, 1998, spouses of foreign people working in Canada will be able to work too. This removes a serious barrier to having married (or common-law) people move here to work. Of course, an announcement of a new maximum personal tax rate of 30% would go much further. For details on who this applies to and other changes to the act affecting software specialists, please see the CIC web site.

- There are some real contrarian positions to the generally accepted shortage of high tech workers in the US and Canada. I have culled a few articles about the US situation together here for you to look at.
http://www.techweb.com/se/directlink.cgi?EET19980928S0053
http://www.upside.com/texis/mvm/story?id=360c25f80
for the side that wants to increase foreign workers

http://www.upside.com/texis/mvm/story?id=34712c0b9
http://www.redherring.com/mag/issue56/leader.html
for the side that says that there are enough workers

The general feeling is that US companies are preferring to pay foreign workers less to work longer hours in all forms of engineering. So, they have manufactured the shortage to get the US government to increase the foreign worker visas. I have part of a letter to me below that laments the same issue here in BC. My feeling is that there is a perceived shortage of workers simply because every technology company believes that there are brighter, more diligent workers around somewhere to fill new and existing roles. I also think that the pace of new company creation in technology has passed the infrastructure's ability to provide for it. There will be layoffs and consolidation coming shortly to correct this problem. Finally, I believe that the complexity of hiring technically skilled workers is beyond a lot of the human resources capabilities in these tech companies. I have spoken to search firms and HR outsourcing firms and they concur. The biggest problem a tech company, working at Net speed, has is actually trying to define what it is that they need.

- Last point this week is a fable: I went to the Valley. I made the pilgrimage to nirvana. I met the worker bees. I drove the 280 and 101. I lunched with the financial foxes. As I walked through the Valley of Silicon, I felt the earth moving below and the world spinning out of control around me. I was intoxicated by the rapture of money and success. I was inspired and invigorated. Hey, if I could make it here, I could make it anywhere. The thin man with the funny goatee and a rather long forked tail was waving employment contracts and smiling a smug knowing smile. "ComeÖ play here for a while", he said. Then the cold slap of reality: $2400/month for a 2 bedroom condo in a desert, no one has a tan (except the VCs), disloyal automatons as employees, no Whistler mountain, Don Cherry or the Tragically Hip. I shuddered as the thin man's visage disappeared and an airport waiting lounge appeared. The moral of this story is "Don't go. You just might stay."




Response From Last Week's Column:

hello!

I have just read the response to last weeks column on the ESA changes.

I have to agree completely with the opinion of the response! The idea that the government has to take away the rights I currently enjoy as a high-tech professional appalls me. If I so choose, I can wave those rights. If I feel that extra time is necessary in situations such as prior to product releases, etc... then i don't have a problem with staying later and making sure the product is completed to my satisfaction.

I enjoy my time off. I love to enjoy the scenery and outdoors lifestyle that Vancouver has to offer. I wouldn't live anywhere else, even if the salaries are higher. Lifestyle is important to me. If i'm stuck in the office for most of my week, I guarantee that I will move on to another job that provides more job satisfaction.

Job satisfaction does not equate more money. This is a point that has to be understood by businesses and the government! High-tech professionals enjoy the creative freedom provided by this industry. Just because you offer more money to stick around for a few hours, does not make them instantly satisfied! A balance is necessary for employees to be happy with their work. I cannot stress this enough!

I look forward to what the government chooses to do in the coming months with these changes, and I hope they make the right decision in the best interest of this province's professionals. Otherwise, "brain-drain" will become the only solution.

James Nedila

- I think the old vision of the worker punching a time clock, saying, "Goodnight, Sam." is over. This ain't manual labour. I don't hear that many tech workers saying "it's only a job" and watching the clock to bolt at 5 pm. Workmen's Compensation isn't getting a lot of claims from software or biotech firms (carpal tunnel syndrome gets a real sneer from the forestry guy with a broken arm and 18 stitches). Hell, my biggest problem is my contact lenses drying out 'cause I stare at a 15" screen all day. Point is, you can't apply the same regulations for workplaces as varied as cubicle farms and fishing trawlers. It doesn't work.

Dear Mr. Holliday:

I was looking in the BC Technology web site, when I came across your column. I hope you might provide some job finding advice.

The high technology industry says they are desperate for skilled workers. I fit that category but where are the positions? I can't find one.

As technology becomes more complex, clear writing and communication skills rise in importance. I'm a writer who excels in turning highly complex information into easy to read English; "Turning Technish into English" if you will.

Canada Manpower's own survey (1997) says this skill is in, and will continue to be, in high demand.

Other technical writers say my ability to speak both engineering and English is a rare one that should be in demand. I'm still waiting to use it.

Possessing several years experience as the technical writer for an electronics firm would stand me in good stead finding a new job, I thought. Well, 6 months later, I'm still looking. Getting desperate in fact. So where are all these high tech jobs??

I've knocked on all the doors in the "High Tech Corridor" with little more than "we'll keep you in mind if something opens."

There was a high tech career fair last week. If you were a software engineer, or any engineer at all, you had more job offers than you could ever hope to respond to. But how about the rest of us?

The postings for technical writers on the web site (T-Net) helps. But it seems that most come from a single recruiting firm. I've sent in my resume, but they haven't replied to several requests for an interview. As for the rest of the jobs, I've applied, but no luck. Maybe there is something about the industry I've overlooked or don't understand or appreciate?

Or is it only university trained technonerds need apply and have hope?

Name withheld (but if you want to talk to him I'll hook you up)

- What about the rest of us? That's a tough one. University trained techno-nerds with experience are in high demand. In fact, look at the NAFTA requirements and they show that people with Bachelor's degrees or even Master's degrees are the minimum requirement to move to the US. But what about sales people, manufacturing people, HR people, accountants, counsel and yes, technical writers that are necessary parts of technology firms? The short answer is you have to have a track record and know someone that can vouch for you. I believe that there is a shortage of domain knowledge with respect to these jobs. There are not enough lawyers in town that understand the intricacies of technology licensing, intellectual property law and venture financing, for instance. You are much more attractive if you have direct experience. If not, you need a strong reference. It's still very much who you know. Good luck.


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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