The MBET Experience

The University of Waterloo – Master of Business, Entrepreneurship and Technology Program

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“Double-Double” Entre-Nous

April 4th, 2007 · Comments Off on “Double-Double” Entre-Nous

When I was looking at this week’s schedule, all I saw was “CBET Grand Opening” on Monday afternoon, followed by “Accounting Exam” first thing on Tuesday morning. With those distractions, the Entre-Nous scheduled for this afternoon didn’t really register. Finally, after the accounting exam this morning, I got around to asking a classmate who was coming in to talk with us today. My jaw just about hit the floor when I was told it would be Paul House, the President and CEO of one of Canada’s most famous franchises, Tim Horton’s.

From the entire hour and a half discussion and Q&A, Paul’s visit was filled with pearls of wisdom. He has quite an interesting story, starting off working on the family farm, where, as he said, he learned most of what he knows about selling from his mother. His first taste of entrepreneurship came as owner of a service station in his twenties. From there, he moved on to Dairy Queen, where he worked his way up to a Vice-President at the age of 32, and ran the company from 1980-1985. In 1985, he was convinced to join Tim Horton’s, was part of the sale to Wendy’s in 1995, and in 2006, was named President and CEO when Tim Horton’s was again spun off as a separate entity. In his words, “he is bringing the company home.”

What I found most interesting was that up until a couple years ago, Paul had visited every single Tim Horton’s location. He still spends a lot of time on the road, talking to franchisees, and getting their input into how to build a better company.

Throughout the session, I found it hard not to write down everything he said. I managed to take about four pages of notes. Here’s a few of the highlights:

  • Business is still pretty friggin’ basic – it’s about taking care of the customer.
  • Knowledge without passion is a wasted resource. Many knowledgeable people never achieve anything because the don’t have the passion.
  • Recognize the tradeoff between Price and Quality. As Price goes up, Quality goes down. Tim Horton’s coffee is great because the price is right! If they tried to charge what Starbuck’s charged, the quality would go down.
  • Timing is everything. You need to know which products to rush to market (bagels in 1996), and which products you can take time with (the breakfast sandwich).
  • Do what you need to do for your business, not what the other guys do. The only reason to watch the other guys is to get a good idea.
  • The one thing that good entrepreneurs have that others don’t is perseverance.
  • Try to get to the end of your life with no regrets.

I know I’ve said this before, but I’ll have to repeat myself: this was another one of the best sessions we’ve had this year. Paul was extremely candid and down to earth, and it was extremely generous of him to take the time out of his busy schedule to share his thoughts with us! He has a great philosophy and it was extremely motivating to hear his story!

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MBET 2007-2008 Group on Facebook

April 3rd, 2007 · Comments Off on MBET 2007-2008 Group on Facebook

I’ve talked to quite a few potential MBET students, and many of you seem to have found my blog. This is great to hear, and I hope it has been useful!!

Last summer, one of my classmates, Jon Chang, setup a website for our class at It was a place for us all to introduce ourselves and get a feel for what we were getting into before classes started. We’ve since switched to using Google Groups to manage our calendar and mailing list, but it was a great place to start building the MBET v4 community.

One of next year’s students, Steve Pulver, has taken it upon himself to start an MBET 2007-2008 group on Facebook. Hopefully you future MBET’ers can use that to get in touch!!

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The Official CBET Grand Opening

April 3rd, 2007 · 1 Comment

Back in February, the Accelerator Centre hosted the “unofficial” welcome party for MBET with the Blueprint to a Billion event. Today however, was the “official” MBET kickoff party. The founder and directory of CBET, Howard Armitage, has returned from his sabbatical in Abu-Daubi and was able to attend, along with UW President David Johnston and a number of other CBET supporters.

I had the chance to do the “90-second” investor pitch for HealthSpoke in front of the entire two hundred plus crowd, many of whom are angel investors. So for all of you who think “Why the heck would I 90 second pitch?”, think again. 🙂 I put the pitch together from a few of the presentations we have done so far, and despite my nervousness, I think it went pretty well. I had a few people chat with me about the business afterwards, so that was a great sign.

MBET has definitely lived up to the promise of providing the opportunities to work on presentations, public speaking and presenting your business. These are vital skills for any entrepreneur – you constantly have to sell your business, to investors, employees, partners.

It was a good little party, and I had the opportunity to meet some former MBET students, as well as some more people from the community. The bad part was that when it was over, it was right back to the classroom for an accounting exam study session…

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Investment Industry Association of Canada

March 30th, 2007 · Comments Off on Investment Industry Association of Canada

Last Thursday, I attended a cool event at the Accelerator Centre, hosted by the Investment Industry Association of Canada. Ian Russell, the President and CEO of the association, was in town to talk about the state of Financing Small Businesses in Canada.

Ian’s talk focused on four main issues:

  1. The funding gap that exists for companies in the pre-commercialization or early commercialization stages. Government grants support basic research, and VC money is available to more established companies, but there are very limited resources for the company in between.
  2. Tax laws that make it difficult to raise money. Canada’s tax laws punish entrepreneurial and growing companies.
  3. Corporate governance issues. In the post-Enron era, many corporate boards are focused on legal issues, which Ian called “compliance boards”. However, there is a strong need for “guidance boards”, which are hands on, active directors, who focus on competitive issues and actively assisting management in developing strategies.
  4. A strict regulatory regime. The narrow, rules based approach, intended to protect investors, really does not offer much to investors, but is burdensome to small businesses. Ian called for a principles based approach to regulation, where managers would not need to ask “Is this legal?”, but instead ask “Is this right?”

I found this to be an interesting talk. Specifically, I found the corporate governance issue intriguing. In small, growing companies, particularly those with inexperienced management teams, a strong board can be key to the company’s success. In today’s environment, the empahsis placed on compliance may be hindering company’s growth potential, as limited resources are wasted dealing with dotting i’s and crossing t’s, instead of developing strategies to grow and compete more effectively.

After the event, James and I took full advantage of the networking opportunites, and added a few more connections to the electronic Rolodex (aka – Microsoft Outlook). This was probably not the most exciting event of the year, but one more opportunity to meet a few new people and learn a little more about the general business climate in Canada.

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RBC Innovator Challenge Finals

March 29th, 2007 · 2 Comments

Wow… it has been a busy couple weeks, as evidenced by the lack of blog posts lately. This week was very exciting though, as Jas, Jenn and I headed down to Toronto on Monday afternoon for the finals of the RBC Next Great Innovator challenge.

Day 1: Monday, March 26, 2007

From the moment we arrived, everything was first class. We checked into the Intercontinental Hotel, right downtown, where the Miami Heat basketball team happened to be staying (I found this out when I started chatting in the elevator with the largest man I have ever seen). Gift packs were waiting on our beds, which included some great RBC gear and clothing.

After getting settled in, all the teams convened in the lobby, where we were greeted by the RBC representatives. The five teams were from schools across the country – UBC, Schulich (York University), Ottawa, McGill and Waterloo. We rode up to the Ontario Science Centre on a pimped-out limo bus, where we were met by the RBC Olympians, Bernard Luttmer of the Sailing Team, and Lori Dupuis, who was part of the silver and gold medal winning Women’s Hockey teams in 1998 and 2002.

We had the entire Weston Innovation Centre booked off for us, and got to mingle with the athletes and other contestants over dinner and activities. Everyone was fairly tired, and with the presentations looming in the morning, we headed back to the hotel early and got ready for the big day on Tuesday.

Day 2: Tuesday, March 27, 2007

Presentations were scheduled first thing in the morning. The J2D Innovate team was scheduled second, at 9am. We ran through our presentation after breakfast, and before we knew it, it was showtime. The judging panel consisted of some of the top people at RBC:

  • Marty Lippert, CIO and Vice-Chair
  • David McKay, Executive Vice President & Head Canadian Personal Banking
  • Anita Sands, Head, Innovation & Process Design
  • Janet Barkwell, Vice President, Client Strategies, Personal Banking
  • Cathy Honor, Head, Cards & Payments Solutions

We delivered our presentation well, but got asked some tough questions surrounding the implementation of our idea. It was difficult to gauge their reactions, and not having seen any of the other presentations, it was hard to know where we stood. However, we left knowing that we had done the best we could.

The presentations took the entire morning. Once everyone finished up, we were escorted up to 40th floor of the RBC tower for lunch. All I can say is WOW – I hope one day HealthSpoke has an executive level like that. 🙂 Lunch was highlighted by a visit from Gord Nixon, the president of RBC. He dropped in for a few minutes to congratulate us. It was very cool to hear him speak of how much excitement the Next Great Innovator Challenge had generated within the bank.

At 5:30pm, the teams gathered again in the hotel ballroom for the awards ceremony, attended by over 100 RBC executives. We had a chance to have a couple drinks and do some mingling, and finally it was time to announce the winners. Jas, Jenn and I huddled together nervously, and were a little disappointed to hear our names called first, putting us in 5th place. The big winners were the team from UBC, with Schulich, Ottawa, McGill and us following. It was a little disappointing, particularly when we learned that after sharing our ideas, we were ranked first by the other teams, and that a couple of the judges had us ranked first heading into the presentations. On the bright side, we were in the top 5 out of over 100 submissions, had a great time in Toronto, and are still walking home with $500 each. Not bad for a couple pages of writing!

After the awards ceremony, we had a much smaller dinner party with the RBC team in the hotel restaurant. It was great to relax and get to chat with the judges and hear their stories. The JD2 Innovate team capped off a great two days with a few drinks in the hotel bar!! We would have loved to been celebrating a win, but were happy with what we accomplished.

Overall, it was definitely one of the highlights of the year for me. I made some great connections and it was an awesome experience. It also highlighted something I heard earlier this year, that 80% of life is just showing up. We almost pulled out of this contest at the last minute, but thanks to “team cheerleader” Jas, we buckled down and got our entry submitted. We definitely got a great return on the few hours of investment!!

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E-Business Project

March 14th, 2007 · Comments Off on E-Business Project

Today we got handed back a short paper we submitted at the end of last term summarizing what we learned from our E-Business projects and the class presentations. For this projec, each team had to select two competing companies, and evaluate the e-business offerings and strategies of each. When I read my summary again today, it actually was kind of interesting, so I thought I’d share it here.

BET 609 – E-Business Project: Self-Assessment

As part of the E-Business course, students were required to research the e-business operations of two publicly traded companies and present their findings to the class. It was extremely interesting to note the wide-range of companies covered by the presentations. We looked at huge multinationals such as IBM and FedEx, companies synonymous with the Internet (Google and Yahoo), and lesser-known corporations such as Workbrain and Saflink. This report summarizes the “lessons learned” during these presentations.

The Web Is For Real
Hoping to cash in on the Internet “gold rush”, investors in the late 1990’s poured billions of dollars into Internet companies. The gold rush appeared over when the tech-bubble burst. However, as we saw in the presentations, there are numerous companies operating successful Internet based companies. With use of the web still growing rapidly, and broadband becoming more widespread, it is likely that there will continue to be new opportunities for e-business.

E-Business is Not Optional
As mentioned above, the range of companies using e-business in their operations encompassed corporations large and small, from a variety of industries. The message is clear – in order to compete in the digital era, e-business is essential! Companies that have not yet captured the power e-business, such as K-Force, will face serious challenges in the future.

If You’re Not Growing, You’re Dying
The investment community is unforgiving. Investors are continually looking for companies to grow revenues and profits. Stagnant companies are considered to be dying companies. More and more companies are using e-business to grow revenues or cut costs. Companies that are able to do so successfully increase their chances of success.

What Do They Have That Is Not Copy-able?
This point was brought up in a number of presentations, particularly regarding Dell and Google. To relate it back to our strategy class, we can phrase the question as “What is the source of competitive advantage?” For Dell, it appears to be customization and low prices, while for Google, it is better search algorithms. But what happens when someone else comes along and does the same thing? Do these companies have a sustainable source of competitive advantage?

Hype Is Not a Sustainable Business Model
To continue from the previous point, “hype” is clearly not a sustainable source of competitive advantage. This comment was made during the post-presentation discussion of Google, whose stock price recently topped $500. While the company has experienced remarkable growth and receives tremendous media coverage, does it have a sustainable competitive advantage? Coming up with the “magic formula” that will keep a company on top is a key issue that needs to be addressed when starting and growing any business.

Overall, I found the presentations quite interesting. Having to perform the research also gave us an excellent opportunity to compare how two companies in similar industries were using e-business, and evaluate which strategies were more effective. As outlined above, there were a number of excellent takeaways from the presentations and class discussions.

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Government Programs to Help You Succeed!

March 8th, 2007 · 1 Comment

Typically, when we discuss “the government”, the conversation usually takes on a negative, “what good do they do” attitude. This afternoon at the Accelerator Centre, the government and Communitech put on a great event – “Business, Science, Technology and You – Federal Programs to Help Your Business Succeed”.

The goal for this event was to provide information on government programs that exist to assist technology focused entrepreneurs and small-medium enterprises. As James and I are in the thick of writing our HealthSpoke business plan, and just today were going through the financials, this event couldn’t have happened at a better time.

What made this event so great was that it was short and sweet. There was about an hour of presentations, which presenters from the following programs:

  1. NRC-IRAP (National Research Council – Industrial Research Assistance Program)
  2. DFAIT (Department of Foreign Affairs and International Trade Canada)
  3. SR&ED (Scientific Research & Experimental Development Program)

For each program, the organizers arranged for two speakers: a representative from the government program, and a local CEO who could discuss their experience with the program first hand. This brought some realism to the talk, and really helped to get an idea of what was available. I was very impressed with the funding, international assistance, and tax credits available to startups – if you are thinking of starting a company, definitely take the time to research these programs!! SR&ED can be particularly lucrative, and the NRC and DFAIT offer a number of free programs to help get you going!!

One of the most valuable parts of the session was the networking before and after the presentations. We had an opportunity to meet the representatives from the government programs, chat with them a bit, and most importantly, exchange business cards! James and I now have a name and a face and a reference point with people at organizations who can help us fund our business!!

For any future MBET students or entrepreneurs (this was an open event), I can’t highlight enough the value of getting out to as many of these sessions as possible. You can get some great information and meet some key people who will be able to help move your business forward!

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RBC Innovator Challenge – J2D Innovate Inc. Reaches Finals!

March 7th, 2007 · 3 Comments

Back in October, Jenn recruited me to join her and Jas to submit an entry to the RBC Next Great Innovator challenge. The contest required us to tackle this challenge:

“How will today’s teens influence the financial services industry in Canada? Describe an innovation, idea or concept that financial services should consider in light of this.”

When we signed up back in October, I didn’t think this would be that big of a deal. However, when the deadline for our submission hit in late January, spending time on this was the last thing I wanted to do! Both Jenn and I thought of pulling out, but with some motivation from Jas, we buckled down, came up with an idea, and got our entry submitted.

When I read our paper again a couple weeks later, I thought… “wow, this is actually a pretty cool concept.” Still, with at least five teams from our class submitting entries, not to mention the numerous other entries that must have come in from around the country, I didn’t think we had much of a chance at making the next round. Well, wouldn’t you know, on Friday, I got a call from a very excited Jenn telling me that we had made the finals!! I was more than a little surprised, but was thrilled to hear the news.

Our team, J2D Innovate, was one of five finalists selected to head to Toronto at the end of March to present our idea to a panel from RBC. We are guaranteed one of the cash prizes – at a minimum, $1500, and up to $20,000 for first place! This is an awesome opportunity, and should be a great experience. We’re going to have to put some work into this presentation and blow away the judges from RBC!!

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Celebration of CBET – Grand Opening in the Accelerator Centre

March 6th, 2007 · Comments Off on Celebration of CBET – Grand Opening in the Accelerator Centre

I’m a little late with this post, but over reading week, the home of the MBET program, CBET (Centre for Business, Entrepreneurship and Technology) was moved from Needles Hall to the Accelerator Centre. The contrast is striking – Needles Hall is a typical old University of Waterloo building (and architecture is certainly not the source of its strong reputation), while the Accelerator Centre is a brand new, state of the art, business incubation centre.

Last Monday, the Spirited Investors Corporation sponsored a Celebration of CBET event to mark the opening of our new facility. Rick Baker, the founder of Spirited Investors, arranged for David Thomson, the author of Blueprint To A Billion, to be the keynote speaker. Other speakers included David Johnston, President of UW, and Dave Caputo, the founder of Sandvine Inc, a local high-tech company.

David Thomson’s Blueprint To A Billion book was based on reseach he conducted over a number of years to determine if there was a pattern that could be found in high-growth businesses. An interesting point he made was that revenue growth is the most difficult line item for management to achieve. He found that companies with compounding revenue growth typically hit an inflection point at $50 million in sales, and from there, went to $1 billion in 4, 6, or 12 years.

Thompson outlined 7 essentials to achieving the required “escape velocity” to reach $1 billion:

  1. Breakthrough Value Proposition
    The key point here was that you don’t need to create a new market – many companies achieved $1 billion by redefining or optimizing a market.
  2. High Growth Market Segments
    Another interesting point – most companies grow in mature markets, not emerging ones. A portfolio of products is vital to achieving $1 billion in sales.
  3. Marquee Customers
    Use big-name customers to test your product and help sell to other customers.
  4. Big Brother Alliances
    The big brothers can help you out – see Microsoft and IBM, eBay and AOL.
  5. Exponential Returns
    Get cash flow positive early, and scale up your cash flow positive idea.
  6. Inside-Outside Leadership
    Having a dynamic duo makes a big difference in the success of the business.
  7. Essential Experts
    Ensure you have the people you need to succeed on your board.

In the companies Thomson studied that went to a billion, over 90% of them had 5 or more of these essentials in place. One of the good points he made in the question period was that to maintain exponential growth, it is important to do things today that will benefit you tomorrow. This is a key point to remember in order to ensure that you don’t lose sight of the long term goals of the company. It was definitely an informative talk and I look forward to reading the book.

All in all, the Celebration of CBET was a great event. Over 200 local business people attended the event, giving us MBET students an excellent opportunity to network and show off our projects. James and I have been working on our new company, HealthSpoke, and we had the chance to create and display a poster describing our business at the event. It was a great opportunity for us to gain some attention from potential partners and investors! I’m looking forward to the rest of the year at the Accelerator Centre!

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Examining the Economics of Software Distribution over the Internet

March 5th, 2007 · Comments Off on Examining the Economics of Software Distribution over the Internet

A couple weeks ago, we were assigned the following reading as part of our marketing course: This article examines the assumption that production of software involves low marginal costs.

As someone who has started a software company that is in the process of developing its first product, I found this article fascinating. The traditional assumption in the software business is that once the money has been spent to develop a product, the cost of replicating the product is essentially zero. This implies that there are no variable costs associated with a software product.

The article referenced above challenges this assumption, by arguing that software distributed over the Internet has not been produced until is has been downloaded. For example – if there are no downloads in a given day, production is zero. If there are 100 downloads, 100 units of software have been produced. Further, the author argues that distribution of software is the process of driving traffic to the website where it can be downloaded.

By adopting these views, it is now possible to assign a Cost-of-Goods-Sold (COGS) to a software product. I think that the Internet Distribution Chain is especially useful in calculating the true cost of production and distribution of software. Simplifying the equations used, we end up with:

Cost per Acquisition = Total Cost / Number of Customers

Basically, you can compute the cost based on the total amount spent on driving traffic to a webserver divided by the number of customers acquired through these efforts. For example, suppose I spend $1000 on Google AdWords for 1,000,000 impressions. I get a 2% click through rate, or 20,000 hits. With a download rate of 5%, my product ends up being downloaded by 1,000 potential customers.

Of these 1000 downloads, 5% become customers, for a total of 50 customers. My total cost is $1000, and I got 50 customers. Therefore, I spent $20 to acquire each customer. This $20 is the variable cost of producing and distributing my software! If my product only sells for $19.99, then I might as well close up shop and go get a real job (or work for the government)!!

The key takeaways that I took from this article are:

  1. Sometimes the underlying assumptions of an industry need to be re-evaluated and challenged. This opened my eyes to a new way of looking at delivering web-based software.
  2. When determining how to price software delivered over the Internet, using the Internet Value Chain to estimate costs is extremely helpful. This will ensure that products are priced profitably.

As a final thought, in the calculations used above, if you can figure out a way to drive traffic to your site for zero cost, then the variable costs for distributing your product also go to zero!

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