Dima Yashkir is a software engineer and freelancer who worked at a variety of startups and founded some companies. Living in Japan right now. He likes to climb, run and ski in the mountains. He’s currently interested in making ML projects more efficient at delivering results and applications of Deep transfer learning to 3d convolutional MRI analysis, also trying to generate style transfer images of Japanese Alps as would be drawn by Camille Pisaro without melting his laptop down.

Q1: How is the tech start-up space seen in Japan? Is it like the crazy Silicon Valley rush to do insane things, more laid back like in Wannabe-Toronto or is it limited to supporting innovation in the big companies?

Silicon Valley is a one-off place, nothing is remotely like it. Tokyo being a megapolis and heart of the Japanese economy is also very unique. It is hard to estimate numbers but my guess it would fit somewhere between NYC and TO on scale of the startup ecosystem. It does operate nothing like NYC or TO though. A lot more partnerships with established big companies/conglomerates. Most money coming from these large companies, often in form of research contracts.

Q2: How’s the engineering market? Are there lots of hackers and self-taught geniuses or are there lots of highly-educated geniuses? What common technologies do you see in demand? Programming Languages? Development Techniques? Can you contrast those to North America?

Self-taught geniuses are rare anywhere I think, I can not think of one that worked with either in Canada or here. The Japanese education system funnels people to top schools through early and brutal selection. Power that name of school like Tokyo University(Todai) or Kyoto university carries is huge, it opens all doors and gets investment. My current contract is with a Todai graduate-founded startup and it is always amusing mentioning it here for the reaction it gets.

One interesting, not well-known fact is that it is very easy to bring people to work for you in Japan. If they have a degree it is trivial. So you can hire people from anywhere in the world with ease and not have to deal with the crazy US or Canadian immigration system. It is hard to become a Permanent resident but it is very easy to get a work visa.

Language and tech wise it is hard to judge but my guess is that Ruby is more popular, Python about same, and Nodejs far less so. There seems to a bigger market for desktop apps as well. In ML area mostly same tools are popular, in addition to Scala being more popular due to some libraries having been developed in Japan.

Q3: What’s your sense of trends and innovation? Does it seem Japan copies other countries or leads in certain areas of innovation? Do they look at ideas for their own market or for export to Asia or the US? Are there any strong startup trends (like in TO we see Cannabis, AI-Machine Learning, Fintech/Blockchain getting a lot of interest at the moment)?

It is a mix. Japan has many innovative companies often in more traditional industries. See iPhone component breakdowns, textiles(lightweight breathable insulation), or radiation-resistant robots to reach Fukushima core. In software perhaps not so much.

Japan most often is the primary market targeted, and Japanese companies often do have a problem adapting to outside, perhaps because of the uniqueness of the Japanese market.

Trends.

Tokyo had the highest volume of crypto trading, you can actually use bitcoins to pay for things in some “normal” shops. One interesting thing is that a lot of Japanese exchanges make the majority of their revenue from people doing short-term gambling on the value of crypto. Sort of like a legal online casino, playing while bored in the office.

ML/AI. Medical, Self-driving cars. I would not be surprised if a Japanese company like Toyota would be the first to release a real self-driving car with self-driving coverage of the whole Japanese highway system. Using pre-mapping and fact that Japanese highways, in general, are very well maintained, are simpler and people drive much less aggressive then it is common in NA.

Q4: Where is the tech world going? What do you think is going to be big in the next 5-10 years?

1. The cryptocurrency general hype will crash and burn but private blockchains will become the standard for payment settlement for interbank transactions. So private blockchains as the new backbone of a payment settlement system.
2. The commoditization of ML. Algorithms and models developed for hard problems like self-driving will spread to a variety of areas: from cooking to manufacturing to mining. ML projects will move from being research projects to implementation projects. Pre-trained commonly understood and easily usable ML models will become a normal solution for many problems. Transfer learning works and works well. This is what I am excited about, taking ML models devised for hard research problem and applying them to a simpler common problem, saving customers money and time.

 

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Dima can be reached on a mountain or beach in Japan.  Don’t worry you can just walk up and say “hi!”

Bill Sharpe is the former Chairman and CEO of Havas Worldwide, founder and CEO of Sharpe-Blackmore, MD of DDB Canada, President of Robins Sharpe. Currently his styling himself as CEO of a new marketing startup Simmons Sharpe.  We met with Bill at the Prohibition Gastrohouse on Queen East.  Over a beer and cobb salad, Bill told us why he was so successful over is last 4 startups: picking a great co-founder, filling gaps, and timing the visit just right to the anchor client.

What do you look for in a partner?

1. The first attribute is always Trust.  Do you trust the person? Do you have the ability to have a dialogue during not just the easy times but the difficult times? Because obviously, every business will go through extremely tough times.
2. Is it a complementary skillset?  Do they do something much better than I do?  Then I should be able to do things much better than they do.  And therefore we’re not bumping heads all the time and overlapping.  It’s almost as if automatically some problem comes in and we both look at it and go, “this is yours“.  “This is a math issue and you’re a math genius.” If it’s a softer issue or a client issues it’s, “this is for me.”  I learned this the hard way. I started my first Agency when I was 34, and I knew virtually nothing about running a company.  The only thing I had run before was a kid residential YMCA summer camp. So that’s how I ran the agency … like a YMCA summer camp.
3. Another thing with partners is you need to understand what’s going on with customers and who works best with them. So my first partner was a total opposite of me, hyper-aggressive and totally willing to kill, and so what happened was we balanced each other out because we had trust and we listened to each other about being more aggressive or being more passive.  When a customer came in and said “I want to meet you today and then 3 months from now after your success report”, that was my partners. When a customer came in and said “I want to take measured and planned steps to get to my goal,” I spoke with them.
4. Finally, when you are bound together by only money it’s not a great partnership, so do you have shared economics of what’s going on beyond the money?  It doesn’t take long to understand the softer side of the business – the question is do I want to keep working with this person? Are they going to respect my time?  Are they going to see me as a professional who engineers things or as a mechanic who waits for things to break? If they see me as a mechanic the relationship won’t last long.  So from the get-go, you need that consistent vision of what we want to do together.

How did you decide to pivot in your current business from a service offering to more of a technology offering?

I saw a gap.  The gap I saw was essentially between the agency holding companies and the Deloitte’s and Accenture’s coming down the alley buying agencies. The agencies being in the middle.  Then there are big production companies who started scooping up experiential marketing companies and they were coming up from the bottom.  So if you are an agency, you’re high cost, you actually can’t innovate because “New York won’t let you innovate” and you can innovate only if you want to take a real career risk yourself. You are stuck in the middle with a known offering and a dwindling market. 

So the gap could be filled with a digitally-focused consulting company, that actually executes but doesn’t touch anything that is conventional. As soon as you touch anything conventional you become a threat to the agencies.  For us, that leaves ROI-based digital strategies. 

So that’s where we pivoted.  The Deloitte’s buy agencies because they have great connections with CMOs.  We want to develop those relationships with CMOs as well by being innovative and efficiently solving the new problems.  That might be an exit for us.

Advice for founders who want to reach an anchor customer

There’s nothing so compelling as going to your customer and showing them a good demo.  Can you deliver?  That’s the million dollar question.  If you bobble the delivery that’s the end of the relationship.  You need to get this right by practice and rehearsal and understanding what the client wants from you.

Going back to my industry, the CMOs are risk averse because it is such a complicated World.  But the see-saw is that if you are too risk averse the competition will outflank you and you lose your job.  Or you make a bad choice and you lose your job.  What you need to understand is that you can bring a solution to this embattled CMO figure and ease their pain and nudge them to move forward.

This brings me to the other thing I have seen work if the demo doesn’t impress them.

Heather my partner is a phenomenal researcher.  She wasn’t asked to do it, but she uncovered some solid gold information about one of our client’s core businesses.  When we presented our findings to them they were floored that we brought such an important insight into the business they were in for decades.

So those two things: a great demo or business insights that give the client an advantage.  Because they are both novel and you can leverage them into a relationship.

For us, we went from “a basic supplier” to “wow! you guys understand where our business is going!”

Any advice for new hires entering a new role that could be beyond their skillset?

I’m a firm believer of actually giving someone a shot.  Whether they fail or succeed at a big task they do uncover truths about themselves and we can then build a great career on the things they are good at.  When I had the feeling that someone could do it I would give them a shot, but I would build up a lot of oversite because after all, we’re a business, not an educational institution.  We couldn’t damage a deliverable or a client relationship.

What I’ve seen is that technically most young people are smack on to the sweet-spot of a role, but what’s missing in all of the failures I have seen is the soft skills.  By that I mean they failed to read the room – and reading the room is something that comes from experience.

What newly promoted employees should admit this to themselves is that they are not a 75-year-old master negotiator.  Soft skills come from time spent with people, there are very few naturals with this attribute, and there is no education for this just lots of experience.  Admit it.  Ask for mentorship.  You will be an asset sooner than you think.

 

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Bill can be reached at his new marketing startup Simmons Sharpe Inc., or through LinkedIn.

Kevin Kliman is the CEO and co-founder of Humi HR, an HR benefits management company. Kevin is a 2nd-time founder with focus and vision and has lived the Silicon Valley dream with his startups since 2012, by keeping his ear to the ground in San Francisco and basing his teams in Toronto.  Humi HR works in the same category as Gusto ($1 Billion valuation) and Zenefits ($2 Billion valuation).

Funding how much time did it take? How many people did you visit?

We’re probably somewhat of an anomaly for the Toronto startup ecosystem. We raised $2.5 million dollars at the end of 2 ½ weeks and it’s mostly because we went through Y Combinator. Prior to Y Combinator, we spent approximately 3 months talking to people in Toronto and we had gotten about a million dollars in commitments. We eventually told those people we couldn’t take their money just because when we got to Y Combinator they told us to go back to our old investors and hold off until we finish the program and had a better understanding of our valuation and trajectory. At the end of that program, Y Combinator does a really good job of creating a market for the companies that go through it. And a lot of pressure on the investors to act and act quickly to create valuations that are significantly higher than they are in Toronto.

How hard was it to get into Y Combinator?

So we’re also a special case where Y Combinator is concerned. I applied for Y Combinator Office Hours when they came to Toronto. They do it as a way to spread the word and meet new interesting startups. I met them on a Saturday after a soccer game. I did the 15-minute pitch. I got home later that night and they asked me to come to San Francisco in 2 days time to interview to join the Y Combinator cohort that had already started. We had a team of 13 and we were required to be there every other week for a team board meeting and a dinner. We went down every other week for 36 hours at a time. Just the founders went because of our unusual position of getting in the program late, we could keep the main team here in Toronto.

Can you describe the program a bit?

You have to meet every 2 weeks and you will be pushed on the progress you’ve made, culminating in a demo day. This is their idea of a board meeting. On those days they have impressive speakers at a hosted team dinner for great insights and ideas as well. They also offer office hours for you to reach out to these founders and mentors. But the main theme of the setup is heads-down focus and to use their resources as they are needed. These are the terms, take it or leave it. One of the founders of Zenefits went through the Y Combinator program again with his new startup Rippling. The terms were not what the founder wanted, but he accepted anyway because he knew the benefits and results of the program.

Because Humi HR was modeled after two very successful companies that went through Y Combinator they already had metrics and starting points for that type of a business model. A lot of the questions were related to those two companies, to the market and they wanted to know about Canada and how we would do a Canada-only play. Their big questions where: Is it a big enough market to build a $1 Billion company. How are our growth rates different from Zenefits, how are they the same? How are we going to go to the marketplace with an offering? The founders of Zenefits and Gusto, employees and investors gave us a lot of knowledge and they were part of our mentor team at Y Combinator.

How valuable do you think pitching is for a company?

For people who get inundated with pitches, it’s important that they get the sense that you not only understand the business you are operating, but you understand what the potential outcomes are, what are you driving towards and how you get there. I don’t think you need to know exactly how you get there but you need to have intelligently formed a good narrative. So if you’re creating a Saas company you should know what the expectations are for your type of company at your stage and what the next steps are to get to the next stage. If you can’t do this on a stage or at a whiteboard in about 15 minutes, you are not ready to for money.

We’ve heard of some pitch competitions where they give you some non-dilutive capital. What advice would you give to startups thinking of getting into these pitch competitions?

I’d look for the opportunity costs. How much preparation should I have to do for it? What are the odds that I will get X number of dollars and X benefit out of it? Will I have a better or worse future if I enter? If someone is offering to take 15-20% of your company and offering to reach investors in the golden horseshoe you should think again. You could reach these investors on LinkedIn yourself without giving up a part of your company. Is this your second company and you know the first 5 things to do? If you need this type of capital to get going then it might make sense. There are no clear answers here, I would suggest you need to look at where it gets you after it happens.

What do you think you did wrong in this process?

We had a lot of false assumptions on the market and the product, how we were going to sell it, how to onboard and hire and how to structure compensation. I think failing a 1000 times is fine as long as you make progress in understanding the process. Investors like the learning abilities you bring to the table. This sense of exploration and passion by you actually lowers the risk for them. When people invest at this stage they expect you to be 99% wrong. I have heard people say that when they get their seed stage it’s 90% story and 10% actual execution.

Advice for estimating your market?

If you are selling 300 units per year to scientists, you want to figure out how much are you selling them for? Is there enough to get to the venture scale? Are scientists sales-cycles very long with small budgets?

Or going the other way, you have 7 billion people in your market and I want to give it away for free. I’d want to know how you can get 100 people to love the product. Then you can scale that. Is the customer is engaged? What is their true value?

In either case, there may be no market if you can’t do the math and make a profit and have a growth plan.

When would you go for debt and when would you go for equity?

We will use debt in every round of financing, because very simply, paying 6% on borrowed money is less expensive than selling equity. I feel that my equity will grow 100x in the next 10 years. BDC expansion loans (almost free money) are what we would be after. ECanadianadian should go to BDC first, then SVB, most of the Canadian banks are starting to come out with the SVB type of offerings and the competition will help.

A Madness that’s seeking a Business Model

Some of TheMIN membership came across XPR last year as we were scanning for travel experience companies for corporate development. The founder behind XPR (an active North American hobby-sharing, leisure, and travel experience company) is Ottawa-native Joelle Parenteau. We caught up with her over email this month.

Reviewing some of her startups and ideas, you discover that madness is a good word describing the way Parenteau does things. Looking for a way to connect with her, we found t-shirt-selling websites, central-purchasing businesses, and then XPR. All founded or co-founded by her. This type of energy and ability to risk failure is an excellent attribute of a founder.

Many founders have that often-talked-about reality distortion field, that way of framing what they see around themselves and what their customer wants. The best founders match this with inspiring those around them to fulfill on that promise. If you want to introduce something new or have a customer look at a solution in a different way, you need to employ this field. In speaking with Parenteau, she displays this ability to convince.

In XPR, Parenteau seeks to give “access to world-class icons and ultra-rare experiences.” Taking a rather rational step she decided to pass on Ottawa as the location for this startup. “What better place to start,” she says, “than the Entertainment Capital of the World itself: Las Vegas. From playing poker with the pros to fight night with world champions, exclusive chef’s tables and race days with NASCAR pros.” Looking at it from the investor point of view, this makes a lot of sense. This is where your pool of experience junkies is going to reside.

Before launching XPR 2.0 in Vegas, Parenteau tested the concept on a smaller scale in Ottawa where she managed to create and offer experiences that even now are not being offered by competitors: knife forging, racing military Humvees in a private quarry, sniper training, llama walking, axe making and more.

As we saw in trying to contact her, Parenteau hasn’t been in the experience industry only. Her elevator pitch for her previous startup Epic Perks is, “combined and leveraged the collective buying of small businesses to give them first-time access to the preferred rates typically reserved for large corporations.” She ultimately closed a partnership with Canada Post which would see her program offered to over 250,000 of their small business customers.

There is something similar in central purchasing and experience selling: a two-sided marketplace. Most investors shy away from marketplaces. Why wouldn’t they, as the founder you have to find the buyer AND the seller AND join them up. But having an established marketplace is the business top companies are in: Amazon doesn’t write any books but finds booksellers and book buyers, Apple doesn’t write a lot of apps or author music but finds music authors and music buyers, Google doesn’t make websites but it finds website creators and website consumers. All these companies see being a middle-agent in the market as the best spot to be in. Parenteau has managed to convince investors too. XPR has had combined seed and angel investments to the $500,000 level from several sources including the founders of Shopify and a C-level exec at Tweed.

When it comes to fundraising Parenteau’s approach is, again, somewhat unorthodox. When asked how she pitches investors, she answers “I don’t”. Perplexed we ask how then she managed to raise half a million dollars. That’s when she explains that she never overtly asks to pitch anyone, instead “I just talk to people about what I’m doing” and some of those people love the idea so much they ask her if she’s fundraising. Some of these investors are contacts she’s known for a while who’ve followed her progress for years – others she met at a poker game. That’s just how she rolls.

As an Angel group, we always think about an exit.  We asked Parenteau to name some sources of Series A funding she would like to have.  Perplexed with such a silly question,  “I guess that depends on who I end up talking to. I won’t know until I meet them. I look for cool fun people who really get the value of accessing unique life experiences. The ones who really understand our mission I don’t have to sell – they themselves have experiences they dream of doing, and our whole purpose is to make these impossible things, possible. Already we’ve made some pretty incredible experiences happen for our investors, that in of itself is incredibly rewarding.”

On advice for founders: “Be really picky with your investors. I learned that the hard way by accepting an investor that turned out to be a huge hassle. Fortunately, I managed to get another investor to buy him out so we were lucky to not have to deal with him, but be very careful who you take money from. Also, don’t focus only on fundraising, build your business and make shit happen and the fundraising should then happen organically. I’m also a big fan of building sustainable business models as quickly as possible versus relying on multiple rounds of funding to stay alive. We raise as little as possible and stay frugal as possible because I believe this is a forcing function in honing the business model early on.”

When asked what she found as some good digital hangouts for her ideas she said LinkedIn, “because it shows the ‘degrees of separation’ with my current network, and since I have a pretty big network, it gives me access to a lot of very interesting people. I use it to randomly message people I’d love to work with and share our story – I don’t pitch them, I just tell them what we’re doing and ask if they want to talk. I’ve had many great conversations and made amazing contacts this way.”  For Gust and Angel.co, “no – because I don’t believe in chasing investors.”

There is an investing adage that the odds are better for a second-time founder. Add to that a driven founder with a solid network and just the right amount of funding, it’s easy to see Joelle Parenteau is well on her way to success.

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Joelle Parenteau can be reached by email at jo@xprvegas.com. If you want to read more of her adventures you can check out her Medium articles.