View from the ‘Loo: A big year for BigRoad, Thalmic Labs Anthony Reinhart May 9, 2013 View from the ‘Loo One vastly improves the working lives of truckers, and is led by a 45-year-old veteran business executive. The other, led by a 23-year-old technical whiz, will give people Jedi-like capabilities. Neither existed just over a year ago, but today, BigRoad and Thalmic Labs are among this area’s most promising new companies. The fact that their respective co-founders Kelly Frey and Stephen Lake – who spoke at a Communitech UpStart Breakfast this week – found traction so quickly is a powerful reminder of the depth and breadth of the Waterloo Region tech ecosystem. On paper, you’d be hard-pressed to find a pair of startups more different than these two. BigRoad, based in Waterloo’s Accelerator Centre, is a software-as-a-service business aimed at a tough-to-crack, old-school and decidedly unsexy industry (albeit a $700-billion one). Kitchener-based Thalmic’s futuristic MYO is a hardware geek’s dream; a muscle-reading gesture-control armband with the potential to redefine the way we use computers. What the companies share is a strong start made even stronger by the diverse pool of talent, advice and resources they’ve been able to tap, both here and in Silicon Valley. Both entrepreneurs underscored the importance of this in their presentations Wednesday morning at the Delta Hotel in downtown Kitchener. Frey spoke about a trip to San Francisco he made last year for 48 Hours in the Valley, a regular event hosted by the C100, a group of influential Canadian entrepreneurs and investors based in Silicon Valley. “I went out there and I thought, ‘Are any of these guys really going to want to know about trucking? It’s not that exciting’,” Frey said. “Not only did I get initial meetings at a number of really great-quality VCs, but I very quickly got second meetings, and then some people introduced me to other VCs.” Among them was Sequoia Capital, arguably the Valley’s most prestigious venture firm. Virtually everyone Frey met was willing to share what they knew and introduce them to their networks. Back in Waterloo Region, Frey encountered a similar ethos among the angel investors and mentors who have helped BigRoad get to 56,000 users and counting with its Android app for truckers (iOS and BlackBerry versions will debut soon). Ex-RIM co-CEO Jim Balsillie, as an example, advised him on the value of leveraging various government programs to accelerate early growth. “This is an example of things we have in this community that others don’t have,” Frey said, referring to our access to globally experienced tech leaders, whose cumulative success continues to grow. Frey also credited the diversity of available talent for strengthening his company, which is led by graduates from the University of Waterloo, Wilfrid Laurier University (including himself) and Conestoga College. Lake, whose company was born over beer around a table at the Huether Hotel just a year ago this week, offered similar observations. The University of Waterloo mechatronics engineering grad shared a photo from his pre-Thalmic days, showing his student dragonboat team, with himself and classmates Aaron Grant and Matthew Bailey in the middle. “One really key thing when you’re starting a company is that working with people you get along with – people you like, and smart people – is such an important thing,” Lake said, adding that Grant and Bailey would become his Thalmic co-founders. Bailey and Lake also spent time in Switzerland during their fourth year at UW, working on a project involving a vibrating belt for blind people that scans their surroundings and alerts them to obstacles. “The technology itself is not related to what we do at Thalmic, but it got us really interested in this whole area of wearable technology,” he said, “and how we could more closely connect us as humans with the digital world, and blur that line between the two.” Lake showed another photo, of his now-20-member team at Thalmic, who will soon move into 11,500 square feet of space in downtown Kitchener. The old building, most recently an off-track betting facility, sits on Charles Street just a few blocks east of the Communitech Hub in the former Lang Tannery. Among the 20 faces on the photo was that of Gord Tanner, a software developer who last month wound up a stint with BlackBerry, which two years earlier had acquired TinyHippos, the mobile development startup where Tanner had worked with co-founders Dan Silivestru, PJ Lowe and Brent Lintner. Tanner spent much of his BlackBerry stint working out of the Communitech Hub, where Thalmic has been based for the past several months, in the UW VeloCity Garage. “We wanted to be close to the Tannery, so we looked within a couple-kilometre radius of there,” Lake told me of the new space. “It’s like the Tannery; it’s brick-and-beam inside, tall ceilings, the old brick style.” Thalmic is the latest in a growing line of Waterloo Region startups to graduate from Y Combinator – one of the tech world’s most exclusive and sought-after accelerator programs, based in Silicon Valley – and then move back here to continue building. Lake told the audience how he and his co-founders funded Thalmic’s first six months of operation on maxed-out credit cards and loans from family, while living in “crappy student housing.” Its first external money came in the form of a $25,000 investment from the VeloCity Venture Fund, which had been created in 2011 when another young Waterloo Region entrepreneur – Kik founder Ted Livingston – donated $1 million to UW. “It was a small amount of money, but it gave us that little bit to keep building prototypes and paying our rent, basically,” Lake said. Thalmic raised about $1 million in angel investment shortly thereafter, then successfully applied to Y Combinator, whose charismatic co-founder Paul Graham has said applications from UW startups are better than those from any other university. “We’ve had the experience of spending a few months being based in the Valley, and then we came back here,” Lake said. “We’re not the first company in Waterloo (Region) to do that; we’ve had great examples like BufferBox and Vidyard; companies that have gone to the Valley and came back. Lake said “it’s important we realize it’s not that much different in the Valley.” Its ecosystem is exponentially larger, “but the same community, and that same idea of other companies and other CEOs helping you out is just as present here as in the Valley.” After three months in California, Lake said, “we discovered there was no reason we had to move the company there. If anything, there’s a lot of reasons to be here.” Lake cited the “unfair advantages” Waterloo Region’s tech ecosystem has given Thalmic. “Number 1 is the people; we’ve been able, here in Waterloo, to attract and retain the best people in the world, bar none…and it’s something companies in the Valley cannot compete with, because as a startup, you cannot attract and retain this calibre of people when you’re competing with the Googles and Apples and Facebooks of the world, paying $150,000 a year to new grads.” He also cited Communitech and VeloCity as “organizations that really help out companies like us and play a huge part in our growth,” as well as “the people here in the room. The community in Kitchener-Waterloo is so supportive; other entrepreneurs are willing to help you out; other companies and businesses and even the municipal government here is very supportive of startup technology companies.” Finally, he cited basic economics. “It’s just cheaper to do business here. Salaries are lower, it’s a more reasonable cost for rent than in California and there are the incentives and grants.” None of this is to say Waterloo Region can’t keep improving. Lake said the tech scene here “would absolutely explode” if there were a high-speed (ie. 40 minutes or less) transit link to downtown Toronto. He also called for more reinvestment into the ecosystem by successful entrepreneurs, and greater access to capital “at all stages” of a company’s growth. “A lot of these things are happening right now,” Lake said, “but this is what will help accelerate this awesome growth we’re seeing in the region.” It’s a kind of growth that is attracting more and more attention well beyond Waterloo Region, not to mention Ontario and Canada, as demonstrated in a lengthy VentureBeat piece published the same day as the UpStart Breakfast. Lake was also struck, as I was, by the fact that a truckers’ app and a gesture-control armband could sprout from the same entrepreneurial soil. “The diversity is huge here, and if anything, it says it’s a very healthy ecosystem here,” he said. “It’s not just a small bubble of web companies, or in our case, hardware companies.” Then again, Waterloo Region’s economy “has that diversity all the way through, not just in startups,” Lake said, citing a spectrum that runs from Maple Leaf Foods to BlackBerry. The kind of success BigRoad and Thalmic have seen in this community in just one year – as just two of more than 500 active startups in the region – makes me wonder what tasty items might appear on the breakfast menu a year from now. Anthony Reinhart is Communitech’s senior staff writer. View from the ‘Loo is a weekly look at the issues, people and events that shape Waterloo Region’s technology sector.