Communitech photo: Anthony ReinhartFrom salary to startup: Communitech’s Duncan McDowell goes all in Trish Crompton January 15, 2014 Communitech, Featured, Startups Photo: “The key to any successful startup is that you have to do things differently, or else what are you doing?” says Duncan McDowell. The startup scene has been glamorized by tales of success and different theories on how to hit the big time, but what often looks like an overnight success rarely is. As current manager of the startup services group at Communitech, Duncan McDowell spent the last two and a half years mentoring more than 300 early-stage companies and helping them overcome challenges. At the same time, he worked on his startup Decision.io, which he co-founded with Jesse Guild, former Communitech business analyst, and Josh Wright, former director of strategic initiatives at the Accelerator Centre in Waterloo. Decision.io, a decision-making platform for online form submissions, made big strides in the last few months, including graduating from the University of Waterloo’s Velocity Garage two weeks ago. Just days after the company moved into the former Vidyard house nearby, word came that it had been accepted by a leading U.S. accelerator. As the pace quickens for the team of seven, McDowell is spending his last week at Communitech, preparing for the next chapter in his startup story. Before he leaves on Friday, I asked him to reflect on his time here, and to look forward to the coming months: Q – Decision.io just moved to offices a week ago and then this happened almost overnight. How did this all come about? A – It was around September-August, our team got together to discuss some options, and it just so happened that this one investor from Silicon Valley somehow found us online, on his own. He emailed us and said that he was interested in our team and what we were doing. We met with him at Ethel’s Lounge in Waterloo, which is where we go for all of our serious business meetings. We were looking at if he would be interested in investing and what that would look like, and we came to the conclusion that it would be a good time and a good option to apply to some of the top accelerators. We got an interview to one in early December and went down there and had a very interesting interview. We weren’t horribly positive coming out of it, just because of the way it went down. When we got back, we more or less assumed that we wouldn’t get in and we moved forward on plan B, which was staying here and finding a place for us to live and work, and then going for financing and pretty aggressive revenue growth here in the community. Jesse got the call Wednesday night last week, and said that we had been accepted. So we had an emergency meeting at Ethel’s at 10:30 p.m. and made a decision by Friday morning. Q – During your time at Communitech what was the most unusual thing you encountered? A – I didn’t expect there to be so much of the divide between technical and business co-founders and the fact that they seemingly can’t find each other without assistance – it came up over and over again. You hear that startups need two things the most – one is financing the other one is talent – but it was somewhat surprising to me the sheer numbers of startups that didn’t have the essential half of the equation pinned down. It really is all about the team and they say this a lot – I’ve been able to validate it myself – you can do extremely well with a B-product and an A-team, but the inverse is rarely true. Q – Were there any companies that proved your initial thoughts wrong and that may have surprised you? A – There’s been a number of companies that I have worked with that have pivoted from something that I thought was not very interesting, to something that was quite interesting. But generally, you kind of get that gut feel from the entrepreneurs who you know are going to be successful, whether it’s with the idea that they are talking to you about at the time, or something completely different in the future. It’s a personality type, a passion and a motivation that you can feel that emanates from them. Q – What is the worst thing that I can say as an entrepreneur when meeting an analyst? A – The worst thing is “We don’t have any competition” – never say that – it’s a dumb thing to say, even if you are in a blue ocean market. Competition doesn’t mean that there is someone that’s doing the same thing you’re doing. It simply means that people have a different workflow for accomplishing the same problem point that you’re attacking, so many entrepreneurs don’t understand that distinction. The other one would be “we’re going to go viral”. You can’t rest the prospects of your company on that assumption, because the whole point of virality is that it’s a rare thing that occurs and if everyone was able to do then it would all get lost in the noise. Unless you have something that is incredibly appealing to a large B2C market then it is very rare that it’s going to happen. Q – What advice would you give to companies? A – The worst thing that they can do is to build a product without talking to people who are going to pay for it. For better or worse among some of the engineer-centric startups or entrepreneurs that I have met with, they are much happier to sit in a basement and code a product than they are to go talk to people and confirm that they want to use it. You will see people waste six months of effort and quite a bit of money building something that no one really wants to pay for. It’s a tough lesson to learn if you have to learn through doing. I much prefer to be able to tell someone don’t do it, up front. Customer validation is key and there is not enough focus on it, and it’s getting better with people like Steve Blank drilling it home. It’s not conventional wisdom yet and I think that it needs to be. Q – On the flipside of that, what’s the best thing that I can say when meeting an analyst for the first time? A – The best thing that you can say to me is “I’ve talked to 500 customers and I have all those MOU’s (memorandums of understanding) in my hand ready to pay me.” It’s a non-binding agreement that basically says, “If you build it, I will buy it”. It just shows that the entrepreneur has done their homework and thought about the different scenarios. The problem is that you have a lot of first-time entrepreneurs and serial entrepreneurs who are so obsessed with “stealth mode” and keeping everything under wraps, because they are so afraid of someone coming in and doing it, that they forget to see if it is actually something worth doing. It’s paranoia, in my opinion, that is unfounded. Anybody who has the talent to build something is busy building it, and while you may have a cool idea, the Facebook story that you see in the movies is not the reality of life nine times out of 10. I think a lot of companies don’t do the most sensible thing at the time, which is validate the product-market fit. Q – How did your day job help you with your startup and vice versa? A – Good question. I’m not sure who said this, but there’s a quote that says, “The best help an entrepreneur or startup can get is from someone who is six months ahead of them,” and I really believe that. For myself, when I was working with companies, mentoring and coaching companies, I was able to give them advice that was really fresh in my own mind because I just went through it or I had just been through it in the last six months or year. It’s true, you learn and you keep knowledge fastest by teaching other people. I think that’s a bit of a different thing that we have here at Communitech that we can foster. We have a number of executives in residence at Communitech, and they are great for high-level advice and a few among them are particularly brilliant. But what you don’t get from that is that fresh learning at an actual entrepreneur level, which can be critical. I was definitely able to help companies a lot more in the last year than I was in the first year of working here. Q – Do you want to comment on the theory of all-in versus on-the-side approach to startups? A – Conventional wisdom, especially from many accredited investors, is that you need to be 100 percent focused on your startup. From an investment perspective, it’s obvious why they would want that, because they don’t want you distracted. Especially if they’re investing money into your company, there is no real need for you to be distracted with another job. Ideally, they’re giving you money for you to focus. But from a more organic-growth, lean-startup approach, I think there is some value in having some additional income on the side that allows you to have your startup going at those critical and key early moments, assuming that you’re not already funded in some other way. We did a lot of that and we’re different, because one of our core values as a company is that we do things differently than other startups – for better or for worse. The key to any successful startup is that you have to do things differently, or else what are you doing? For the original founders, Josh, Jesse and myself, our strategy all along was to get jobs in organizations that would allow us to have some cross-pollination between our startup and where we are working. It’s not like we were going to flip burgers and do this tech startup on the side. We were working in organizations that are facilitating the growth of tech startups every day. Just like any startup I think it’s very context-specific if you should have something on the side or not. It really helps to have something that is at least paying dividends and helping you learn. But like I said, don’t go flip burgers if you want to start a tech company, but if you’re able to, get a job on the side that is adding benefits and complementary, as long as you’re smart about it. Q – What’s the biggest thing you have learned so far as an entrepreneur? A – It takes longer than you think. Startup culture is really romanticized and a lot of people get into it thinking that it’s going to be this really great ride that leads to fame or wealth, and it’s almost never like that. The things you see in TechCrunch are the outliers; it’s just unfortunate that it’s not portrayed as such. You need to be realistic about how fast you grow, especially if you are taking a lean approach and not a round of seed financing off the bat. You have to be a little cautious and not expect an overnight success. Q – What’s in store for the future? A – It looks really busy; it looks like we won’t be sleeping much, and we are going, for the first time ever, to be totally, 100 per cent focused on growing this company into a billion-dollar business. Q – Any final thoughts? A – I just think that it’s awesome that Communitech is an organization that allows its employees to have startups on the side, or aspirations to be entrepreneurs; it’s so critical for the culture and I don’t know if we would be here without that.