The startup’s siren call: A feature chat with Dan Martell Anthony Reinhart June 21, 2012 Startups After his second trip to jail, Dan Martell knew something had to change. He was 17 and ready to be done with drugs, even if the drugs weren’t done with him. A year later, he entered rehab – again. This time it was different, though. This time, the rehab workers were recovering addicts themselves, who knew what Martell was going through. And so, they were able to help the future entrepreneur make the most important pivot of his life, away from drugs and toward computers. Martell is 32 now, and one of the brightest stars in Canada’s startup universe. He has just launched his third company, an advice-for-entrepreneurs service called Clarity, after two successful exits through acquisition: Flowtown in 2011 and Spheric Technologies in 2008. A proud native of Moncton, N.B. who lives in San Francisco, Martell stopped by the Communitech Hub this week during his first full tour of Waterloo Region’s tech ecosystem. From what he told me during a brief sit-down, it sounds like he’ll be back. Q – Tell me about Clarity; what it is, where it’s at and where it’s going. A – We’re five weeks live to the public. I haven’t disclosed the numbers on record, because we’re going to do a press release soon around that. But things are going amazing. We’ve done calls in 42 countries, so we have entrepreneurs all over Canada and North America. If you don’t even know who you need to talk to, you can just submit it and we’ll actually go and find people and recommend people on your behalf. So, the product has definitely opened up a lot. We’re realizing that a lot of organizations kind of want to use Clarity as an internal tool. For example, Communitech has mentors and members and clients, and they want a way to connect those people and know who’s actually being the most helpful, and then also have access to the other mentors who are just part of Clarity but maybe not part of the organization. It lets you find the members who have committed to helping out; ones who are available if you want to pay for it or ones who are free, around different domains of expertise. That’s kind of where the current product is and where we’re thinking of going with it. I wanted to start a company that could have an impact, and my goal was to positively impact a billion people within the next 10 years. It’s a crazy ambitious goal, but I was really at that point in my career where I didn’t want to work on anything that didn’t have that potential impact. I came out with the first prototype of Clarity, which was really just a way to build a call list for an advisor to be able to send an e-mail with a link, or to a distribution list for an incubator I was a mentor of, and say, ‘Hey, if I can be helpful, add myself to your list; I’ll call you back when I’m free.’ That was the first version, but I realized that could be scaled to what it is today, and the goal is to have a positive effect on a billion people. Not necessarily that a billion people will have used Clarity, but that somebody who got advice from Clarity created something that created jobs, or they speak now, and whatever they do has had a positive effect directly correlated to the advice they got at Clarity. So far, so good on that goal; we’re a few months in and it’s been fun. Q – You’ve spent the day touring Waterloo Region’s tech scene. What are your impressions? A – It’s way bigger than I thought, in regards to the amount of things going on. I knew that the University of Waterloo was active, with a lot of computer science engineers and mechanical and medical companies, but in regards to the Accelerator Centre and all those companies, there are some really big, meaningful, multi-person companies with some funding, although I think we can do a better job at that. There’s Communitech and VeloCity, and this building is beautiful. I mean, it makes me jealous. I come from a town of 100,000 people, Moncton, New Brunswick, and I would love one one-hundredth of what I’ve seen in this city so far. Even co-working space with other startups would be nice; even though there’s not a lot of us, just putting us all together makes a lot of sense. So it’s way bigger than I thought, and the quality of the entrepreneurs is, as well. I think that’s just an indication of the DNA that’s part of the community that’s getting recycled; guys who maybe came to school here, went to the Valley, worked at Google or built a company and sold it, and now are coming back to raise their families and saying, ‘How can I get involved and give back?’ You’re seeing that with a lot of the mentors and EIRs. Q – I was checking out your blog, and you’re very candid about your life and the rough times you had as a young person. What can you tell me about that, and how it has shaped the course of your life? A – I like to joke that I had a colourful upbringing. Colourful meant that, by the time I was 11, I got taken out of my house. I pretty much lived on the streets when I was 13, up until I was a teenager and got involved with the wrong group. I became addicted to drugs and eventually found myself in jail, twice. Then I went to rehab at 17. It was through rehab that I discovered computers, and through computers, it definitely saved my life. I’ve always been a hyperactive kid, ADHD, with a lot of imagination, but going through that experience, I wouldn’t change a thing. People ask me, ‘If you could change anything, would you?’ No frickin’ way. I learned everything, I mean, crazy business lessons, on the streets, doing what I was doing. Even though it wasn’t positive, there were still lessons I learned. I grew up a lot faster than I think most teenagers would have, because I had to kind of fend for myself, and I learned at 17 or 18 that the best advice you can get is from people who have been down that path before. At Portage, the rehab centre I went to, the reason why that rehab centre worked and none of the several other ones I went to before worked was because half the staff were ex-drug addicts. You know, when you have heroin addicts who had spent 15 years in jail telling you, ‘You’d better smarten up or you’ll end up like me,’ you stand up and listen. I learned at that age to get advice from people who have climbed out of that hole that you’ve found yourself in. When you translate that to business, it’s changed my career. Instead of turning to your parents or your family or your friends to get advice on how to build a business, you turn to guys who’ve had success. Now, most guys who’ve had success have not had success always, so they still teach you those lessons of failure, but they give you a better context for how to think about what you should do next in your life. So, I look at what I went through as a teenager as the foundations for what Clarity is today. Clarity is about getting advice from people who have been successful in the thing you’re trying to learn from, so it was a lesson I learned when I was 17. Q – You’re a proud Canadian who lives in San Francisco – A – Ridiculously proud, yeah. Q – And yet you continue to build in Moncton. What is the relevance of location to launching a successful tech company? A – The reality is – and I tell people this – if you’re a kickass entrepreneur, it doesn’t matter if you’re in Waterloo or San Francisco; you’re going to be a great entrepreneur. There are certain things that are going to be easier, obviously, like fundraising, hiring certain types of talent, et cetera. So in regards to the probability of success or the size of the outcome, it may be two to three times easier to do in the Valley for certain things, or have a two- to three-times-higher outcome if you have a presence there. If you build a company and you get acquired in five years for $10 million, that could have been $50 million if you were in the Valley, because access to talent would have helped you grow faster and access to capital would have helped you grow faster. And, the companies that could have acquired you would have been larger in number, so you would have created a bidding process to get a higher outcome. So, do you need to be there? No. Is it a bit easier? Yes, but it doesn’t mean success or failure. That’s an entrepreneurial decision that has no dependence on geography. I mean, look at Steve Jobs. He gets kicked out of Apple and he starts Pixar. You could have grabbed him and dropped him in Antarctica and he would have been a billionaire; he’s just that type of guy. Q – Some people say Canadian tech companies can be too quick to exit, often to U.S. acquirers, thus hindering Canada’s ability to grow its footprint on the global tech landscape. What do you make of that view? A – I’d have to see the numbers per capita. I’m not sure that that’s true; I think the perception looks that way but the dataset is smaller, so it’s easier to infer that that’s the norm. But it could be that it’s the same ratio in the Valley, but there’s just many more companies; the Googles, the Facebooks, the billion-dollar companies. There’s really only 10 $100-million companies created every year out of the 30,000 startups that get started, and out of the 2,000 that get funded. So are the ratios really different? There are a lot of companies that sell to Facebook and Google. Is it different there versus here? I don’t know; I’d have to see that number. What I will suggest to entrepreneurs who get the opportunity to exit is that it’s their duty to reinvest in the local community. I’ve been angel investing since 2006. I didn’t have a lot of money when I started; I had a couple extra hundred grand in my bank account because of the company I was running, and I decided to start giving people $20,000 investments for a piece of their company, just because I wanted to be helpful. But I knew I had a company to run, so I figured capital, plus some advice from time to time, would be the best way. So, if you’re ever are in a position where you have capital, I think it’s your duty to reinvest in the entrepreneurs, a) because you’ll learn so much, b) because somebody did it for you; if you’ve exited because you’ve raised money, somebody believed in you earlier on, and c) it’s just a heck of a lot of fun. It’s the most fun I have, hanging out with these really bright entrepreneurs and changing the world. Q – How much of your angel investing is done in Canada? A – I would say half, but I had done four or five in New Brunswick before I moved to San Francisco, and while I’ve been there, I’ve probably done another eight or nine in San Francisco, and then the rest in Canada, another four or five. So, 18 in total now. My wife’s going to kill me because I told her I’d slow down, but I did three deals in the last 10 days. I usually only do two a year because I believe you should always be in the market and deploying capital, even if the economy’s down. But there are just some really great entrepreneurs who I believe in, who I know are going to do right by my money. That is the thing I look forward to more than anything. Q – Were you tempted by any of the companies you met with in Waterloo Region today? A – Yeah, there’s one that I will not do because I’ve got to slow down, but I’ve introduced them to three investors who are some of the best top investors in Canada. I may not be involved directly, but I try to be helpful. Q – What’s been the most surprising aspect of life as an entrepreneur? A – Once you start, you can’t stop. I guess for a while I thought, ‘Oh, build a company, sell the company, retire.’ I lasted three months. I did it again with Flowtown, and what I’ve realized now is that it’s the journey, not the end, that is actually the fun part. So, even if you do get an exit and you’ve got enough money in the bank to do nothing for the rest of your life, that is not why you got up every day beforehand anyway; it was to be around and do cool stuff. It took me a while to realize that I’ll always be entrepreneurial. I’m an unapologetic entrepreneur. Some people apologize for being an entrepreneur because they work a lot or whatever. Screw that. I’m unapologetic, this is who I am, and if you like that, cool; if not, go find some other people to hang out with, because this is just who I am and I’m okay with that. Q – When do you think you’ll be back in Waterloo Region? A – That’s a good question. I’d need a reason to come back, but it wouldn’t take a whole lot. I spend a lot of time in Toronto, in and out, through New Brunswick. I’m going to be recruiting; I just need to figure out how to do that here. I have an advantage in New Brunswick because I have a brand there, and in the Valley, but I don’t have that here. This trip has definitely helped with that, so hopefully people think I said some smart things, and then when I come back for recruiting, they’ll make some good introductions with some brilliant people.