Entrepreneurship is a Science: Identify the Problem, Hypothesize, and Test

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How have tech entrepreneurs responded to COVID-19 and how will the current crisis impact the future of the tech ecosystem?

Our first concern, like most, was to protect our team and help our customers through the pandemic.  Our core purpose is to democratize technology for small and medium businesses and COVID-19 has accelerated change in the technologies that these businesses need to survive. In particular, we have seen an increase in the need for e-commerce, remote working tools and online learning. 

Fortunately, we have been able to prioritize these needs and deliver free e-commerce and remote work to the businesses that need them to survive. We were also able to build out an online academy and community where our customers can learn and share best practices.  

“This idea of product led growth—providing value before asking for a single penny—is an idea that is here to stay in every ecosystem and not just the tech sector.”

All of this was provided with the idea that these partners and business would pay when they are able.  This idea of product led growth—providing value before asking for a single penny—is an idea that is here to stay in every ecosystem and not just the tech sector.

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What is your approach to entrepreneurship and what would you advise a young entrepreneur?

At heart, I have always been an entrepreneur. Even in university, I opened a clothing store while earning my geophysics degree. After university, much to the chagrin of my parents, I left a good job working as a geophysicist to start a computer store, which quickly became two computer stores. I went on from there to work for a number of software companies, before starting my own—Vendasta.

Being an entrepreneur, to me, means never quitting. It means understanding that you never really lose, you only learn. To be an entrepreneur, you need to have an unrealistic expectation of winning. I have always looked at problems that needed fixing, and thought: how can we make this happen? I have always had that in me—the desire to build something.

As an entrepreneur, the challenges are always right in front of you, and they are constantly changing. A common trait among all entrepreneurs is adaptability—it is not who is the strongest or smartest, but how they adapt. People who accept change and find ways to work through challenges are the ones who succeed. I have found the scientific method to be a great way of overcoming any problem, and that probably derives from my background in physics.

“A common trait among all entrepreneurs is adaptability—it is not who is the strongest or smartest, but how they adapt.”

The scientific method entails thinking deeply about the problem in a logical way, figuring out how to overcome it with a hypothesis, and solving for it. When I look at a challenge, I try to break it down. You need a hypothesis, and then you must look to find if other people have dealt this your problem—maybe even in different industries. How have other people failed trying to solve this problem? That is one of the things we do at Vendasta. To solve a problem, we really drive down—we’re logical, scientific and systematic about it. I’ve instilled that in my team.

Over the years, we have learned many things the hard way—by failing. This is one way to grow faster: capitalize on your failures, learn from them, and never repeat them. It is kind of a cliché, but it’s true.

Being challenged in life is unavoidable but failing is optional. When I go to sleep at night, I think about whether there are solutions to a problem. If there are, why have I solved it? If there is no solution—there are some things in life you cannot solve—then I put those thoughts aside. But when I wake up in the morning, I have a new, fresh start on the problem. Sometimes you can be beaten down by the end of the day, so you have to be persistent. That is the way to move forward.

“There is always going to be someone doing what you are doing, so you have to look at what is out there, be logical about your approach, understand your market, build a hypothesis and test it.”

To younger entrepreneurs, I would advise them to test their market and hypothesis before getting out there. They should generate real revenue from real customers, try to bootstrap it as long as they can until they have a decent valuation, and then get out there. New entrepreneurs should be talking to others who have experience in their area, and they should remove their blinders. There is always going to be someone doing what you are doing, so you have to look at what is out there, be logical about your approach, understand your market, build a hypothesis and test it. Then, you can go to market and try to get revenue as quickly as you can.

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What are the challenges in the tech ecosystem today?

There is no shortage of ideas and talent in Canada, and we are seeing a proliferation of startups that exist to prove that. But the biggest problem is growth after the initial traction—getting capital, infrastructure, experienced talent, proper education and mentorship. All of these things combined form the ecosystem, but that ecosystem is not evolved in Canada. We need to pull together to find successful businesses that can become anchor companies—similar to Shopify and Lightspeed, and hopefully Vendasta—and use them to build that ecosystem.

“Canada does a good job of supporting its tech entrepreneurs, particularly from inception to Series A financing, but we are falling short in the late growth stage.”

Canada is a big place, and we have tier one cities like Vancouver, Toronto, Montreal, Kitchener and Waterloo, which all have early maturing ecosystems. You then have tier two cities, like Edmonton, Calgary, Saskatoon, Winnipeg, Quebec City and Halifax which have younger ecosystems that are not fully formed yet. It is hard for entrepreneurs to reach their full potential in those cities, so you have many people moving out or selling too early.

However, I think Canada does a good job of supporting its tech entrepreneurs, particularly from inception to Series A financing, but we are falling short in the late growth stage. For some reason, the ecosystems are not evolved enough, and we are missing on capital at the growth or scale stage of the business. We are also lacking in experienced talent, education and mentorship—this is where we are falling down.

How can the education system adapt to meet the needs of startups?

Hypergrowth is about growing faster than your executive team can learn. The only way to bring in knowledge is to bring someone in who has experienced the chapter your company is going through. They have read the book, and they know the answers. We see this a lot with bigger companies that are bringing people in from the outside who have “been there, done that.” We have some of the smartest people in Saskatoon, but experience is something that you have to earn. So it is important for companies to bring people in to teach what they have learned.

For example, 25 years ago, I started a foosball club in Saskatoon. We thought we were pretty good and went to Edmonton— where they destroyed us. Their team had a different shot, which they taught to a few of our people. Within a month, we could beat them. But we never would have discovered that shot on our own, we needed someone to teach us. 

“Entrepreneurship is really a science, and it should be taught in universities.”

There are a number of things that could be taught at the university level, but it is hard because curriculums rarely change. We have been part of a couple of different educational programs, including Reforge. We send our people there, and they can give us that kind of leapfrog learning. Entrepreneurship is really a science, and it should be taught in universities. Sometimes, people become too busy capitalizing on the knowledge they have, but at some point, we have to give back to our educational institutions so we can become competitive globally. 

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Do you think the government provides ample support for entrepreneurs in the tech ecosystem? What can they do to improve?

The government has put in place a couple of programs which have been fantastic.

The first is the Scientific Research and Experimental Development (SR&ED) tax credit, which we have used. To receive the credit, your company must be owned by a Canadian and you have to opt to do research and development (R&D) in Canada. This encourages companies to stay and grow in the country.

Vendasta has also taken advantage of some of the immigration programs in place, and we’ve used one to bring people from overseas within four weeks, which is fantastic.

One step the government can to improve the ecosystem, is make it easier to find anchor tenants and support those tenants—that would really take the ecosystem to the next level. Canada should build infrastructure to provide incentives for companies to stay in the country, because one of the hardest things—when you are growing fast—is securing space to expand. When the government invests cash in a company, they can easily move on, but investing in infrastructure would be longer lasting and would become an asset to the company. If the government were to provide space at a lower price, companies would be encouraged to stay.

“Canada should build infrastructure to provide incentives for companies to stay in the country.”

In general, the government should make it easier for winners to continue winning. They should not fund unproven companies with losing ideas—they should make sure a company has a winning idea before they invest in it. They should build out infrastructure including buildings and educational facilities and provide incentives for companies to stay in Canada. The SR&ED tax credit is helpful, but there is more that the government could do.

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As an entrepreneur, is it important to be thinking global from the start? 

When you say global, I do not think you include the US. We went to the US first, and that has been our primary market. I found it easier to sell to American companies for a number of reasons. First, they have a larger need. We started there in the traditional advertising space, before moving to digital marketing. Over there, Yellow Pages had fallen off a cliff, so it was the right place to start. That did not happen as fast in Canada, so we came back here after that.

So, “going global” is something that crept up on us because of demand. In some aspects of business, like designing technology, you have to think globally at first. But when it comes to sales and marketing, it makes sense to focus on the biggest markets that you have. So, I would suggest to a new entrepreneur that they focus on North America when they start their company, and to do that, you need to operate in English, French and Spanish.