You Can’t Cut Your Way To a Billion Dollar Business

by NextMontreal on January 11, 2012

“I grew up being a socialist and I have problems with it because I grew up in Canada [and] I’ve spent a lot of time in Scandinavia, where I believe countries legislate out creativity. They cut off the tall trees. Everyone’s a C-minus. I came to America from Canada because Canada is stultifying boring and incredibly hypocritical. Thanks, Canada.” — Shane Smith, VICE co-founder and CEO via Forbes.

Earlier this week, Next Montreal ran its 2012 predictions, in it, PressBooks’ Hugh McGuire wrote:

2. Many of the Best Incubator & Lean Startups will Leave Montreal

If I had a dollar for every time someone said: “If you want to raise money/succeed, you should leave Montreal and move to San Francisco, New York or Boston…” I would have, well about $20. In general I think they are right. You don’t NEED to be elsewhere to succeed, but Montreal has a problem: we don’t have that many successful entrepreneurs to talk to. And that, I am convinced, is the X-factor that helps build success: talking to other successful startup entrepreneurs. Talking to other entrepreneurs who’ve done it is worth about a million blog posts about Lean Startup methodology. So: many companies will heed the advice. Some won’t. Hopefully we’ll maintain a growing and increasingly successful startup scene in Montreal. Maybe some of those big-shots will come back.

If you get a chance to read Matthew Fraser’s Quebec Inc.: French-Canadian entrepreneurs and the new business elite or Guy Laliberte’s biography Guy Laliberte: The Fabulous Story Of The Creator Of Cirque Du Soleil by Ian Halperin, it’s abundantly clear that Montreal entrepreneurs are successful despite the incumbent business Establishment and not because of it.

By now you’ve certainly heard about how Montreal and Quebec society is risk-averse. But the reality is that most cultures don’t systematically embrace risk-taking. As I pointed out in my most recent TechCrunch article on Bootstrapping: entrepreneurs need to balance unbridled optimism with delusional foolishness as they are mocked and misunderstood until they are wildly successful, at which point the chorus changes from “good luck with that ‘business’, pal” to “I always believed in ya, buddy!”

Yes, even in San Francisco and New York; but more so in Montreal.

Maybe it has to do with the impact of the Church on la culture Quebecoise, maybe it’s the fact that despite Montreal’s initial historical significance in North American commerce and culture, the current generation of entrepreneurs has seen Montreal stigmatized to a second-class status relative to both Toronto and the USA. Whatever it is, for a creative city that has spawned the likes of Just for Laughs and Le Cirque Du Soleil, Montreal leaves a lot to be desired when it comes to fostering entrepreneurship.

[No] More Vegetable Lasagna, Please

When I was completing my studies in finance at Concordia’s John Molson School of Business, not a single teacher or academic advisor referred me to an interview with any of the obvious places a self-respecting commerce grad sought to join. At the time, I chalked it up to some kind of medieval ritual to remind me that I didn’t kiss enough butt throughout college even though I was a fairly good student that had lectured finance at both Concordia and McGill at the BCOM, MBA and PhD levels while still in college.

In hindsight, I guess that would be akin to St. Louis Blues coach Ken Hitchcock benching Jaroslav Halak in his first game back in Montreal to “show him who’s boss”, but that’s the kind of backwards mentality I’d put up with throughout my life, so I just persevered blindly.

Things Happen For a Reason

That lack of support eventually led me to not land a corporate job and instead join Mamma in 2000 before the NASDAQ crashed, reporting to the CEO and COO. By September of that year, I joined AskMen when it was a handful of people in a thousand square foot room and headed up sales until 2005. AskMen sold for $13.5 million to IGN Entertainment whom in turn sold to News Corp. for $650 million.

Before it was in vogue, I realized the advantage of startups was that there was no glass ceiling, because no one had an economic incentive to hold other people back. It was a beautiful thing.

Actually, Why Don’t You Kiss My…

When I left AskMen to start WatchMojo, despite AskMen’s successful exit I got zero support from the Establishment. It was as if I was being punished for not kissing enough butt (once again), though this time around, the reality was that I didn’t even know whose butt I should kiss since the Establishment was too busy hiding in their chalets and boardrooms while I was hustling on the front lines. This is where Hugh’s comment is spot-on: I now spend a third of the year in New York where I learn a lot from more successful entrepreneurs. I also get more support and feedback on each week-long trip than I have in all of my life from Montreal’s “business elite”. That’s plain wrong, but it’s the truth.

… Derriere

There’s also something fundamentally wrong with Quebec when for all of the talk about the dumbing down of American teens, many are rushing to learn Mandarin, whereas half of the local job applicants at WatchMojo can’t speak English properly. It’s not politically correct to say so, but it’s a fact. The business elite is too silent to speak about this, but it costs us as a society far more than we will admit. This is why the talent pool here is falling behind.

“The tallest blade of grass is the first to be cut by the scythe”, Russian Proverb

But more importantly, the fact that the more ambitious and determined talent is shunned (at best) or ostracized (at worst) is why so many successful entrepreneurs then turn their backs on the city once they hit the big time.

I don’t think I’m entrepreneurship’s gift to Montreal; heck, honestly on a good day I might crack the Top 100 best entrepreneurs in the city right now (let alone in the past decade), but having worked at Mamma and helped build AskMen (two of the more successful consumer internet startups of the 2000s) you’d think the Establishment would rush to partner with me.

Nope.

What Have You Done For Me Lately

Extending Hugh’s observation, as much as I try to see the forest from the trees, indeed, if tomorrow WatchMojo sells for $10 million or $100 million, I’d be lying to you if I said that I would be compelled to donate a penny to Concordia or Montreal despite the fact that I actually do feel indebted to both.

Stating so might not make me a “team-player” in the clichéd sense of the word, but it does make me honest and sincere, which is something that everyone lacks (there’s one thing Montreal shares with New York, San Franciso, or Anytownistan).

Like it or not, the only team I care about at present point is my team: WatchMojo.

What Goes Around Comes Around

Don’t get me wrong, I believe in karma, but I don’t think karma has all that much to do with business (sadly).

In my interview with Shark Tank/Dragon’s Den Kevin O’Leary, he told me that “money goes to bad people, but not to bad ideas” and frankly, he’s half-right. Ultimately, it’s a self-fulfilling prophecy: unless you support an idea or entrepreneur it’s unrealistic to expect it to grow.

Recipe for Success: Here’s What You Need

I think success boils down to six things: vision, ambition, execution, determination, luck and timing; with the first four being the things you control and the last two being externalities.

Ultimately, Montreal’s Establishment simply doesn’t welcome – let alone reward – ambition the way other startup hotbeds do. I fully agree that wearing one’s ambition on one’s sleeve is a recipe to get cut off at the knees (hence that Russian proverb), but it’s a requisite to be successful whether the Establishment likes it or not. For what it’s worth, ambition isn’t the most important requirement to succeed, to find out what is, tune in to my next TechCrunch article this weekend.

I’d also like to point out that the new crop of investors is technically part of the solution and not the problem. This isn’t about them. But so long as the city remains conservative and backwards, we’re ensuring that so many of our more driven entrepreneurs grow up resenting the city as a result. You might be thinking by now that I’m some crusty bitter old man, but I’m 33 and generally happy and very grateful for what I do have.

In fact, I have tried to help founders and startups in Montreal but the reality is I have no time to do so because I’m focused on growing my company. Hence the irony: the new fleet of investors is focused on making Montreal the next San Francisco or New York for startups but they’ve turned their backs on those more experienced entrepreneurs that refuse to prostrate to the elite.

If you’re going to embrace and foster entrepreneurship, you might as well learn to understand what makes an entrepreneur an entrepreneur!

Au Revoir Mes Amis…

Ultimately, Montreal’s new breed of investors is positioning Montreal as a great cost-effective place to launch and grow businesses, but as my New York brethren like to remind me: you can’t cut costs on your way to building a billion dollar business.

Indeed, on my last trip back from the States, I realized the harsh reality of Montreal’s myopic “value proposition”: most of the would-be American buyers or investors care little about the cost savings associated with WatchMojo remaining in Montreal. Repeatedly, the deals we’re offered are contingent on us relocating part or all of our operations to the US. With personal roots in the city, that’s a tough pill to swallow.

After Dubai’s meteoric growth period, the region crashed down to the ground because those who had moved to Dubai had little roots there – and thus little incentive to remain.
That should hopefully serve as a lesson to Montreal’s Establishment.

Ash is CEO of http://WatchMojo.com, follow him on Twitter at @ashkan.