Introduction

Hello, everyone.

A Shift from Technical Talks to Entrepreneurial Lessons

I was asked to fill in last minute today, so I'm going to do a bit of a different talk than I have in the past.

I've done kind of technical talks, and every time I've done a technical talk, I've been kind of bombarded with a lot of questions about people with business ideas and starting a business.

So having been an entrepreneur for 25 years, I thought maybe I'd share some experience on gotchas, what to do, what not to do, for my opinion.

not to say that I'm always right, but I'll share my opinions on the ins and outs of starting a

business.

I'm motivated because I've been helping a lot of startups with kind of being an executive

advisor, helping them with funding and just managing their business.

I see a lot of the

same things.

So for young technical people starting a business, it's a tough, tough thing.

Speaker Background

So I'll tell you a little bit about myself.

Early Education and Research Experience

I mean, I'm an aerospace engineer.

I went to U of T,

84 to 88 undergrad, and then I went to the University of Toronto Institute for Aerospace

Studies.

I ran a research program for them, I had a $5 million budget, so I got exposed to financials

pretty early in my career, running the research budget.

Then I got a master's degree in computational fluids at the Institute for Aerospace Studies.

First Startup and Hard Lessons

Then I worked with my buddies, started a software company called MedTech Systems, doing kind

kind of a 4GL, object -oriented programming.

Ended up being about a million dollar company

with five people, eventually grew much larger,

and then, like a lot of partnerships,

all the good buddies now hate each other

and ended up in court and flamed out horribly,

which is one of the gotchas in business.

Corporate Leadership in Data and AI

I worked for a loyalty management group

that runs the AirMiles program.

I was there for five years.

I built a consulting practice for them,

doing machine learning consulting.

Then worked for IBM Canada,

ran IBM's machine learning practice,

I ran a business that was a $50 million business with 200 employees.

So all along the way, you see, I've been kind of in businesses, running businesses, learning about corporate finance.

It was a technical education.

You don't get a lot of corporate finance knowledge.

So I think that's one thing that I got out of my career being in companies.

Executive Roles and Founding Daisy Intelligence

Then I was COO for a company called Adastra.

At the time, there were about $10 million in revenue, 100 people.

And they've consequently become much bigger than that.

And then I founded my own business called Daisy Intelligence.

Ran that for 20 years.

got it to about 5 million in revenue.

We peaked at about 60 employees and ended up with about 30

employees at the end.

And for the last couple of years, I've just been kind of an advisor to

startups and scale -ups, helping with funding, helping them integrate AI into the roadmap.

I have about six AI patents.

I'm a very technical guy.

And my business was about reinforcement

learning.

So we did kind of process automation with no human in the loop using reinforcement

enforcement learning to make smarter decisions.

So I've been helping a lot of midsize and enterprise

companies who want to integrate AI into their products and have no idea where they want to go.

So that's who I am.

Why You Might Not Want to Be an Entrepreneur

So I'll talk you out of why you shouldn't choose entrepreneurship.

It's not

the big glory thing that everyone thinks.

If you want a quick win to turn a quick buck,

entrepreneurship is not the way to go.

There's other things you can do to make more money.

The Demands: Sales, Finance, Stress, and Stamina

if you're not a salesman that's a tough haul if you can't sell your own idea that's a tough way

to start a business so you have to be able to sell sell sell whether you're a technical person or not

if you don't know anything about business corporate finance you know there's lots of

hard lessons you'll learn along the way people will take advantage of you so knowing a lot about

business is super important if you're stressed about your personal finances don't get into

to business you know you'll be I'll remember so many bill chasers chasing me for 20 years you know

you're always the last one paid super painful you need to have a very thick skin if you don't like

to work hard you don't want to know willing to work 100 hours a week and then some pull all

nighters on end to get things done you know sweat equity is the way that most businesses succeed so

if you're not willing to do that not going to happen if you're not a leader of people you know

You need to sell people your vision and attract employees to join you.

You're not a risk taker.

You know, these are things, elements that you need to have if you want to be an entrepreneur

and certainly really need to look hard at yourself before you get on that on the journey

because the journey to success is not a short one.

Alternatives to Founding Right Now

Intrapreneurship and Learning Within Larger Organizations

So other alternatives, you can be an entrepreneur, you know, start up a new business unit in a company.

I did that.

you know that's how I got some exposure at the air miles company I started a

machine learning consulting practice for them and selling machine learning

consulting to the sponsors in the program and learned a lot about that so

I worked for a bigger company learned a lot about how to run a business you know

same thing you can get a job in a big corporation try to rise up the levels

either on a technical track or business track see if you can evaluate your ideas

learn about your potential clients like I got a lot of ideas for my company

from working for IBM and being exposed to clients

and seeing what their problems were

and the things they were struggling with.

Build Finance Skills and Network Relentlessly

Certainly learn about corporate finance.

Having financial acumen is huge.

That's one thing I see in all the little startups I've run.

You know, how to manage financials report,

how to manage cash.

All these things are short supply.

And networking, I'd say get out and meet people like crazy.

Meet people from business, technology.

technology, that's where you'll make all kinds of interesting relationships and opportunities.

You're going to spend a lot of time doing that.

If you're a technical person who's an introvert,

and I've been one of those as a younger person, that's my natural state of being is to,

you know, sit in front of my laptop and put my headphones on and disappear.

But you need to

learn to meet people, greet people, talk to them, find out how they can help you, how you can help

them.

Why Choose Entrepreneurship Anyway?

So why entrepreneurship?

Mission, Responsibility, and Resilience

You know, you have a personal vision, a mission.

This is like not,

and it's not that you want to be rich.

It's not about the money.

It's about, you have a goal and

it's something you want to achieve and that's what you want to bring to the world.

You have, you're very self -determined that you really want to do this.

You're perseverant.

You want to employ people.

Employing people is a huge responsibility, knowing that people will

join you.

You pay their salary.

They raise families, children, all of that.

So carrying

the responsibility of employees is a challenge, but you won't want to do that.

You want to

contribute to society with your idea.

You want to be a leader.

You're a salesman.

You're good at

that.

You have incredible stamina and perseverance.

That's the biggest skill I think I had grinding

grinding out a lot of hard days and you have a super thick skin you know the business world is

tough there's a lot of people out there who'll take advantage of you and you need to be able to

persevere through anything so if some of those are the traits that you have then you know worth

The Reality Curve vs. the Hockey Stick Dream

considering the reality is everyone draws a nice hockey stick plan not a nice plan everyone has

this nice exponential curve in their financial model that's not reality the reality is much

uglier than that the path to success is never a straight line so don't expect

things to go smoothly expect them to be the worst case scenario I remember

signing a million dollar deal one day then losing your biggest customer the

next day and you gotta not get too excited or too depressed because every

day is like that and if you if you follow the swings the lows and the

highs you'll drive yourself crazy and you know to make money takes a long time

The average age of a billion dollar business takes about six years for a unicorn to go from idea to billion dollars.

And that is literally like one in a million companies achieve a unicorn status, even less than that.

And it won't be you.

If you're starting a business, you're not going to be a unicorn.

Just start with that attitude and don't rely on your plans on achieving that goal.

Though it might be your goal, but it most likely won't happen.

It Takes Time: Rethinking Timelines and Outcomes

and successful software companies take at least 15 to 20 years to get to about 50 to 100 million

in revenue so this is not a quick money flip it's a long journey that takes a lot of time

to figure out what's going on in the market to be able to change and pivot and move your ideas

around so the reward is not the exit you know I had one of my investors they owned a family

business they owned a seniors homes across Canada and they sold that

business for like two billion dollars and the his brother was a CEO for 25

years was a family -owned business and his brother got a check for 700 million

dollars and then he went into a deep depression for a year because his

purpose in life disappeared he had didn't know what to do with himself for

20 years he was there building this business was the CEO driving its growth

the vision and then you got this big check you think money makes you happy

doesn't I think that you know the success and starting a business is the

journey for me I had a 20 -year journey in my company at the end the company got

financially restructured and sold I didn't make a million dollar check at

the end of the time but for 20 years it filled my life and I paid my salary put

my kids through school so that's the journey the reward is the hard work the

the fulfilling of every day, and you need to enjoy every minute of that journey.

That's what

entrepreneurship is about.

It's not about an exit and a flip.

That's the pyramid scheme that

society sells you, right?

So if you have a business, you're around for a long time, and you make a

living, that's great.

Key Considerations to Start the Right Way

So you've heard the warnings, but if you want to start a business anyways,

here's some key considerations.

Stop Talking, Start Doing: Define Your True Business

First is, I hear a lot of people talking, you know, so stop talking

and start doing i like this a walt disney quote uh um you know just get on about it if you're

going to start a business start doing something towards that it'll never happen if you just talk

about it at parties but you need to figure out what you are i think here at the ai group most

people think they're a tech business i think a tech business would be maybe you're creating

original technology or you're building a software product that you hand over to a customer they pay

for support and upgrades and you deliver annual releases you charge an annual fee that's most

likely not you to get to a software business is like stage two or three or four you know

writing 10 million lines of code doesn't happen in six months and you shouldn't start a business

writing software so even though you have a technology background you're likely not going

to be a technology business you're likely not innovating brand new llms you know some some

Some people are, you know, I have friends who are physics PhDs and they're inventing some new

hardware gadget that's like a new step up over something else.

But the vast majority of us

are not technology businesses.

I was in Daisy Intelligence.

We built the reinforcement learning

automated decision making.

What I sold was information.

My customers wanted to know for

retail what products they should promote, what prices they should charge, how many units of every

item they should have in every store that was the information they wanted they didn't give a crap

how i created it if i had a thousand people sitting in a back office manually churning to

create that they could care less so the technology i created was for me was for the company to more

efficiently deliver the information that the customer wanted so i really was i was a tech

business just to service this information efficiently and so i always tell my employees that

that we can't take six weeks to deliver a new feature

because the customer is not paying for the software.

They're paying for the information.

Just get it out the door however we can,

figure out how to automate it later, right?

So that's the first thing.

So most likely, most of the businesses

are information businesses,

and that's mostly likely what you are, right?

But figure that out.

Find Paying Customers Before Building Software

First step is to find paying customers.

So before you write a line of software,

when I started my company,

I started just as a consulting company,

you know selling consulting and and uh and analysis right so you want to get revenue in the

door without spending any money right you want to find customers who are willing to pay for the idea

that you have or you can do consulting to try to figure out what that idea is right because that's

kind of product market fit is the biggest challenge of all technology businesses every business i've

worked with you know they have trouble selling it's telling me that they don't have the product

you know their product doesn't fit the market need right so working with

customers is the most important thing you can do create the information the

customer wants however you can half manually half with technology you know

figure that out and once you get to five ten a hundred a thousand paying

customers you know the smaller number is if you have a larger ticket per customer

but once you get to that then you have some revenue coming in you have some

inkling that there's product market fit now you can start to start to build

Co‑Funded Development and First-Mover Pricing Traps

something and start to perhaps develop something you know what I learned at IBM

was they never develop any software unless they have a paying customer on

day one so I wouldn't develop so now you've got these paying customers who

are paying for your bubblegum and chicken wire you're handing information

to them they're happy they're seeing value in the information they love you

they don't know the pain you're going through to create these fancy PowerPoint

point decks or a nice website with some information on it and uh you know they love you you figure

okay i've got i might have a product market fit idea here but i can't keep scaling because it

takes me 30 people to service my 10 customers okay i got to automate that now i'm going to

develop some software to automate what i'm manually delivering but i still at this point

you want to get a paying customer ibm would never let us develop any software unless i had a customer

to co -fund the development so they would kick in IBM would kick in half if a customer would kick

in half and then the customer wouldn't own the IP you would say you get a first mover advantage

you will have the lowest price forever so my mistake was my first of a kind customer was

Walmart so Walmart notorious about price so I delivered huge value to Walmart for like a pittance

because they were my first customer and once you gave them that low low price you could never move

them off of it right so they get that first mover advantage price and they get a system or software

a service that's tailored to their specific need right and uh and so now you have you've

built something because you built it for a customer you know it works for at least that

one customer i had chosen walmart figuring if it works for walmart it should work for other

hyper market or grocery retailers as well you've got your other customers who are paying you

okay now now you're in a good place you haven't blown your brains out you haven't spent all your

time and money before you have a penny of revenue you've got revenue coming in the door you got a

customer paying uh you know like paying for your development right and you want to be super

Financial Discipline Over Vanity Metrics

conservative financially all this is telling you that you know cash is king revenues in a relevant

metric you know all these arr multiples mrr all the things that uh sas metrics that people quote

these are irrelevant metric cash is king your free cash flow how much free cash flow your business

can generate is what's the most important number you want to spend less than you can make for 15

years when i started my company i funded it 100 myself we broke even every year and i wish i had

kept doing that the biggest mistake i did was to take vc money i'll talk about that in a second

right so and you only want to grow as fast as you can service and keep happy customers

the most important thing you want to have is customer sat and you don't want to grow too fast

that you can't service those customers if you don't have happy repeatable reference customers

you are nowhere you'll never be able to sell your product so grow even if you're growing at five

percent a year but you have happy customers your retention rate is super high that that that's the

business you want to have don't fall into the trap that vcs give you money and they expect you to

to grow at 100 % a year, that's a recipe for disaster, right?

So I'd say financially conservative,

build financially conservative growth models too that don't rely on you growing at, you know,

double, triple every year, right?

Founding Team Roles: Everyone Must Sell

Your founding team should have someone who's responsible for

financials, who can build a financial statement, a financial model, and who can sell, right?

Everybody in the founding team needs to be able to sell.

You're the primary salespeople.

and then someone responsible to deliver, which could be technology deliver or consulting deliver

and sell.

If you can't sell your own product, nobody will ever sell it for you.

Ever.

Never,

ever, ever.

If you can't sell, nobody else will be able to sell your product.

The only way other

people will be able to sell your product is they replicate the model that you created that you can

sell, right?

When I was at IBM, I'd have a million software companies call me and I would say, look,

look, if you expect me to sell your software, never going to happen.

I will never sell a single license of your software.

You call me when you're selling so much that you can't deliver,

then I'll help you deliver.

You know, and that's all the big consulting firms and IBMs of the world.

That's the model that they work.

So don't rely on taking VC money and expecting them to sell for you

because they never will.

My investors didn't sell a penny of revenue for the 10 years

that they were in the business, right?

Right.

Partnership Pitfalls and Alignment

And partnerships are super difficult.

So my high school buddies who I worked or my university buddies who I worked with, my one of my first jobs, the partners, they all hate each other, flamed out, sued each other.

My first partner that I started the company with, I sued him, ended up in court fighting over it, was sued by multiple people who took a small stake in the business.

Like business is cruel and unusual.

If I had to do it all over again, I wouldn't have taken a partner.

I had all the requisite skills, so I didn't need to have partners in the way I could have hired employees to fill in the gaps.

But you need to be very wary and careful about choosing the partners you work with, because when there's money involved, people get very nasty.

And you also want to make sure you have someone who aligns with your willingness to work hard and contribute, etc.

Raising Capital: Risks, Alignment, and Growth Pressure

Capital raise.

Taking outside money, as I said, is highly risky.

You need to do a lot of due diligence on the outside money partners because you want to make sure that they're aligned with you.

The biggest mistake I made was taking VC money and then not realizing what I was, that I didn't have product market fit, that I expected them to help me grow.

And it's like crack cocaine taking money.

Once you take outside money, you think you'll get on the wagon of taking more.

And the VCs wanted me to hire more people, get a big fancy office downtown, blow a bunch of cash.

and started burning money like crazy.

So outside money will not help you grow revenue.

No outside money will make your business profitable, right?

It just puts huge pressure

on growth.

Make sure you understand the model that your investors have.

If you do take money,

my VCs expected me to grow at 100 % a year, 50 to 100 % a year, which for the type of business I was,

was not realistic.

And this put unnatural pressure on us and it started affecting customer

customer satisfaction right so if you can't run your business profitably without outside money

you have no business right the smartest people i met in business they would ask me one question

they'd say how much cash are you burning a month i'd say a hundred grand they go okay you're worth

zero you know they would base business valuations on the multiples of free cash flow that your

business generates and i'd say that's the mentality you should have if you have profit you have an

infinite runway and the world isn't going quickly.

I started a machine

learning, reinforcement learning, automated process automation for Walmart,

hundred million lines of code, super tech thing in 2015.

That market still hasn't

happened yet.

There is no rush.

You have years and years to make your business

idea come true.

So you have time.

You don't need to be in a rush to go get it.

I fell into the trap of I thought it was gonna happen quickly and ten years later

later it still hasn't happened what I started in 2015 when our product was

generally available.

Leverage Canadian Grants, Credits, and Programs

There's tons of government funding so if you're a

Canadian company and I would I've worked with a couple startups who were advised

to incorporate in the US like you know now they can't get any Canadian

government funding because they're not a Canadian entity although they all live

in Canada they all work in Canada their offices in Canada and now they can't get

any of the funding because they were told that they should start a US LLC

Then they do a Canadian subsidiary, which is a cost center, so they can get some of this funding.

And now they have super complicated accounting financials.

They've got to pay two sets of books.

You know, start a Canadian company.

We have great funding programs here.

I funded my company through Shred.

So I did a lot of software development, paid through by revenues, and then had Shred claims that would offset the cost of that.

So programs like SR &ED is great for tech businesses.

businesses, NRC, the National Research Council, IRAP program is another great program.

Those first

two programs fund technical uncertainty.

So if you have any software development, it doesn't have to

be technically uncertain to the general market.

It could be general knowledge that everybody knows,

but you don't know it.

So that's technical uncertainty, even if it's common knowledge

elsewhere.

So iterative software development falls under that.

And so I raised over the 20 years in

business i raised probably about 15 million dollars in tax credits like i would literally

get a check at the end of the year for like seven eight hundred thousand dollars

from the government and in the early days i would use that to fund i would get venture debt funding

so there's companies that will give you a loan in advance against your shred claim especially when

you get a track record so i would get 80 of your shred claim in advance that you could use to

help finance the business, right?

Other programs like OCE, CanExport, FedDev, there's tons of these

programs that are out there.

Many hiring programs that'll help you hire, they'll pay for 10k of a

new hire salary or half of a new hire salary or interns.

Programs like MyTax, NRC IRAP has some

hiring programs.

OCE has some hiring programs.

And so all of these apply to Canadian -owned

businesses you're a Canadian corporation or a provincial corporation and you have

full -time employees you know that's they get if you have full -time employees is

preferential contractors in Canada will get less funding but if you have

full -time employees all these funding programs want to create jobs right so

you always tell a story about how many new permanent jobs you're going to

create through the funding that these programs give you and so yeah I raised

more money through federal grants and tax credits and federal loan programs

and I did from a venture capital and so definitely look for all of those in

Putting It All Together

AI Is a Tool; Customers Buy Outcomes

summary so I would say this hype about LLMs and AI this is these are tools to

help deliver efficiently they are not your business like 99 .9 % of companies

are not raw technology companies like you're not innovating in LLMs you're

using this other people's technology to generate an idea likely you're selling

some type of information or automation that to your end clients and they don't

care how you do it they don't care whether you do with LLMs or not they

just want to know that they're getting the output they're paying for right get

paying customers before you spend a dollar of money writing any software or

spending a lot of cost right most customers again want that output right

You know, the vast majority of them don't care how you do it, right?

Beware Valuations; Prioritize Cash Flow and Fit

Be wary of venture capital.

Do your due diligence.

Do as much due diligence on them as they do on you, even more.

Leverage all the government funding that's available for Canadian businesses.

And slow, steady, profitable growth, right?

Keeping satisfied customers all the way.

That should be your primary goal.

Customer sat and profitability.

accountability and it takes 15 to 20 years to get to 50 million in revenue.

Less than, you know,

one, less than one in a million companies becomes a unicorn with a billion in revenue, not a billion

valuation.

Valuations are bullshit, right?

You know, they should, unless it's based on like a

multiple of free cashflow.

So companies that get multi -billion dollar valuations with no revenue

or no profit, those are delusional and they set you up to fail.

You know, I did that.

My first,

my VC round, I had about $5 million in revenue.

They gave me a multiple of $5 million.

The company

was worth $25 million.

And according to their valuation, multiple of five times ARR.

And then

COVID happened.

We shrunk back to about $4 million, $3 .8 million.

And we stayed flat for a couple

years.

And then we burned through the VC money because the VCs want you to burn money.

And then

had to go do another round and because you went down in value now the next round basically wipes

out you know i lost control of the company uh and and the only ones who win at that point are the

vc so they set you up to have a down round so they can take the lion's share of the company you need

to be not that they do that on purpose but that's likely what happens to many tech companies because

selling is hard because you don't have product market fit that's the most important thing you

you have to figure out is what is the market need and what is the product that fulfills that need

and the vast majority of us fail at doing that even though I ran my business for 20 years

I ran 50 million in revenue through the company in those 20 years I don't think we ever achieved

product market fit because if you have product market fit you know you will sell your product

will sell itself you know when you invented an iPhone you don't have to sell the iPhone you just

walk into the store and they will buy as many as you can manufacture.

That's

product market fit.

When you're cajoling, arm -twisting, lowering the price, all

these are signs that you have no value.

One of my good friends says he

gets his cost estimate from his development team and he multiplies it by

pi and then he goes to the customer and if they're not willing to pay that he

walks because if you can't be fat, dumb and happy as you deliver your product

you will not have a business and your customers won't have the service that they're paying for so

those are my two cents hopefully that's helpful and different than maybe what you expected today

but uh on a short notice this is what i thought i'd share today happy to answer any questions

and you can reach out to me i gotta i can't hang out late tonight it'll leave shortly after the

talk but there's my email address my linkedin profile if you want to reach out feel free to do

Q&A Highlights

Choosing a Co‑Founder: Alignment Over Friendship

so yeah the idea with a co -founder you just need to make sure that like that you have your super

aligned because like i said best buddies at a university my closest friends started a business

and now they all hate each other because at the end of the day there was a misalignment in values

and understanding and that disconnect weird reared its ugly head when the business started making

some money and who's contributing what percentage we each took a third a third and a third but I'm

doing three quarters of the work and you guys aren't doing anything and like you need to have

those ugly conversations on day zero to say that and and otherwise you know shit can happen

hopefully it doesn't but a lot of the times I've seen it happen it happened to me and the partner

that I chose I was like okay let's make it 50 50 even though I have the technical brains and the

idea I don't want the other guy to be jealous and then it was a disaster like I delivered 90 % of

the work he didn't he sued he was stealing money like it was just a disaster like you need to know

the people you get into business with.

One more question.

Solo Technical Founder: When to Add Finance Expertise

Let's say you are on the technical boundary and you start your own business by yourself.

What's the perspective on when you're dealing, whether it's pressure or not?

If you have a business, you need to have somebody who understands financials.

I worked for a while in corporations, and I luckily got exposed to financials that way,

so knowing about corporate financials is super important.

So once you start to have revenue and you need to manage cash and build financial statements, then, you know, maybe find a partner who can do that.

Right.

Or maybe hire like if you have the idea and you have money, you've bootstrapped it yourself.

Why do you need a partner?

Just hire a part time CFO.

Like, call me.

I'll be your CFO.

A day, a month.

I can pull your financials together.

You know, like, cool.

Thanks very much.