Bootup Companies

Thanks to Michael Fergusson and the team at Rude Boy Games for hosting last nights meetup with the team from Wavefront. Wavefront is a non-profit “accelerated commercialization centre” for BC, focusing on wireless and mobile applications and devices.

They came to Gastown to find out more from developers and companies working in mobile here in Vancouver, to tell us more about themselves and the services they offer, and to feed us free beer and pizza.

Michael ran the evening admirably. He had everyone sit in a circle, introduce themselves, their company, their projects, and talk about challenges they were facing around mobile here in BC. We didn’t get very far before some person’s commentary on anything from embracing the web as THE path for mobile development or a discussion on funding realities right now evolved into a discussion by everyone in the room.

I talked a bit about Bootup Labs, a bit about the VCC program (info on BC’s Venture Capital Programs here) that we’re applying for, and a plea for less duplication and more working together on common issues. Things like “HR bootcamp” or a seminar on getting investor ready is not at all specific to mobile startups, and I’d hope that local industry groups work together on co-sponsoring or organizing such events.

Lastly on the funding side of things, I mentioned the JumpStart program from the BlackBerry Partners Fund — this is something to keep an eye on to get started with really early stage. For those that are currently iPhone crazy, getting some investment dollars to focus on BlackBerry might be what it takes for people to look at the platform more closely. I definitely think there are interesting demographics around it, and of course folks are much more guaranteed to have things like data plans.

Back to the discussion, the huge theme was seeing the web as the primary platform for delivery, and anything like device specific applications being a step backwards. There were a handful of Nitobi developers there that in particular esposed this point of view, hence their involvement in the open source Phone Gap project, to make native iPhone apps (and soon, Android) using just web technologies. Parveen Kaler from Smartful Studios – who comes from a game developer / console background where he has dealt with lots of “gatekeeper” companies with much stricter rules and is now building iPhone apps – was the main contrarian: he’s loving Objective C and developing natively for the platform, and his business model fits with the rules in place.

It was great to find out more about Wavefront and the programs they’re currently offering. The item of biggest interest, judging by the crowd, is probably the handset library they are going to build up. They have a couple of G1 Android phones today, and one of them already got lent to the guys from Handi Mobility. I still see a little bit of overlap with, for example, WINBC, but it would be great if Wavefront focused on the developer / technology / direct carrier interactions. I think leading these type of developer-centric gathering events would be a great direction for Wavefront, and hope to see more of them as they get ramped up.

Roger Ehrenberg just wrote a post entitled: “The Pyramid Principle: Venture Investment in a Capital-Efficient World”  I think it’s very much worth reading if you’re as passionate about making Vancouver a world class tech center as we are.

It will require a culture that pushes rapid assessment and admission of mistakes, rewards innovation and compensates heavily for successes that can be broadly applied. Most large venture firms find this activity too time-consuming and capital inefficient to warrant much attention. In the future I believe that getting the base right will be the key to success in the large-scale venture field.

Bootup Labs is the base of the Pyramid.  We live to serve the rest of the Venture Capitalists who don’t feel like changing their model or letting go of their management fees.  Help us, help you.

The PACT event that we attended just had a release from the Trade Commissioners out of the San Francisco office. It looks like some of our feedback — specifically, moving the “Boot Camp” programs of prepping companies for investment and pitches to regional locations in Canada — are going to go ahead. We’ll keep everyone up to date on how this program evolves, it looks like there are definite plans for a similar event April / May 2009.

Thanks Guillaume, Thierry, and the rest of the San Francisco and Palo Alto office teams for putting this event on. We’re looking forward to be involved in the regional Boot Camps as well. Full post of the results / press release after the jump.

Title:  SFRAN0029 - Canadian Technology Start-ups Plug and Play in Silicon Valley!

1. Summary:

The Consulate General of Canada in San Francisco /Silicon Valley, in partnership with the Canadian Chapter of the Association of University Research Parks (AURP), organized a venture financing “Boot Camp” for IT start-ups in conjunction with an Investor Forum and EXPO at a successful local incubator, Plug and Play Tech Center.  The two-day program was delivered to 21 Canadian companies and five Canadian incubators, October 20-21, 2008, in Santa Clara, California, with a view to prepare companies’ investment pitches and put what they learn immediately to practice in front of  Silicon Valley investors.  Detailed program click here.

2. Key Findings/Outcomes:
High client demand for VC access services: 25+ Canadian technology start-ups indicated strong interest after a first broadcast (Company Profiles click here) as well as 5 incubators (OCRI, MaRS, Waterloo, Victoria, and Bootup Lab/Vancouver)
High client satisfaction for this formula as indicated by spontaneous client testimonials and follow-up survey: Business Plan/Pitch Review + Exposure to about 30 Silicon Valley Venture Capitalists/ Angels (Full agenda click here)
Immediate success was recorded from a few participating start-ups in securing funding and/or partnerships (at least 3 tangible transactions)
One of the participating Canadian companies, Redwood Technologies, won the Plug and Play pitch competition (43 international participants)
Post is actively working with a number of these new clients, introducing them to additional VCs and other contacts
AURP and participating science parks would like to repeat the exercise and possibly open a Canada Pavilion at Plug and Play as an added-value service to clients - At least one company decided to move to Plug and Play in order to get access to network of investors and partners
There would be value to host regional “Boot Camps” in selected Canadian cities ahead of time of a follow-up start-up mission to the Silicon Valley.  This would also allow a better qualification of companies for this activity
In spite of financial crisis, a number of Silicon Valley VCs are still in an investment mode
3. Next Steps:
In association with IT cluster organizations and DFAIT regional offices, SFRAN will coordinate a series of “Boot Camps” in selected cities across Canada, to be facilitated by Chris Gill, the Executive Director of  the Silicon Valley Association of Start-up Entrepreneurs (SVASE).  This may take place in the early spring in preparation for a follow-up mission by qualified companies before the summer.
Most suitable technology start-ups will then participate in the second phase of the program in the Silicon Valley with a view to get maximum exposure to VCs and Angels: very early-stage start-ups would participate in the Plug and Play Tech Centre EXPO/ PACT (Date TBC in April/may 09); more mature companies would participate in “Launch Silicon Valley” (Date TBC in April/may 09)
Post will assist in the identification of resources for opening a Canadian Pavilion at the Plug and Play Tech Center to facilitate the temporary stay of Canadian start-up entrepreneurs in the Silicon Valley, to allow them to quickly be “up and running”.

4. Report:

The Silicon Valley is home to more than 500 VC firms and received last year approximately 35% of all VC investment in the US (+$10B).  This is also the home of the largest concentration of entrepreneurs, including numerous Canadians who moved to the Valley to launch or grow their own business.  This market is therefore of great appeal to Canadian techno-entrepreneurs who can get access to venture financing, strategic partners, clients (including some of the largest IT  and life-science companies) and share experience with peers in a highly networked environment.

Targeting this clientele, SFRAN/PALTO arranged its first IT start-up boot camp with the support of Chris Gill, Executive Director of SVASE, a local association devoted to assist technology start-ups excel in the Silicon Valley, and some VC friends of the Consulate.  The program was developed in order to give start-ups as much exposure as possible to venture capitalists while providing them with the education/right tools to succeed in this very competitive market.  Recruitment for the project was undertaken through DFAIT regional offices, DFAIT HQ colleagues, NRC, Industry Canada, and Various Research Parks and Incubators across Canada.

The program started with a coaching session led by Chris Gill. Many topics were covered in this session from “how fundable is my business” to “what should I include in my pitch” to “what potential investors are looking for”.  Two guests from RIM and the new Blackberry Partners Fund were invited over lunch as keynote speakers.  The afternoon session was a dry run for participating start-ups in pitching their business in front of two panels of three local venture capitalists and an opportunity to receive constructive feedback following their performance. This component of the program was key in order to assist start-ups to prepare their pitches to 30+ venture capitalists the day after.  Beyond communication aspects, it turns out that the session was also useful in refining some aspects of business plans.

The second day was essentially concentrated on the pitch competition and EXPO, although Post arranged a visit to Google headquarters, in Mountain View, a global company which was not so long ago a small “garage” start-up.  More than 300 people attended the pitch competition and EXPO, and several high-level players from the Valley shared insights on where the industry goes and what are their expectations.  Canadian start-ups, with competitors from other countries such as Israel, Spain and Australia to only name a few, were given 2 minutes to pitch their business to a crowd of venture capitalists during the “extreme” pitching session. It is a total of 43 companies who pitched, whom from which 21 were from Canada. Start-ups that were the most fundable were then given an additional 10 minutes to present their ideas in more details; two Canadian companies were selected to come back for the 10-minute presentation and Redwood Technologies from Calgary actually won first place. The program concluded with a networking reception including all start-ups that were in attendance, various industry players and venture capitalists.

5. Feedback:

We administered an e-survey to capture everyone’s feedback and improve this program moving forward. Feedback received so far were very positive ranging from “I have learned more in 4 hours that in 4 months” to “Thanks for opening my eyes to Silicon Valley … we are now planning our next trip to San Francisco to meet with VCs” to “First exposure to the Valley and gained significant insight on the opportunities in the Valley and what VCs are expecting”. For complete analysis matrix, please click here.

6. All company profiles of participating start-ups can be found here.

7. Lessons learned on the format and follow-up:
Develop this program on an annual basis
Run 2-minute extreme pitching dry runs on the preparatory day
Hold “Boot Camps” in major Canadian IT clusters while ensuring a national reach
Have more lead time for adjusting presentations
Open a Canadian Pavilion at Plug and Play Tech Centre to facilitate entry of start-ups in this market
AURP will spread the gospel among their 27 national members and post articles in their monthly newsletters
8. Conclusion and Acknowledgement:

We wish to thank all participating Canadian start-ups for the hard work and professionalism they have put into fine tuning their pitches and plan. Special thanks to the Canadian Chapter of the Association of University Research Parks for partnering with DFAIT to make funding available to participating start-ups. The energy emanating from the group was stimulating and everyone in SFRAN/PALTO look forward to build on the success of this project.

Drafted /Released: Guillaume Parent, Trade Commissioner
Consulted /Approved: Thierry Weissenburger, Senior Trade Commissioner

1. Open all the mail!  This is often a quickly relinquished responsibility and it really shouldn’t be!  Awareness of key documents include tax notices, tax assessments, payables, bank statements, cleared cheques, customer payments and legal notices… all need the attention of the owner even for 5 seconds!   Tax notices highlight late payments which might be an indicator of untimely bookkeeping, cleared cheques should be checked to ensure they are all valid, bills need to be inspected for fraud or errors, and customer payments or lack thereof need to be monitored for deposit prioritization or follow up.  You don’t need to spend a lot of time- just open, check and hand off to bookkeeper… or scan/fax using QCDocs of course.  Also consider using QCMail services whereby you receive your mail by email… kills several birds with one stone.
2. Sign all the cheques!   This is rarely not in effect as it is pretty obvious.  I would point out that you should make a habit of requiring the back up documents to support cheques which is often skipped (ideally the voucher - PO, Packingslip, Invoice).  Also note that dual signatures is always the best unless you are the sole owner/shareholder!  What if you’re out of the office a lot… then get QCDocs Systems so you can do all this online!  
3. Monitor online bank accounts and general business activities.   Monitoring controls are very important as they ensure that you are aware of unusual transactions and unusual behaviors.  Trust in your accounting/bookkeeping staff is tremendously important and you should hire accordingly but it isn’t a control!  Fraud occurs when owners are just so trusting that opportunities arrise and we hear about those stories every so often in the press.  Monitoring controls… ie. just taking an interest, requesting reports, reviewing documents, inspecting files on occassion is key to shutting those opportunities down!
4. Segregation and access controls-  Control of cheque stock is critically important. Do not place reliance on your signature and the bank review.  You need preventable measures to watch for fraud and identity theft these days so control your cheque stock.  Also monitor online bank accounts and make sure you can identify transactions- EFT’s (”Electronic Funds Transfers/online payments, etc) are being coming more and more common but they don’t provide enough information to understand nature of payments sometimes.  Also control access to payroll systems (ADP control pretty much gives person ability to write a cheque to themselves by creating and paying a fictitious employee) so monitor this closely.  Those big lump sum autowithdrawals need to be monitored for unusual fluctuations and tied out to payroll reports. 
5. Timely, involved review of monthly financial statements and bank reconciliations.  This one is rarely done and poorly understood.   On the 15th of every month you should have received a 3 month trended balance sheet, 3 month trended  P&L, a budget to actual, a G/L for the the month, bank recs, AP, AR and fixed assets listing .  Get them if they are “ready” or not! and get some perspective on where you’re numbers are at.  If you don’t understand them go through them with your accountant and get them to give you some perspectives on them and what you should be looking for specifically- or I’ll save that for another blog.

The paperless back office has long been dreamed of but just hasn’t happened!  The cost-benefit just hasn’t been there in terms of ease of use and practicality.  Here are my thoughts on why the world is now poised to finally see the paradigm shift happen!

1. First let me point why I think it has taken so long to come about!  PDF just doesn’t work!   Everyone was waiting to see what electronic document format would be the defacto standard and everyone thought Adobe’s PDF format would be it.  Problem- slow to open (time a 1 page PDF versus 1 page jpg or gif), or the dilemma of opening whole file or just first pages (practicality of Accounts Payable), scanning challenges (what if pg 51 and 52 went together you have to scan the whole pdf again), try to name a pdf document while it is open…good luck!,  what if page 51 is upside down (pdf doesn’t have page by page rotation), open source… sure there are many pdf creator apps now… but they are not all fully compatible.  
2. Solution- Image Documents- Fast to open (small file sizes without sacrificing quality), resulting ease of use, view and name editing capability, everyone has digital cameras and are extremely familiar with working with images,   The biggest problem with this is 1 file is one image (multipage-tiff being the exeption) so file management just doesn’t work or so you might think.  Surprise, surprise, software can solve this problem…welcome to QCDocs!
3. Fraudulent Documents- Early concerns over the editability of electronic documents created a perceived “auditor” pre-occupation with fraud problems.     Again Adobe appeared to be the defacto standard to address this problem.  Practically everyone has come to realize that creating a manually fraudulent document is equally if not easier then with electronic documents and again there is a division between legal documents and electronic copies versus originals that is of course preserved in the paperless world. 
4. Stability of Windows- So all your documents are saved on your computer.  Well the days of Windows crashing posed a considerable dilemma… this has been for the most part resolved.
5. Big harddrives and system backups.   Storage of documents is no longer a concern… especially with 200-300 dpi image documents and ease of storage and search!
6. Dual monitor videocards and LCD’s-  Ahhh yes plenty of room for two monitors- one for viewing documents and one for working in your legacy system!
7. Scanners- Fujitsu well done!  Scansnaps should be in every small business office everywhere! Although they are still married to pdf… they slipped in JPG- well done!   HP, Brother, Epson, etc. multi-functionalprinter/scanners with multi-doc feeds and Twain scanner functionality… of course it is everywhere although get your default settings to accomodate office documents not only high res pictures of the family!!
8. Online connectivity!  In my mind the piece that clearly shatters the cost/benefit divide is the connectivity of the paperless office to the internet!  Coupled with online banking security protocols this innovation enables the distributed workforce, telecommuting, outsourcing, mobile salesforce, mobile operations, distributed offices, global commerce to truly evolve.   It also enables the re-invention of the “ERP” by reversing the workflow… a concept I leave for next time!

We were all crossing our fingers and holding our breath, hoping that Yaletown would close their new fund in these tough market conditions.  That’s why I was so happy to learn that we can finally exhale!  Yaletown did a first close with $65M and plan to do a second closing to top the fund out at $100M.

Congrats to Steve, Mike, Kirk, and Hans.  But more importantly, I think this is a big win for the Vancouver tech scene in general.  Many funds around town have put themselves in maintenance mode, and angels are in a wait and see pattern, which has all but halted any new innovation in BC.  I’m hoping that Yaletown folks will be acting like kids in a candy store.

My favorite warren buffet quote: “Be fearful when people are greedy, and be greedy when people are fearful.”

Sean from QCDocs is king of the “top 10 lists” on the QCDocs blog. He just posted a wrap up of lessons learned from our PACT conference attendance last week. I still need to do a longer wrap up plus cut and paste the content from my Cover It Live live blogging session from last week, but I’ll add a few comments on Sean’s post here.

As Sean says, Chris Gill from Silicon Valley Association of Startup Entrepreneurs (SVASE) did a great job of running the presentation Bootcamp organized by the Federal government trade commissioners. I think there was consensus that running such a Bootcamp on a regional / provincial level would be ideal: get everyone trained in their home locations, and then do an investment roadshow to Silicon Valley similar to how TechStars, Y-Combinator, and Seed Camp do.

There were lots of connections to be made with Canadian companies from across the country, and we’re still navigating our way through introductions at both the Federal and provincial level. There definitely are resources to lean on, it’s a matter of finding the right ones. To continue those connections, please join the PACT Canada 2008 LinkedIn group so we can stay in touch.

Image by bmann via Flickr

And yes, the Mai Tais were delicious, and *I* think they helped loosen us up for presenting the next day.

To get an investor to agree to that first round of financing, usually all you need is three documents:

1. Slide Deck
2. Executive Summary
3. Financial Projections

You’ll notice that I didn’t put a business plan on that list.  Most investors don’t have the time to read a full blown business plan.  They would much rather spend face time with you because they know that a startup is very dynamic, and a business plan is very static. You’ll need more documents in the due diligence phase, like your captable, articles, employee agreements, past financials (if any), etc. I came accross Martin Bliemel’s free financial templates and think it’s great template to work with.

Had the pleasure of attending last weeks Plug & Play Acceleration & Collaboration Track (PACT for short) event down in Sunnyvale, CA.  The event included start ups from Spain, Japan, China, Australia and Canada and was organized on Canada’s side by Guillaume Parent from the SFO Consulate.  For a first time event it was extremely well done- primarily in that it happened! and without a whole lot of excessive logistical requirements!

Top ten lessons:

10. Thumbs up to the Toyota Prius Hybrid- takes a little while to get use to booting up your car but handled 100 mph on the 101 and comfortably seats 5 and 1 in the trunk (beauty Wayne) so very much impressed! 

9.  A bundle of valuable pitch advice from Chris Gill the CEO of SVASE a Bay-Area NFP helping start ups get funding and a bunch more.  Key points I got, not included in the hand out.

a.  Don’t specify your value in your pitch - ”The market will set the value of the business”  

b. Ultimate pitch is 10 minutes.  

c. Sales cycle average- Awareness (3mnths), Consideration (3mnths), Trial (6 mnths), Approved (6 mnths), Purchased (6 mnths) so pitch viral marketing and sales accordingly.  

8. “SaaS” or Software as a Service means a lot things depending on who you talk to- some say that only web applications are SaaS, some say executable applications that rely on online connectivity are Saas, some say hybrids like QCDocs are SaaS and some say that provisioning of services over the internet like Tandem or our new friends from Corefino are even SaaS.   We’ll leave it up to our new friends from www.theSaaScenter.com to figure it out!

7. QCDocs may have a bit more margin to be had- Professor Matsuo from Kyushu University picked up QCDocs to just share business cards he’s received with colleagues around the world -”$25/month… done.”

6. Redwood Technologies Inc from Calgary are building some whicked mobile apps (cellphone client/billing management- sorry clients I’m doing something about my $500/month blackberry bill now!) LOL’s. Chatted up Terry Hughes (kick ass pitch by the way for a Brit!) about how QCDocs and the paperless online backoffice could jump start a whole new domain of business related wireless apps- ie. our blackberry remote cheque/check signing, sick day, time and vacation submission/approval sync to payroll/billings, expense reporting and doc approvals, paperless receipt mgmt, remote EFT payments, workforce management, etc.)

5.  Other companies to watch- Simo (before travelling LD with your cell phone check them out!), 3rdwhale(Boyd chat with BigRoom) and you’ve got a winner!), Coveritlive (because Boris was intrigued with the live blogging for obvious reasons!), odijoo (looking forward to getting our online training ported into pro-version!), Dynamite (because we’ll use this at some stage), Ariane Controls (because of my semiconductor days but proof is in the engineering),  Applocation(because this would be a nice add on to QCDocs for end-to-end asset tracking), Visionnet (because this would be a nice add on to QCDocs for SMB’s to streamline multimedia sales and marketing initiatives) andAdhack (People-powered advertising…brilliant, practical adaptation of social networking!)

4. Get on Guillaume’s twitter account so you don’t miss the bus!?  Also there’s something weird about downloading Googlemaps in the Google parking lot to find your way to Plug&Play…!?

3.  Some great Bay Area resources to help Canadian Start ups that I met - Guillaume of course,  Rick Rassmussen, working with Canadian trade commission out of Palo Alto,  Gordon Smythe with Invest-BC also working out of Palo Alto. 

2. Plug & Play - Wow!  Kick ass facility for incubating start ups.  Great starting point for early stage Canadian Tech Bay Area point of presence.  Jupe Tan, Jackeline Hernandez and Saeed Amidi were great hosts!

1. Beware of Danny’s ”5 more Mie Ties” at Tau Tau’s (happy, happy btw) the night before 2 minute pitch to Tim Draper and VC panel.  LOL’s

Risk Master

Danny and I are still down in San Francisco at the Plug and Play Tech Center, just wrapping things up before we head up to our Canadians in the Valley beer up in the city.

I’m taking a few minutes to catch up on my reading when I came across May Chu’s post on the Clarity Accounting blog - Don’t be afraid to be small. It’s an absolutely great write up of their approach to their business.

Less than 12 hours ago, I received an email sent through our contact form from a potential client who wanted to know more about our company. He wanted to know how long we have been in business and how big our firm is. He noted that our mailing address looked like a small business running out of some one’s apartment. He wanted to know if the business he is dealing with is a big, fail-proof company.

At first I was worried about how best to respond to this inquiry. After all, we are a small company that is run virtually. Everyone who has ever worked on this project has been contracted virtually. In the spirit of being an online accounting software, we conduct our business using as many “online tools” as possible.

Go read the whole post, and also check out the two Seth Godin posts that May references — Small is the new big, from 2005, and his recent post Too small to fail.

May and Dobes are doing a great job with Clarity Accounting, building their business one piece at a time, and I can’t help but think that they will be highly successful. I’ll leave you with another piece of information that I think highlights this:

Recently I found out that a company providing similar services as us burns 6 million dollars a year. I thought to myself, “wow, give me 6 million dollars and I would only spend a fraction of that amount”. In fact, within 1 month of our full launch, the business is already paying its own bills.

Image by akakumo via Flickr

Yeah, that title has probably been overused a lot lately. We have a joke here in the office that pretty much anyone that has a website can now say that they do “cloud computing“. But we *have* been doing a lot of thinking about how hosting and Internet infrastructure will be changing. From the beginning of thinking about Bootup Labs, we also thought that we could support the companies we were working with by helping point them at best practices around scalable web services: from hosted tools to hosting providers.

LayerBoom is Trevor’s baby: it’s tackling problems around next-gen hosting and virtualization that would be THE area that I would have been diving into if Bootup weren’t around. Now I get to have my cake and eat it too, as I peer over Trevor’s shoulder in investigating where all this stuff is going.

To that end, I completely agree with his most recent post on the future of the hosting industry: Hosting Apocalypse. Yep, that does deserve a drumroll and an explosion. I could go into all sorts of Gutenberg printing press analogies etc., but the fact of the matter is that we don’t really know what orders of magnitude changes affect: some businesses are destroyed, but like fireweed after a fire, new opportunities are created. Hmm, kind of sounds like the current economic situation, too.

Other folks covering related ideas include Mark Mayo, who writes about the changing role / skillset of sysadmins. Tim Bray’s Tough Times series covers infrastructure in part. Zero Cloud Lockin is having a good discussion on what does or does not constitute lock in with platforms.

Lastly, the ask. LayerBoom is running a survey asking what people would want from tools to run their own cloud. Trevor will be sharing the results on the blog, trying to get some data to see if the hosting apocalypse concept is real, and how far away it is.

Behold Sinners! The Apocalypse Aproacheth. No in all seriousness if you run a managed hosting company then your time is officially ‘up’. You won’t survive the coming hosting Apocalypse. Here’s why.

There are a few companies you may have heard of building large compute grids for consumption by the general public. They’re calling them their Cloud Computing products. IBM is building BlueCloud, Microsoft is building the Mesh, Amazon already has EC2, and Google has AppEngine. AppEngine is in a slightly different category than the others and the BlueCloud details are sparse, but they’re still worth mentioning. Of more immediate interest are Amazon and Microsoft’s solutions.

Microsoft is currently building their famous 300,000 server Data Center in Chicago. That’s roughly 3 times the number of servers that Google has. Microsoft has also announced several other Data center projects - each worth about $500 Million. It’s fair to say that that’s a lot of computing power, and it’s not all for MSN - Microsoft is planning on providing their platform in the cloud.

The real question is what Amazon will do when the Windows Cloud comes online. Microsoft has enough money in the bank to provide their 300,000 servers to customers for *years* without earning a single cent. That implies they can offer services at super low rates; Low enough to at least compete with Amazon’s EC2, which will support the Windows Server OS in fall 2008.

What happens with two huge cloud hosting companies get into a price war?

In the interest of self preservation they won’t make their services commodities - at least right away. But it won’t even matter. When you’re as big as Amazon, Microsoft, Google or IBM, you can afford to buy servers in such massive quantities that you could make money selling compute time for 10$ a month. The hosting space will change forever, because Amazon will eventually drop their prices by an *order of magnitude* and that has dire implications for the rest of the Mom’n'Pop hosting companies.

If thousands of companies can’t compete with Microsoft or Amazon on price, and they can’t compete in terms of convenience, then why would anyone use them? If you have to buy individual servers, or even servers by the rack, then you’re not going to get the price you need to be able to compete. You also don’t have access to the handful of specialized individuals and hardware required to make things work on such a grand scale.

The only answer is for all the smaller players to band together - to create a Federated Hosting environment, where together they can provide services that begin approaching levels of service and power that the Big 4 will offer.

Either way, we’re in an interesting period in the industry. Computing and the infrastructure of technology has become such a requirement for the economy that it will eventually become a general utility. The real question is who will be around.

Do you think it’s the end? We’re working on the answer, and your opinion is important.

Hi everyone!

I’m looking for some help answering some questions to help LayerBoom and some associated projects determine what companies and individuals really want in their own “Cloud Computing” environment.

I know the Term has been getting worn out, so to summarize, LayerBoom is providing software that helps companies build utility computing environments using existing hardware and network infrastructure. The idea is to provide software as a common platform, then provision resources across many distributed environments, and enable companies and academic environments to rent/share unused resources for extra revenue.

There’s a survey posted up at http://survey.layerboom.com

I’d appreciate your help and time!

-Trevor

(Also posted on http://trevoro.ca)

Okay here it is- end to end CRM to bank deposit slip!  Understanding how to optimize your sales starts with understanding the paperflow and process best practices- so here it is as I see it!  I so look forward to hearing from the sales guys out there to correct the accountant!!

1. Leads - They’re everywhere (Yellow pages to Cards gathered at a tradeshow to LinkedIn) you just need to prioritize and record them somewhere so you can go after them! Word, Excel, Maximizer, ACT!, Salesforce.com
2. Accounts- Now that you have your huge list of leads you start the process of going after them and you move them into Accounts- you start recording more information about them and strategize about how you’re going to sell to them.  Accounts are at the Corporate level.
3. Contacts- Are all the people within the “account” that you can talk to, email, etc. that can influence or influence purchasing decisions within your Account/client.
4. Opportunities- Opportunities arise from communicating with your Contacts and they consist of the “please send us a quote, or you should be aware of this RFP (request for proposal) that we’ve got, or we want to add what your selling to next years budget, etc.”
5. Quotes/Proposals- This is where documents start to take over- These consist of all the materials and communications that help you convince your potential customer to buy!  
6. Signed Quotes/Engagements/Purchase Orders- I highlight this one, which is really an extension of 5 as it is the first key document that must interface with accounting!  ie. This is when QCDocs connects with the CRM to takeover to ensure Sales connects to Accounting and Engineering/Production!   Signed quotes and Purchase Orders form your Backlog!  
7. Credit application form- Okay now you’ve landed the sale, and for most you may have figured this out in the CRM but you should get signed credit application on file so collections can monitor and maintain customer records properly.
8. Work Orders/Pick lists/engagement plans/Time sheets etc.  - This is where production personnel document the inventory items or work items that need to be assembled for delivery.  Sometimes this can involve several layers of subassemblies which are different forms of inventory processing (See Inventory flows).  This step can also consist of time sheets used to record time spent on delivering services.  Unbilled Work Orders are called WIP and are an asset recorded at cost.
9. Shipping Documents/Packing Slips/Service slips- This is where the products are boxed up and shipped and accounting spits out a packing slip (best practice) is to correspond to a customer invoice (see 9).  The packing slip has no financial information but references the customer PO # above and details the items being delivered.  Sometimes short shipments are made (see Inventory flows) which details on the packing slip what was order and what was actually shipped.   Service delivery slips can be used for one-off field services.
10. Customer Invoice.  As mentioned, customer invoice should be prepared at the same time as the packing slip.  Accounting applications generally record revenue at this stage so important revenue recognition considerations at this point to consider worthy of stand alone blog.
11. Customer Statements- Okay, customer is past their 30 day credit terms so you send  them out a customer statement.  Practices differ significantly here- some do this only with problem accounts others with good collections practices do this as a matter of course.  Interest charges on late payments are an interest discussion which I’ll preserve for another blog.
12. Customer Cheque/Check-This is a critical document for obvious reasons in accounting because you really only get a chance to record this right once and they can get screwed up easily if you have multiple cheques on one deposit or short payments, etc.   Best practice- scan your customer cheques into QCDocs before depositing and/or keep a really orderly deposit book- see 13!
13. Deposit Slip-  Deposit slips serve to document who paid you and are especially important if you deposit more then one cheque in a day.  Trick for ATM deposits- deposit one at a time but waste of envelopes…makes accounting for deposits really easy though!!  Key rules- no outstanding deposits at month end (lazy accountant!) and messy month end close!  Credit card deposits 2-3 day lag unavoidable.

There are a lot of ways for companies to bootstrap, and even more companies and partners willing to lend a helping hand if you know who to ask, and where to look. One of the companies that’s willing to help is Sun Microsystems.

Through their Startup Essentials program, companies can get access to Sun gear and resources at heavily discounted rates. That’s great, because Sun gear is pretty much the best out there, and being competitive with other companies like Dell and HP on price will help get their technology into more Data Centers and up and coming businesses. But like all shiny objects, servers lose their luster. Even if they’re free.

In order to run a server you have to secure colocation space, pay for bandwidth, buy some switching gear and a router, and depending on your setup get UPS power. Sure you can get cheap switches to connect your high-end servers, but depending on your work load it would be like running a jet engine on bacon fat.

If you’re running more than a few servers you’ll probably need to get more than the standard ~3000W/Rack - especially if you have a SAN device. That means one full rack with extra power. Most older data centers don’t have the cooling capacity to handle todays dense and powerful systems, so your full rack will probably be half full (if you’re lucky), then you’ll have to get another rack if you want to expand. That involves more waiting. Average amount of time for a colo to provision a new rack? 4-6 weeks. You’ll also need to pay for installation, and every colo provides space on contract so you’re committed for a year. Time is money, and waiting 4-6 weeks to be able to expand your environment means you have less flexibility.

There are certain scenarios where getting colo still makes sense. If you’re running your own hosting environment *as a business* then obviously having the control over your environment is necessary. Companies with certain regulatory or security requirements will also need to stick with colo, but otherwise, why lock yourself into contracts and inflexible environments and hire extra staff to manage that operation, when you can just rent some servers en-masse and get super cheap bandwidth?

If you run the numbers you can get just as much if not more *power* for the same amount of money from companies like Joyent, Amazon, ServerBeach or Rackspace, and not have to worry about contracts. While it’s nice to have an awesome piece of kit, sometimes it isn’t worth the time or money.

I’ve been watching and reading CNBC, Bloomberg, New York Times, Paul Kedrosky and everything else I can get my eyes on.  And I think I’ve figured it out!!  NOBODY knows what’s going to happen with the economy.  It’s a very unsettling time.  I actually feel like I’m staying up to date with developments of the bailout, the elections and the extreme depth of the problems the world faces as a result, but they’re not providing me with any conclusions.

I do, however, have two fundamental beliefs:

1. The economy will recover at some point (1-5 years)
2. Investors make the most money when they buy low and sell high.

So am I making is this just too simple?  Is the “Buy low and sell high” doctrine just too obvious to really work?  With the dow closing at 9447 today, I think we can all agree, that we’re in a buyers market.  Take Warren Buffet and JP Morgan for example.  A New York Times article, Like J.P. Morgan, Warren E. Buffett Braves a Crisis, calls Warren a “Profitable Patriot”.  The biggest fortunes in the world’s history have been made in times like these. But investors are also human, and fear does often override this basic common sense logic.  The smartest investors are the ones who can put their fears aside, and invest long in companies now, when valuations are low.  By the time these companies are ready for a liquidation event, the markets will have returned.  I still find it very puzzling how some long term investors (like Angels and VCs investing in private startups) make investment decisions based on short term indicators.  Ron Conway is one of the more respected Angel investors, and I take the message that he’s sending out to entrepreneurs as a pragmatic warning of my very point.

“I would tell (entrepreneurs) to keep their day job until they got one year of funding, and if they couldn’t get that, then they’re not meant to start that company right now…. My advice to (start ups that don’t have a year’s worth of money in the bank) would be to raise money by reducing your own spending. If you can’t raise more money, you have to cut costs. And that’s what I’m harping on to my companies.”

Vancouver’s own Lyal Avery had some pretty insightful words to say in the comments:

“With all respect to Mr. Conway, I think it’s dangerous advice to tell people behind startups to “not quit their day job.” In my opinion, economic downturns are the perfect time to get started - the conditions are better than during a boom. Labour is cheap, distractions are minimized, and a lack of over-abundant investment means the business models produced can weather future storms. “

What do you think is going to happen?  When do you think the market will return?  Is it actually prudent for investors just wait and see?  or Are We All Doomed?!

Well, James and I head back to Vancouver tomorrow, after 2 days in Banff, and one day in Calgary.

The Banff Venture Forum was definitely a worthwhile event. I got to connect with many different people, from entrepreneurs to VCs to government representatives. I also got to review a ton of different investment pitches, taking notes for working on our own pitches.

I worked with James at AdHack to tune the presentation: we ripped it apart and put it back to together last week, with an excellent graphical upgrade from AdHack Community Manager, Corey Rollins (check out the WTF is AdHack video for another Corey production). But, at the end of the day, James went off by himself, prepped, and then stood up on stage and spent 12 minutes telling the story of AdHack, and (in my opinion) — knocked it out of the park. Congrats, James!

(Sandra captured most of the pitch on video, so I hope that we can link to a copy soon.)

After a great closing keynote by Terry Matthews, Calgary Technologies Inc put on an entrepreneur “unwind”. I invited Terry to join us, but he was a bit busy — he did have great things to say about Todd Tessier, Director of the Investment Capital Branch and BC Renaissance Capital Fund. At the unwind, I spent quite a bit of time finding out more about the non-profit CTI program and people, and how they support startups of all kinds in Calgary. I’m looking forward to connecting the west by working more with them.

Kudos to Nicola Burdeniuk, Associate Executive Director, and the entire rest of the Banff Venture Forum team. You put on a great event and I look forward to attending next year, hopefully with a larger contingent of delegates of all kinds from BC.

I’ve been working on a project that lets you quickly move systems between your private Xen implementation and Amazon’s EC2 service. There are a lot of hurdles to get this to work, and most of them are surrounding how Amazon doesn’t let you download a Kernel or Ramdisk image out of S3 unless you’re the owner. You can download someone elses image if you’ve saved it as your own but you still can’t download the kernel and ramdisk. Also, EC2 has specific requirements for how the image is built. Here’s how you can get your image out of Amazon and run it locally on your own Xen hypervisor. I will assume you are already using Amazon Web Services and have created an account. If you haven’t then sign up.

Amazon calls their instance images Amazon Machine Images or AMI’s. If you want to be able to grab one of the many images from Amazon you can use download the Amazon AMI tools and AWS tools then do the following. You can download the tools here

Find and Download the AMI

$: ec2-describe-images
IMAGE   ami-cc6386a5    ubuntu-hardy-ruby/image.manifest.xml    848278689040    available       private         i386    machine
IMAGE   ami-386c8951    ubuntu-ruby-lapack/image.manifest.xml   848278689040    available       private         i386    machine
$:

Fields 3 and 4 contain important information. For this example I’m listing the images that I own. Optionally you can provide a switch that will list all Amazon images by including ‘-a’ to the end of the ec2-describe-images command.

Field 3 is the unique identifier for the AMI, and field 4 is the bucket and AMI “manifest” - or a file that describes the AMI. Because users can specify the name of the manifest, you should pay attention to this value when trying to run the next set of commands.

The AMI tools from Amazon include a utility called ‘ec2-download-bundle’. This will download the manifest file from the bucket, parse through to see what other files it needs to download, then it will reassemble the AMI image locally, and check its signature. The AMI’s are encrypted in small (usually 10 meg) chunks. The signatures for those chunks are also included in the manifest.

To download the first AMI listed above, run the following commands

mkdir 'image-to-download'
cd 'image-to-download'
ec2-download-bundle --bucket ubuntu-ruby-lapack -m image.manifest.xml --access-key $AWS_ACCESS_KEY --secret-key $AWS_SECRET --privatekey $EC2_PRIVATE_KEY

That will start downloading the bundle to your local system.

Rebuild the AMI

Now we have to unbundle the files

ec2-unbundle -m image.manifest.xml -k $EC2_PRIVATE_KEY

This will decrypt and reassemble the image from all the individual components in the list

Now you have an image named ‘image’ in your directory. You can take a look at this file by mounting it

mkdir /mnt/image
mount -t ext3 -o loop image /mnt/image
cd /mnt/image

If you’re lucky there will be copies of the kernel and perhaps the ramdisk in the /boot partition. Otherwise you’ve got to do something really tricky : You have to guess as to what kernel will work the best. Thankfully we have a good understanding of what’s required to boot one of these images.

If you’ve created an image for Xen already then chances are your kernel will work just fine, but your ramdisk might need some adjusting. A trick you can use is to chroot to the /mnt/image folder, specify which modules you want loaded and rebuild the ramdisk - then exit the chroot, copy the kernel and ramdisk out of /mnt/image and you’ll have all the components you’ll need.

I know what you’re thinking: That’s a lot of work / guessing

You’re in luck. While there are a couple sites for sharing pre-built Xen images, the community is nowhere near as large as the Parallels or VMware ‘appliance’ sites. Jailtime.org has a hanful of images but they don’t follow any sort of standard, and the disk layouts / configurations aren’t compatible with Amazon’s EC2.

LayerBoom has a Xen image that is completely compatible with Amazons AMI format, and it can run in your own environment. This means you can copy a system into Amazon from your test environment without any hassle. It also works with the Eucalyptus project, and can be booted in xVM server as well (Instructions are coming)

Download the Xen package

url: http://layerboom.com/files/xen/images/centos52-20080930.tar.gz
md5: d54a83fc22f1ec052db6ebe3c258ee45

u/l :root/password

Strutta launched the first real customer on it’s new platform yesterday.  I’m saying “real” because we did run the Launch Party contest on it last week, but it was sort of an inside job since we also organize Launch Party.

Check it out, enter to win Free Pizza for a year, and let us know what you think.  Oh, and especially let Maura know if you want us to make something like this for you.

Win Free Pizza for a Year!