Game Changer - Austin Hill

Austin Hill first came up on the radar…(okay, let’s be blunt, he downright broke the old radar and re-calibrated it to expect more from all entrepreneurs)…at Zero-Knowledge Systems where he was not only co-founder and president, but also raised $52.0 million USD in financing. He then carried that team onto its next life as it became Radialpoint. That company of course became one of Canada’s fastest growing technology companies. He then went on to co-found TotalNet - one of Canada’s largest Internet Service Providers at the time (later sold to to MPACT Immedia/BCE Emergis).

His list of credentials are endless from being named a technology pioneer of the World Economic Forum, a valuable start-up advisor and investor, and a frequent invited speaker in the conference circuit. And, yes, he has even once called the Enemy of the State!

You would think that this would be enough and he would be soaking in the rays in Tahiti with his feet up. But nope, not Austin! Retirement is far away. He’s relentlessly on the go, advising and investing in start-ups and building yet another game-changing company.

This man accomplishes more in a day than most mortals, so I am glad that I could pin him down for our interview. So, on to our chat with our biz guru:

KTY: Welcome Austin!

I read that geeks who built companies were your childhood heroes. Since then, you’ve been really pushing the definition of serial entrepreneur with the number of companies you built and led to success.

Was this the grand master plan or did you happen to simply fall into each new project?

Austin: Actually, it is a mix of both.

Before I was even 11 or 12 years old, I was already avidly reading about Bill Gates, Steve Jobs and Apple becoming a big company. I remember being totally upset with my parents because I had not been born earlier and that we did not live in Silicon Valley where the action was happening. I felt like I missed jumping aboard the future technology train, and was determined to change my fate!

As for each new project, I try to do whatever is fun to do…or I get tired very easily. I am like a kid when I’m building a company. I need to be excited.

KTY: Do you prefer being a serial entrepreneur or a VC?

Austin: That’s a tough decision. When I left Radialpoint, I debated whether I should join a VC or set up an angel investment fund. I also felt that I still have work to do as an entrepreneur.

I didn’t leave Radialpoint because I was bored or tired. I had a vision to do something with friend, Alex, and that was to create Akoha. Akoha culminated from 2 years of discussions and a whole bunch of research. It was time to give it an honest and good shot, so I took the leap and went to work on it.

I am also doing some investing. It allows me to teach and relearn as I teach. As for opportunities, it’s not so much that there are as many opportunities as compared with let’s say, the Silicon Valley. It is just that there are similarly great opportunities with no mentorship, early stage capital or competition for great deals. There is no Y Combinator or active angel community like the Band of Angels and The Founders Fund, so Canada becomes a great environment to find diamonds in the rough. We have many bright minds coming out of our universities and filled with energy, drive and ideas to create something new.

KTY: What are the key differences between Silicon Valley and Canada?

Austin: The Valley has an incredible engine of innovation and speed that are hard to match. But that speed and engine run a bit hot and the valley develops institutionalized A.D.D. Many end up copying each other without innovating and as a result they are constantly distracted by what appears on TechCrunch everyday. The fact that there is a lot of easy access to capital makes it easy to pump out me-too copycats.

There is a reason why Canada has been the birthing ground of truly innovative services like Flickr, StumbleUpon, Librivox, or many new ones that have yet to be discovered. Creativity loves constraints and Canadian entrepreneurs tend to be a creative bunch.

Valley entrepreneurs have so many great options for early stage capital from established angel networks, entrepreneur friendly funds and new models like YCombinator.

Here in Canada, it’s different. You can find lots of creative differences between companies and projects. And although smaller in size, the investment community is rich in capital. We have a “hidden” network of investors and we share ideas and refer projects to each other. This network or other early stage entrepreneur friendly organizations have a great opportunity to address the gap in Canada. Canada has a very creative & bohemian culture, our potential to create great companies is just as strong as other technology centers if a few things would change.

Also, with a competitive cost structure and top-notch research and development activities, we should be a hotbed for start-ups.

KTY: How do you see your role as an investor?

Austin: There is a great need for true mentorship and early stage capital for start-ups. And, every team and entrepreneur needs different things.

I try to:

1) recall what type of advice was the most useful and valuable to me when I was starting out

2) recall what type of advisor best helped me for what I needed at that stage

3) make sure that the company is realistically equipped with the right things (capital, connections, team) to have a good chance to execute their plans.

KTY: What type of questions do you ask before you even consider investing in a company?

Austin: Before I start barking up the wrong tree, I want to know:

1) What did you build before? I don’t care what…I just need to know if they have any good experience building something…I prefer backing engineers so I want to know what products they’ve shipped but it can be building anything. Was it a team? A company? A fundraiser?

2) Who are your co-founders? You really need to be able to sell your idea to at least one other person who buys into it. Otherwise, how can you expect to sell the idea to an investor or the market?! The quality of the co-founder and their ability to get things done also reflect on your ability to pick great people.

3) What do you know, or what can you do that no one in your industry is wise to yet?

KTY: What type of startup would make you salivate if it showed up at your door?

Austin: I like game changing ideas. I have no interest in an easier way to share videos online. I want to see something that really changes the world.

It’s a way of life for me. You could say that I have almost a holy appreciation for entrepreneurship.

Businesses have a responsible role in society that few truly acknowledge. In a matter of speaking, you could say that business is our contemporary way to teach us about dealing with change .

In the past, the Church and politicians took on this role…today we’re increasingly looking to business to deal with change. This role can be misused and abused.

An entrepreneur who helps society deal with change, this always creates opportunities. As businesses, we need to ask ourselves what the future will look like.

For example, there are roughly 1.2 billion obese people in this world…there are also the same number of people living on the brink of starvation as well. Technology has an opportunity to do something about this. There are literally millions of great opportunities created by the massive change that is occurring throughout our world.

Entire demographics of transfer of wealth, education, technology shifts, and cultural habits are changing as a result of other shifts in wealth, education or technology.

KTY: What do you look for in an entrepreneur?

Austin: Someone who demonstrates ability, intellect, ambition and passion.

A little while ago, an entrepreneur approached me to say he had saved enough money to apprentice with me, to learn as much as he can about creating a successful start-up, without pay.

Impressive! He was driven; he also showed me ability & intellect in numerous ways before I got involved with him. In the end, I am funding an idea for which he is a co-founder right now.

KTY: How do you find those “diamond in the rough” deals?

Austin: It’s not hard to do. The market is overloaded with opportunities. My fellow investors and I spend a bit of time referring deals to each other. I often have other VCs and angels asking me to look at deals. I even have former employees recommending projects. Although I am very busy, I try to be accessible and available to give advice to companies.

I also read extensively. I normally read about a book a day to keep up to speed. This is down now that I’m doing a start-up again, but I’m still reading a fair amount.

Plus, I track a number of leads and see opportunities and ideas for all sorts of solutions for which I’m just waiting to find a great team to match them.

My problem is finding enough capable teams and time. As a lone angel investor, with a focus on running my own start-ups, I can only get involved in one or two deals a year as an advisor and investor.

KTY: Who do you consider are the “best in class” small companies on the rise that have impressed you with their ingenuity and smart thinking?

Austin: There are so many great entrepreneurs out there and many operating companies at different stages with very diverse types of businesses, so I am hesitant to name off some and accidentally ignore others in their league. But, off the top of my head, here are a few that would be considered ‘start-up entrepreneurs’ in the sense that they are still in the early stage:

• Borris Mann from Bryght

• Leonard Brody – he’s a Canadian entrepreneur extraordinaire and a true pioneer in citizen journalism. I’ve known Leonard for almost a decade and he’s among our best entrepreneurs

• Tara Hunt  - she’s a Canadian who recently did a round-up of top Canadian companies at her site, Horsepigcow  and she also has a company Citizen Agency in the Valley (although she’s still a Canadian at heart)

• Mike McDerment from Freshbooks – a great Canadian web software company

• Martin Dufort & Alain Lavoie from Kakiloc -  a small team, and they continue to show interesting products in the location based mobile social networking area

• Alec Saunders from iotum – Alec has won Demogod, is part of the Canadian Barcamp scene and is building really cool products with iotum in Ottawa

• Anand Agarwala from Bumptop - Anand’s on his way to some great places as an entrepreneur. I first saw him at Democamp in Toronto last May, and then met him at the TED conference where he spoke. I think Bumptop is going to be doing some amazing things

• Isabelle Bettez and her brother from 8D Technologies - they are tried and true entrepreneurs building that company through the technology bubble and crash

• The entire team at Radiant Core in Toronto - they’re cool, including my friends David Crow and Jay Goldman

• Michael Sikorsk’s Cambrian House team is cool - they have done a great job with their crowdsourcing concept

• Alistair Croll and the team from Coradiant - they are doing interesting things in Web performance and user monitoring systems

• The team from JobLoft in Toronto - a good bunch of guys

• Rocky Mirza - a crazy serial entrepreneur who is creating lots of interesting web companies like Weblo, Swapedo and others

• Bernie Aho from ConceptShare – an innovative web-based collaborative white board

• Albert Lai - a great serial entrepreneur from BubbleShare

• Chris Sukornyk from Fivelimes - he connects people active in going green and living a more healthy life

• Mark Dowds from Creation Step -  he’s not only an entrepreneur with a string of great companies that they operate, but also doing some great mentoring & support activities

• Mark Gingras at Tungle in Montreal - Marc’s doing cool things as well.

I also need to mention a great team that I’m involved with (aside from my own project Akoha) which is Fred Ngo & Ben Yoskovitz from Standoutjobs.com. Fred and Ben are great entrepreneurs – and I’m very excited about what they are working on.

Once again, there are probably 30 other great ones I’ve left off for the few that I’ve mentioned here.

KTY: What’s been your highest point to date?

Austin: Tough question. As an entrepreneur it depends whether we are talking personally, financially or just business success.

For example, TotalNet was a medium deal from a business point of view (the multiple of revenue we sold for at the time was quite low). Financially though, it became a big success when it later became BCE Emergis. We were one of the largest ISPs in Canada, were one of the few that was “cash flow positive” and that was a good business success. I was proud we survived the ISP wars and emerged as one of the leaders who had a real business (iStar Internet and Hookup Internet would kill the public markets for ISP valuations making it impossible for us to raise capital to grow at the time). We sold the company at market rates that weren’t great by any of today’s standards. But because of the bubble, it eventually led to a lot of financial success due to some luck and the crazy market valuations BCE/Emergis would go on to reach.

On the other hand, Zero-Knowledge Systems (now Radialpoint) was my greatest adventure and gave me my personal highs and lows in terms of personal success. I had the pleasure to work with some of the smartest people on the planet and we did groundbreaking things on many fronts. Those were really exciting times and there were some tough times, but it was an incredible journey.

At Zero-Knowledge, we were one of the few companies able to turn around during the dot com bursts, and with Radialpoint, it has now become the 22nd fastest growing technology company in Canada last year and 2nd in Quebec. That is due to the incredible team over there and I’m happy to have played a part in what they’ve been able to do.

KTY: Okay, so then, what was your worst? And how can others avoid the same situation?

Austin: Laying off people who didn’t deserve it and whose loss of jobs was no fault of their own. We had to let go of employees, which included friends, some of which moved across the continent to join us only to be left with no job and in a new town without work permits. We were very responsible in how we did it, employing placement officers to ensure people landed on their feet but it was very tough for everyone involved. It had a lot to do with the undisciplined growth of the era, but ultimately it was my fault as a leader to have made those decisions to grow too quickly. The business environment encouraged it…even supported us to grow fast. In hindsight, we could have been more disciplined in our hiring. Part of the learning experience…You really earn your scars by looking into the eyes of the employees you need to fire.

KTY: If you named an advisory board of virtually anyone you wanted, including legends of the past, who would be at the table with you?

Austin: If I could name anyone, I would say:

Historical people would include:

Mahatma Gandhi - suffice it to say, he needs no introduction.

Richard Feynman. I have a long historical obsession with Richard Feynman….his genius, thinking and approach – as well as his intellectual quest for honest play with knowledge. He lived his life like a curious child, and was surprised when others didn’t see what he saw. I love stories from him.

Also a weird addition to just shake things up would be a Canadian known as Dai Vernon who died when he was 98. He spent his life learning obscure ways to cheat at cards because he was obsessed with the wonderment of magic. He is often quoted as saying “An emotion is worth a thousand sentences” and he loved to create the emotion of wonder. A consummate card cheat, he was the world best card handler and fascinates me.

Trust me these three would throw quite the advisory board parties!

Living Social Entrepreneurs:

Jeff Skoll (Skoll Foundation & Participant Productions) and Pierre Omidyar for their investment approach of supporting social entrepreneurs and companies which focus on large social missions. Both Pierre and Jeff see their wealth as an obligation to serve society as agents of change. I love that attitude.

Bill Drayton of Ashoka leading social entrepreneurs

Muhammad Yunus – last year’s Nobel Peace Prize winner

Financiers & Angel Investors

Roger McNamee - Roger is one of the smartest guys I know in the Valley and was always there with the right words of support and wisdom, even though many times I didn’t understand why until a couple of years later. In the peak of the bubble he gave me a couple great pieces of advice that helped save the company from some major missteps.

Paul Graham – Y Combinator  – with a unique slant on investing in early stage companies. I love what Paul is doing and would love to spend time look at the Y Combinator process.

Reid Hoffman of Linked In  – Reid is an entrepreneur’s angel investor. He is one of the best on product issues, knows great consumer products back & forth. And, as an angel investor, I think Reid is a great example.

There are a lot of others, but these are a few from the top of my mind.

KTY: Do you have any final advice for our start-ups and VCs?

Austin: 

For entrepreneurs:

• Force yourself out of your comfort zone. Engineers, go hang out with sales and marketing people. And vice versa. You need to be able to be comfortable speaking with system architects, IP experts, bankers, customers…

• Aggressively build mentoring relationships…people who you admire and can learn from, past employers, etc. There are certain people out there who collect advice and mentors…and they’re very smart to do that. Actively seek out and nurture advisors.

• Be informed and self aware. You should be crystal clear on your own abilities, what you know how to get done and what you can’t do yourself. Be informed about who can help you get those things done that you can’t (which engineer can help you build your dream etc.)

For investors:

• Take a geek to lunch. There is so much you can learn from getting to know the people behind the ideas…much more than you could on paper or at an official presentation.

• Ignore business success, past credentials and look for authentic passion and just plain smarts. Look at Chad Hurley (co-founder and CEO of YouTube), look at Matt Zuckerberg (Facebook creator) look at the CEO’s and leaders of most of the ‘web 2.0’ success stories and you won’t find a lot of ex-VP’s from telco’s or media companies. You’ll find geeks, entrepreneurs and dreamers.

KTY: Excellent and timeless advice! Thank you for sharing your captivating insights with us today. We’re all looking forward to hearing more about your continued success and the launch of your upcoming ventures.