HL: Tech leaders talk growth company IPOs and scaling at the CEO Summit

September 26, 2014 Brett Wilkins

Day three of the C100 CEO Summit at Google’s Mountain View, California headquarters focused on initial public offerings, mergers and acquisitions, company sales and human resources.

Growth and scaling were themes which featured prominently throughout the day as tech executives from both sides of the border shared insights and advice.

The morning kicked off with a keynote address from Crossing the Chasm author Geoffrey A. Moore, who discussed scaling, building transaction-based services businesses and what he calls the four gears of successful business-to-consumer (B2C) enterprise: enlistment, acquisition, monetization and engagement. Moore’s ‘slowest gear’ theory is meant to identify the weakest of these four ‘gears,’ asking, “What is our slowest gear, and what are we doing to speed it up?”

Moore said the consequences of inaction are potentially devastating to a business:

1.        When acquisition fails, companies lose market share

2.        When engagement fails, companies lose brand power. 

3.        When monetization fails, companies lose revenue

4.        When enlistment fails, companies lose profit

Identifying the ‘slowest gear’ is paramount to successful scaling, said Moore.

Scaling is fraught with challenges, warned Rocket Fuel Inc. president Richard Frankel, especially for fast-growing companies. Finding, hiring and retaining top talent rank at the top of the list of those challenges.

“It’s important to assess staff objectively,” said Frankel. “That’s super-easy advice to give, but it’s actually really hard to do.” Frankel cautioned to avoid the “blinders of friendship” and to “get creative in hiring.”

That’s a bit of a juggling act, as different individuals have different expectations that may not evolve as their company does.

“Super high growth isn’t for everyone,” said Frankel. “If you grow too fast, you’ll outgrow some of your people.”

 THE RIGHT TALENT

“The talent you have today may not be the best talent for tomorrow,” said Facebook corporate development director Gary Johnson.

Even when companies do find the right people — and that increasingly means searching for top talent overseas — there are still significant obstacles.

“Cultural acclimatization is one of the biggest challenges of hiring the best global talent,” said Frankel.

The highly restrictive U.S. immigration system presents additional barriers, which companies like Rocket Fuel Inc. overcome by onshoring — not only when they encounter visa difficulties, but also sometimes when they exceed hiring quotas.

A BETTER CANADA

David Wismer, BMO Capital Markets managing director, wants to build “a better Canada,” especially for his six children. Wismer believes innovation is the key. He points to a recent World Economic Forum study which ranked Canada 15th out of 144 nations in competitiveness, 27th in innovation and research and development, and 48th in government procurement of advanced technology as proof of a need for “improved innovation.”

Wismer implores Canadian entrepreneurs to “grow Canadian businesses.” He urges those considering taking their companies public to make sure they’ve adequately prepared.

Michael Kousaie, head of business development at the Toronto Stock Exchange, urged growth companies to think about their long-term goals before going public.

“Going public isn’t an event that ends the first day the closing market bell rings,” he said. “It’s a lifelong commitment.”

Kousaie stressed that preparation and finding the right market in which to succeed are critical elements of going public. He also advised businesses considering going public to “make sure a Canadian listing is part of your plan,” pointing out that the TSX is one of the world’s leading exchanges based on market capitalization.

The best way to prepare? Surrounding yourself with the right people, said Michael Tenta, a corporate law partner at Cooley LLP.

Tenta advised companies considering an IPO to prepare by “getting good advisors on your side, building a great management team” and “upgrading your board and your corporate governance.”

 MARRIAGE AND M&A

When it comes to mergers and acquisitions, Facebook’s Johnson likened them to dating and marriage.

“You don’t show up to your first date with an engagement ring,” he said, “and if your company is [an M&A] target, know that [the relationship] might not last.”

 Johnson also offered advice on how to tell if an acquisition offer is serious: “Ask how many times the buyer has issued term sheets and not closed the deal.”

He also had this tip to companies enjoying early market leads: “Don’t sell your company if you are early in the market and first or second in your field,” he said. “Don’t sell if you plan on being a major player.”

 THE PEOPLE SIDE OF SCALING FOR GROWTH

Talent management executive Laila Tarraf and Stitchfix chief people and culture officer Margaret Wheeler explored talent recruitment, hiring and human resources issues. Tarraf asserted that “early stage, high-growth companies” have difficulty hiring good leaders.

“Hire passionate people and they will become passionate about what they do,” she added.

“For a culture of innovation to thrive, it has to come from the top down,” said Tarraf. “Be cognizant of your directions, expectations and rewards. Reward calculated risks that don’t turn out well.”

Addressing Canadian companies with Bay Area operations, and the implied leadership dispersal this causes, Wheeler offered advice on how to keep things operating smoothly.

“Tread carefully, and make sure management spends significant time together,” she said.

“Leaders must travel back and forth so they’re visible,” added Tarraf. “Use tools like videoconferencing too.”

Hummer & Winblad managing director Lars Leckie and DocuSign CFO Mike Dinsdale also discussed hiring. Leckie interviewed Dinsdale about selecting the right chief financial officer and other leadership perspectives.

“The CFO is the most important hire,” said Dinsdale, mostly because of what he called their “horizontal view of the company.

“Always hire people better than yourself,” he added.

From scaling and company growth, to IPOs, hiring and exits, the third and final day of the C100 CEO Summit offered unique insights into growth and innovation from some of the leading tech business leaders from both Canada and the United States.

It was a rare opportunity for networking with the brains behind some of Canada’s biggest brands, and as the attendees rushed to catch flights back north, many were already looking forward to next year’s summit.

About the Author

Newsrooms correspondent

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