Jevon MacDonald is working on his fifth startup. Jevon MacDonald is 29.
We know what you’re picturing: a Silicon Valley über-preneur who made his first million before he was old enough to drink. MacDonald doesn’t quite fit that mould, however. First off, he’s a Maritimer. Second, while he’s had modest successes, he scored his first major hit only recently, when California giant Salesforce.com bought his two-year-old startup GoInstant for $70 million in June. The Halifax-based company, which makes software that lets people in different locations surf the same website together, had raised money from the likes of LinkedIn co-founder Reid Hoffman and Facebook’s former VP Chamath Palihapitiya, but the Salesforce deal will enable MacDonald and his three co-founders to really ramp up, doubling their workforce of 12.
Thirdly, MacDonald is known less as an entrepreneur than as an entrepreneurial cheerleader via StartupNorth, a blog chronicling the Canadian startup community. In late July, CB editor-at-large Joanna Pachner caught up with him between trips to San Francisco and his cottage in Prince Edward Island. At the time, he was planning a company bash to celebrate the Salesforce deal—which was to be by no means a farewell party. “We’re not retiring,” he insists. “We’re just going to the next phase.”
Canadian Business: So I just have to ask this. In an April post on StartupNorth, you wrote: “Rather than being the companies who are getting picked off for $20 million here and $50 million there, we need to find opportunities that let Canadian startups become the acquirer and growth engine.” How do you square that admonition with selling GoInstant?
Jevon MacDonald: People point at companies like us that have sold to Google and Apple and complain we’re selling our best innovations. But you’ve got to be pragmatic. We joined Salesforce because GoInstant will be stronger and get into the market faster this way. The purpose of what we’ve done is to continue to grow the product here, in Canada. In the past, you had a sense of ending when you sold. We really don’t feel that way.
Sure, seeing a company sell for $20 million and move the entire team to the U.S. is not a great outcome. Do we need mechanisms for Canadian companies to become the acquirers? Absolutely. But most of Bay Street doesn’t even look at tech anymore. Talk to 99% of the Toronto private equity guys, and they’re not going to back Hootsuite or Shopify to go on an acquisition spree.
Meanwhile, the border continues to erode. There are more border guards than ever on the damn thing, but there’s a lot of private-sector initiative bridging the gap between Canadian tech and Silicon Valley money. So there will be times when the resulting technology will find its home with American companies. But remember, these are truly global companies. I think SalesForce’s second-biggest office is in Toronto.
CB: How does this eroding border affect the startup scene? You’ve said before that venture capitalists now have to compete for startups as much as startups compete for VC money.
JM: We have a habit in Canada of creating VC firms that have geographic restrictions—funds that can only invest in Quebec or Ontario, for example. What we need is to create the best VCs in the world, who know how to find the best deals wherever they are. Entrepreneurs need capital, but it can’t be dumb capital. It has to understand your environment and technology. By putting restrictions on the people raising funds, we’re taking away their ability to find the best deals.
CB: So how do you foster smarter money?
JM: God, I don’t know. But take Halifax: any startup here can raise money from an international backer. Five years ago, there would have been a lot of pain involved in doing that. But local VCs don’t get discounts anymore just because they’re here, because you’ve got these hot U.S. investors coming and saying, “I don’t care if you want to stay in Canada, I just want to invest in great ideas.” Canadian VCs now have to come earlier, and compete harder. They have to switch from being the guy in a suit in an office tower to showing up at coffee shops and bars and events to meet entrepreneurs—that hustle.
CB: There’s been much bellyaching since RIM went into its slump about the failing health of Canada’s tech industry. What’s your thinking?
JM: I’m pretty selfish in my thinking. Overall, RIM’s decline is good and healthy for the startup ecosystem. It unlocks a lot of talent for startups and frees backers who had been locked up in RIM to support those startups. We have a secret RIM recruiting program, and we’re probably not the only ones. Waterloo is lucky that the blow-up is taking a longer period. At some point, it will happen all at once, and there will be this big talent pool that will fan out. And much of that talent wants to stay in Canada because they’ve established themselves and built families here. As great as working for Google in California may be, it’s impossible to afford a house, and it’s a crazy commute to Silicon Valley.
CB: You’ve made a distinction between people who are founders and those who are “irrepressible builders.” Can you explain?
JM: People who just want to be founders are in love with the idea of a startup. We all have our reasons to want to work for ourselves or employ people. Then there’s this other level, like Elon Musk [PayPal, Tesla Motors, SpaceX] and [Salesforce CEO] Marc Benioff, who are not driven by the startup life but see businesses as tools for achieving truly amazing things. For Elon Musk, it’s going into space. These are absurd ideas that take a kind of irrational view of the world to really want to achieve. You may have to break the current rules or, short of physics being a limiting factor, create new rules. It’s about having the really big idea.
CB: How do you know when you have the big idea?
JM: It takes on a life of its own. You tell someone about it, they go away, and when they come back to you, they’ve formed their own version of the idea. You can’t stop it; people don’t let you stop it. The more you think about it, the deeper you get, you have more questions, you want more answers.
CB: GoInstant is about two people surfing a web page simultaneously. That doesn’t seem like such a big idea.
JM: If you see the articles we’ve written and the web manifesto we’ve shared, the big idea is there: making the web a multiplayer experience. But as a small startup, you need to build something that matters to customers, and some subset of people ends up unusually interested. As we talked to e-commerce retailers, they were passionate about the impact it would have on their business. So you develop revenue lines, and messaging comes from that.
CB: You seem a fan of recreating the values and infrastructure of Silicon Valley in Canada, but this country lacks a central tech cluster like the U.S. has.
JM: If I was running this country, I would focus a lot of resources on building a corridor between Toronto and Waterloo, the same way the U.S. government made Silicon Valley what it is. The highway between Toronto and Waterloo is one of the worst commutes! Yet a huge amount of Canada’s brainpower goes up and down it every day. I’m talking about building a train: that kind of basic stuff has to happen. Governments talk about this stuff in airy-fairy terms, like we’re investing in innovation, and no one knows what that means. Everyone knows what a Porter flight from Toronto to Kitchener means. If we can build this machine, it can produce powerful stuff. But there are no people in government trying to build that vision. So what we’re left with is trying to strengthen local communities, and that’s probably more in step with the Canadian identity than creating one centre.
CB: There’s another suggestion you’ve made, which I just love: make programming part of the public education curriculum.
JM: Now that I’m back on the east coast, I’m seeing it again—how far behind the education system is. Software development is probably the single most awesome career path you could go on: You want to work for yourself? You want to deliver products to billions of people? It’s also a career in high demand, and the net benefit to the economy is huge because software can be resold over and over. But we continue to focus on educating kids to become doctors, lawyers, accountants. Of course we need those, but computer science should rise to that level of prominence. We should give kids the opportunity to learn programming in junior high and high school. What they’re being taught now is to be consumers: play this game, download this app. We need to show them it’s not just about being entertained but creating ideas. If you’re 10 or 13, you can do it. The power of imagining something and building it yourself and having full control of that process is addictive. Software is probably the only career that’s akin to an artist. You don’t need anyone in the middle: you’re the architect, designer and builder.
CB: Do you worry that GoInstant will be swallowed up by Salesforce, becoming just a feature, or be shuttered altogether, as has happened with other companies?
JM: They call those talent acquisitions. Often it’s an indicator that the company being bought is in trouble. The entrepreneurs are still making the best decision possible for that company. Until you’re in those shoes, you’ll never understand what it means to have your company unable to raise money. Believe me, none of them are doing it because they just want to sell out.
You have to look at deals carefully. They take a lot of back and forth negotiation.So you get a sense of relief as much as excitement: Wow, we got it done. Then you get inundated with friends and family and the press, thousands of calls and e-mails. The first one I got was from one of our VCs, who said it was the highest return in a seed deal they’d ever done. We feel great that we did that from Canada.