As a founder, I attended many founder summits over the years. Now, as an investor, I am hosting our own.
Based on my own experience and from speaking with many founders I know, if I had to pick one thing that allows founders to get the most out of a founder summit, it is peer-to-peer learning, not celebrity speakers.
That is how we designed our Two Small Fish Founder Summit.
We wanted to create an interactive environment where founders could learn from other founders, not through generic advice, but through lived experience: what worked, what did not, what surprised them, and what they are still trying to figure out.
As a thesis-driven VC focused on deep tech, half the battle is won naturally.
Many of our founders come from similar technical backgrounds. They are building in adjacent areas, exploring similar frontiers, and facing similar company-building questions. More importantly, they have learnings that other founders in the room will find directly relevant because they are on a similar journey.
This is also where our own experiences make a difference. Our whole investment team comes from backgrounds similar to many of our founders. We have been engineers, operators, and company builders. We know how hard it is to turn technology into a product, a product into a company, and a company into something enduring.
We are not outsiders looking in. We have been there. We understand the company-building journey because we have lived it ourselves.
But relevant context is only part of it. For founders to share openly, they also need trust. We wanted to create a safe space for founders to ask hard questions, share what they have learned, and help each other out.
To make that possible, our team also shared some of our own painful war scars from building companies and working with founders over the years. Many of these are lessons we have never shared externally. But in a confidential setting, they became part of the conversation.
That is what makes the conversation different. It is focused enough to be relevant, and trusted enough to be honest.
For our Founder Summit, we also focused on unique topics that are particularly relevant and useful for founders coming from deep tech backgrounds. Building world-class companies requires more than great technology. It requires founders to keep building new muscles in many other areas.
We believe we delivered something uniquely Two Small Fish Ventures: focused, relevant, interactive, high-trust, and founder supportive for deep tech founders.
Thank you to all the founders who joined us, especially those who travelled from out of town.
Thank you to Matt Clancey, Program Director for COVE’s NATO DIANA Accelerator Program, for joining us as our guest speaker and leading such an informative session. As a veteran and also an engineer, Matt brought a perspective that was especially relevant to many of the founders in the room. COVE’s work is especially important at this moment.
Upper Bound has become one of my favourite annual trips.
This year, more than 11,000 AI geeks and aspiring geeks gathered in Edmonton. I had the chance to give a main stage masterclass called Calculating Risk, Maximizing Upside.
Many people are perceived to be risk averse. Over the years, I have discovered that they are not really risk averse. They just do not have a good framework to help them understand how to take risk in order to achieve outsized outcomes.
That was the heart of my talk.
The best bets are not fearless. They are bounded, advantaged, and asymmetric.
Or, in three words:
Downside. Edge. Upside.
I wrote more about the framework on my Substack here.
P.S. I was also on the Winning with Responsible AI panel at Upper Bound. More thoughts on that in a separate post.
In the past few years, I have been spending much of my time with researchers, professors, and deep tech founders sitting on remarkable breakthroughs and asking a difficult question:
What does it take to turn this innovation into a world-class company?
That question has become central to how I think about this chapter of my life.
This month marks the fifth anniversary of the Wattpad acquisition in 2021. That milestone naturally invites reflection. I am deeply grateful for that chapter and everything I learned from it, but I have 100% moved on.
Why?
Because I have even more fire in the belly for what comes next.
People sometimes ask me: Do I miss operating? Why am I doing this now? Why not just start another company and do it all over again?
Those questions all lead to a deeper one:
What does winning look like for me now?
For me, winning has always been about impact. Of course, many other things matter too. But without impact, I am not interested.
That has not changed.
What has changed is where I believe my experience is most useful, where I can have the highest-leverage impact, and what kind of challenge I feel most drawn to now.
I have no interest in simply repeating the last chapter. I have already co-founded and led one iconic company that reached 100 million users globally and became a cultural phenomenon. Fewer than two hundred companies in the world have achieved that 100-million-user milestone. Even fewer founders have stayed for the full marathon, from the first user all the way to a home run.
Rather than taking it easy, I want a new and even more ambitious challenge.
I have come to believe that one of the most important challenges in deep tech today is helping scientists and deep tech founders cross the very difficult bridge from scientific and engineering breakthrough to building a world-class company.
That is the work I feel most drawn to now. It is also work I feel unusually prepared for.
I started three companies. Between them, I have seen almost every major founder outcome: one VC-backed failure as CTO with tons of very stupid mistakes, one bootstrapped company as CEO with a small exit, and one VC-backed home run in Wattpad as CEO.
From the outside, Wattpad looked deceptively simple. In reality, it became an incredibly complex global business spanning consumer, enterprise, subscriptions, virtual goods, social media, frontier technology, traditional publishing, entertainment, and even geopolitics.
We were one of the pioneers in UGC and mobile, before the iPhone even existed. Over time, Wattpad also became a deep tech company. We started building our first of many proprietary machine learning models around 2013, long before most people had even heard of AI. That shaped how I think about technology disruption and how real technical innovation becomes an enduring advantage.
I also lived through strategic investors, IPO preparation, multi-bidder acquisition processes, the constant need to disrupt and reinvent ourselves, moments when tech giants were clearly trying to kill us, and a few phoenix-from-the-ashes moments.
I do not say any of this to dwell on the past. I say it because seeing that many startup permutations from the inside gives you a massive toolbox of practical judgment and wisdom.
Those tools were built and tested through real-world operating experience from day one, scaling a business into a world-class company while enduring the full roller-coaster ride.
You learn them by starting a company when the market is not ready. You learn them by doing things no one has done before. You learn them by making painful mistakes. You learn them by carrying a company through long periods when it is working, but not yet obvious. You learn them by navigating the transition from prototype to product, from product to business, from business to company, and from startup to an enduring world-class venture.
That sequence matters deeply in what I do now, because very few people have lived it end to end: a breakthrough is not yet a product. A product is not yet a business. And a business is not yet an enduring, world-class company.
The bridge between those stages is turning innovation into product and then commercializing it. That is where many promising breakthroughs fail. Not because the innovation is weak, but because turning groundbreaking innovation into a world-class company requires a different set of skills and judgments: timing, technical moat, customer need, business model, smart capital, team building, endurance, and grit.
You need to understand how all of the pieces connect and work together to build a world-class company.
I now know what I did not know.
That belief sits at the center of how I now spend my time. My mission is to unleash the full potential of scientists and their innovations by helping them become entrepreneurs and build world-class companies.
That, more than anything else, is what this chapter is about for me.
That is also part of what makes TSF distinctly TSF.
We are not trying to be a generic early-stage fund. Across our whole investment team, without exception, we bring together a combination that is very rare in venture globally: deep technical chops, real-world operating experience, scar tissue from world-class company building, and a mission-driven commitment to helping scientists and technical founders build enduring, world-class companies. We are also proven full-cycle investors with the experience of backing multiple companies of exceptional scale.
To me, TSF is not simply an investment platform. It is one of the highest-leverage ways I can apply what I have learned to make the greatest impact.
Building one iconic world-class company is hard. Leveraging that experience to help build multiple world-class companies may be even harder.
That is the challenge I want.
The next chapter started four years ago when I stepped down as Wattpad CEO, and I have been building into it ever since.
I am entering this next stretch with a lot of fire in the belly and 100% commitment. For me, that is what winning looks like.
My last post — Stop Supplying. Start Owning. — was one of the most engaging posts I have published in recent weeks. One part of that talk that I did not go deep enough on was the banana analogy.
I have been using this framework in talks for some time now — most recently at the Engineering Deans Canada annual meeting in Winnipeg, and before that in a keynote at York University’s Schulich School of Business on a related but different topic: “Think like an owner”. I think this analogy deserves its own post.
So for this Sunday morning, something a little lighter. Just five banana lessons that I think apply whether you are a student figuring out your first job, a founder building a company, or an investor trying to understand where value actually lives.
Yes, I went bananas — but not in a way you might think. It all starts with a monkey.
The Setup
Jack Ma once said: if you put money and a banana in front of a monkey, the monkey takes the banana. It does not know that money can buy many bananas.
I love this analogy. On the surface, it is a simple observation about short-term versus long-term thinking. But the more I have sat with it — through three companies with well over a thousand employees across three companies, two exits, and now as an investor in over 60 companies — the more I think it contains an entire philosophy of value creation.
Here are the five lessons I have drawn from it.
Lesson 1 — Cash Is Better Than a Banana
Jobs are bananas.
People grab them because a steady salary and job security feel safe. And they are not wrong to. A banana feeds you. It is real. It matters.
But a banana feeds you once. Cash — real ownership, real equity, real stakes in what you are building — feeds you many times. The problem is not that people value jobs. The problem is that too many people never stop to ask whether there is something better in front of them.
Recognizing that alternatives exist is the first step toward creation and ownership. Most people never take that step — not because they lack ambition, but because nobody ever put the alternative clearly in front of them.
Lesson 2 — Some Bananas Are Better Than Others
Not all jobs are created equal.
Some opportunities teach you, compound your skills, put you inside exceptional teams, and give you proximity to how great companies are actually built. Others keep you comfortable but stuck — including, surprisingly, many high-paying jobs at large, slow-moving organizations.
The number of jobs created is not a useful measure of prosperity. The quality of those jobs — and what they teach, and what they lead to — is what matters.
When I was early in my career, I worked at Delrina, one of the most successful Canadian tech companies of the 1990s. The company grew from 20 people to 800 in four years when Eva and I worked there. We learned more in that rocketship environment than I could have anywhere else. That was not a banana. That was a greenhouse banana — rare, valuable, and 100% worth seeking out.
The lesson: be deliberate about which banana you grab. Not all of them are the same.
Lesson 3 — A World-Class Banana Tree Is Better Than a Banana
A banana feeds you once. A tree feeds you forever.
This is where the shift from employee thinking to founder thinking begins. One banana is a salary. A tree is equity, ownership, and compounding returns on something you built.
Ownership compounds. Wages do not.
The number of jobs created is still the wrong KPI. A single world-class company — owned, scaled, and defended — creates more durable economic value than a thousand comfortable jobs at organizations that will be restructured, acquired or hollowed out over time.
Do not just own the banana. Own the tree.
Lesson 4 — A Banana Farm Is Better Than a Tree
A tree is better than a banana. But a farm is better than a tree.
Dole, a company valued at just over $1 billion and one of the most recognizable fruit brands in the world, does not just grow bananas. It operates a vertically integrated business — owning farmland, managing logistics, controlling supply. It works with over 8,000 independent farmers who supply it. Those farmers are good at what they do. But they are suppliers.
Participation as a supplier is not enough. Ownership of the platform — the farm, the infrastructure, the system — is where the compounding really begins.
Even “the number of trees” is the wrong KPI. It is the farm that matters.
Lesson 5 — A Store Is Better Than a Farm
This is the one that tends to land hardest in a room.
Even Dole — a billion-dollar company, one of the most recognized brands in its category — is a tiny supplier to the giant retailers that actually own the customer relationship. Walmart. Costco. Amazon. These are the stores. They do not grow bananas. They sell them — at scale, with leverage, owning the customer from end to end.
The store owns the customer. The store sets the rules. The store captures the value that flows through the entire chain. Needless to say, many of these stores are an order of magnitude more valuable than Dole.
This is the lesson that I applied at Wattpad. We were not just a reading platform. We owned the direct relationship with five million writers and one hundred million readers, with virtually no external dependencies. That end-to-end ownership is what made us defensible.
Amazon Kindle tried to kill us — not once, but multiple times. They launched product after product specifically designed to compete with Wattpad. Not only did we win every battle, we won the war. A clean sweep. It is rare for a company our size to take on Amazon Kindle directly and come out on top. Owning the full chain — the writers, the readers, and the relationship between them — is what made that possible. I will save the full story for another post.
True prosperity means owning the whole chain — from innovation to commercialization, from suppliers to customers. The number one KPI is ownership. Jobs follow capital, innovation, and commercialization. Not the other way around.
Why This Matters Beyond Business
I have shared this framework in many different rooms — with founders, with students, with engineering deans — and it lands every time. I think it is because the banana lessons are not really about business. They apply broadly to how we think about our lives.
Yes, the framework is useful in a business context. And yes, it is useful in an investment context. But it also applies to personal decisions, career choices, relationships, and how we spend our time. Are you grabbing the banana in front of you because it is comfortable and familiar? Or are you asking what the tree looks like? What the farm looks like? Who owns the store?
The mental model you build early about what success looks like shapes every decision that follows. Most people never stop to interrogate it.
Do not just grab the banana. Ask yourself what the tree looks like. Then ask what the farm looks like. Then ask who owns the store.
That is where the real value lives — in business, in investing, and in life.
If you missed the post this is a follow-up to, you can read Stop Supplying. Start Owning. here: [Link]
We are super excited to share our investment in Tiptree Systems!
Founded in Montreal by two Mila AI researchers, Dr. Martin Weiss and Nasim Rahaman, Tiptree is building an AI-native researcher and knowledge network: infrastructure for how AI researchers share, exchange, and advance knowledge.
There is an irony here. AI has advanced remarkably quickly, yet until now, there has not really been an AI-native way for AI researchers themselves to share knowledge and build on one another’s work. Tiptree is solving that problem.
This is exactly the kind of company that fits our thesis at Two Small Fish. We invest in technologies that can reshape large-scale behaviour, enabled by foundational shifts in computing. The collapsing cost of intelligence is changing not only how software is built but also how work gets done. It is also changing how knowledge can be organized, explored, and shared.
At Two Small Fish Ventures, we invest in the next frontier of computing and its applications. Supporting that thesis is our focus on research grounded innovation, which means we spend a lot of time with people who are building from first principles and turning technical breakthroughs into real companies. Not surprisingly, many of those people are world-class women researchers, scientists, and engineers. We have been fortunate to back a good number of them, and we are better for it.
This shows up in our portfolio, but it also shows up in our own team. Roughly half of our team is female. Our investment team is also roughly half female, with Eva and Mikayla bringing perspectives that genuinely shape how we think, how we evaluate, and how we support founders.
This is not just something to celebrate. It makes us better. One of the most common pieces of feedback we hear from founders is that we ask very different questions. That is exactly the point. Different perspectives lead to better conversations, smaller blind spots, and stronger judgment. In deep tech, where the path from breakthrough to company is rarely straightforward, that matters.
So today, we celebrate the many women founders, researchers, scientists, and engineers we have backed, and the many more we hope to back in the years ahead.
I spent a full day at Ontario Tech University in Oshawa a few weeks ago. It was my first time on campus, despite it being just over a 40-minute drive from Toronto, where I live. I arrived curious and left with a clearer picture of what they’re building.
Ontario Tech is still a relatively young university, just over two decades old. What’s less well known—and something I didn’t fully appreciate before the visit—is how quickly it has grown in that time, now serving around 14,000 students, and how deliberately it has established itself as a research university rather than simply a teaching-focused institution.
That research orientation shows up not just in output, but in where the university has chosen to build depth—areas that sit close to real systems and real constraints.
This came through clearly in conversations with Prof. Peter Lewis, Canada Research Chair in Trustworthy Artificial Intelligence, whose work focuses on trustworthy and ethical AI. The university has launched Canada’s first School of Ethical AI, alongside the Mindful AI Research Institute, and the work here is grounded in how AI systems behave once deployed—how humans interact with them, and how unintended consequences are identified and managed.
Energy is another area where Ontario Tech has built serious capability. The university is home to Canada’s only accredited undergraduate Nuclear Engineering program, which is ranked third in North America and designated as an IAEA Collaborating Centre. In discussions with Prof. Hossam Gaber, the emphasis was on smart energy systems, where software, sensing, and control systems are developed alongside the physical energy infrastructure they operate within.
I also spent time with Prof. Haoxiang Lang, whose work in robotics, automotive systems, and advanced mobility sits at the intersection of computation and the physical world.
That work is closely tied to the Automotive Centre of Excellence, which includes a climatic wind tunnel described as one of the largest and most sophisticated of its kind in the world. The facility enables full-scale testing under extreme environmental conditions—from arctic cold to desert heat—and supports research that needs to be validated under real operating constraints.
I can’t possibly mention all the conversations I had over the course of the day—it was a full schedule—but I also spent time with Dean Hossam Kishawy and Dr. Osman Hamid, discussing how research, entrepreneurship, and industry engagement fit together at Ontario Tech.
The day also included time at Brilliant Catalyst, the university’s innovation hub, speaking with students and founders about entrepreneurship. I had the opportunity to give a keynote on entrepreneurship, and the visit ended with the pitch competition, where I handed the cheque to the winning team—a small moment that underscored how early many technical journeys begin.
Ontario Tech may be young, but it is already operating with the structure and discipline of a mature research institution, while retaining the adaptability of a newer one.
Thank you to Sunny Chen and the Ontario Tech team for the time, access, and thoughtful conversations throughout the day.
P.S. If you enjoyed this blog post, please take a minute to like, comment, subscribe and share. Thank you for reading!
This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
I wrote my master’s thesis on Code Division Multiple Access, or CDMA, a wireless communication technology that originated from military needs in World War II. CDMA uses a technique called direct sequence spread spectrum, which spreads a signal across a wide bandwidth so that it appears as random noise. This made it far better at encryption, resisting jamming, and avoiding eavesdropping. Needless to say, it was perfect for military environments long before it found its way into everyday communication.
A startup company called Qualcomm was beginning to commercialize CDMA. I spent countless hours studying their technical papers, which demonstrated how a technology with military grade robustness could also be applied to large scale commercial mobile networks. Working on that thesis in the 90s was also the first time I encountered the idea of dual use, the concept of a technology that can be used in both military and civilian environments, and one that has existed since the post–World War II era.
Geopolitics Has Recentered Dual Use
Fast forward to today. Geopolitics has returned to the foreground. Defence budgets around the world are rising. Countries are rethinking supply chains and rediscovering the importance of technological sovereignty. The focus is no longer only on wartime capability but also on the resilience of civilian systems that society relies on every day.
In this environment, dual use has moved from the background to the forefront of national strategy. In the AI era we are in, governments everywhere are looking for new technologies that strengthen national security and economic competitiveness at the same time. Technologies that once seemed far removed from defence are now recognized as essential.
A Tailwind for Deep Tech
For Two Small Fish Ventures, none of this comes as a surprise. Deep tech has always lived at the intersection of what is scientifically hard and what is societally important. Today, it naturally lends itself to dual use.
Breakthroughs in the five areas that TSF invests in — vertical AI platforms, physical AI, AI infrastructure, advanced computing hardware, and smart energy — were never designed to be solely military. Yet many of these technologies have clear applications in resilience, cybersecurity, automation, sensing, communication, and energy stability.
In other words, dual use does not narrow a company’s mission. It broadens it. It is the rare case where one innovation can truly kill two birds with one stone.
Defence Technology Is Not Only About Weapons
There is a common misconception that defence technology refers only to weapons. That has never been true.
Most technologies are neutral. I am certain our national defence department uses Microsoft Office, for instance. This is a reminder that much of what defence departments buy is not lethal but operational.
To be clear, we do not invest in companies whose sole purpose is military lethal weapons systems.
Our focus remains on building companies in the areas where we believe the next frontier of computing is taking shape. When those technologies also support national resilience, that is not mission drift. It is simply the nature of deep tech.
Deep tech requires scientific and engineering breakthroughs that are difficult to copy. In a dual use environment, this becomes an essential advantage.
A New Frontier for Founders
Founders often think of defence as a separate world. That is changing. Defence is a complicated beast, and anyone who believes they can simply walk in will be disappointed. But for those who understand the landscape and can navigate it, this is a generational opportunity waiting to be captured.
When I first studied CDMA decades ago, I never imagined that a communication technique developed for the battlefield would become the backbone of commercial wireless networks.
Today, many deep tech founders are standing at a similar moment. For founders and investors in deep tech, this is the beginning of an important cycle. And we are excited to support the innovators who will define what comes next.
P.S. If you enjoyed this blog post, please take a minute to like, comment, subscribe and share. Thank you for reading!
This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
I had the opportunity to join a panel at the Impact 2025 Summit in Calgary, moderated by Raissa Espiritu, with Janet Bannister and Paul Godman. Ironically, none of us are labelled as impact investors, and I explained on stage why Two Small Fish Ventures does what we do.
At Two Small Fish Ventures, we’ve never called ourselves an impact fund. That’s not because we’re indifferent to impact; in fact, it’s core to what we do. Our focus is on deep tech, the next frontier of computing, where innovation can create meaningful, long-term change. Specifically, we invest in five key areas: Vertical AI Platforms, Physical AI, AI Infrastructure, Advanced Computing Hardware, and Smart Energy.
We care deeply about scientific advancement, and more importantly, about turning those breakthroughs into real-world impact. That’s how meaningful progress happens.
Eva is our General Partner, and both of us are immigrants. Diversity isn’t a marketing point for us; it’s part of who we are. It naturally shows up in our portfolio: about half of our companies have at least one female founder, and many come from underrepresented backgrounds. That said, uncompromisingly, we back amazing deep tech founders who are turning their creations into world-class companies.
It’s actually rare that we talk about topics like women investing or investing in underrepresented groups in isolation. Not because we don’t care, quite the opposite. The fact that Eva is one of the few female GPs leading a venture fund, and that we’re both immigrants, already says a lot. Our actions speak volumes. We walk the walk and talk the talk.
We need to deliver results. Period. Our competition isn’t other venture funds; it’s every other investment opportunity available in the market. If we can’t perform at the highest level — top decile in everything we do — we can’t sustain our mission. Delivering some of the best results in the industry enables us to do what we love and make an impact.
That’s why I believe impact and performance are not opposites. The most powerful kind of impact happens when companies succeed, when they become world-class companies. Strong returns and meaningful impact can, and should, reinforce each other.
I also talked about the importance of choosing the right vehicle for the right purpose. When we made a 2 million dollar donation to the University of Toronto to establish the Commercialization Catalyst Prize, it wasn’t about investing. It was about supporting a different kind of impact — helping scientists and engineers turn their research into innovations that can reach the world. Not every kind of impact should come from the same tool.
At the end of the day, labels matter less than intent and execution. We don’t need to call ourselves an impact fund to make a difference. Our goal is simple: to back bold deep tech founders using science and technology to build a better future and to do it with excellence.
A big thank you to Raissa, George Damian, Sylvia Wang, and the entire Platform Calgary team for putting together such a thoughtful and well-run event.
P.S. If you enjoyed this blog post, please take a minute to like, comment, subscribe and share. Thank you for reading!
This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
The Laus have some exciting news to share. We are making a $2 million donation to the University of Toronto, our alma mater, to launch the Eva and Allen Lau Commercialization Catalyst Prize for Computing & Engineering Innovation.
And the best part: U of T’s Faculty of Arts & Science and Faculty of Applied Science & Engineering will match our gift, doubling its impact. This partnership will give even more researchers the resources they need to take their inventions and turn them into impactful companies.
Why This Matters
Canada is full of world class talent. At U of T alone, researchers are pushing the boundaries of semiconductors, AI, robotics, and quantum technologies—fields that will shape the future. The brilliance is already here.
But getting from invention to an impactful company is not easy. What is often missing are the resources that help move ideas out of the lab: mentorship, funding, workspace, and access to prototyping labs. That is where this prize comes in.
Each year, one team from Arts and Science and one from Engineering will receive support to bridge that critical gap and bring their boldest ideas closer to reality.
Why Catalyst
We named this prize Catalyst for a reason. Commercialization does not happen in isolation. It takes a community of mentors, peers, industry partners, and funders to transform research into companies that scale.
Our hope is that the Catalyst Prize sparks more than just a few startups. We want it to inspire others to join in, to create the conditions where many more homegrown tech giants can start, grow, and scale right here in Canada.
U of T
The University of Toronto is already a leader in innovation and entrepreneurship. It is home to one of the world’s top university incubators, has helped launch more than 1,200 venture backed startups, and is ranked among the top ten universities worldwide for powering innovation .
Add to that U of T’s research depth, industry partnerships, and global alumni network, and you have a powerful engine for turning big ideas into global impact. We are thrilled to help fuel that engine.
Coming Full Circle
For us, this is also personal. U of T gave us our start, Allen in electrical engineering and Eva in industrial engineering, and laid the foundation for everything that followed. From building Wattpad to starting Two Small Fish Ventures, we have lived the journey from idea to scale.
Now, through the Catalyst Prize, and with U of T matching to double the impact, we want to give today’s researchers and students even more opportunities than we had.
Innovation is unpredictable and the path is seldom linear. But with the right support at the right time, sparks can turn into something extraordinary.
That is what the Catalyst Prize is all about, helping Canadian innovators move their ideas out of the lab and into the world.
In 1865, William Stanley Jevons, an English economist, observed a curious phenomenon: as steam engines in Britain became more efficient, coal use didn’t fall — it rose. Efficiency lowered the cost of using coal, which made it more attractive, and demand surged.
That insight became known as Jevons Paradox. To put it simply:
Technological change increases efficiency or productivity.
Efficiency gains lead to lower consumer prices for goods or services.
The reduced price creates a substantial increase in quantity demanded (because demand is highly elastic).
Instead of shrinking resource use, efficiency often accelerates it — and with it, broader societal change.
Coal, Then Light
The paradox first appeared in coal: better engines, more coal consumed. Electricity followed a similar path. Consider lighting in Britain:
Period
True price of lighting (per million lumen-hours, £2000)
Change vs. start
Per-capita consumption (thousand lumen-hours)
Change vs. start
Total consumption (billion lumen-hours)
Change vs. start
1800
£8,000
—
1.1
—
18
—
1900
£250
↓ ~30×
255
↑ ~230×
10,500
↑ ~500×
2000
£2.5
↓ ~3,000× (vs. 1800) / ↓ ~100× (vs. 1900)
13,000
↑ ~13,000× (vs. 1800) / ↑ ~50× (vs. 1900)
775,000
↑ ~40,000× (vs. 1800) / ↑ ~74× (vs. 1900)
Over two centuries, the price of light fell 3,000×, while per-capita use rose 13,000× and total consumption rose 40,000×. A textbook case of Jevons Paradox — efficiency driving demand to entirely new levels.
Computing: From Millions to Pennies
This pattern carried into computing:
Year
Cost per Gigaflop
Notes
1984
$18.7 million (~$46M today)
Early supercomputing era
2000
$640 (~$956 today)
Mainstream affordability
2017
$0.03
Virtually free compute
That’s a 99.99%+ decline. What once required national budgets is now in your pocket.
Storage mirrored the same story: by 2018, 8 TB of hard drive storage cost under $200 — about $0.019 per GB, compared to thousands per GB in the mid-20th century.
Connectivity: Falling Costs, Rising Traffic
Connectivity followed suit:
Year
Typical Speed & Cost per Mbps (U.S.)
Global Internet Traffic
2000
Dial-up / early DSL (<1 Mbps); ~$1,200
~84 PB/month
2010
~5 Mbps broadband; ~$25
~20,000 PB/month
2023
100–940 Mbps common; ↓ ~60% since 2015 (real terms)
>150,000 PB/month
(PB = petabytes)
As costs collapsed, demand exploded. Streaming, cloud services, social apps, mobile collaboration, IoT — all became possible because bandwidth was no longer scarce.
Intelligence: The New Frontier
Now the same dynamic is unfolding with intelligence:
Year
Cost per Million Tokens
Notes
2021
~$60
Early GPT-3 / GPT-4 era
2023
~$0.40–$0.60
GPT-3.5 scale models
2024
< $0.10
GPT-4o and peers
That’s a two-order-of-magnitude drop in just a few years. Unsurprisingly, demand is surging — AI copilots in workflows, large-scale analytics in enterprises, and everyday generative tools for individuals.
As we highlighted in our TSF Thesis 3.0, cheap intelligence doesn’t just optimize existing tasks. It reshapes behaviour at scale.
Why It Matters
The recurring pattern is clear:
Coal efficiency fueled the Industrial Revolution.
Affordable lighting built electrified cities.
Cheap compute and storage enabled the digital economy.
Low-cost bandwidth drove streaming and cloud collaboration.
Now cheap intelligence is reshaping how we live, work, and innovate.
As we highlighted in Thesis 3.0:
“Reflecting on the internet era… as ‘the cost of connectivity’ steadily declined, productivity and demand surged—creating a virtuous cycle of opportunities. The AI era shows remarkable parallels. AI is the first technology capable of learning, reasoning, creativity… Like connectivity in the internet era, ‘the cost of intelligence’ is now rapidly declining, while the value derived continues to surge, driving even greater demand.”
The lesson is simple: efficiency doesn’t just save costs — it reorders economies and societies. And that’s exactly what is happening now.
If you are building a deep tech early-stage startup in the next frontier of computing, we would like to hear from you. This is a generational opportunity as both traditional businesses and entirely new sectors are being reshaped. White-collar jobs and businesses, in particular, will not be the same. We would love to hear from you.
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One of the most powerful frameworks I’ve come across is the Rule of 3 and 10, coined by Hiroshi Mikitani-san, founder and CEO of Rakuten. The idea is simple: every time a company triples in size, everything breaks.
As Rakuten grew from a handful of people into a global business, Mikitani-san noticed a clear pattern. At each stage — 1 to 3 people, 3 to 10, 10 to 30, 30 to 100, 100 to 300, and beyond — what worked before suddenly stopped working. And by everything, it really does mean everything: payroll, meetings, communication, budgeting, sales, even the org chart. The challenge is that many leaders blow right through these milestones without realizing what’s happening until it’s already broken.
What I Wish I Knew
I’ve been part of many really fast-growing companies — first as an employee, and later as a co-founder in two of them. And I can tell you, this rule is 100% true.
At Wattpad, I didn’t fully internalize it until we were approaching 100 people. By then, we had already missed natural breaking points where we could have rebuilt earlier. That lag made scaling harder than it needed to be.
Looking back, the stages feel something like this:
At 3 people, you’re a tight-knit unit where everyone knows everything.
At 10, you need to change how you communicate just to stay aligned.
At 30, the days of everyone reporting to the CEO are long gone — a first layer of leaders emerges.
At 100, there are layers of layers of leaders, and even well-designed systems need rethinking.
At 300, you’re running a completely different company than the one you started.
At 1,000, it feels like a mini-society with its own subcultures, bureaucracy, and politics — alignment becomes the hardest problem of all.
The Employee’s View
Before becoming an entrepreneur, I lived through this as an employee too. The breaking points are just as visible from the inside.
As companies scale, it gets harder to push things through. Meetings multiply, but decisions slow. Bystander problems appear — more people in the room, but fewer actually taking ownership. From the employee’s perspective, it feels frustrating and inefficient. But it’s not about capability; it’s about systems that no longer fit the size of the company.
Why This Matters
In the moment, it can feel like failure. But it isn’t. It’s simply that scale changes everything.
The good news: these challenges are solvable. Every growing company has faced them. The bad news: if you only react after things break, you’ll always be catching up instead of leading.
My Takeaway
If you’re building a fast-growing company, expect everything to break at 3, 10, 30, 100, 300, 1,000… and plan for it.
Don’t see it as failure. See it as evolution. Each breakdown is proof you’ve unlocked a new stage of growth. The chaos is part of the privilege — it means you’re building something worth scaling.
If I could go back and tell my younger CEO self one thing, it would be this: anticipate the breaks before they happen. Build a culture that embraces reinvention at every stage. You’ll save yourself and your team a lot of unnecessary pain — and you’ll enjoy the ride more.
P.S. The banner is using Ideogram Character to generate. It rocks!
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A few years back, Eva met Dr. Scott Stornetta. Later, I did too. Alongside Dr. Stuart Haber, Scott is widely credited as the creator of blockchain. Blockchain is a technology built on a simple but radical idea at the time: decentralization. No single authority, no central point of control, just a trusted system everyone can rely on.
Now, these two scientists are teaming up again to start a new company, SureMark Digital. Their mission is to bring that same decentralized philosophy to identity and authenticity on the internet, enabling anyone to prove who they are, certify their work, and push back against deepfakes and impersonation. No middlemen. No central gatekeepers.
It took us about 3.141592654 seconds to get excited. We are now proud to be the co-lead investor in SureMark’s first institutional round.
At Two Small Fish, we love backing frontier tech that can reshape large-scale behaviour. SureMark checks every box.
Eva has written a deeper dive on what they are building and why it matters. You can read it here.
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At most dinners, introductions start with your name and maybe what you do.
At this one, we began with: “Second edition.” “Fourth edition.”
Why? Because this was our “School of Fish – Legends of Semiconductors” dinner, hosted at our home, where your relationship with the Sedra & Smith textbook was the common thread. (I’m second edition, if you’re wondering.)
We were incredibly honoured to have Dr. Adel Sedra, former Dean of Engineering at the University of Waterloo, join us. Recently appointed to the Order of Canada, Dr. Sedra is a towering figure in the world of electrical engineering. Since 1982, his textbook has taught more than three-quarters of the world’s electrical engineers. It is hard to find someone in the field who has not studied from it. I consider myself extraordinarily fortunate, not just to have learned from his book, but to have been his student more than 30 years ago at the University of Toronto. Few have had the privilege of learning directly from a legend.
We were equally honoured to host Benny Lau, co-founder of ATI Technologies, whose legacy lives on in AMD’s GPUs to this day. AMD acquired ATI for $5.4 billion nearly 20 years ago, still one of the largest tech acquisitions in Canadian history. When Eva worked at ATI, she had the chance to work closely with Benny. His presence brought our conversation full circle, from classroom to commercialization. Adding even more depth to the evening, Benny was also once a student of Dr. Sedra. Two generations of engineers at the same table, both shaped by the same teacher.
From left to right: Benny Lau, Eva Lau, Ljubisa Bajic
This evening was also a chance to reconnect with those who shaped my own journey. Martin Snelgrove and Raymond Chik, my professor and TA respectively, were both there and are now serial entrepreneurs. They are also co-founders of Hepzibah, a Two Small Fish portfolio company. (I still can’t help but sometimes call him Professor Snelgrove.) Xerxes Wania, another one of my TAs from back in the day, went on to build and exit two semiconductor companies and added his voice to the conversation.
From left to right: Xerxes Wania, Dr. Adel Sedra, Allen Lau, Martin Snelgrove, Raymond Chik
We were also joined by Ljubisa Bajic, former CEO of TensTorrent and now CEO of Taalas, who also spent part of his career at ATI, further adding to the thread that connected many of us. Chris Yip, Dean of Engineering at the University of Toronto, and Deepa Kundur, current Chair of U of T’s Department of Electrical & Computer Engineering—continuing the legacy of leadership that Dr. Sedra once held in that position—also attended. Professor Tony Chan Carusone, now also CTO of Alphawave Semi and coauthor of the Sedra & Smith textbook starting with the 8th edition, brought both academic and commercial perspectives to the table.
From the TSF portfolio side, we were thrilled to have Professor Doug Barlage of the University of Alberta and Professor Chris Eliasmith of the University of Waterloo, co-founders of Zinite and ABR, respectively.
And of course, our partner Dr. Albert Chen joined us. He is a graduate of Waterloo Engineering and knows a thing or two about semiconductors himself.
Semiconductors brought us together that night. Textbook and tapeout were what we talked about, and we all loved them.
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A swimming world champion, a cycling champion, and a marathon champion each tried their hand at a triathlon.
None of them even came close to the podium. All were easily defeated.
Why?
Because the swimming champion could not bike, nor could he run fast.
The cycling champion did not swim well.
The marathon runner was painfully slow in the water.
The winner?
It was someone who had been humbled by the swimming champion in the pool for years, finishing second in the world championships multiple times. He was an exceptional swimmer, yes. However, he could also bike fast and run hard. Not the best in any single discipline, but strong across all three. And that is what won him the race.
The takeaway:
To win in triathlon, you need to be competitive in all three disciplines.
The winner is often world class in one of them, but they must be very good if not great at the other two.
This is the same mistake many first time deep tech founders make.
They believe that superior technology alone is enough to win.
It is not.
While technology is crucial, and in fact it is table stakes and the foundation of innovation, it must be transformed into a usable product. If it does not solve a real problem in a way people can adopt and benefit from, its brilliance is wasted.
And even if you have built world class technology and a beautifully crafted product, you are still not done. Without effective commercialization, which includes distribution, pricing, sales, positioning, and partnerships, you will not reach the users or customers who need what you have built.
Neglecting any one of them is like trying to win a triathlon without training for the bike or the run.
Just like a triathlete must train in all three disciplines, a founder must excel across all three pillars:
Great and defensible technology
An excellent product
Execution on commercialization
You need all three.
That is how you win the world championship.
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I recently spent a few weeks in Asia, visiting Tokyo, Hong Kong, Singapore, and Taiwan before returning to Toronto. Eva joined me for the first part of the journey, while I spent time in Singapore on my own, a city I’ve visited numerous times before. In Taiwan, I was accompanied by Albert, who was born there and still has family ties in the region.
This was by far my longest trip in quite some time. These destinations represent some of the world’s most developed economies, with GDP per capita levels comparable to or exceeding those in North America. Singapore, for instance, has a per capita GDP of around 90,000 USD, roughly 50 percent higher than the United States’ 66,000 USD.
Conversations and Perspectives
Coincidentally, my visit aligned with Liberation Day. Needless to say, it sparked many fascinating conversations, including the so-called “penguin tariffs,” whether AI is already smarter than certain politicians, and everything in between. Around that time, I also came across a perspective that stood out. While tariffs were initially expected to threaten Asian economies, many locals believed they had ended up affecting the United States more. Businesses in the Asia Pacific region had begun diversifying away from reliance on the US market years ago. As a result, they now have more leverage, and the direct impact of tariffs has been relatively limited. The broader concern was the possibility of a global recession.
Tech Energy in the Region
Across all four regions, I witnessed growing momentum in tech entrepreneurship. I had the chance to speak at tech conferences, lead masterclasses, take part in fireside chats, and encourage high school students to consider entrepreneurship as a path worth exploring.
Why It’s Happening
Why is this happening? These regions have strong technical capabilities. Taiwan, for example, manufactures about 90 percent of the world’s most advanced chips, and its capabilities are unmatched by any other country. Singapore, on the other hand, excels in semiconductor fabrication and biotechnology, and its presence in AI and computing infrastructure continues to grow.
Understanding the Cultural Landscape
At the same time, the cultural differences between East and West remain clear. The East tends to emphasize social harmony, collective behaviour, and conformity. The West often puts more weight on individual expression and free spirit.
Even small things reflect these differences. Take jaywalking. In Tokyo and Singapore, it is rare. People stare at you if you do it. In contrast, after jaywalking was recently legalized in New York City, I actually felt social pressure to jaywalk. Not doing so made me feel out of place.
Why Culture Matters in Business
For companies working across borders, recognizing these kinds of cultural nuances is not optional. It is essential. A one-size-fits-all approach often leads to missteps.
The Bicultural Perspective
Having been raised in Asia and now living in Canada for decades, I’ve come to appreciate the value of navigating both worlds. That dual perspective has become a quiet but important asset in both my personal and professional life. It is not a liability.
As I often say:
“Bamboo is neutral. If it’s used as a ceiling, it becomes a barrier. But if it’s used as a pole for jumping, one can leap incredibly high. Biculturalism is a powerful asset. If you leverage it in the right context, it can become your unfair advantage.”
Biculturalism, when used with intention, becomes a meaningful advantage. It helps you understand nuance, communicate across different environments, and approach global opportunities with more adaptability.
Looking Ahead
In an increasingly interconnected world, going global is no longer just a choice. During Asian Heritage Month, this feels especially relevant. Let’s celebrate not only our roots but also the advantages that come from navigating multiple worlds.
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Fibra is developing smart underwear embedded with proprietory textile-based sensors for seamless, non-invasive monitoring of previously untapped vital biomarkers. Their innovative technology provides continuous, accurate health insights—all within the comfort of everyday clothing. Learning from user data, it then provides personalized insights, helping women track, plan, and optimize their reproductive health with ease. This AI-driven approach enhances the precision and effectiveness of health monitoring, empowering users with actionable information tailored to their unique needs.
Fibra has already collected millions of data points with its product, further strengthening its AI capabilities and improving the accuracy of its health insights. While Fibra’s initial focus is female fertility tracking, its platform has the potential to expand into broader areas of women’s health, including pregnancy detection/monitoring, menopause, detection of STDs and cervical cancer and many more, fundamentally transforming how we monitor and understand our bodies.
Perfect Founder-Market Fit
Fibra was founded by Parnian Majd, an exceptional leader in biomedical innovation. She holds a Master of Engineering in Biomedical Engineering from the University of Toronto and a Bachelor’s degree in Biomedical Engineering from TMU. Her achievements have been widely recognized, including being an EY Women in Tech Award recipient, a Rogers Women Empowerment Award finalist for Innovation, and more.
We are thrilled to support Parnian and the Fibra team as they push the boundaries of AI-driven smart textiles and health monitoring. We are entering a golden age of deep-tech innovation and software-hardware convergence—a space we are excited to champion at Two Small Fish Ventures.
Stay tuned as Fibra advances its mission to empower women through cutting-edge health technology.
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Note: One of the most common pieces of feedback we receive from entrepreneurs is that TSF partners don’t think, act, or speak like typical VCs. The Contrarian Series is meant to demystify this, so founders know more about us before pitching.
When I said “Two Small Fish love Zero TAM businesses,” I said it so matter-of-factly that the crowd was taken aback. I even saw quite a few posts on social media that said, “I can’t believe Allen Lau said it!”
Of course, any business will need to go after a non-zero TAM eventually. But hear me out.
Here’s what I did at Wattpad: I never had a “total addressable market” slide in the early days. I just said, “There are five billion people who can read and write, and I want to capture them all!”
Even when we became a scaleup, I kept the same line. I just said, “There are billions of people who can read, write, or watch our movies, and I want to capture them all!”
Naturally, some VCs tried to box me into the “publishing tool” category or other buckets they deemed appropriate. But Wattpad didn’t really fit into anything that existed at the time. Trust me, I tried to find a box I would fit in too, but none felt natural.
Why? That’s because Wattpad was a category creator. And, of course, that meant our TAM was effectively zero.
In other words, we made our own TAM.
Many of our portfolio companies are also category creators, so their decks often don’t have a TAM slide either.
Yes, any venture-backed company eventually needs a large TAM. And, of course, I don’t mean to suggest that every startup needs to be a category creator.
That said, we’re perfectly fine—in fact, sometimes we even prefer—seeing a pitch deck without a TAM slide. By definition, category creators have first-mover advantages. More importantly, category creators in a large, winner-take-all market—especially those with strong moats—tend to be extremely valuable at scale and, hence, highly investable.
So, founders, if your company is poised to create a large category, skip the TAM slide when pitching to Two Small Fish. We love it!
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It’s been almost three years since I stepped aside from my role as CEO of Wattpad, yet I’m still amazed by the reactions I get when I bump into people who have been part of the Wattpad story. The impact continues to surface in unexpected and inspiring ways frequently.
Wattpad has always been a platform built on storytelling for all ages and genders. That being said, our core demographic—roughly 50% of our users—has been teenage girls. Young women have always played a pivotal role in the Wattpad community.
Next year, Wattpad will turn 20 (!)—a milestone that feels both surreal and deeply rewarding. When we started in 2006, we couldn’t have imagined the journey ahead. But one thing is certain: our early users have grown up, and many of them are now in their 20s and 30s, making their mark on the world in remarkable ways.
A perfect example: at our recent masterclass at the University of Toronto, I ran into Nour. A decade ago, she was pulling all-nighters reading on Wattpad. Today, she’s an Engineering Science student at the University of Toronto, specializing in machine intelligence. Her story is not unique. Over the years, I’ve met countless female Wattpad users who are now scientists, engineers, and entrepreneurs, building startups and pushing boundaries in STEM fields.
This is incredibly fulfilling. Many of them have told me that they looked up to Wattpad and our journey as a source of inspiration. The idea that something we built has played even a small role in shaping their ambitions is humbling.
Now, as an investor at Two Small Fish, I’m excited about the prospect of supporting these entrepreneurs in the next stage of their journey. Some of these Wattpad users will go on to build the next great startups, and it would be incredible to be part of their success, just as they were part of Wattpad’s.
On this International Women’s Day, I want to celebrate this unintended but, in hindsight, obvious outcome: a generation of young women who grew up on Wattpad are now stepping into leadership roles in tech and beyond. They are the next wave of innovators, creators, and entrepreneurs, and I can’t wait to see what they build next.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
In many companies, the bottleneck isn’t necessarily in the execution of decisions. The real bottleneck is the excessive time people waste making decisions.
When I was Wattpad’s CEO, everyone in the company knew I had a simple 2×2 framework to empower the whole team to make fast, high-quality decisions – all by themselves!
The essence of this framework comes down to two questions:
• Is this decision reversible?
• Is this decision consequential?
These two factors create four types of decisions:
1. Reversible and inconsequential
2. Reversible and consequential
3. Irreversible and inconsequential
4. Irreversible and consequential
Examples of Each Type
1. Reversible and Inconsequential
This actually makes up the bulk of decisions in a company:
• Internal Slack messages? Delete them if you don’t like them.
• Marketing team’s benign social media copy?Remove the post if it doesn’t work.
• Small typo like the one in the above image? Yes, I purposely left the typo there. I look sloppy, but I could silently replace it with a better one when I have time.
• Small bugs in the product? If a bug fix causes other problems, revert the changes.
The list goes on. The trick is to empower each person in the company to make these decisions independently. I reinforced the same message to the Wattpad team over and over again:
From the most junior interns to the most senior leaders—you’re empowered to make the call all by yourself.
No boss to ask. No approval process. Just do it!
The company moves fast when most decisions don’t require a meeting!
2. Irreversible and Inconsequential
Here’s an example:
At one point, we ran out of space at Wattpad’s Toronto HQ and needed overflow space. We found a small office—just a few hundred square feet with a couple of meeting rooms—in the building right next door. The location was perfect, but the space itself? Just okay.
The problem was the lease—it was relatively long. Once we signed, we couldn’t back out. That limited our flexibility (irreversible), but we knew that if we needed more room, we could always find another expansion space. The cost was small in the grand scheme of things (inconsequential).
Given our growth, there was little downside to signing the lease. So we moved fast, signed the deal, and moved on to the next item on the to-do list.
For this type of decision, you can still move fast. Just be careful—double-check the lease for any hidden “gotchas.” It’s not about if we sign or not. We will sign, but we just want to make sure the bases are covered before we do.
You’d be surprised how much time people waste on indecision. Just make the call and do the due diligence!
When done properly, product releases can be very consequential but still reversible. At Wattpad, we released high-risk software all the time—but always with a way to roll back if things didn’t work.
We knew how to press the undo button!
For these kinds of decisions, move fast and make the call—but monitor the outcome and always be ready to press undo.
Important: How to Increase the Quality of These Decisions
For both Irreversible and Inconsequential decisions and Reversible and Consequential decisions, always ask:
Is there any way to make this decision more reversible or less consequential?
If you can tweak the decision to minimize fallout—no matter how small—do it. It will save time and stress down the road.
4. Irreversible and Consequential
Many of these are leadership-team-level or CEO-level decisions.
They’re rare but also the hardest to make. They require a lot of context, consideration, and, sometimes, choosing between two bad options. Occasionally, you get a good one and choose between a few great choices.
The ultimate example for me?
Whether to take the company public, maintain the status quo and keep going, or accept an acquisition offer.
Sometimes, knowing which quadrant a decision falls into is an art. But imagine if we didn’t have this framework—slow decision-making would have ground the company to a halt.
The key to moving fast isn’t just execution—it’s deciding fast, too.
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“Deep Tech” is one of those terms that gets thrown around a lot in venture capital and startup circles, but defining it precisely is harder than it seems. If you check Wikipedia, you’ll find this:
Deep technology (deep tech) or hard tech is a classification of organization, or more typically a startup company, with the expressed objective of providing technology solutions based on substantial scientific or engineering challenges. They present challenges requiring lengthy research and development and large capital investment before successful commercialization. Their primary risk is technical risk, while market risk is often significantly lower due to the clear potential value of the solution to society. The underlying scientific or engineering problems being solved by deep tech and hard tech companies generate valuable intellectual property and are hard to reproduce.
At a high level, this definition makes sense. Deep tech companies tackle hard scientific and engineering problems, create intellectual property, and take time to commercialize. But what do substantial scientific or engineering challenges actually mean? Specifically, what counts as substantial? “Substantial” is a vague word. A difficult or time-consuming engineering problem isn’t necessarily a deep tech problem. There are plenty of startups that build complex technology but aren’t what I’d call deep tech. It’s about tackling problems where existing knowledge and tools aren’t enough.
In 1964, Supreme Court Justice Potter Stewart famously said, “I know it when I see it” when asked to describe his test for obscenity in Jacobellis v. Ohio. By no means am I comparing deep tech to obscenity—I don’t even want to put these two things in the same sentence. However, there is a parallel between the two: they are both hard to put into a strict formula, but experienced technologists like us recognize deep tech when we see it.
So, at Two Small Fish, we have developed our own simple rule of thumb:
If we see a product and say, “How did they do that?” and upon hearing from the founders how it is supposed to work, we still say, “Team TSF can’t build this ourselves in 6–12 months,” then it’s deep tech.
At TSF, we invest in the next frontier of computing and its applications. We’re not just looking for smart founders. We’re looking for founders who see things others don’t—who work at the edge of what’s possible. And when we find them, we know it when we see it.
This test has been surprisingly effective. Every single investment we’ve made in the past few years has passed it. And I expect it will continue to serve us well.
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Sonos replaced its CEO last week. The company faced significant backlash after launching a redesigned app earlier last year that was plagued by bugs, missing features, and connectivity issues, frustrating customers and tarnishing its reputation. This also led to layoffs, poor sales, and a significant drop in stock price.
While I usually don’t comment on companies I’m not involved with, as a long-time Sonos user, I was very frustrated that the alarm feature I had been relying on to wake me up in the morning for well over a decade disappeared overnight. There were other issues, too.
Throughout my career, I have worked on numerous redesign projects. A fiasco like this is totally avoidable. Today, I am sharing a couple of internal blog posts I wrote for my team (when I was Wattpad’s CEO) about this topic. Of course, these are just examples of the general framework I used. In practice, there are many specific details in each redesign that I helped guide the team through, as frameworks like this are like a hammer. Even the best hammer in the world is still just a hammer. The devil is in the details of how you use it.
These internal blog posts are just some of the hammers and drills in my toolbox that I use to help our portfolio CEOs navigate trade-offs and move fast without breaking things.
Happy reading through a sample of my collection of half a million words!
Note: These two posts have been mildly edited to improve readability.
Blog Post #1 – Subject: Feature Backward Compatibility
I have gone through major technology platform redesigns many times in my career. One problem that arises every single time is backward compatibility.
The reason is easy to understand: users can interact with complex products (such as Wattpad) in a million different ways. There is no way the engineering team could anticipate all the permutations.
There are two common ways to solve this problem. First, run an extensive beta program. This is what big companies like Apple and Microsoft do when they update their operating systems. This approach is also a great way to push some of the responsibility to their app developers. Even with virtually unlimited resources, crowdsourcing from app developers is still a far better approach. However, running an extensive beta program takes a lot of time and resources. Most companies can’t afford to do that.
The other approach is to roll out the changes progressively and incrementally. It is very tempting to make all the big changes at once, roll them out in one shot, and roll the dice. However, I am almost certain that it will backfire. Not only is it a frustrating experience for both users and engineers, but it also makes the project schedule much less predictable and, in most cases, causes the project to take much longer than anticipated.
Next year, when we focus on our redesign to reduce tech debt, don’t forget to set aside some time budget for these edge conditions that are so easily overlooked. Also, think about how we can roll out the changes more incrementally to minimize the negative impact on our users.
Blog Post #2 – Subject: The Reversibility and Consequentiality Framework
The other day, I spoke to the CEO of another consumer internet company. In terms of the scale of its user base, this company is much smaller than Wattpad, but we are still talking about millions of users here.
Like us, this company has been around for over a decade. Not surprisingly, technical debt has been an ongoing concern. A few years ago, the team decided to completely redesign its platform from the ground up. The redesign was a multi-year effort, and the team finally pulled back the curtain a year ago. While it is working fine now, this CEO told me that it took a few months before they fixed all the issues and reimplemented all the “missing” features because many of their users were using the product in “interesting” ways that the new version did not support.
These problems are fairly common when redesigning a new system from the ground up. In practice, it is simply impossible to take all the permutations into account, no matter how carefully you plan. However, if we mess things up, our user base is so large that it might negatively impact (or ruin!) 100 million people’s lives in the worst-case scenario.
On the flip side, over-planning could burn through a lot of unnecessary cycles.
One way or another, we should not let these challenges deter us from moving forward or even slow us down because there are many ways to mitigate potential problems. In principle, ensuring that the rollout is reversible and inconsequential is key.
The former is easy to understand: Can we roll back when things go wrong? Do we have a kill switch when updating our mobile apps? These are best practices that we have already been using.
However, at times, these best practices might not be possible. Can we reduce the consequentiality when rolling out? If the iOS app were completely redesigned, could we do it in smaller chunks, parallel-run the new and old versions at the same time, or try the new version on 0.1% of our users first? If not, could we roll out the new app in a small country first?
Again, our objective is not to avoid any problem at all costs. Our objective is to minimize (but not eliminate) the negative impact when things go wrong—not if things go wrong. Although Wattpad going dark for 100 million people for an extended period of time is not acceptable, in the spirit of speed, it is perfectly okay if we have ways to hit reverse or reduce the impact to only a small percentage of our users. These are not rocket science, but they do require a bit more thoughtfulness because our user base is so large that we can’t simply roll the dice.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
Who are the top 50 VCs in Canada? Two Small Fish Ventures is one of them! At Two Small Fish Ventures, we are deeply honoured to be named among Canada’s top 50 venture capital firms in this year’s edition of The 50 — the annual guide produced by the Canadian Venture Capital & Private Equity Association (CVCA) and the Trade Commissioner Service (TCS).
This recognition is not just a badge for us; it’s a reflection of the thriving and globally respected Canadian venture ecosystem we are proud to be part of. We share this honour with an incredible group of firms that are shaping the future of technology, science, and innovation across the country and beyond.
If you are an entrepreneur, this list represents the Canadian VCs you should talk to — firms committed to partnering with visionary founders, pushing boundaries, and building category-defining companies.
We look forward to continuing to back the next generation of transformational founders and are grateful to the CVCA and TCS for this spotlight.
The Full List: Canada’s Top 50 VCs
Here’s the full list of the firms recognized this year (in alphabetical order):
This is the picture I used to open our 2024 AGM a few months ago. It highlights how drastically the landscape has changed in just the past couple of years. I told a similar story to our LPs during the 2023 AGM, but now, the pace of change has accelerated even further, and the disruption is crystal clear.
The following outlines the reasons behind one of the biggest shifts we identified as part of our Thesis 2.0 two years ago.
Like many VCs, we evaluate pitches from countless companies daily. What we’ve noticed is a significant rise in startups that are nearly identical to one another in the same category. Once, I quipped, “This is the fourth one this week—and it’s only Tuesday!”
The reason for this explosion is simple: the cost of starting a software company has plummeted. What once required $1–2M of funding to hire a small team can now be achieved by two founders (or even a solo founder) with little more than a laptop or two and a $20/month subscription to ChatGPT Pro (or your favourite AI coding assistant).
With these tools, founders can build, test, and iterate at unprecedented speeds. The product build-iterate-test-repeat cycle is insanely short. If each iteration is a “shot on goal,” the $1–2M of the past bought you a few shots within a 12–18 month runway. Today, that $20/month can buy you a shot every few hours.
This dramatic drop in costs, coupled with exponentially faster iteration speeds, has led to a flood of startups entering the market in each category. Competition has never been fiercer. This relentless pace also means faster failures, and the startup graveyard is now overflowing.
For early-stage investors, picking winners from this influx of startups has become significantly harder. In the past, you might have been able to identify the category winner out of 10 similar companies. Now, it feels like mission impossible when there are hundreds—or even thousands—of startups in each category. Many of them are even invisible, flying under the radar for much longer because they don’t need to fundraise.
Of course, there will still be many new billion-dollar companies. In fact, I am convinced that this AI-driven platform shift will produce more billion-dollar winners than ever—across virtually every established category and entirely new ones that don’t yet exist. But by the law of large numbers, spotting them among thousands of startups in each category is harder than ever.
If you’re using the same lens that worked in the past to spot and fund these future tech giants, good luck.
That’s why, for a long time now, we’ve been using a very different lens to identify great opportunities with highly defensible moats to stay ahead of the curve. For example, we’ve been exclusively focused on deep tech—a space where we know we have a clear edge. From technology to product to operations, we have the experience to cover the full spectrum and support founders through the unique challenges of building deep tech startups. So far, this approach has been working really well for us.
I guess we are taking our own advice. As a VC firm, we also need to be constantly improving and striving to be unrecognizable every two years!
There’s no doubt the rules of early-stage VC have shifted. How we access, assess, and assist startups has evolved dramatically. The great AI democratization is affecting all sectors, and venture capital is no exception.
For investors who can adapt, this is a time of unparalleled opportunity—perhaps the greatest era yet in tech investing. The playing field has been levelled, and massive disruption (and therefore opportunities) lies ahead. Incumbents are vulnerable, and new champions will emerge in each category – including VC!
Investing during this platform shift is both exciting and challenging. And I wouldn’t want it any other way, because those who figure it out will be handsomely rewarded.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
Important: Before continuing, read SRTX‘s CEO Katherine Homuth’s posts first (here and here).
Hi Katherine,
I read your blog posts about your current challenges and future plans. Originally, I planned to reply to you privately, but in the end, I decided to share my response as an open letter on my blog.
First of all, if you think I’m going to give you any advice, you’d be mistaken.
Why? Because I don’t think I’m qualified. I have never built a company that reinvented the textile industry. Unless I have “been there, done that,” you shouldn’t listen to me — even though TSF has been an investor in SRTX since the early days.
That said, there are numerous similarities between SRTX and Wattpad. One lesson I learned might be useful to you.
Both SRTX and Wattpad set out to reinvent industries that had remained largely unchanged for the past century. Wattpad raised over $100M USD and lost millions per year to build the business’s foundation — overcoming the chicken-and-egg problem — before we could monetize profitably. That had been our strategy from day one, and it was hard to explain on a spreadsheet. From the outside, it looks like it’s all wins. From the inside, we don’t know if the next leap forward will be our last.
Sound familiar? Like you mentioned, SRTX also raised well over $100M USD and lost millions of dollars to build the foundation of the business — overcoming the chicken-and-egg problem — before you could monetize profitably. That’s been your strategy from day one, and it was hard to explain on a spreadsheet. From the outside, it looks like it’s all wins. From the inside, you don’t know if the next leap forward will be your last.
When an entrepreneur is building a transformative company in an unconventional way, they will inevitably attract a lot of naysayers. These naysayers are usually missing key context (which is fine, as you don’t have to convince everyone), give unsolicited bad advice (which is uncool but typical of armchair coaches trying to look smart), and fail to recognize that there’s more than one way to build a massively successful company.
Here’s an example.
A few months after Wattpad was acquired, someone said to me:
“Congrats on your acquisition. But you could have been more capital-efficient. Compared to most B2B SaaS companies, your exit value relative to capital raised was not as high as it could be.”
WTF? He might as well have said McDonald’s generates more revenue than you.
Of course, we all know the proper benchmark is to compare Wattpad to other consumer companies like Snap, Twitter, or Facebook. In fact, Wattpad was massively more capital efficient — both on a per-user basis and an exit-value basis — than most other consumer companies at similar or larger scales. In some cases, we were ahead by an order of magnitude.
I wasn’t angry, upset, or offended by this ignorance, naivety, or arrogance because, over the years, I’ve had to deal with many naysayers — even after Wattpad’s successful exit.
Here’s the important lesson I learned:
Naysayers will always naysay.
They want to make themselves look smart.
They want to feel superior to you.
They don’t want to admit they were wrong, so they continue to naysay.
Most people don’t believe in moonshots because they can’t do what you do.
If you can use them to fire yourself up, that’s great. If not, don’t even spend a millisecond on them. Your time and energy are better spent focusing on finding a handful of new investors who believe in your vision, growing a fanbase that loves your product, and scaling your company. These are what you have been doing. The results will speak for themselves.
If anything, SRTX has de-risked so much over the years. Millions of people are already buying your unbreakable tights. It’s the best-selling tight in North America — unbreakable or not. A lot of capital has been raised, enabling your mega factory to become a reality. Major B2B partnerships have been formed to scale. New products, beyond tights, are soon to launch.
You’re very close to the top of Mount Everest. Who cares about those people who don’t dare to leave base camp?
Best,
Allen
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
Note: One of the most common pieces of feedback we receive from entrepreneurs is that TSF partners don’t think, act, or speak like typical VCs. The Contrarian Series is meant to demystify this, so founders know more about us before pitching.
For Wattpad, it was exactly ten years between raising our first round of venture capital in 2011 and the company’s acquisition in 2021. Over that decade, we discussed countless topics in our board meetings.
But one topic we never discussed? Exit strategies.
I distinctly remember, a couple of years before the acquisition, I raised the question to a board member. “We’ve been venture-backed for almost ten years now. Should we start talking about exit…”
I couldn’t even finish the sentence. That board member cut me off:
“Allen, I just want you to build a great company.”
That moment stuck with me. Only after the acquisition did I fully appreciate the significance of those ten years as a venture-backed company without focusing on an exit.
Wattpad’s four largest investors—USV, Khosla Ventures, OMERS, and Tencent—enabled us to focus on building the business, not selling it. OMERS, as a pension fund, and Tencent, as a strategic investor, don’t operate under the typical 10-year fund cycle that drives many venture firms to push for exits. USV, with its consistent track record of generating world-class returns, had the trust of its LPs to prioritize long-term value over short-term outcomes. And Khosla Ventures? Well, no one can tell Vinod Khosla what to do, and he loves making big, long-term bets.
Their perspectives freed us to focus on building a great company rather than prematurely worrying about how to sell it.
In early 2020, a year before Wattpad was acquired for US$660M, we set an ambitious company objective: to become “Investment Ready.” This meant ensuring we could scale profitably and confidently project $100M+ in revenue with a minimum of 40% year-over-year growth. By the end of 2020, we wanted to be in a position to choose between preparing for an IPO (we even reserved our ticker symbol WTPD), raising growth capital to accelerate expansion, or scaling organically without any additional funding.
When an inbound acquisition offer came in mid-2020, this optionality proved invaluable. It allowed us to run a proper process with multiple interested parties. We were clear with potential acquirers: our preference was to remain independent. If the offer wasn’t higher than the value we could command through an IPO, we weren’t interested, and we would walk away. Because we had the fundamentals to back it up, no one doubted us.
This underscores an important point: the best way to generate a great outcome is to build an amazing business. Focus on creating value, and optionality will follow.
Any CEO who claims to have an exit strategy—especially in the early stages—is either naïve, disillusioned, or lying.
Here’s the reality: M&A is far less common than people think. The pool of serious potential acquirers often narrows to just a handful in the best-case scenarios. And even then, the stars have to align—you need the right timing, the right strategic fit, and the right price. It’s easier said than done.
Of course, that doesn’t mean I ignored the idea of acquisition entirely (and founders should consider M&A, but only under the right circumstances, and I will save it for another blog post). For instance, we built relationships with potential strategic acquirers and stayed aware of the landscape. But the time I spent on this was minimal. Even my leadership team occasionally asked why I never talked about M&A. The answer was simple: it wasn’t a priority.
Too many founders overthink their “exit strategy,” and it often backfires. Changing their product to appeal to a potential acquirer? Building one-sided partnerships in the hope they’ll buy the company? Hope is not a strategy.
The same goes for VCs. Some overthink their portfolio companies’ “exit strategy” because they worry about selling before the 10-year fund window closes. While this concern is valid, it doesn’t mean they should push their best portfolio companies to sell. There are many ways for VCs to liquidate their positions without forcing a sale. Ironically, the best way for a founder to help their investors exit is to focus on increasing enterprise value. Shares in a great company are always in demand.
For an early-stage startup, having an exit strategy is as absurd as asking an infant to decide which jobs they’ll apply to after university. The founders’ job is to nurture that infant—raise them into a great human being. The results will follow.
Build a great business, and everything else will fall into place. There’s an old saying: Great companies get bought, not sold. It couldn’t be more true.
P.S. Founders, if you have an exit strategy slide in your pitch deck, please remove it before pitching to us. TYSM!
P.P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
There are three distinct phases in the journey of building a great tech company: technology, product, and commercialization. These phases are sequential yet interconnected and sometimes overlap. Needless to say, mastering each is critical to the company’s eventual success. However, it’s important to recognize their differences.
• Building technology is about founders creating what they love. It’s driven by passion and expertise and often leads to groundbreaking innovations.
• Building a product is about creating something others love to use. This is where usability and solving real problems come into focus.
• Commercialization is about building something people will pay for and driving revenue. This phase transforms users into paying customers or finds someone else to pay for it, such as advertisers.
These phases are related but distinct. Great technology doesn’t guarantee anyone will use it, and a widely-used product doesn’t always lead to revenue. I’ve seen many technologists create incredible technologies no one adopts, as well as popular products that fail to commercialize effectively (though it’s rare for a product with tens of millions of users to fail entirely).
For deep tech companies, these phases often have minimal overlap and unfold sequentially. The technology might take years to develop before a usable product emerges, and commercialization may come even later.
In contrast, shallow tech B2B SaaS products often see complete overlap between the phases. For example, a subscription model is typically apparent from the outset, and the tech, product, and commercialization phases blend seamlessly.
Wattpad is also a good example of how these phases can play out differently. Initially, we built our technology and product hand in hand, creating a platform loved by millions of users. However, its commercialization—whether through ads, subscriptions, or movies, the three revenue models we had—was deliberately delayed. Many people assumed we didn’t know how to make money without understanding this counterintuitive approach (but of course, we purposely kept some of our strategies under wraps). This approach allowed us to use “free” as a potent weapon to dominate—and eliminate—our competitors in a winner-takes-all strategy. Operating for years with minimal revenue was clearly the right decision for the market dynamics and our long-term goals. More on this in a separate blog post.
Given this variability, asking, “What is your revenue?” must be thoughtful and context-specific. For some companies, the absence of revenue may be an intentional and brilliant strategy. For others, insufficient revenue could signal serious trouble. It all depends on the company’s stage, strategy, and goals. Understanding the sequence, timing, and specific needs of a business model is crucial for both investors and entrepreneurs. Zero revenue could be a blessing in the right context. On the other hand, pushing for revenue growth—let alone the wrong type of revenue growth—can be fatal, a scenario we’ve seen many times.
At Two Small Fish Ventures, we are very thoughtful and experienced investors. We understand that starting to generate revenue—or choosing not to generate revenue—at the right time is one of the secrets to success that very few people have mastered. We practise what we preach. Over the past two years, all but one of TSF’s investments have been pre-revenue.
No revenue? No problem. In fact, that’s great. Bring them on!
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
In previous blog posts (here and here), I’ve delved into the mathematical model for constructing an early-stage VC portfolio designed to achieve outsized returns. In short, investing early to build a concentrated portfolio of fewer than 20 moonshot companies, each with the potential for 100x returns or more, is the way to go.
The math is straightforward—it doesn’t lie. Not adhering to this model can significantly reduce the likelihood of achieving exceptional returns.
However, simply following this model is not enough to guarantee outsized results. Don’t mistake correlation for causation! The real challenge lies in identifying, evaluating, and supporting these “100x” opportunities to help turn their vision into reality.
At TSF, we use a simple framework to evaluate whether a potential investment can meet the 100x criteria:
10x (early stage) x 10x (transformative behaviour) = 100x conviction
The first “10x” is straightforward: We invest when companies are in their earliest stages. For instance, over the past two years, all but one of TSF’s investments have been pre-revenue. This made financial analysis simple—those spreadsheets were filled with zeros!
Many of these companies are also pre-traction. While having traction isn’t a bad thing, savvy investors shouldn’t rely on it for validation. The reason is simple: traction is visible to everyone. By the time it becomes apparent, the company is often already too expensive and out of reach.
At TSF, we have a unique advantage. Before transitioning to investing, all TSF partners were engineers, product experts, successful entrepreneurs, and operators—including a “recovering CEO”—that’s me! Each partner brings distinct domain expertise, collectively creating a broad and deep perspective. This allows us to invest only when we possess the domain knowledge needed to fully evaluate an opportunity. We “open the hood” to determine whether the technology is genuinely unique, defensible, and disruptive, or whether it is easily replicable. If it’s the latter, we pass quickly. A strong, defensible tech moat is a key criterion for us. This approach means we might pass on some promising “shallow-tech” opportunities, but we’re very comfortable with that. After all, we believe the best days of shallow tech are behind us.
Maintaining a concentrated portfolio allows us to commit only to investments where we have unwavering conviction. In contrast, a large portfolio would require us to find a large number of 100x opportunities and pursue those we might not fully believe in. Frankly, I wouldn’t sleep well if we took that route. This route would also make it difficult to provide the meaningful, tailored support we’ve promised our entrepreneurs (more on that in a future post).
When evaluating product potential, we look beyond the present. At TSF, we assess how a technology might reshape the landscape over the next decade or more. We start by understanding the intrinsic needs of the user and envision how a product could fundamentally change customer or end-user behaviour. This is crucial: if a product that addresses a massive opportunity has a strong tech moat, first-mover advantages, and the ability to change behaviour while facing few viable alternatives, it can unlock significant new value and create a defensible, category-defining business.
This often translates into substantial commercialization potential. If we can foresee how the product might evolve into adjacent markets (its second, third, or even fourth act) with almost uncapped possibilities, we achieve the “holy trinity” of tech-product-commercialization potential—forming the second 10x of our conviction.
Here’s how we describe it:
Two Small Fish Ventures invests in early-stage products, platforms, and protocols that transform user behaviour and empower businesses and individuals to unlock new, impactful value.
This thesis underpins our investment decisions and ensures that each choice we make aligns with our long-term vision for transformative innovation.
While this framework may sound simple, executing it well is extremely difficult. It requires what I call a “crystal ball” skill set that spans the full spectrum of entrepreneurial, technical, product, and operational backgrounds.
Over the past decade, we’ve built a portfolio of more than 50 companies across three funds. By employing this approach, the entrepreneurs we’ve supported have achieved numerous breakout successes. This post outlines our “secret sauce,” and we will continue to leverage it.
As you can see, early-stage VC is more art than science. To do it well requires thoughtfulness, insight, and the ability to envision the future as a superpower. It’s challenging but incredibly rewarding. I wouldn’t trade it for anything.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
More than two decades ago, before I started my first company, I was involved with an internet startup. Back then, the internet was still in its infancy, and most companies had to host their own servers. The upfront costs were daunting—our startup’s first major purchase was hundreds of thousands of dollars in Sun Microsystems boxes that sat in our office. This significant investment was essential for operations but created a massive barrier to entry for startups.
Fast forward to 2006 when we started Wattpad. We initially used a shared hosting service that cost just $5 per month. This shift was game-changing, enabling us to bootstrap for several years before raising any capital. We also didn’t have to worry about maintaining the machines. It dramatically lowered the barrier to entry, democratizing access to the resources needed to build a tech startup because the upfront cost of starting a software company was virtually zero.
Eventually, as we scaled, we moved to AWS, which was more scalable and reliable. Apparently, we were AWS’s first customer in Canada at the time! It became more expensive as our traffic grew, but we still didn’t have to worry about maintaining our own server farm. This significantly simplified our operations.
A similar evolution has been happening in the semiconductor industry for more than two decades, thanks to the fabless model. Fabless chip manufacturing allows companies—large or small—to design their semiconductors while outsourcing fabrication to specialized foundries. Startups like Blumind leverage this model, focusing solely on designing groundbreaking technology and scaling production when necessary.
But fabrication is not the only capital-intensive aspect. There is also the need for other equipment once the chips are manufactured.
During my recent visit to ventureLAB, where Blumind is based, I saw firsthand how these startups utilize shared resources for this additional equipment. Not only is Blumind fabless, but they can also access various hardware equipment at ventureLAB without the heavy capital expenditure of owning it.
Let’s see how the chip performs at -40C!
Jackpine (first tapeout)
Wolf (second tapeout)
BM110 (third tapeout)
The common perception that semiconductor startups are inherently capital-intensive couldn’t be more wrong. The fabless model—in conjunction with organizations like ventureLAB—functions much like cloud computing does for software startups, enabling semiconductor companies to build and grow with minimal upfront investment. For the most part, all they need initially are engineers’ computers to create their designs until they reach a scale that requires owning their own equipment.
Fabless chip design combined with shared resources at facilities like ventureLAB is democratizing the semiconductor space, lowering the barriers to innovation, and empowering startups to make significant advancements without the financial burden of owning fabrication facilities. Labour costs aside, the upfront cost of starting a semiconductor company like Blumind could be virtually zero too.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
#paid was one of the first investments we made at Two Small Fish Ventures. It’s been over a decade since we backed Bryan and Adam, who were still working out of Toronto Metropolitan University’s DMZ at the time. They had a vision to build a platform that connected creators and brands before “creator” was even a term! Back then, influencer and creator marketing campaigns were just tiny experiments.
A decade later, the creator economy has taken off. It’s now a $24 billion market—an order of magnitude larger than just a few years ago, with no signs of slowing down. The next wave of growth is still ahead as ad spending continues to shift away from traditional media. With the global ad market approaching $800 billion, one thing remains true: ad dollars follow the eyeballs—always. And where are those eyeballs today? On creators and influencers.
Today, #paid has become the world’s dominant platform, with over 100,000 creators onboard. It addresses a significant challenge: most creators don’t know how to connect with brands, especially iconic brands like Disney, Sephora, or IKEA. On the other hand, brands struggle to find the right creators amidst a sea of talent. #paid bridges this gap, acting as the marketplace that makes collaboration easy. They use data-driven insights to determine what makes a successful match, ensuring that both creators and brands can find each other effortlessly.
At #paid, brands and creators work with a dedicated team of experts to build creative strategies backed by research, first-party data, and industry benchmarks. This means campaigns run smoothly, allowing creators to focus on doing what they love—creating—without getting bogged down by administrative tasks.
I’m not just speaking as an investor—I’ve actually run a campaign with #paid as an influencer myself, and I can personally vouch for how seamless the experience was.
If you think #paid is all about TikTok, Snap, or Instagram, think again. Brands leverage #paid content across every platform. Want proof? Just check out the Infiniti TV commercial, which came from a #paid campaign.
How about billboards in major cities like NYC, Toronto, and more? #paid has that covered too.
#paid also brings creators and marketers together in real life. I had the privilege of speaking at their Creator Marketing Summit in NYC a few weeks ago, and I was amazed at how far #paid has come. The summit brought together hundreds of creators and top brand marketers—an impressive showcase of the platform’s evolution.
Looking back on this journey, here are my key takeaways:
• Great companies take a decade to build.
• To create a category leader, especially in winner-take-all markets, the idea has to be bold and often misunderstood at first. Bryan and Adam saw something that few others did, and their first-mover advantage has solidified #paid’s leading position today.
• There’s no such thing as “done.” #paid constantly reinvents itself. Generative AI is another exciting opportunity for step-function growth, and I can’t wait to see what’s next.
Bryan and Adam should be incredibly proud of what they’ve accomplished.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
In the early 2010s, when Wattpad began raising capital from Silicon Valley, Valley VCs didn’t ask me ‘if’ I would move the company or open a second office there; they asked ‘when.’ They argued that Toronto lacked great product people and scale-up leaders, although we had top engineering talent. At that time, it was common for Valley VCs to ask non-Valley companies to move to the Valley as a condition for funding.
But I told them, ‘I won’t move.’
While their argument had a point, Valley VCs failed to see my “big-fish-small-pond” advantages. I don’t need to hire a million great people. After raising one of the largest funding rounds by a Canadian-based company at the time, I was absolutely sure we could hire “enough” great people to help us build a world-class company based in one of the most populous metropolises in North America called Toronto. Paradoxically, it could even work to our advantage. As one of Toronto’s biggest fish, we could hire the best. I couldn’t say the same thing if we moved to the Valley. Besides, building a company culture with a single office location was much easier.
It was a contrarian bet that few people saw, but it was so obvious to me. In hindsight, it was clear that it was the right call.
It all worked well until it didn’t. While the Toronto ecosystem went from strength to strength during the 2010s, it also meant that the talent competition became very fierce towards the end of the decade. The small pond became a much bigger pond, and there were a lot of big fish in it, including many Valley-based companies setting up shops here.
The tipping point for me was when someone bought the old building next to Wattpad HQ. Initially, we had no idea who wanted to turn it into an office tower until Google announced that it would hire a few thousand people. Where? Right next to Wattpad HQ.
My first-mover advantage has eroded. I had to figure out a new plan to regain my big-fish-small-pond advantage.
My solution was to establish a second HQ in a less populous city with a thriving tech ecosystem and an abundance of post-secondary institutions, where we could be the big fish again and have enough talent to enable us to continue to grow rapidly. It had to be a Canadian city because I wanted a few existing Wattpad employees to relocate there to help us “seed” the culture. It was far harder for me to pull it off if it was cross-border.
I toured around the country. I was impressed by what I saw. There were a handful of cities that met our criteria. I knew we could make it work.
At that time, I was already very familiar with Halifax, having been involved in the local ecosystem for a while. While there, I took advantage of the opportunity to grab dinner with Jevon McDonald, whom I had known for a few years. Nothing compares to talking to a local guru.
Jevon gave me the rundown of all the nuances I couldn’t find on Google search. But when I asked him to name one thing that he didn’t like about Halifax, this was our conversation:
Jevon: “I have a few employees in San Francisco. Going there is very painful as I have to catch a 5am flight to connect through Toronto first.”
Me: “So, there is no direct flight from Halifax to SF?”
“Nope.”
“Great!”
“What?!”
It’s a short flight between Toronto and Halifax. There are numerous daily flights between the two cities, so day trips are super easy. However, the lack of direct flights to the Valley means Valley-based companies won’t show up any time soon. An unfair disadvantage became my unfair advantage. The lack of direct flights became my talent moat.
The rest is history. Wattpad established its second HQ in Halifax. We hired a lot of fantastic people there. I have been the biggest champion of Atlantic Canada ever since, as I have encouraged other Toronto-based companies to do the same.
It was another contrarian bet that few people saw, but it was so obvious to me. It was the right call.
These are just a couple of examples. There were many more that Wattpad did, like establishing a movie studio or investing in something unproven called AI more than a decade ago.
Similarly, some of our best investments in Two Small Fish Ventures, such as Sheertex or BenchSci, had a very tough time raising capital early on because very few people saw what we saw.
Of course, I am not suggesting that one should be contrarian for the sake of being contrarian. But when a contrarian bet results in a first-mover advantage in a big opportunity that no one else saw, that will almost always generate an amazing outcome with outsized returns.
Don’t tell anyone.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
When Eva and I were on stage yesterday at Entrepreneurship Week at the University of Toronto, moderator Bianca Bharti from BetaKit asked us:
“Given we are celebrating women and raising awareness about related issues this week, what do you want to tell the audience here today?”
Here is what I said. When I was Wattpad’s CEO, we didn’t just talk about diversity or run flashy programs just to make us look good. Instead, we invested in it. We allocated real resources, dollars, and people’s time to create a truly diverse and inclusive culture at Wattpad.
The business reason was simple – half the world’s population is female. If we want to properly capture this market, do you really think a bunch of male guys in the room can figure this out?
The end result is that we achieved gender parity at BOTH the employee level and the leadership team level. However, the numbers don’t tell the whole story. Anyone who worked for Wattpad can testify that we have created a truly inclusive culture.
Personally, I would consider this one of our biggest achievements.
But that was only the first chapter of the story. At Two Small Fish Ventures, we carry the same DNA. It was mostly Eva’s work, as I only started to be more involved in recent years. Through inspiration, advocacy, and mentorship, we achieved 50% female founders in our portfolio. In fact, many of our rocket ships are female-led.
Our job is not done yet. Together, we can change how the world operates.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
Most of Two Small Fish Ventures’ portfolio companies are based in North America. However, we also invest globally, as we firmly believe that global companies can be built anywhere. To us, where founders and their teams sleep at night is irrelevant to their potential for greatness.
Consequently, we actively engage with many tech ecosystems, regardless of their size. A pervasive issue we’ve encountered across these ecosystems is the challenge entrepreneurs face in finding investors who provide not just capital but the right kind of support. This problem is more acute in less developed ecosystems, but even those that are more established are not exempt.
An investor from another ecosystem eloquently discussed this issue in an article. I couldn’t have said it better myself, so with her permission, I’m sharing her insights here, albeit anonymized to avoid casting any ecosystem in a negative light. After all, this challenge is universal:
There are plenty of rich people and “wantrepreneur” investors in our community, but most of them have made their fortune in real estate, finance, or other traditional sectors. They have great intentions, but unfortunately they do not have experience in investing in technology and innovations. Some of them would take too much equity ownership. Some of them have conflicts of interest pursuing their own agendas and push their founders to work on products or customers that they want. Some are so risk averse that they structure their startup investment as if it is a personal loan. We have seen our startup founders take money from these investors and almost always end in disaster.
What our community really needs are the startup investors who have “been there and done that.” Or we will continue to be stuck in this vortex of wrong investors investing in the wrong companies. We need investors who truly understand the startup founders’ blood, sweat and tears approach. Someone who knows how to be a guide and a coach. Someone who knows how to provide advice, connections, and funding only when the founder really needs it.
To achieve this goal, we need to invite investors from established ecosystems to teach local investors the best practices in venture investing. And we do believe these skills can be learned. The local investor community needs the knowledge and skills to make investment decisions that maximize the founders’ success therefore their chances of success.
Investing in innovation significantly differs from other forms of investment. For instance, real estate investments have established methods to evaluate rental yields, and traditional businesses use EBITDA to estimate enterprise values. However, early-stage startups, particularly those disrupting the status quo, cannot be evaluated using these metrics because of their lack of yields or EBITDA, or even clear business models!
Often, experienced investors from other sectors mistakenly apply the same approach when they invest in tech startups, leading to almost certain failures. This can result in many problems, such as a messy cap table, ensuring the startup unfundable in future funding rounds and potentially “die young” despite its potential. We’ve regrettably had to pass on numerous investment opportunities due to such issues.
As the quoted investor highlighted, learning the skills and best practices in tech investing is possible. Needless to say, the best way to do this is to learn from people who have “been there and done that.” It’s crucial to acknowledge that investing in tech startups – and innovations in general – is a different sport than other sectors.
After all, bringing a tennis racket to a hockey game is a recipe for disaster.
This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
There’s an old saying that goes, “Know the rules of the game, and you’ll play better than anyone else.” Let’s take baseball as our example. Aiming for a home run often means accepting a higher number of strikeouts. Consider the legendary Babe Ruth: he was a leader in both home runs and strikeouts, a testament to the high-risk, high-reward strategy of swinging for the fences.
Yet, aiming solely for home runs isn’t always the best approach. After all, the game’s objective is to score the most runs, not just to hit the most home runs. Scoring involves hitting the ball, running the bases, and safely returning to home base. Sometimes, it’s more strategic to aim for a base hit, like a single, which offers a much higher chance of advancing runners on base and scoring.
The dynamics change entirely in a home run derby contest, where players have five minutes to hit as many home runs as possible. Here, only home runs count, so players focus on hitting just hard enough to clear the fence, rendering singles pointless.
Imagine if the derby rules also rewarded the home run’s distance, adding extra runs for every foot the ball travels beyond the fence. For context, the centre field is typically about 400 feet from home plate. So, a 420-foot home run, clearing the centre field by 20 feet, would count as a 20-run homer. This rule would drastically alter players’ strategies. Not only would they swing for the fences with every at-bat, but they would also hit as hard as possible, aiming for the longest possible home runs to maximize their scores, even if it reduced their overall chances of hitting a home run.
This scenario mirrors early-stage venture capital, where I liken it to a home run derby with uncapped runs. The potential upside of investments is enormous, offering returns of 100x, 1000x, or more, while the downside is limited to the initial investment. Unlike in a derby, where physical limits cap the maximum score, the VC world is truly without bounds, with numerous instances of investments yielding thousandfold returns.
This distinct dynamic makes assessing VCs fundamentally different from evaluating other asset classes, where protecting the downside is crucial. In the VC realm, the potential for nearly limitless returns makes losses inconsequential, provided VCs invest in early-stage companies with the potential for exponential growth. The risk-reward equation in venture capital is thus highly asymmetrical, favouring bold bets on moonshot startups.
For illustration, let’s consider two hypothetical venture capital firms: Moonshot Capital and PlayItSafe Capital.
Moonshot Capital approaches the game like a home run derby with uncapped runs. They aim for approximately 20 companies in their portfolio, expecting that around 20% will be their home runs—or “value drivers”—capable of generating returns from 10x to 100x or more.
Imagine they invest $1 in each of 20 companies. One yields a 100x return, three bring in 10x, and the remaining are strikeouts. The outcome would be:
(1 x 100 + 3 x 10 +16 x 0) x $1 = $130
Their $20 investment becomes $130 (or 6.5x), a gain of $110, despite 17 out of 20 companies being strikeouts. Yes, you are correct. 85% of the portfolio companies failed!
PlayItSafe Capital, on the other hand, prioritizes downside protection, ensuring none of the portfolio fails but also avoiding riskier bets. In the end, one company generates one “10x” return, five companies return 3x, and the remainder is equally split between breakeven and failing.
(1 x 10 + 5 x 3 + 7 x 1 + 7 x 0) x $1 = $32
Despite several “successes” and very few “losses,” the fund’s return of $12 pales in comparison to Moonshot Capital’s. Even increasing the number of companies generating a 3x return to 10 with no loss (which is almost impossible to achieve for early-stage VCs) only yields a $29 gain from a total investment of $20:
(1 x 10 + 10 x 3 + 9 x 1) x $1 = $49
No one should invest in the early-stage VC asset class with the expectation of such a paltry return.
As illustrated, success isn’t about minimizing failures, nor is it about the number of “3x” companies or even the number of “unicorn logos” in the portfolio, as how early when the investment was made to these unicorns is crucial as well. One needs to invest in a unicorn when it was a baby-unicorn, not after it became a unicorn.
In summary:
Venture funds live or die by one thing: the percentage of the portfolio that becomes “value drivers”, i.e. those capable of generating returns of 10x, 100x, or even 1000x.
At Two Small Fish Ventures, we are the IRL version of Moonshot Capital. Every investment is made with the belief that $1 could turn into $100. We know that, in the end, only about 20% of our portfolio will become significant value drivers. Yet, with each investment, we truly believe these early-stage companies have the potential to become world-class giants and category creators when we invest.
This is what venture capital is all about: not only is it exhilarating to be at the forefront of technology, but it’s also a great way to generate wealth and, more importantly, play a role in supporting moonshots that have a chance to change how the world operates.
P.S. This is Part 1 of this series. You can read Part 2, “Winning the Home Run Derby with Proper Portfolio Construction” here.
This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
One of the three things that CEOs only do is to “make sure there is enough cash in the bank” (see job #3 here). Although CFOs may be responsible for much of the heavy lifting, keep in mind that CEOs’ job #1 is to communicate vision and strategies to all stakeholders, which certainly includes potential and existing investors. It is very hard to raise capital to build a great company without great storytelling skills, something almost all great CEOs possess.
Clearly communicating a bold vision is especially important for early-stage venture-backed companies. These companies are usually pre-revenue, pre-product-market-fit, and definitely pre-scaling. From the VCs’ perspective, they invest not only in where the company is today, but also where the company would be, could be, and should be. In many cases, investors buy into the company’s second, third, and fourth acts in the future, as very few great companies are one-trick ponies.
SRTX is the perfect example. Last week, we went to the grand opening of their mega-factory in Montreal. To my knowledge, it is now the largest textile factory in Canada. The pictures and videos don’t do justice to the massive scale of this facility.
This is especially impressive when you know that 180 days ago, when they took over the facility, the roof was leaking, there were no walls, and there was no electricity. The SRTX team moved mountains, rock by rock and at lightning speed, to get the factory ready for production.
I wish I could share some pictures inside the factory. Unfortunately, I can’t share their secret sauce. If you really want to have an insider view, you have to become an investor 😉
It took 7 years from its inception for SRTX to begin evolving into a fully verticalized behemoth through innovations in advanced material, hardware, and software to deliver traceability, sustainability, durability, and cost advantages, which is now giving them an “unbreakable” advantage – pun fully intended!
Today, millions of Sheertex unbreakable pantyhose are sold. They became THE best-selling pantyhose, unbreakable or otherwise, in North America, not bad for a 15-person company based in Bracebridge, Ontario, a town with a 15,000 population and a 2-hour drive north of Toronto when Two Small Fish Ventures invested!
Now, they are ready to license the IPs of their rip-resistant technology to other textile companies. That’s their second act. Watertex, one of the world’s most hydrophobic polymers that is engineered for unparalleled water resistance for use in, say, swimwear, is their third act. There are other IPs that are in the works. I would call them their fourth act.
But please don’t use the word pivot here. Pivot implies ‘nothing works, let’s try something else.’ Since the early days, Katherine was very clear that selling pantyhose online was the necessary first act to give her the economy of scale before she could begin her second act, third act, and fourth act. What we see today is exactly how she articulated her bold vision when we invested in the seed round five years ago. We bought into her vision, joined the journey, and now, what she told us is becoming a reality. We wouldn’t have invested in a company that was merely selling pantyhose online, even if millions were being sold.
The power couple, Katherine Homuth and Zak Homuth, are not your typical founders. SRTX is rewriting the rules of textiles through innovations. I can’t wait to watch the second, third, and fourth acts unfold right before our eyes from my front-row seat.
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
Silicon Valley’s founder CEO worship definitely has its merits. As a CEO backed by many valley VCs, I have immersed myself in that view for decades (e.g., Ben Horowitz’s Why We Prefer Founding CEOs). I get it, I understand where it comes from, and I do mostly agree. That’s why TSFV backs founding CEOs almost 100% exclusively.
Great founding CEOs tend to have all three traits: 1) Comprehensive knowledge of the entire company (including knowledge of every employee, product, technology decision, customer data, and the strengths and weaknesses of both the code base and the organization), 2) moral authority, and 3) total commitment to the long-term, while professional CEOs often don’t.
On the other hand, being a great CEO is more than just starting a company. It’s a super stressful job that nobody can learn overnight, and running a company with hundreds or thousands of employees is definitely a different ball game than being a founding CEO of a five-person company. However, founders who can’t scale with the company can’t stay in the captain’s chair forever.
If the two jobs are so different, why do we still prefer founding CEOs, even though many are learning on the job? Because it gives the company the best chance to become ultra-successful.
Typically, a company goes through four stages of growth. I call it the “4S’s”:
Start: where everything begins, with just the co-founders and a tiny team.
Sprout: achieving product-market fit, with the CEO calling most of the shots in a mostly informal setting.
Scale: rapid growth, hiring functional leaders, building depth, and starting to establish business processes. This is often where founder CEOs, especially first-time founder CEOs, stumble as they might lack experience in hiring and leading large teams.
Success: achieving a major milestone like an IPO or a massive liquidity event.
But the growth of a company isn’t a waterfall. An innovation company can’t stop innovating once its (first!) product has achieved product-market fit and cannot simply switch gears overnight to focus on business optimization. The most successful companies aren’t one-trick ponies; they need second and third acts long after their first product takes off.
Based on my own experience and my observation of hundreds of CEOs’ personal growth, I can confidently say that it’s far easier for a founding CEO to learn leadership than for a professional hire to become innovative and visionary. When the company hits scale-up mode, a founding CEO’s leadership needs to be solid, but any gaps can be filled by hiring strong leaders. Most founders can successfully make this jump.
On the flip side, pushing someone to be innovative and visionary is much harder, as is finding a team of leaders who can fill that gap for a professional CEO. That’s why it’s tougher for professional CEOs to succeed, though it’s not impossible. It is also possible to hire an “entrepreneurial” professional CEO, although they are rare gems.
However, this is all pretty generalized. Generalization tends to default to pattern recognition without thoughtful consideration of the specificity of the company’s situation. The ideal scenario is a founding CEO leading all the way, but sometimes, if a professional CEO is the only option, that’s what we have to work with.
The good news for TSFV’s portfolio CEOs is that you’ve got a founding CEO who’s been through it all – me! These days, I spend a lot of time helping founding CEOs fast-track their learning to operate more effectively on the job. For our professional CEOs, I offer guidance to help them think and act more like founders. Helping our portfolio CEOs is the best use of my time to ensure our portfolio companies’ success. It is also extremely high-leveraged because sometimes, even a 30-minute conversation with me can help change the trajectory of a company. After all, if our CEOs aren’t successful, it’s nearly impossible for our portfolio companies to be successful, isn’t it?
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
I was reading a report from the investment firm LetkoBrosseau, which highlights how minimally the Canadian pension system is investing in Canada. Their headline caught my attention:
“Canada Has Cut Back On Investing In Its Greatest Asset – Itself.”
Canadian pension funds largely invest our money outside of Canada. Given Canada’s population size, it’s not unreasonable for our pension funds to look abroad, but the pendulum may have swung too far. That’s a topic for another day, however.
One particular slide, slide 4, jumped out at me, presenting several not-too-fun facts:
Canada’s GDP per capita has steadily declined to 75% of that of the United States, down from near parity 40 years ago. One of the main reasons is Canada invests substantially less in our own startups, R&D, and our workers.
In 2023, American investment per worker is 2.25x that in Canada. It was near parity 40 years ago.
In R&D intensity (the ratio of a country’s R&D expenditures to its GDP), the US is at 3.5, Japan at 3.3, Germany at 3.1, the G7 average at 2.6, France at 2.4. Canada lags at 1.9.
Canada is underinvesting in its own startups: For every dollar Canada invests in venture capital, Israel invests $2 (despite Israel’s economy being a quarter the size of Canada’s), and the US invests $39. This means that on a per capita basis, Israel invests 8 times more than Canada, and the US 4 times more.
Moreover, Canadians only provide about 33% of the funding for their own startups, with the remaining 66% coming from other countries. At Wattpad, we observed a similar ratio. Our largest investors were Union Square Ventures (NYC), Khosla Ventures (Silicon Valley), OMERS (Canada), August Capital (Silicon Valley), and Tencent (Asia). As you can see, most of them are not Canadian, highlighting a limited appetite for investing in our own innovative ventures.
But it’s not just about pension funds. The awareness and appetite to invest in venture capital as an asset class are significantly lower among family offices and endowments in Canada. For example, in the US, it’s not uncommon for university endowments to allocate over 20% to VC. In Canada, many are at zero or in the low single digits.
But it all depends on whether you’re a glass-half-full or glass-half-empty person.
I’m a glass-half-full person. This is clearly a market gap, and market gaps create opportunities.
A decade ago, when Wattpad began raising capital from Silicon Valley, Valley VCs didn’t ask me ‘if’ I would move the company there; they asked ‘when.’ I told them, ‘I won’t move.’ They were all surprised to hear from me that building the company in Canada would be far better due to less competition for talent, paradoxically allowing us to hire and retain top talent more easily. Wattpad was one of the first to commit to scaling our company in Canada, successfully proving (to them) that a world-class tech company could be built here (obvious to me). The Wattpad team played a part in reshaping the narrative of Canada’s innovation ecosystem.
I am very committed to doing it again. This time, I’m not convincing people in the Valley that Canada is great; I’m convincing Canadians that Canada is great! My goal is to encourage more attention towards VC as an asset class. As a VC myself, I’m putting my money where my mouth is, and I will let our results speak for themselves. For many decades, Americans and Israelis have known that investing in top-tier VCs can help create world-class, iconic companies, benefiting their local economies significantly while also generating consistent, outsized returns. Canada can undoubtedly do the same.
This is my last post of the year. I’ll be “off the grid” until the new year, recharging for what promises to be a super busy 2024. Happy holidays!
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
One of the most unusual practices I used as CEO was writing an internal blog called “Allen’s Thoughts” on Wattpad every day. My preferred form of communication is the written word, a key reason behind co-founding Wattpad.
Although it might sound time-consuming – and it is – blogging helped me tremendously in clarifying my thinking. More importantly, context matters. The 30-60 minutes I spent each day aligned and interacted with hundreds of employees, arguably making it the most effective activity in terms of leveraging time. Here’s what I explained on Allen’s Thoughts about why I needed to do this:
“Wattpad is an incredibly complex company. We are a tech company, a media company, a book publisher, an advertising company, an influencer network, an AI company, a movie studio, a social network, a community, and also an entertainment company that makes people happy.
What links us together is our common vision, mission, values, and culture. Allen’s Thoughts is less about the numbers and company updates, which you can get on Slack, email, Google Docs, or other channels. This blog is more about sharing the context, the whys, and the intangibles in a narrative that helps you navigate that complexity so that you can make the best possible decisions and do your best job.
This blog is one of my unique superpowers that connects everyone.”
I started Allen’s Thoughts in 2013 and stopped daily blogging after stepping down in May 2022. My final post, “IT’S THE FINAL CURTAIN CALL. A NEW STORY BEGINS,” was shared publicly on allensthoughts.com.
Do I miss it? Absolutely, yes. However, after writing half a million words, I became too mentally exhausted.
After a long break, I am fully recharged and ready to reactivate my public blog. Although the Wattpad story is well-documented, many challenges and triumphs weren’t shared externally. These backstories are valuable case studies in business, leadership, entrepreneurship, venture capital and even time management. Re-reading my old posts, I realized they are a startup treasure trove, offering insights from scaling from two co-founders to a scaleup with hundreds of employees and 100 million users. I plan to share these lessons, along with many new topics.
Of course, I will also share my perspective on the startup investment landscape, our investment thesis, and our areas of focus – i.e., AI, protocols, and sustainable computing – among other topics.
This material will be part of our “School of Fish” Masterclass Series, more on this later.
I don’t plan to write daily. Frequency is not the most important aspect; it’s more about when inspiration strikes. My goal is to share high-quality, high-leverage, and impactful content. I will use Allen Thoughts to think things through “in public,” writing for my own enjoyment and hoping it benefits many others. After a hiatus, I’m eager, hungry, and excited to do it again!
P.S. This blog is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, redistribute, remix, transform, and build upon the material for any purpose, even commercially, as long as appropriate credit is given.
As we enter the final hours of the 2010s, to reflect and look forward I would like to share a couple of very contrasting collages. One was taken this year. The other was taken exactly 10 years ago.
Wattpad grew ~100x in virtually every single dimension – number of employees, the size of the office, number of users, number of stories shared but more importantly the positive impact on the Wattpad communities, our employees, our city and millions of lives we touched.
Two Small Fish Ventures grew from a side project to a VC firm with tens of rocket ships in the portfolio.
Most importantly, although the size of my family has not grown 100x (thank God!), my two little girls + an amazing lady has become two amazing young ladies + an even more amazing lady. They are the most influential on the most influential. They are the best and unquantifiable.
Look forward to 100x our impact on 100x more people in the 2020s!
It’s a situation founders know well: the agonizing wait to see if the product/service they’ve launched will take off. The reality is, it takes months and even years to find product-market-fit. And once that happens, the struggle doesn’t really end because there’s always another, more complex problem to solve. It can begin with product-market-fit then morph into customer/user acquisition and engagement and then shift to monetization. For entrepreneurs, building a business can feel like a never-ending cycle of wait-and-see.
When we launched Wattpad 13 years ago, my co-founder Ivan and I immediately started monetizing with ads. And when I say we “immediately monetized” the site, I really mean we earned $2 in monthly ad revenue a full year later. A minuscule amount.
When we first launched our Android app, we saw about 10 downloads in the first month. Even in 2011 when Android really started to take off our download numbers were still puny.
Today, we see more than 60,000 Android users sign up every day and half of our daily usage comes from Android users. Our monthly advertising revenue is in the hundreds of thousands of dollars. We’re no longer talking about trivial amounts. It’s been a long road that had to start somewhere.
‘Everything starts small’ is a valuable mantra for any entrepreneur. Look at Spotify: When it first launched in the US in 2010 it had 100,000 paid subscribers. Today, Spotify’s number of paid subscribers is about to cross the 100 million mark.
Not too long ago, we launched Paid Stories and we also introduced a subscription model called Premium at Wattpad. The numbers are still small. But they won’t stay that way forever (especially since we’ve rolled out these programs globally). As long as we keep improving, keep optimizing and keep promoting — basically, if we continue to hustle and grind as all great entrepreneurs do — the numbers will go up.
But we can’t expect a silver bullet. No single feature or no single promo or no single country launch will 10x these numbers overnight. While it’s not impossible to find a 10x growth hack, the reality is that it’s probably better to find 100 little things to grow 10%.
My fellow entrepreneurs, please remember: Tomorrow will be better than today. The day after tomorrow will be better than tomorrow. Everything starts small.
A few months ago, Wattpad announced a partnership with Anvil Publishing in the Philippines. Together, we’re launching Bliss Books, a new Young Adult imprint that’ll bring some of the biggest Wattpad stories and authors to bookshelves across the country.
The news means Wattpad can realize the vision I laid out in the Master Plan much, much faster. But really, speed is just one of the values a strategic partner brings to the table.
Anvil also has deeper insights into local purchasing habits and consumer behaviour than we do. The first part of the Master Plan is to “Discover more great stories,” and we do this by leveraging our Story DNA machine learning technology and a passionate community to find unique voices and amazing stories that are validated in Tagalog. With their local insights, Anvil can corroborate our insights using their local knowledge to guarantee a successful adaptation.
The best strategic partners also have a reputation you can piggy-back off of. Another element of the Master Plan is ‘Turn these stories into great movies, TV shows, print books, etc.,” Anvil has a reputation for publishing high-quality books, and that’s exactly what we want to do.
Anvil is the publishing arm of the National Book Store with hundreds of bookstores. It’s established presence means we – through NBS – have the ability to distribute Wattpad books to every practically every part of the country tying into another key part of the Master Plan to “Distribute and monetize content on and off Wattpad and earn money for storytellers.”
The Philippines is one of Wattpad’s largest markets and a very important one since its home to some of our most passionate users. Plus, when you factor in the expertise and reach of Anvil, it was an easy decision to partner with this local company who can help us continue to celebrate and reward Filipino authors and their fans.
Entrepreneurs: if you have the ability to form a partnership with another complementary company, seize it. The strategic upside is great and may help you realize your vision faster than you ever could alone.
I spoke with an entrepreneur whose company is building a new, disruptive product for the education sector. One of the challenges he’s facing is that none of the company’s co-founders have worked in the education sector before. He wondered if he should hire someone with some relevant experience.
Another entrepreneur friend of mine is building a tool that is catered to the public sector. The company is struggling to scale as a business. The sales process is too slow. The product is becoming too specific for one sector.
In both cases when these entrepreneurs asked for my advice, I told them: Don’t be a parasite if you want to be a disruptor.
There are so many verticals out there that still have not been fully transformed by the Internet — education, public sector, book publishing, the list goes one. But it’s extremely hard to transform any industry if you have a lot of dependencies with the old systems. You can’t think out of the box. Your sales cycle is too long. And often you end up with a product or a service that is incremental at best rather than revolutionary.
Now, there’s nothing wrong with that. In fact, a lot of people have built great businesses by providing incremental solutions like consulting services to the government. But, if you want to build something truly transformative and net-native, then you have to stay as far away from the traditional systems as possible and draw closer to your end users or customers.
If you want to create something truly game-changing and be a disruptor, you can’t begin the journey as a parasite.
As a startup scales, it’s natural for tension to creep up among different teams who are working on disparate objectives. Either of these conversations sound familiar?
“Showing users more ads can help generate more revenue, but it could also hurt engagement. Do we optimize for revenue or engagement?”
“We have a limited budget. If we spend it on A, B, and C we won’t be able to pay for X, Y, Z. What should we choose?”
The best way entrepreneurs can embrace and then ease tension among their teams is to establish a set of principles. Principles can help teams avoid indecision and move fast.
In the example above about serving ads at the expense of user engagement for instance, if the team has previously established that ad experiments can’t impact engagement by more than X%, it becomes easier for them to test different combinations of ads to drive the most revenue without negatively impacting engagement.
Establishing principles streamlines decision making, eliminates unnecessary meetings and propels the company forward. Everyone knows what to do and understands how much (or how little) leeway the team has.
Of course, there will be times when you may not have a principle to fall back on. That’s when the teams representing the conflicting priorities need to escalate the matter further and involve an arbitrator. Most times decisions are reversible and having an arbitrator can resolve issues quickly. In the world of startups, a quick decision always trumps a slow decision (or worse, no decision at all).
Tension is natural and a sign your company is growing. But as your business grows and becomes more complex, decisions aren’t as straightforward as they used to. Creating a set of ground rules that inform your team’s priorities and outcomes can help avoid unnecessary confusion and conflict.
At some point in your career, someone you know will a) ask for an introduction to someone else in your network, or b) offer to make an introduction to someone they feel you should know.
Email introductions can be a double-edged sword. On one hand, obviously, they can be incredibly useful. On the other hand, they can suck up a lot of time if not done properly.
The very worst email introductions automatically assume that the connection being made is appropriate and beneficial for the involved parties. But the truth is, unless you’ve explicitly asked in advance, this is just an assumption.
Here’s an example of an email I recently received:
Hey Allen,
I would like to introduce you to Cindy Lou (cc’ed). Cindy Lou is an expert in X, which you will find useful. I’m sure you would enjoy the meeting. I’ll let you two find the best time to meet next week!
Cheers, Horton
The problem is, while Cindy Lou might be an expert in X, I don’t really care about X; it’s just not my thing. Naturally, I don’t want to spend even more time feigning interest in X. And I definitely don’t want to waste Cindy Lou’s time either. The other problem: Despite what Horton thinks, I’m mostly out of the office next month, so I can’t find a time to meet without a lot of calendar shuffling.
I used to accept blind introductions (and subsequent meetings) like these out of politeness. It was an ineffective use of my time – and theirs. Even when I dared to say no, I had to spend time crafting a firm yet polite email to decline the opportunity. Drafting the email didn’t take up nearly as much time as a meeting would, but it still took time out of my day that could be better spent on other challenges. Eventually, it became too much.
Nowadays, when people ask me to connect them with someone in my network, I make sure I have a double opt-in. This means I’ve asked for—and received—the permission of both parties before I send a note. Here’s what it looks like:
Pavel would like me to connect him with John.
I’ll ask Pavel to send me a new, well-written email with the request (Pavel should NOT include our previous conversation i.e., the original request). It could look something like this.
Hey Allen,
As discussed, it would be great if you could introduce me to John. Here is a summary of my ask: <insert awesome summary here>
Thanks in advance for your help.
Live long and prosper, Pavel
Then, I would add a sentence or two before forwarding the note to John (without including Pavel). My addition would provide further context and could be something along the lines of: “I don’t know Pavel well, and I haven’t tried his products, but the elevator pitch sounds relevant to you” or “Pavel is brilliant and working on a super interesting project you might be interested in.” This context setting is important, but should only take 30 seconds of your time.
If John agrees to the introduction, then I add Pavel to the thread. If he says no, I’ll let Pavel know that as well.
Double opt-in email introductions work well for a number of reasons.
The onus is on the person requesting the introduction to write an awesome email detailing why the connection is valuable. It’s not the facilitator’s responsibility to make the case.
It avoids putting people in an awkward position of accepting a connection or meeting when there is zero interest in the product/service/pitch.
It encourages frank dialogue. If a person wants to decline an introduction, chances are he/she is more likely to provide a candid reason in a private one-on-one email with a trusted connection. It allows the facilitator to filter the information appropriately while still providing a truthful explanation to the requester.
It allows for brevity without sounding cold. Since the facilitator has established relationships with both parties, a to-the-point email doesn’t come off as arrogant or rude.
One more thing—please don’t write the email as though it came from me. Each person has a unique writing style and voice, and I have mine, too. You won’t be able to capture my voice exactly.
I make lots of introductions, and I am more than happy to do so. It’s great for community building. I hope the double opt-in method helps make introductions faster and a better experience for everyone!
Both my parents used to work for a bank. For them, the work day started at nine in the morning and ended at 5:00 pm sharp. Day in and day out, this was their routine. They never understood the concept of flexible hours. They questioned why I would bring “work” home. On the other hand, they were always amused that I never needed to take time off work to see the doctor or get the car fixed during office hours.
“Am I expected to work an 8-hour day?” I get this question from employees from time to time, but I believe this is the wrong question to ask. Employees are expected to get their work done, deliver on OKRs and contribute to a positive workplace culture. For the most part, I don’t (and neither should their direct manager) care where or how the work gets done. Of course, it goes without saying (but I’ll still say it), flexible work hours should never impact collaboration or attendance at critical meetings.
Startups are fast-paced, ever-changing environments filled with bright employees. They’re solving complex and fascinating problems and it’s all very exciting. Being a disruptor and part of a paradigm shift is thrilling and the work itself should compel employees to give 100%. Offering flexible hours instills trust in your team and gives employees a sense of ownership to execute on projects in the way that works for them.
That’s not to say there will be no instances when burning the midnight oil for a specific project or tight deadline is required. Make no mistake, there will be times when a critical security issue needs to be addressed after-hours or a client has an urgent need on the weekend. But there should also be opportunities to take it easy and spend a few weeks out of the country or deal with a family or health issue. It’s about flexibility.
Most startups offer flexible hours, and it makes sense. After all, tech is a creative industry unlike working at a bank or factory. As people head back to work after their relaxing summer vacations, my advice to founders and startup execs? Measure productivity by outcomes and results, not timecards.
I love gadgets. They surround me everywhere – in the office, in the car, at home. I’m always connected … except when I go completely off the grid.
Twice a year I unplug for 2-3 weeks. I turn off my data. I don’t reply to email. I stay off social media. I take a break from being an entrepreneur and focus on being a husband and a dad.
It’s during these weeks when I’m unplugged that I have an opportunity to reflect on the past challenges and think about future opportunities. Going off the grid gives me a sense of clarity and enables a freedom of thinking I can’t achieve when I’m constantly pulled in multiple digital directions.
Case in point: I recently spent three weeks in Asia with my family. While I’ve traveled throughout the region extensively for work, this was the first time I could experience cities like Taipei and Shanghai as a tourist. I got to enjoy a ride on the fastest train in the world, eat the most delicious food, and shop like the locals do. I observed, indulged and enjoyed without the need to constantly check my devices. And while I was technically off-the-grid and not working, my offline experiences provided me with inspirations I will take back to the office.
Building a business is hard. Entrepreneurs have infinite to-do lists. They are constantly pushing ahead through one challenge to seize the next opportunity. While the line between work and personal life is becoming more blurry (especially when you’re scaling a startup), it’s critical that entrepreneurs carve time out of their hectic schedules and go offline. A digital detox – even for a short period of time – yields tremendous business and personal benefits.
If you still have a summer vacation planned, I challenge you to use your time to explore, discover and connect IRL.
Years ago, a summer job gave me one of the most valuable lessons in entrepreneurship.
I needed tuition money for university so I got a job at a factory printing t-shirts. I witnessed firsthand how the owner juggled multiple and often diverse tasks in order to operate a successful business. Looking back, I was naive to think that a t-shirt printing company was just about printing t-shirts.
If you look at the journey of an entrepreneur, it all starts with an idea. But an idea is just that – a thought. Without execution, an idea is as good as yesterday’s newspaper. Only when execution follows an idea, can you determine if there’s product-market fit. If you achieve product-market fit – congratulations, that’s a major accomplishment! You can start a company to further iterate on the idea and cement your place in the market. But once you start a company, you have to turn it into a business.
I’ve personally gone through this journey three times. My first business failed, I sold the second one, and the third has become one of Canada’s most successful startups. My experiences failing and succeeding as an entrepreneur reinforced the lesson I learned that summer many years ago: As an entrepreneur, the best product you can build is yourself.
You will wear many hats throughout the entrepreneur journey. As your company grows, you play different roles in the company and you can expect to change ‘jobs’ every few months. Each new job requires a different skill set. You may start as the product designer, but soon you’ll lead a team as a manager, and then eventually you transition into a leadership role. I have yet to meet a single person who, at the launch of their company, has every required skill. So welcome continuous learning and crave self-improvement.
Taking the time to build yourself as a well-rounded entrepreneur will pay dividends.
