startups

Announcing Our Investment in ByteShape: Make AI Massively More Efficient

AI has a massive efficiency problem. It uses too much compute. It costs too much. It uses too much energy. And it is too slow.

Today, it can take a serious cluster of GPUs and a very non-trivial amount of electricity just to answer a simple question like “Can you summarize this document?” or “What should I reply to this email?” The machinery underneath is anything but.

This is why we invested in ByteShape. The company was co-founded by a world-class team out of the University of Toronto: Professor Andreas Moshovos [link]—whose group’s papers have amassed more than 10,000 citations—together with scientists Miloš Nikolić [link], Enrique Torres Sánchez [link], and Ali Hadi Zadeh [link], whose life’s work is making computation more efficient. Both Ali and Miloš were also postgraduate affiliates of the Vector Institute, and Miloš’s PhD research formed the foundation of ByteShape’s core technology—work that earned him recognition as an “ML and Systems Rising Star” by MLCommons last year.

They are building the kind of deep technology that changes the economics of AI deployment, then changes what products become possible.

Quantization, In Plain English

Many techniques underpin what ByteShape does. One of them jumped out: quantization.

Quantization is about using fewer bits to represent the numbers inside a model. Many models are trained with higher precision formats because it helps learning remain accurate. But AI inference often does not need that much precision everywhere. If you can safely represent weights and activations with fewer bits, you shrink memory use and speed up compute, often dramatically, while keeping outputs essentially the same.

ByteShape’s approach, ShapeLearn, does this in a way that feels obvious in hindsight and very hard in practice. ShapeLearn adaptively taps into the AI training process to learn optimal datatypes for parameters and inputs. The result can be 7x faster training and 10x faster inference.

In layman’s terms, the idea is simple and powerful: fewer bits, less work, and smaller models, without sacrificing results. All is being done adaptively.

Then ByteShape takes it one step further. ShapeSqueeze is their lossless compression layer that applies per-value encoding to minimize off-chip data transfers, with up to 40% extra compression.

Put the two together, and you get something that really matters in the real world. ShapeLearn reduces what the model needs to store and compute. ShapeSqueeze reduces what the hardware needs to move around. Less compute and less data movement means faster AI, lower cost, and lower energy.

This is not limited to savings in cloud data centres. It is a step-function improvement in what can run locally, which means a step-function improvement in what products can exist. It opens the door to privacy-sensitive and offline workflows, on-device agents, and embedded intelligence in robots and machines where speed, power and thermals matter.

Why TSF invested

Two Small Fish Ventures is an early-stage deep tech venture capital firm investing globally in the next frontier of computing and its applications. We invest where foundational breakthroughs create the conditions for new category-defining companies, and we back founders at the earliest stages when the technology is ready for commercialization.

ByteShape fits that thesis perfectly. They are building a foundational efficiency layer for AI that can reshape performance and cost across cloud, enterprise, and edge deployments. And because all TSF partners are engineers with deep operating experience, we do not just evaluate the science. We lean into technology through commercialization, with hands-on support informed by having built and scaled companies ourselves.

With ByteShape, the future is models that run faster, use less energy, and fit on far smaller hardware, without sacrificing the quality that makes them worth using.

Try it yourself on Hugging Face! [link]

Software is Dead, Long Live Software

Is software dead?

Today, writing software is no more difficult than pressing a button. You describe what you want. In a few minutes, not a mockup but a fully functional application is ready to use.

I can testify to this personally. In 15 minutes, using AI, I have “written” more software than I did in a full year when I was writing software professionally. Although my old skill is now obsolete, it is wonderful because I can build faster than I ever could. This is the best of times!

So yes, in a narrow sense, the old software opportunity is dead.

The writing has been on the wall for a while. Shallow tech software has been democratized and, in many cases, is not investable. Public markets have finally figured out that a new wave of software is coming. They just do not really know what it is yet, so they sell indiscriminately. Generic business and financial skills do not work during a paradigm shift because disruption does not show up neatly on a spreadsheet full of ARR, EBITDA, and CAGR. Those are the wrong questions to ask when the underlying rules are being rewritten.

At the same time, the early phase of a paradigm shift is often the best time to invest. The people who have new specific knowledge and the courage to build for an AI native world will have a clear edge and, if they are right, capture outsized returns.

Now here is the twist.

When the cost of X collapses, the world does not get less of the thing. It gets flooded with it. That is Jevons Paradox in action. Make something cheaper and easier, and overall demand goes up significantly, often faster than the drop in price. We have seen versions of this before as humanity adopted electricity, personal computers, the internet, and now intelligence.

So software is not dead. We are about to have 10x, 100x, maybe 1000x more software than we have today.

We have seen a similar movie in content. Thanks to the internet and mobile devices, as the cost of content creation and distribution dropped, the amount of content exploded. That created giants that seized the opportunity. Fun fact, I co-founded a business two decades ago on that thesis and rode that wave myself, so yes, I have been there and done that.

Back to software.

The question now is how to capture the opportunity when the world has 1000x more software and the cost of creating software is approaching zero. Inevitably, the business model shifts because we move to a different part of the price elasticity curve when software becomes abundant. When code becomes cheap, value migrates to what stays scarce.

Shallow tech, run-of-the-mill software companies, including a lot of AI wrappers, are generally not investable from a VC perspective because they are so easy to build, copy, and replace. I have been saying this for many years, even before ChatGPT came out. If you still need more evidence, you are already behind. The button is not coming. The button is here.

This does not mean these companies cannot make money. Some will. But “can generate cash when bootstrapping” and “can return a venture fund” are not the same statement.

In contrast, deep tech software is a fantastic opportunity. There is a reason TSF shifted to deep tech investments years ago. That was not an accident. When the cost curve of intelligence collapses, businesses whose primary moat is “we can write this software” or “we spent 100 engineer years building it” need a rethink.

This is why we are unapologetically investing in deep tech.

Deep tech software is a completely different sport. In many cases, the moat is not in the software. The moat is the unique technology embedded in the software, plus the data and the system it connects to. The software is the container. The defensibility sits underneath.

People often ask how to draw the line between deep tech software and everything else. We have a definition, and it is more true than ever in this “software is abundant” era. More importantly, making that call takes specialized skill. That is why deep tech investing is reserved for trained eyes, as it requires engineering judgment, product instinct, operating experience, and recognition of a market gap that comes from building and commercializing disruptive opportunities. We can do deep tech because we are equipped to do so. Been there. Done that.

To be clear, of course, I am not suggesting the only software opportunity is deep tech. There is also a massive opportunity in bespoke software and disposable software.

For decades, companies bought off-the-shelf software because that was the only option that made economic sense, even when the software was not a perfect fit for their workflow. You ended up customizing your workflow around the software. Bespoke-built software was too expensive, too slow, and too hard to maintain.

Now the economics are changing.

We can now build software for problems that were previously too small to matter economically. We can now create personal tools designed for an audience of one. We will ship internal workflows the way we send emails. We can now generate software that lives for a week, does its job, and disappears.

That is a massive opportunity. Much of it will look like a low-tech, large-scale service business. Some of it will become platforms and infrastructure for software generation itself. Some of it will become entirely new categories we do not have names for yet. Some of it will help make deep tech software even more defensible.

But the direction is clear. Software is becoming abundant, and the economics of software will be drastically different.

So, is software dead?

Yes, software as a scarce craft is dying.

Software-as-a-moat because “we spent 100-engineer-years building it” is dying.

But software as leverage is exploding. Software as the fabric of everything is exploding. The world is not losing software. The world is getting more of it than we can possibly imagine.

Back to the movie analogy. It is like the theatre business. The movie is not the only product. The experience is the product. The popcorn is the product. The atmosphere is the product. The movie is what gets you in the door.

The winning recipe has changed forever.

Software is dead. Long live software!

Reflections from the Impact 2025 Summit

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.

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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.

Masterclass Series: The Rule of 3 and 10 — Lessons I Wish I Learned Earlier

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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Announcing Our Investment in FUTURi Power: The Last Dumb Box in Our Home Gets a Brain

For nearly 70 years, the home electrical panel has looked the same. Meanwhile, the home itself is transforming: solar on the roof, batteries in the garage, heat pumps, EVs in the driveway, and smart appliances and devices everywhere.

And yet, the panel? Still the same. It is the last dumb box left, and FUTURi is fixing that with deep tech.

FUTURi’s Energy Processor

FUTURi Power, founded by Dr. Martin Ordonez (UBC Professor, Kaiser Chair at UBC, and recipient of the King Charles III Coronation Medal for leadership in clean energy innovation), reimagines the panel as the Energy Processor, a programmable energy computer that finally gives the home’s electrical system a brain. It is designed as a like-for-like replacement for the traditional panel that is future-proof and intelligently measures and coordinates loads, avoids peaks, and manages energy use at the edge.

Why This Matters

Homes are no longer passive energy consumers. They are dynamic nodes in the grid. By making the panel intelligent, FUTURi enables:

For homeowners: Achieve a 100% electric home without costly service upgrades. A smarter, more resilient, and efficient energy ecosystem.
For utilities: Demand peaks flattened, demand response (DR) programs and distributed energy resources (DERs) integrated, deferring costly capital expenditures.
For builders and communities: Intelligent electrification helps accelerate the deployment of built infrastructure without overloading the grid.

This is why FUTURi and utilities are already collaborating on projects to evaluate how Energy Processors can strengthen the grid and benefit customers.

Our Perspective

As Dr. Martin Ordonez, Founder and CEO of FUTURi Power, puts it: “Panels used to be passive. The Energy Processor is active, safe, and software-defined. It gives homes and grids a common language.”
At TSF, Smart Energy is one of our five focus areas. Our thesis is simple: the cost of intelligence is collapsing, and the biggest opportunities lie where software and hardware come together to reshape behaviour.

FUTURi is exactly that blueprint for intelligent electrification: deep-tech power electronics plus intelligent control. That combination turns a 70-year-old box into the brain of the modern home. Dr. Ordonez and his team are globally recognized experts in electrification who are translating decades of pioneering research into transformative commercial solutions.

And this is just the beginning. There is so much more the company can do to make electricity truly intelligent. FUTURi has a bright future ahead (pun fully intended).

Five Areas Shaping the Next Frontier

The cost of intelligence is dropping at an unprecedented rate. Just as the drop in the cost of computing unlocked the PC era and the drop in the cost of connectivity enabled the internet era, falling costs today are driving explosive demand for AI adoption. That demand creates opportunity on the supply side too, in the infrastructure, energy, and technologies needed to support and scale this shift.

In our Thesis 3.0, we highlighted how this AI-driven platform shift will reshape behaviour at massive scale. But identifying the how also means knowing where to look.

Every era of technology has a set of areas where breakthroughs cluster, where infrastructure, capital, and talent converge to create the conditions for outsized returns. For the age of intelligent systems, we see five such areas, each distinct but deeply interconnected.

1. Vertical AI Platforms

After large language models, the next wave of value creation will come from Vertical AI Platforms that combine proprietary data, hard-to-replicate models, and orchestration layers designed for complex and large-scale needs.

Built on unique datasets, workflows, and algorithms that are difficult to imitate, these platforms create proprietary intelligence layers that are increasingly agentic. They can actively make decisions, initiate actions, and shape workflows. This makes them both defensible and transformative, even when part of the foundation rests on commodity models.

This shift from passive tools to active participants marks a profound change in how entire sectors operate.

2. Physical AI

The past two decades of digital transformation mostly played out behind screens. The next era brings AI into the physical world.

Physical AI spans autonomous devices, robotics, and AI-powered equipment that can perceive, act, and adapt in real environments. From warehouse automation to industrial robotics to autonomous mobility, this is where algorithms leave the lab and step into society.

We are still early in this curve. Just as industrial machinery transformed factories in the nineteenth century, Physical AI will reshape industries that rely on labour-intensive, precision-demanding, or hazardous work.

The companies that succeed will combine world-class AI models with robust hardware integration and build the trust that humans place in systems operating alongside them every day.

3. AI Infrastructure

Every transformative technology wave has required new infrastructure that is robust, reliable, and efficient. For AI, this means going beyond raw compute to ensure systems that are secure, safe, and trustworthy at scale.

We need security, safety, efficiency, and trustworthiness as first-class priorities. That means building the tools, frameworks, and protocols that make AI more energy efficient, explainable, and interoperable.

The infrastructure layer determines not only who can build AI, but who can trust it. And trust is ultimately what drives adoption.

4. Advanced Computing Hardware

Every computing revolution has been powered by a revolution in hardware. Just as the transistor enabled mainframes and the microprocessor ushered in personal computing, the next era will be defined by breakthroughs in semiconductors and specialized architectures.

From custom chips to new communication fabrics, hardware is what makes new classes of AI and computation possible, both in the cloud and on the edge. But it is not only about raw compute power. The winners will also tackle energy efficiency, latency, and connectivity, areas that become bottlenecks as models scale.

As Moore’s Law hits its limit, we are entering an age of architectural innovation with neuromorphic computing, photonics, quantum computing, and other advances. Much like the steam engine once unlocked new industries, these architectures will redefine what is computationally possible. This is deep tech meeting industrial adoption, and those who can scale it will capture immense value.

5. Smart Energy

Every technological leap has demanded a new energy paradigm. The electrification era was powered by the grid. Today, AI and computing are demanding unprecedented amounts of energy, and the grid as it exists cannot sustain this future.

This is why smart energy is not peripheral, but central. From new energy sources to intelligent distribution networks, the way we generate, store, and allocate energy is being reimagined. The idea of programmable energy, where supply and demand adapt dynamically using AI, will become as fundamental to the AI era as packet switching was to the internet.

Here, deep engineering meets societal need. Without resilient and efficient energy, AI progress stalls. With it, the future scales.

Shaping What Comes Next

The drop in the cost of intelligence is driving demand at a scale we have never seen before. That demand creates opportunity on the supply side too, in the platforms, hardware, energy, physical systems, and infrastructure that make this future possible.

The five areas — Vertical AI Platforms, Physical AI, AI Infrastructure, Advanced Computing Hardware, and Smart Energy — represent the biggest opportunities of this era. They are not isolated. They form an interconnected landscape where advances in one accelerate breakthroughs in the others.

We are domain experts in these five areas. The TSF team brings technical, product and commercialization expertise that helps founders build and scale in precisely these spaces. We are uniquely qualified to do so.

At Two Small Fish, this is the canvas for the next generation of 100x companies. We are excited to partner with the founders building in these areas globally, those who not only see the future, but are already shaping it.

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Investing in Fibra: Revolutionizing Women’s Health with Smart Underwear

At Two Small Fish Ventures, we love backing founders who are not only transforming user behaviour but also unlocking new and impactful value. That’s why we’re excited to announce our investment in Fibra, a pioneering company redefining wearable technology to improve women’s health. We are proud to be the lead investor in this round, and I will be joining as a board observer.

The Vision Behind Fibra

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.

Announcing Our Investment in Hepzibah AI

The Two Small Fish team is thrilled to announce our investment in Hepzibah AI, a new venture founded by Untether AI’s co-founders, serial entrepreneurs Martin Snelgrove and Raymond Chik, along with David Lynch and Taneem Ahmed. Their mission is to bring next-generation, energy-efficient AI inference technologies to market, transforming how AI compute is integrated into everything from consumer electronics to industrial systems. We are proud to be the lead investor in this round, and I will be joining as a board observer to support Hepzibah AI as they build the future of AI inference.

The Vision Behind Hepzibah AI

Hepzibah AI is built on the breakthrough energy-efficient AI inference compute architecture pioneered at Untether AI—but takes it even further. In addition to pushing performance/power harder, it can handle training loads like distillation, and it provides supercomputer-style networking on-chip. Their business model focuses on providing IP and core designs that chipmakers can incorporate into their system-on-chip designs. Rather than manufacturing AI chips themselves, Hepzibah AI will license its advanced AI inference IP for integration into a wide variety of devices and products.

Hepzibah AI’s tagline, “Extreme Full-stack AI: from models to metals,” perfectly encapsulates their vision. They are tackling AI from the highest levels of software optimization down to the most fundamental aspects of hardware architecture, ensuring that AI inference is not only more powerful but also dramatically more efficient.

Why does this matter? AI is rapidly becoming as indispensable as the CPU has been for the past few decades. Today, many modern chips, especially system-on-chip (SoC) devices, include a CPU or MCU core, and increasingly, those same chips will require AI capabilities to keep up with the growing demand for smarter, more efficient processing.

This approach allows Hepzibah AI to focus on programmability and adaptable hardware configurations, ensuring they stay ahead of the rapidly evolving AI landscape. By providing best-in-class AI inference IP, Hepzibah AI is in a prime position to capture this massive opportunity.

An Exceptional Founding Team

Martin Snelgrove and Raymond Chik are luminaries in this space—I’ve known them for decades. David Lynch and Taneem Ahmed also bring deep industry expertise, having spent years building and commercializing cutting-edge silicon and software products.

Their collective experience in this rapidly expanding, soon-to-be ubiquitous industry makes investing in Hepzibah AI a clear choice. We can’t wait to see what they accomplish next.

P.S. You may notice that the logo is a curled skunk. I’d like to highlight that the skunk’s eyes are zeros from the MNIST dataset. 🙂

Contrarian Series: Your TAM is Zero? We love it!

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.

Just before New Year, I was speaking at the TBDC Venture Day Conference together with BetaKit CEO Siri Agrell and Serial Entrepreneur and former MP Frank Baylis.

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!

P.S. Don’t forget, if you have an “exit strategy” slide in your pitch deck, please remove it before pitching to us. TYSM!

Celebrating the Unintended but Obvious Impact of Wattpad on International Women’s Day

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.

After All, What’s Deep Tech?

“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.

P.S. If you enjoyed this blog post, please take a minute to like, comment, subscribe and share. Thank you for reading!

Masterclass Series: Complete Redesign That Actually Works

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.

Two Small Fish Honoured to Be on the CVCA Top 50 List

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):

1. Active Impact Investments

2. Amplify Capital

3. Amplitude Ventures

4. AQC Capital

5. BrandProject

6. Brilliant Phoenix

7. Conexus Venture Capital

8. CTI Life Sciences Fund

9. Diagram Ventures

10. Finchley Healthcare Ventures

11. First Ascent Ventures

12. Framework Venture Partners

13. Genesys Capital

14. Good News Ventures

15. Graphite Ventures

16. Greensoil PropTech Ventures

17. GreenSky Ventures

18. iGan Partners

19. Inovia Capital

20. INP Capital

21. InvestEco

22. Luge Capital

23. Lumira Ventures

24. MKB

25. McRock Capital

26. NGIF

27. Panache Ventures

28. Pelorus VC

29. Portage

30. Radical Ventures

31. Raven Indigenous Capital Partners

32. Real Ventures

33. Relay Ventures

34. Renewal Funds

35. Saltagen

36. Sandpiper Ventures

37. Sectoral Asset Management

38. Staircase Ventures

39. SVG Ventures | THRIVE

40. The51 Ventures

41. Two Small Fish Ventures

42. Vanedge Capital

43. Version One Ventures

44. Vistara Growth

45. White Star Capital

46. Whitecap Venture Partners

47. Yaletown Partners

48. Evok Innovations

49. Cycle Capital

50. Boreal Ventures

AI Has Democratized Everything

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.

Masterclass Series: Unrecognizable Every Two Years

In 2006, Wattpad started as a simple mobile reading app, mainly for classic books. Fifteen years later, it evolved into a global, AI-powered, multi-platform entertainment company with numerous blockbusters before being acquired.

As you can imagine, my role as CEO at the start of Wattpad—when it was just the co-founders and a few hundred users—was drastically different from leading a team of hundreds of employees and overseeing a platform with 100 million users.

A Typical Entrepreneur’s Evolution

In the early years, the founders focused solely on building a product and finding product-market fit, with little thought given to the business side. At this stage, the CEO is the engineer writing code, the product manager, and the product visionary, all rolled into one.

As traction builds and product-market-fit comes into sight, the CEO’s role begins to shift. Suddenly, hiring becomes a priority, and managing people and operations takes center stage. The CEO goes from being a product builder to a hiring and people manager who leads a small, close-knit team and handles the operations that come with it.

Fast forward another phase, and the company is growing even faster. Now, the CEO is no longer just a manager but the manager of managers, responsible for hiring leaders who can build and lead their own teams. Communication becomes an even more critical skill, as the CEO now leads a much larger team—many of whom don’t frequently interact with the CEO. Business models become increasingly crucial, and new tasks, like fundraising, take on greater importance.

As growth continues, the CEO’s role shifts yet again, this time to hiring leaders of leaders—or even leaders of leaders of leaders. Now, the CEO is juggling closing million-dollar sales with key customers, navigating strategic partnerships, working with the CFO to manage finances at scale, media interviews, building the brand, international expansion, raising capital from large institutional investors, and, of course, leading hundreds or thousands of employees. The skill set required here is worlds apart from that of the early days of coding and prototyping.

Entrepreneurship Is Constant Reinvention

Each phase of a company’s growth requires a radically different skill set: moving from building the idea to scaling a product, building the team, leading a large organization, and eventually creating a profitable business. The entrepreneur evolves from crafting the “secret sauce” to building a factory to mass-produce it.

I have yet to meet an entrepreneur who possessed all these skills from the start. The journey demands constant learning—whether it’s coding, product design, finances, fundraising, marketing, sales, or leadership.

I can testify to this: there were numerous times when I thought the company was a well-oiled machine. Six months later, things would feel like they were falling apart. It wasn’t because I had messed up, but because the environment had changed drastically in such a short time. I had to keep upping my game to keep pace with the company. I am completely different from—and better than—the version of myself a decade ago—and not just once, but many times over.

As an entrepreneur, be prepared. As your company scales, you’re effectively getting a new job every few months. This journey is thrilling and challenging, and filled with lifelong learning and self-improvement.

The Biggest Takeaway

And yet, the most important product you’re building isn’t your company’s product. It isn’t even the company—it’s yourself.

If, every two years, you’re not almost unrecognizable from your former self, you’re not growing fast enough, and you will be left behind by your own fast-growing company.

This takeaway isn’t just for CEOs. It applies to anyone working at a fast-scaling company and to anyone with a growth mindset. If you get this right, everything else will follow, and you’ll be in good shape. From my experience, this is one of the most crucial mindset-building tools you can have.

Venture Capital is Call Options on Startups

Early-stage venture capital (VC) has always been the oddball in asset management. Unlike other asset classes, it offers the highest potential returns, but it also comes with the highest variance—especially when portfolio construction isn’t done right. On top of that, it has an inherent “default rate” of about 80%.

Tell a traditional fund manager about this 80% default rate, and you’ll likely get a strange look.

A few months ago, I was trying to explain how VC works to a fund manager. After covering the usual points—how VC is essentially a home run derby with many misses—he paused and said, “I get it. VC is like buying call options on startups.”

I hadn’t considered it that way before, but he was absolutely right.

For those unfamiliar, buying a call option gives you the right, but not the obligation, to purchase a stock at a predetermined price (the strike price) before a specified expiration date. Investors use this strategy to profit from an anticipated—but not guaranteed—increase in the stock’s price. If the stock price rises above the strike price (plus the premium paid), the option becomes profitable. The potential profit is theoretically unlimited, while the maximum loss is limited to the premium paid.

Similarly, investing in a startup gives you the chance to acquire equity at an attractive price, with a ~20% chance the startup will take off—though this usually takes about a decade to materialize. VCs use this strategy to profit from a potential—but not guaranteed—rise in the company’s value. If the startup succeeds and its valuation soars beyond the investment (plus associated costs), the return can be massive. The potential profit is virtually unlimited if the company becomes a breakout success, while the maximum loss is limited to the initial investment.

VC and call options are strikingly similar, don’t you think? They’re like twins!

From now on, I’ll tell people: Venture capital is call options on startups.

Contrarian Series: Contrarian Bets

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.

Masterclass Series: CEO, It’s Your Decision. Don’t Dodge

When you work at a startup, seeking advice and gaining buy-in from the broader team can help you move faster … until it becomes a crutch.

Recently, I bumped into an entrepreneur I invested in. He’s making some changes to the direction of his company, and after explaining them to me, I pointed out some of the potential issues. He immediately asked me: “So, do you want me to revert to the old plan?”

It was the wrong question to ask.

I explained to him that it doesn’t matter what I want. As CEO, with all the context, he’s the only one who can make that decision. As an investor, I’m not thinking about his business 24/7, but he is. It’s his company, and it’s his decision what he does with it (and only his decision). Investors should share their experiences and opinions, but they shouldn’t make decisions that affect the business.

Not long after, I had an investor friend contact me about one of his portfolio companies that’s going through a pretty rough patch. My friend said: “The CEO now blames the board of directors for making the wrong decision.” My ears perked up. This was a red flag and I told my friend as such.

A company’s board of directors only has one decision to make: Hire and fire the CEO. Inexperienced CEOs have a tendency to defer difficult decisions to the board or even other people in the company. It’s not uncommon to hear a newbie (or unconfident) CEO say something like “My recommendation to the board is …” This isn’t helpful. All this does is enable inexperienced board members to jump in and make decisions out of context. It’s tragic, really.

Obviously, I’m not suggesting that there is no value to be gained from consulting with your board: Every CEO has blind spots and can benefit from another perspective. But in the end, what happens in the business is always the CEOs call.

And it doesn’t always have to be the CEO who holds the ultimate decision-making ability (nor should it). I remember speaking with a senior leader at Wattpad, and the person said: “I would advise we do this …” I quickly reminded this person that they are the head of the business unit and the only person accountable for it. It was an important decision with huge implications across the company, so of course, I expected this person would engage with the broader team to think through the different scenarios and make sure all the bases were covered, but at the end of the day, the person was the leader, not an advisor.

These three conversations illustrate one critical point. Whether you’re a co-founder, CEO, technical lead, department manager or even individual contributor, you are the presumed expert in your role, so don’t dodge making tough decisions. Remember: You are not an advisor to your own job.

Don’t Be a Parasite If You Want To Be A Disruptor

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.

When tech giants move next door

A slew of international tech companies – Google, Uber, Samsung, Microsoft, Amazon – have committed to or expressed interest in setting up shop in Toronto. If you’re a homegrown startup or scaleup you can’t help but think about the implications of having these giants in your backyard.

Companies often expand their footprint to lower costs, access specialized talent or for a host of other reasons. It’s not new. They aren’t the first international companies who want to set up shop in Toronto, and won’t be the last.

And why not? Toronto is a world-class city with some of the best universities in the world producing some of the finest technical and business talents. We’re home to an incredibly diverse community who have the perspective and understanding to solve global issues and build products and services that work for the world.

Colleagues and friends have recently been asking me for my take on these moves. Are they helpful or harmful to the city and the local tech ecosystem?

In my opinion, we should welcome these moves – but be wary of them.

When a few foreign companies decide to move to a burgeoning city, they can help build a critical mass that directly supports homegrown companies by spurring interest in the region. They attract high caliber talent and then provide opportunities for these employees to hone their skills and learn new ones so they can further develop into well-rounded and in-demand workers.

But too many foreign companies in a single locale can make it seem like they’ve colonized the area, leaving little room for local businesses. It gets too difficult to compete, too expensive to stay in your backyard. Think about this: If data is the new oil, do you really want all the ‘oil companies’ to be foreign-owned?

So it’s not a choice of either-or. Having zero international companies who operate locally won’t stimulate the ecosystem. With too many foreign companies, locals lose the ability to control their our own destiny, and eventually, ideas and innovation become stifled.

For now, I welcome these new companies into our backyard but make no mistake, it can never replace building our own homegrown giants. I’m certain that the incredible Toronto tech ecosystem will continue to make waves regardless of who moves next door.

The End of 8-Hour Days

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.

Welcome to Allen’s Thoughts

I’m Allen and I’m a serial entrepreneur, angel investor and a champion of the Canadian startup ecosystem. Welcome to my new blog where I plan to share my ideas, insights and inspirations.

I like to write. Over the years I’ve probably shared in excess of 300,000 words. I’ve contributed to media outlets like Inc. and Entrepreneur. My previous blog, Making Things Out of Nothing, covered technology trends, my latest investments and company milestones. For several years, I’ve also maintained an internal blog to communicate with 100+ employees around the world. This private blog encompasses everything from company strategy to technology shifts to management advice. Through my internal blog, I created a lot of content that’s applicable to many people, but discoverable by few.

My hope is that this new blog changes that and becomes a central place for me to share the things I’m passionate about more broadly. And yes, of course, there will be a ton of new content as well. I know there is no shortage of business and tech insights available on the internet, but I believe I can offer a different perspective – from a scale-up or Canadian lens, for example – that sometimes can be difficult to find.

So what am I passionate about?

I’m passionate about entrepreneurship. I’ve launched three companies; the first one failed, I sold the second one, and the third, Wattpad, has grown from a reading and writing app, to a global entertainment powerhouse with a vision to entertain and connect the world through stories (and is well on its way). Both failures and successes have taught me valuable lessons and I’m excited to share these lessons with others – it’s my way to pay it forward so others can avoid (and learn from) the mistakes I’ve made.

I’m a believer in the power of the innovation economy to transform the world by creating a virtuous cycle of disruption and innovation. As both an entrepreneur and investor, I’ve seen some incredible ideas that will dramatically change the way we work, live and play.

As a proud Canadian and as an immigrant myself, I am certain that diversity is a strength, especially in the workplace. It’s no vanity metric either, I can cite numerous examples where diversity powered progress and drove real business results.

So what can you expect from this new blog? In a nutshell, I’ll share my experiences, ideas and even advice about the things that matter to me – entrepreneurship, startups, tech and innovation, leadership, diversity and a whole lot more.

Welcome to Allen’s Thoughts. I’m excited to have you here!