Fish where the fish are. It’s a dusty old saying with an obvious message – if you want to land the big one, you need to go to where the big one is most likely to be.
Among the many big things Canada is known for (including actual fish, if that’s your thing), customers and markets don't rank highly. It’s why one of the first things any Canadian entrepreneur serious about building a scalable business does is get on a plane and fly south.
That got a little easier this week with the launch of Communitech NYC, a landing pad for Canadian startups in midtown Manhattan. Housed on the 23rd floor of the New York Times building on Eighth Avenue, inside the offices of law firm Phillips Lytle LLP, the space sits at the epicentre of what is arguably the world’s financial capital (New York and London perennially vie for the title).
The news comes just weeks after the launch of Canada House in San Francisco, a docking space for Canadian startups at the front door of the world’s technology capital, Silicon Valley.
As pointed out last year by Compass, which ranks the world’s top startup ecosystems, Waterloo Region startups in particular need to forge ties to key U.S. markets to overcome the limitations of being situated in a relatively small Canadian community.
Among those celebrating at Wednesday night’s Communitech NYC launch was Jim Moss, CEO of Plasticity Labs, a Waterloo Region startup whose software helps companies measure and build employee happiness. Moss, along with co-founder and wife Jennifer Moss, will spend much of the coming year cultivating business in New York.
As much as Plasticity’s business and buzz have been growing in Canada – it now counts lululemon, TD and Manulife among its customers, and its founders were named 2015 Innovators of the Year by Canadian Business – Moss knows the seeds of global scale reside in the Big Apple.
I sat down with him in the Communitech Hub this week, just before he caught a plane to New York, to talk about Communitech NYC.
Q – What does it mean to your company to have a landing space like this in New York?
A – We think it’s a good example of true acceleration. [Setting up a presence in New York] is something that we wouldn’t have been able to do, necessarily, for another nine or 12 months; this means we can get there faster and get started.
Specifically, going after the American market was absolutely in our future, and this allows us to just start acting on that future sooner, tapping into the market, and maybe the exchange rate.
Q – Tell me more about how the exchange rate plays into this.
A – It’s very compelling, because we essentially charge the same rate wherever you are, north or south of the border.
The exchange rate has hit such a critical threshold that we could almost run our entire operation off the exchange rate.
Think of the exchange rate as non-diluted funding. We’re not going to bank on it forever, but we should definitely be taking advantage of it now, and it’s another reason to go there faster.
Q – Tell me a bit about the Communitech NYC space.
A – It’s perfectly located in an otherwise extremely expensive district. It’s midway up the island, between Central Park and Wall Street, so you can access the market that we’re looking to, which is financial services and corporate headquarters.
It’s the 23rd floor of the New York Times building, and you look out the one side and you’re looking at the Empire State Building, and you look out the other and it’s a beautiful view of the Hudson River.
It’s definitely a fantastic space. It’s clean, it’s quiet, it’s got everything you need.
Jim Moss at work in the Communitech Hub in Waterloo Region, where the
company will continue to focus software development, while conducting
sales and marketing in New York. (Communitech photo: Anthony Reinhart)
Q – What kind of potential does New York hold for Plasticity in particular?
A – The American market for our verticals is about 100 times larger, or slightly even larger than that, than the Canadian market. So we’ve always known we were going to go there.
I went at the beginning of December to do a bit of feet-on-the-ground market analysis and everything we expected to be there was there. But I was also pleasantly surprised by and reminded of what I was overlooking – the number of international companies that are represented there.
So it will also create a bit of a launchpad for us as we prepare to go overseas.
It’s headquarters to the world, right? So, we can grow inside of American organizations, we can grow inside of the American operations of large organizations, and then ideally have those partners take us through their global channels, by getting closer to their headquarters in New York City.
Q – When you go into a space like this as a startup, what do you do? How do you spend your time there to make the most of it?
A – I think you have to plan it. You have to make sure you’re spending your time on the ground doing the things that need to be done from there, and not remotely.
That’s a really important part – the ability to use their boardrooms and meeting rooms so that you can have face-to-face meetings. So much of business can be done from a distance, but you just can’t build face-to-face relationships that can be a real differentiator in making decisions and accelerating how fast you can move.
I think the time spent in New York is best served meeting face-to-face with the people who are in New York, showing them that we’re a) smart enough to know where they are and smart enough to be there to meet them face-to-face, because we know that that drives really good business, because we’re talking about big, big corporate partnerships, and b) New York City is an incredible hub for the news media, so the opportunity to build out our PR strategy and our thought-leadership strategy will require a lot of relationship building with the media hubs that are headquartered in New York City.
Q – What can you tell me about the current state of the company regarding headcount, revenue, customers and so on?
A – We’re at eight team members right now and we’re getting ready to hire six more people.
We just hit $700,000 in annual recurring revenue, last night at 5 o’clock.
Our three most recent customers are TD, Manulife and lululemon in the enterprise space. With lululemon, the amount of business that we do with them just increased by about tenfold, so we’re starting to see really good success and building really positive relationships with our customers. They’re seeing the value.
We are going to headquarter our sales and marketing out of New York City. So, we will use the shared space at Communitech NYC probably for six months for that acceleration, and to make sure we know where in town we need to be, and then we’ll move to a more permanent office space there.
We want to take advantage of the American-trained and experienced enterprise sales employee base.
Just like we want to keep our research and product team here in Waterloo, close to the well of University of Waterloo and Laurier, we want to go to where the real proven talent is for sales and marketing, as well.
Q – That’s exactly what the authors of last year’s Compass report on Waterloo Region’s startup ecosystem suggested; that instead of trying to run U.S. sales and marketing activities from Canada, it’s best to land in-market and hire people with the contacts and cultural familiarity with the customers you’re going after.
A – I couldn’t agree more.
When I went to New York in December, I met with four or five VPs of sales, and everything about them was different than the ones up here.
There’s a sales culture in the United States that does not apologize for having something of value to sell you, and I’d rather go and get that [culture] than try and train it.
The mentality is what you want; otherwise you would be slower to separate your company into two geographic locations. But if it’s worth it, it’s worth it, and so you figure out how to do it.
That was our assessment of this situation.
Q – How important is it for startups in this region and across Canada to take advantage of this kind of landing space?
A – I think it’s supremely important.
First of all, you need to go to where your market is, because you can only learn so much from a distance.
These are opportunities for soft landings. To go in without all the wear and tear and friction and expense of having to do it all on your own, you can go and warm up a market faster.
I think there’s the potential, within such strong ecosystems as Waterloo and Toronto and the Toronto-Waterloo corridor, to think that you can get everything you need from where you are. But you can get a little bit too centric in your thinking.
We look at the companies that are really successful that we want to model, and this is a very common theme of those companies – that they’ve gone towards their markets.
You’re going to do it sooner or later, so figure out how to do it sooner. And these soft-landing pads allow you to do it sooner.
Q – Anything else you’d like to say?
A – Don’t be afraid of the U.S.
We [at Plasticity] have this mentality of ‘Why not? Why not us? Why shouldn’t we? Why couldn’t we?’
There’s this fear of the big, bad United States, but the market is huge, the people are very talented and they take business very seriously. So go down and start doing business with them, because you’ll learn quick and you’ll grow quick.
Anthony Reinhart is Communitech’s Director of Editorial Strategy and senior staff writer. View from the ‘Loo looks at the issues, people and events that shape Waterloo Region’s technology sector.
