You Want Facebook to Buy Hootsuite?

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It’s been a few months since Zuck was in Vancouver, but I’m surprised people are still talking about Facebook buying Hootsuite. What surprises me more is that people want Hootsuite to be bought. This is downright silly thinking.

I got a reminder this week when a tweet was forwarded to me. I’m not judging the author (maybe it was sarcasm?), but I will say that Silicon Valley buying up Hootsuite is going to do absolutely zero good for Vancouver in the long-term. Although there’s great excitement selling a company and showing the world it has value, selling off Vancouver business across the border is going to really hurt us.

Locally, Vancouver has difficulty building large and great companies. EA is about as big as it gets for tech companies in Vancouver, and that’s limited to gaming. There have been a limited number of massively large companies growing in Vancouver and it’s because the ones that did have potential have been bought out and moved south. Canada in general has been too reliant on the resources sector to continue its growth and I’m quite glad the Keystone Pipeline has been rejected…for now. It’s a smart wake-up call that Canada needs to place its growth elsewhere if it wants to stay ahead of the world. Blackberry’s woes haven’t been great for us, and the Nortel collapse was a huge disappointment.

Why do we want large companies tech in Vancouver? Right now Vancouver has the highest potential out of all of Canada to create, build, and house awesome talent. The city vibe and beautiful scenery attracts the creative and entrepreneurial type that are great for building the right companies. The location beats out the rest of Canada because of our strategic proximity to Seattle and the rest of the hi-tech west coast—that’s San Francisco, San Diego and the Valley. In addition, the Lower Mainland has a huge pool of capital that needs tweaking: most of West Vancouver is sending its money across the border or to resources, and we need smart capital firms to begin encouraging tech investment. Much of that responsibility will need to be picked up by the city if it really wants to grow large companies locally.

In addition, our local newspapers don’t really do much investigative journalism anymore. But thankfully you read the Vancity Buzz, and we do some asking. I reached out to Katherine Barr, a Venture Capitalist who was quoted in an article about Vancouver entrepreneurs missing the mark. Katherine lives in California but is originally from Ontario. She told me that she’s involved with Growlab because there is potential here. Her words: “Bring it, Canadian tech entrepreneurs and show the world what you are truly capable of.  And we’ll do the best to be helpful as we can via groups like C100, Growlab, etc.”

How do we build large tech companies in Vancouver? It will require working with the province and federal government, but there are excellent programs available to those who want to make their business big. The British Columbia Innovation Council (BCIC) leads a new mentor program with the potential to enhance our business skills and link new businesses to top talent in the city. We also need to shift our greed from short-term gains to long-term benefits. When we consider a purchase by “outsiders” we have to think to ourselves, “will X buying Y keep the benefits in Vancouver? Or will it end up in relocation in 3 years?” In addition, we need to start encouraging more creativity within our universities. It’s not common for a medium sized city to have two big and well-developed universities. However, we do not properly leverage talent from SFU and UBC well enough by giving them a place to work. This is where shared offices like the Network Hub come into play and give the young talent a place to start creating.

Where are we missing the mark? Referring back to VC Katherine Barr, she revealed that there are also many Canadian tech entrepreneurs with limited and undifferentiated visions. She’s absolutely right. I also think there are too many poseur entrepreneurs who enjoy the façade of a start up but are very unfocused. It takes focus and commitment to build a business and sometimes our Vancouver entrepreneurs party a little too much. So instead of further bashing on our local businessmen, I only encourage them to sacrifice a little more to making it big.

My take home question is do you think Vancouver has what it takes to make it big? How would you change it to get there?

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Token White Guy 

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  • Kori Handy

    Not a fan of Hootsuite because it encourages fake interactions, the whole idea behind social media is to engage in that moment, not setting up your daily tweets or post in the morning to post every 20 minutes in the day. this is lazy, spammy, and not social. What real value does Hootsuite add to users? if its just a centralized dashboard for my social media accounts this is not a strong enough model in my eyes, It feels like a more corporate tool then user centred. Facebook would get no value from buying them

  • Anonymous

    @tokenwhiteguy, my startups making a service that would have made this article better and help get answers to the question you ask. We should set up a meeting, I emailed Paul (something), who works for you guys (in some way) and asked him to forward my email to you. 

  • Gracejosephine

    I think you’re missing the point. It’s much more than a scheduling tool. I barely use scheduling. It’s a central place from which to communicate, read, respond, and measure. 

  • samantha mathews

    A huge problem for growing tech companies in Vancouver is zoning. Companies are growing faster than the city is updating its zoning and there is no where to put them all. Tech companies grow FAST. If the city doesn’t act as quickly to get the spaces required for these companies we need then they will be forced to move, elsewhere.

  • Anonymous

    this is true

  • Darren Beattie

    I completely agree with this perspective, it would be really nice to see a great tech firm come out of Vancouver that IPO’s but that doesn’t mean there are not great tech companies here or that the environment isn’t promoting their creation. That’s just my Vancouver-ite (and Canadian) pride poking through though.

    The reality is that from a Venture Capital point of view, it’s easier to get your return through a sale than it is to wait it all out for a big IPO. If you’re a founder and you find yourself burnt-out, or stuck after a couple of years in the game, selling is also tempting.

    In the case of something like Hootsuite (which I’m sure is a nicely profitable business relatively speaking) it is pretty obvious, early in the game, that it doesn’t have massive Google or Facebook potential. Therefore, it seems to make sense that they would look for a sale eventually, or that they would look to add (seeing as Hootsuite is really a product of a larger company, Invoke) additional products to the line-up that might make them a larger player across multiple platforms.

    Unfortunately if you don’t become a platform (Facebook, LinkedIn, Apple, Google, Microsoft, Salesforce, Groupon, etc…) or a large player on several platforms (Zynga, EA, PopCap, etc…) it’s tough to IPO these days. Giants like Groupon or Zynga even have stuttered in and around their IPO. I believe this shows just how difficult it is to build a lasting high profile tech company in 2012.

    I see what is happening overall is that more little (by little in this context I mean less than 100 million valuation, give or take) businesses are popping up, as the capital requirements for a start-up follow Moore’s Law. The result is that there are far more start-ups now than ever before, or more people taking a smaller piece of the pie and large IPO’s are becoming less frequent as a result. 

    I don’t think this is a bad thing, it lets more people experience better, if not great, outcomes through entrepreneurship. The reality is that most people would be ecstatic building a 20 or 30 million dollar company.

    It seems logical then that the VC community (I think we’re seeing it with things like GrowLab, Y Combinator and TechStars already actually…) will eventually come around to the idea of investing smaller amounts in more companies like Hootsuite/Invoke and it being O.K. to be a tech company that either IPO’s at less than 100m valuation, or increases profitability and finds new ways to make investors a return.

    What’s wrong with Hootsuite existing as a profitable sub-100 million valuation business?

    The flip-side of the coin is the start-up fever I’ve seen around the world and the many entrepreneurs who are more in love with the idea of a start-up and less in love with the idea they are trying to execute on or create a business around. There is an obvious lack of attachment to many start-up ideas that leads to selling. 

    It takes a special kind of visionary to create huge lasting tech businesses, all one need do is look at the examples set by Jeff Bezos, Steve Jobs, Marc Beinoff, Bill Gates, etc…

    Truthfully, I kind of see Stuart Butterfield as leading the pack in this regard within Vancouver, he built Flickr to put himself in the best possible position to make Glitch (as far as I can tell), and I really respect that kind of long-term vision. I anticipate some great things to come of that and the Vancouver Start-Up community in the next few years.

  • Jameson

    Interesting, but you can see how outdated your comment is. Hootsuite isn’t at sub-100 million valuation, it technically passed the $1 billion mark based on past valuation and current earnings.
    By the way Hootsuite is worth $10s of billions because it has an actual revenue model with real
    corporate customers and heavy social media users, it’s not charging advertisers 10 cents per 1000 views. It won’t get bought out as there is no suitable buyer anymore, at the multi-billion dollar point, its going straight to IPO now.

    And Glitch had a Glitch, not a bright move selling something like that for a measly $30 million, I bet he’s kicking himself now, especially after Instagram sold for a bill.