Allan Isfan is a co-founder of FaveQuest, a young start-up. This blog covers start-up topics.

Sunday, January 28, 2007


audio tipping point

Before I get going, a quick reminder regarding the recent interview on Rogers 22. I think it actually went really well but I must admit I was very nervous. I don't get nervous very easily but being on t.v. is more nerve racking than I expected. When the interview starts, you enter this strange fog ... no time to think at all. They don't do second takes so you get one shot. Time flies and you have no idea how it actually went. I was anxious to check out the newscast at 6:30pm Friday but I was with my girls at Gymnastics and had to wait until later! Overall a great learning experience. I'll get my hands on the clip and make it available on my blog.

Ok ... let's change gears. Let me share what I see coming in the next few years in the world of audio.

In my opinion, we are reaching a tipping point in the online audio streaming world. In case you're not sure what "tipping point" is, here is the definition from WikiPedia "The phrase tipping point ... refers to that dramatic moment when something unique becomes common". Basically it is when something goes mainstream. I read a very interesting book specifically on the subject recently and could get into it more but I'll leave it to another time.

Online audio streaming has been around for quite a while. If you have ever listened to your favorite broadcast radio station through your computer, you would be counted as one of 59 Million people in the US (don't think they count Canada) that has listened to audio streaming online in 2006. If you do this at least once a week, you would be one of 30 Million people weekly users of online audio streaming in the US . Congratulations for being on the cutting edge! These aren't bad numbers. A JP Morgan study that was just released estimates that audio streaming draws ~$500M/year in advertising in the US. That's not too bad but when you consider $20B is spent on traditional radio advertising, it is still puny. That's fine with me because the number of people listening to audio streaming on line is growing by roughly 27% per year since 2000. This tells me that I'm entering into a growing market that is still at its infancy and I see opportunities all over the place. The timing is good for people and investors with vision (nudge nudge wink wink). We take rolled up coins, credit cards, debit cards, PayPal, cheques and Canadian Tire money (I need more pucks and hockey tape, the dogs keep chewing them).

Most people don't listen to streaming audio on the net yet. However, lots of interesting and moderately successful products and services are popping up all the time though, even though most aren't making a lot of money yet. I've mentioned Pandora and in the past. I've also been experimenting with AOL radio and Musicovery to name a few. There are also some excellent internet radios, such as the Squeezebox, and many very low cost WiFi radios will be popping up in 2007. This is the calm before the storm and a perfect indication of a tipping point. In 2-3 years or so, I predict it will be absolutely huge. A few more things need to fall into place and the floodgates will open. These things are falling into place as we speak and the trickle of water is starting.We also plan to help this along (our snorkels are ready).

There is a pretty clear desire to move away from pure broadcast but the existing streaming services lack a number of things before the tipping point happens. First, the services need to ubiquitous and reliable. Second, they need to be as easy to use as radio. Third, they need to be free. Fourth, they need to provide more than music. And finally, as always, there has to be some pretty useful, compelling and entertaining content behind to rip you away from your comfortable and familiar products, especially if you're not a teenager anymore (works the opposite for them).

Some pretty cool stuff is coming down the pipe and I can't wait to share the . I'll share cool stuff with you in the coming weeks. I'm heading to Barcelona next week for the world 3gsm congress, a huge show which focuses primarily on wireless technology. It is a wild and insane show and I expect to come back brutally exhausted but hugely pumped and ideally armed with follow-up meetings with key execs and potential customers. If you are heading and want to chat, let me know so we can set up a meeting ahead of time.


Allan Isfan
Co-founder, CEO


who needs money anyway

My last post included some tidbits that some experienced individuals shared with a crowd of entrepreneurs recently. I promised I would go back to a few important items and I may as well do so now, especially since a friend of mine just lived through a few of the bullets very recently. Fortunately, it was only a flesh wound but it sucks to see this happen.

I've been slapped over the head by the following realizations enough times to have it finally sink in and I'm compelled to pass on the slap. It stings a bit since I see myself making some of these mistakes and must correct course immediately.

Work multiple investors until the money is in the bank!

Investors will sometimes appear to be very interested which gets the entrepreneur all pumped up thinking they have finally found "the one". They jump through hoops, expend lots of energy and stop chasing other investors thinking this one is so close, you'll be cashing a cheque and popping the champagne anytime. Months and months go by ... you finally start talking numbers and you might even be so lucky to get a decent term sheet thinking .... this is it ... time to polish the dancing shoes. Then you realize the due diligence is just beginning ... many more months might go by and the trail goes cold. What the F&%#!?

Slap, slap, slap!!!

Who needs money anyway!

Although this is not possible in all industries, it is good to be ready to move forward without any significant outside investment. This is especially possible with pure S/W plays, especially in a Web 2.0 environment in the year 2007. Fortunately, this is the space we are in. We are prepared to move forward to develop our product on the slow path if that is what it takes. I'll keep the knee pads on and continue prostituting my brain to the telecom world for a while longer. You go numb after a while ... it isn't so bad ... plus the people are great which makes it much easier.

Go to market strategy!!!

So ... you have a great idea. You know what you are going to build, have a developed a compelling business case that shows you'll be swimming in dollar bills in no time and hopefully making more than you're spending. You know how you are going to build your world changing thingy, how many people it is going to take and where they are going to come from. Awesome ... ready to roll. Now comes the hardest part in my opinion. How do we bring this to market?

Basically, how do we ensure everyone in the entire world knows about our product. This is especially challenging for a start-up since the marketing dollars are simply not there. A huge marketing campaign is definitely out. So we are left with a few options:
-have each of the team members tattoo one of the company letters on their butt and we can start streaking side by side through all the major cities (we'll do Canada in the summer ... nuf said)
-hey ... this might not be half bad ... guys, are you in? I'd better hit the gym a little harder
-work with a big brother/channel partner with a big name
-this is one we are looking into quite a bit. The trick is that you need to prove to them that you can do something for them that no one else can (without giving up your virginity for it).... even though you are absolutely nobody and they could step on you like a bug ... where the hell did they go ... they were just here a minute ago!
-viral. This is a really fun one since it can be super powerful but can be very difficult to predict and control. A bit of luck is required here.

The tattoo thing is sounding pretty good!

If you are into listening to music on the net (if not you will be), I'd like to leave you with a neat service I discovered virally (i.e. someone sent me the link). I'm not quite sure if it is really good yet since I've only used it a few times but it is an interesting take on music streaming. It is very simple and free so give it a shot. Let me know what you think.


Allan Isfan

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Sunday, January 21, 2007


Big brothers willing to help

Before I get going, please note that I've syndicated my blog through FeedBurner. Look for the RSS chicklet (orange logo) and associated link to the right of the blog. This allows you to include my feed in your news reader and get updates. Note that you can also register your email and get the blog automatically the day after it is published.

I recently registered my company with the Ottawa Center for Research and Innovation (OCRI) and attended the first of many presentations last Thursday. Basic registration for a start-up is $300 which provides access to what seems to be a significant set of resources, events and networking opportunities.

The session I attended last Thursday consisted of presentations on the topic of early stage financing from a diverse group including a VC (Jim Laird) CFA/VP investments, Covington Capital Corp, a member of the Ottawa Angel Alliance (Irving Ebert), a lawyer (Michael Dunleavy, LaBarge Weinstein ... the firm that represents me), investment consultants (Raj Narula and Mike Manson, Taraspan Group ... assisting OneChip) and a successful serial entrepreneur (Jim Hjartarson now CEO of OneChip Photonics, formerly founder and CEO of Catena networks). If you are from Ottawa, you've probably heard of this last character. Note that Andy Weirich is also at OneChip (coincidence?).

I mostly went to heckle Jim and to do a bit of networking. I must say though, all the presentations were absolutely fantastic ... the best $85 dollar breakfast I ever had. There was lots of great and honest advice. I truly felt these guys took lots of time to prepare and were truly genuine in their quest to help young entrepreneurs. If there is anything to take away from this post is that Ottawa is a close and tight community full of successful people willing to help others. I have already been fortunate to have asked for assistance from many such people and they have certainly not disappointed. If you are an entrepreneur, get out into the community through organizations such as , and/or contact entrepreneurs and other capable people in the community to ask for help ... don't be shy.

I will attempt to summarize the key take aways from the sessions through some short bullets. I'll try to come back to the key items in future blogs.

-rate of return for VCs has been pretty bad over the last few years which makes it difficult for them to raise large funds from which to invest - just fantastic!
-VC early stage investment sweet spot is ~3-5M in Canada and closer to about $9M in us
-if you're looking for something in $3M range, stick to VCs in Canada
-VC funds have a timeline for each fund in 8-10yr range, basically they need to invest and recover funds within that rough time-line
-before you go to a VC, make sure you know what stage their fund is at. If they are late in the fund, they'll be looking for an acquisition or IPO (fat chance) quickly which changes their investment decisions
-liquidity event is typically expected in 4-5 yrs
-ask for twice the amount of money you think you'll need
-kinda obvious but most companies fail when they run out of money :)
-go to VCs before you need the money ... build relationships, get to know them and how they make their decisions, the stage of their fund, the types of companies they invest in and at what stage ...
-this is actually how I ended up as an Entrepreneur In Residence at Skypoint
-give them a sense for what you are thinking about and where the market is going ... then come back in 6 months and show them you were right ... good for credibility
-qualified angel investors invest a significant amount of money and have helped a very large number of companies get off the ground ... definitely worth a serious look
-angel alliances, such as the Ottawa Angel Alliance, are generally much more successful than individual angels (their rate of return seem better than most VCs too)
-angel investors are hands on and local (within ~1hr) ... as Irving put it, angels with faster cars invest in a larger geographic radius
-important to pick the right investors ... don't take shotgun approach
-very wise to do lots of research on each VC before attempting to pitch
-look for short list of 10-12 VCs
-wise to consider getting help from consultants such as (they are working with Jim Hjartarson's new company, OneChip Photonics).
-have fun, have fun, have fun
-investors are diversifying out of telecom (no big surprise here .... darn gotta scrap my next DSLAM idea!)
-don't look for investment until you are completely ready ... bootstrap like crazy to get going

I have more stuff but for the sake of brevity, I'll save the rest for the next post.


Allan Isfan

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Thursday, January 11, 2007


The chicken and the pig

Before I get into my my blog, it is impossible not to mention the iPhone. Holy wicked cool phone thingy batman! As expected, the thing is amazing! I'm going to get one as soon as it is available! That might be mid 2008 in Canada, probably through Rogers ... no way I can wait that long. Why is Steve Jobs the only guy in the world that can come up with stuff like this! The Microsoft Zune looks cold in comparison ... it has no soul (sorry ... don't mean to be so hard on it but that's the truth ... you could do so much better with all you money). I strongly recommend you go the apple website and check out the demos ... way cool.

Ok ... back to my little world.

There are so many things to keep track of when you start a serious company ... it gets crazy. I've been compiling a list of major milestones, assumptions and actions being delegated. Priorities are assigned to each item since the list is getting long. Priority 1 turns red automatically in my spreadsheet and it looks like a blood bath. Tons and tons of work to do but unfortunately important items that were being delegated were just not getting done to my satisfaction. It was time to shake things up, create a sense of urgency and see where the commitment really is.

Doing a start-up is brutally hard ... it is stressful, exhausting, you get rejected by investors and potential partners and customers. In addition, you are trying to build something amazing while having to learn a huge number of new things at the same time and you need to do things on a complete shoestring. You beg, borrow and steal. You call in favors that may not actually be owed to you. And it can certainly be scary. You need the absolute best and everyone on the team has to work their fingers to the bone.

On the positive side though, the people that have been invited into our inner circle get to have an impact like they never have in their entire life. If this thing gets as huge as we think it is, the people on the inside will do very well. Not just financially but by getting involved very early on and living through the creation and eventual growth of a new company. When this thing takes off and people eventually move on to new things in the future, the credibility and experience will be insanely valuable.

It is not an opportunity to squander, especially when you really really believe in something. This is basically what I communicated with the team as a whole and through one on one sessions that are ongoing. Things are coming to a head and you have to decide where you want to end up. The pen is being divided into the chickens and the pigs. As one of the GPs at Skypoint likes to say regarding the role the chicken and the pig play in a great bacon and eggs breakfast ... the chicken is involved and the pig is committed. The litmus test I tossed to the team is "if your spouse hasn't complained that you are working too hard on this ... you're not working hard enough". If you're not working hard, I assume you're not committed.

I'm also asking the following questions:

-do you really, truly believe in what we are doing and why
-how many hours a week can you commit to the cause (I've set an aggressive target)
-what role do you see yourself playing in this company and what are you looking to achieve
-when we close on the seed round and have 6 to 9 months of runway, are you going to quit your job and join at likely lower pay (at least temporarily)

Although I have not spoken one-on-one with everyone, I've been surprised to find people clearly on one side or the other. Either they are in all the way .... work every moment possible and will quit their job at the appropriate time (some of us don't have other jobs which makes it easier) or they are able to work a limited 4-8 hrs a week and are only willing to come in after an A round. That is perfectly fine ... everyone has different goals in life and risk aversion but this is the time to be finding this out. VCs fund teams, not individuals, and without a team, there is no funding. There are many things that scare investors and teams with unclear commitment is one of them. Money is often conditional on key people joining so as the CEO, you need to really and truly know who is behind you.

We are still months away from being in a position to close a seed round which means the core team needs to be nailed down in the next couple of weeks. Hopefully, we'll have lots pigs and not too many chickens. And then we'll have a great greasy breakfast of bacon and eggs.


Allan Isfan

Sunday, January 07, 2007


kicking it up a notch

The tree is finally down, all the millions of pine needles cleaned up, labelled boxes back in the basement and the kids going back to school tomorrow. It kinda sucks really ... it was really fantastic hanging out with my wife and kids for days and days and no cares in the world. Everyone healthy, relaxed, happy. It is now back to reality. Not a bad reality mind you ... but it is time to get really serious about business.

I would like to take you back and do a quick review of 2006 to give you a sense for what has transpired since I quit my job last April. I'll also share a few important items that will be happening over the next few months.

Mid April
1) , 2006: Quit job as Senior Product Marketing Director at Ciena after 7 years
-an extremely difficult thing to do when you're not rolling in dough ... but necessary
2) Launch Isfan Solutions Inc. with my wife and begin consulting for a couple of tech companies while she continues freelancing in graphic design
3) Join Skypoint Capital as Entrepreneur In Residence

4) Spend summer kicking around ideas with several different groups in various spaces such as RFID, WiFi and WiMAX, DSL, Distributed Servers
5) Decide to stop trying to get onto moving trains and get out of internet plumbing business ... I'll be the founder of whatever I do and it won't be on infrastructure

6) Share a short list of ideas with VC. Some good ones in the lot but only one is really keeping me up at night ... and it is probably the hardest one as it is furthest from my direct experience
7) Swallow hard and set a course ... research and capture thoughts like crazy ..... a very exciting time

8) Team comes together and we have first boardroom meeting in my kitchen/dinning room with a borrowed projector, the kitchen table and a bed sheet.
-this was a great great night that I will remember for ever (plus we have it captured with an expensive HD camera just in case)

9) Share update with VC. Goes ok. Some happy, some less happy with progress.
-several lessons learned 1) set clear expectations 2) need to work on pitch really hard ... in retrospect it wasn't very good (wasn't supposed to be a pitch ... but it always really is)
10) Some fantastic meetings with potential senior advisers and partners ... potential senior team members, great advice, excellent connections, great potential help to develop concept ....
11) Take a breather during holidays

Early January
12) Review team and shake things up ... only the best will do ... must believe, work like crazy and deliver

Ok so everyone is caught up. What is the plan moving forward? Of course, I can't share the details but the following can be said:

-what we are doing is still awesome and continues to get better ... I'm more pumped than ever
-need to add some critical advisers and senior members ... will be going hard to fill out team
-VC road trips start in February
-I expect to be depressed 75% of the time during this faze ... it is going to be brutal and I expect to wake up in the middle of night many times wondering what the hell I was thinking
-kicking off regular interviews on local Ottawa TV station to follow the "entrepreneur's story" ... also trying to get coverage from main newspaper
-I'll be getting access to the video and will share it with you. The first installment should happen this month.
-launch a few features in coming months to test the waters and use as learning opportunity
-will set-up invitation only trial ... I'll let you know when we are ready
-raise seed round (<$1M) in spring with A round in the fall ... may look at angel money as long it comes from the right sources and doesn't poison opportunity with VCs

It is going to be a wild wild year! Thank you for continuing to check out the blog. I'll do my best to post at least once a week and sometimes two if I can squeeze it in. I may also use this post for recruiting people with some very specific skills so keep checking it out.


Allan Isfan