I have terrible news. The answer is, you can’t. It won’t work.

Oh, wait, right. First, the question – hold on, I want to get the quote right. Where is your email message? Ah. Here. You said: “I’ve just started working with a new team. And they’re great people, very talented. We have the potential to be something great together. Unfortunately, I think there are a lot of bad habits in the group. Mostly, it’s bad habits around communication, with each other and also with other teams in the company. There’s a lot of complaining about others not pulling their weight, or not being efficient, and there’s a lot of negative talk about the overall culture of the company. I’ve just read The Power of Habit [by Charles Duhigg] and I want to change the habits of my team for the better. I’m not in a position of sufficient authority to try to change the company, but I know I can change my team. Could you write about how a team leader or a middle manager can change his team’s habits and his team’s culture for the better?”

I’ve just read The Power of Habit, too, so I got excited about this request, because, Alberta individualist to the core even under our new orange flag, I’m all about personal responsibility and personal agency and changing organizations by acting as if they’re already changed. Were I not maniacally afraid of needles and pain, I would have “Be the change you want to see in the world” tattooed on my forehead.

So. Tools and best practices for changing your team’s habits, regardless of what’s happening with the top-of-the-food-chain leadership and company-wide culture … um … mmmm … as I was saying. Terrible news.

You can’t. You shouldn’t. It won’t work.

You know that Peter Drucker quote, “Culture eats strategy for breakfast”? Company culture, organizational culture and company-wide habits devour and destroy grassroots and team-level initiatives 99 out of 100 times.

I’m sorry. I don’t want this to be true, because I want you to be able to change your little fiefdom, and, perhaps, to change the meta-culture of your company from within. But your odds of success are not good if you’re working in a vacuum – because nothing works in a vacuum.

I go to Melody Wisoley, an organizational effectiveness facilitator with In Tandem HR Consulting, hoping to find you a loophole.

“Culture is primarily driven by the leadership,” she slams me down, immediately, heartlessly. “It’s very hard to effect change from the middle. I have had middle management come to me and say, ‘I need help with my team.’ They see it as a lack of motivation or lack of cohesion at that level, but when I go in there, what I usually see is the dynamic of tension between what the employees are being asked to do – or what they believe they want or need to do to succeed and make the organization succeed – and how the organization’s processes, structure, rewards and all of those things are set up. Many times, the organization’s processes and structures effectively counter what employees are asked to do.”

Well, yeah. We all know this – most of us have been unfortunate enough to serve time in such an organization. But … give me hope, woman!

“Most employees come into organizations and into roles genuinely wanting to do good work,” Wisoley says. “They want to be successful and to help the organization succeed.” Right. So, all we have to do is tap into that desire and run with it. At the team level. Why does it have to come from the top, be company-wide?

Because company culture is effectively a collection of meta-habits (Duhigg calls them keystone habits), and meta-habits are more powerful than individual habits. (Changing meta-habits is no task for the weak-of-heart either.) If you’ve tried to quit smoking in a smoking culture – or to maintain your “No, thank you, I don’t drink” commitment during the Calgary Stampede, K-Days or the Yuletide season – you know this power dynamic intimately. You know how much effort it requires to maintain the individual habit against the peer pressure of meta-habits. The same rule applies at work, in business. Collective habits are going to do battle against the new, emergent one you’re trying to establish.

And they’re going to win, 99 out of 100 times.

Now, if you’re willing to play those odds, there are things you can do. The premise of Duhigg’s The Power of Habit is, really, that the brain is lazy and will cut corners and do everything and anything to minimize effort and energy, and the creation of habit and routine is the weapon to combat that tendency. The key to changing a bad habit into a good one is deceptively simple – keep the trigger and the reward (outcome, sort of) the same, but insert a new routine after the trigger. Say, for your team, it goes like this: You get the green light on a new project. That’s the trigger – and here come the bad habits. The complaining. The in-fighting. The poor communication. Now, despite all of that, most of the time, the end result is that the project gets done, perhaps even done well. And the poorly communicating, complaining wankers you work with – er, I mean, your team members – get rewarded: They’ve met their metrics, they get to keep their jobs, maybe even get a bonus.

So. Trigger: new project. Insert excellent, transparent communication. A different type of meeting – in a different place, at a different time of day, run along different lines – at which the new way of approaching the work is laid out. Understand that the old habits will rear their ugly heads – recognize them, redirect them. Celebrate the more successful (fingers crossed) outcome. And repeat, repeat, repeat … until the new habit is formed. (It can take years. Yup. You heard me. Not days, weeks or months. Years.)

Alas, alas … at team level, department level? If those new habits of your nascent, evolving team culture constantly rub up against the meta-habits of the organization, if your CEO thinks you’re misguided or downright wrong … it’s not going to work.

“Not even if someone’s really, really determined?” I ask.

“Incremental changes can come from middle management,” Wisoley grants me. But then she crushes me again. “Focusing on their sphere of influence, doing whatever they can to help their employees be more successful– that’s terrific, and depending on how much influence that leader has, can have an effect. But depending on what type of change they are focusing on, sometimes there is a corporate-wide process or structure that will interfere with how they want to change their team.”

So … don’t. You can’t. You shouldn’t. It won’t work. Exception: If the leadership at the top supports your attempts at changing your team’s habits – and is, perhaps, willing to learn from you? Watch what you’re doing as a pilot project, and then deploy it in other departments if it works? At the very least, to not actively combat you: If what you’re doing does rub up against other processes and structures, be willing to make exceptions, adapt to your changes … If that’s the case, OK, try. Maybe you’ll be that one out of 100.

Otherwise? You’re clearly amazing, high-potential, marketable and desirable, so you have a choice. Stay in a company with a toxic culture and a leadership that makes managing in the middle impossible and become habituated to the toxic meta-culture that you’re trying to change – or take your talent where it will be supported and valued.

Damn right I just told you to quit your job. Downturn? Meh. It’s a cyclical thing. You’re talented. You’ll be OK. Be the change you want to see in the world in a company where you stand a chance of success.

Our Experts Recommend

• The Power of Habit: Why We Do What We Do In Life  and Business, Charles Duhigg (Random House, 2014)
• Tipping Sacred Cows: Kick the Bad Work Habits That Masquerade as Virtues, Jake Breeden (Jossey-Bass, 2013)
• The Crossroads of Should and Must, Elle Luna (Workman Publishing, 2015)

The post Stuck in the Middle: Changing Corporate Culture appeared first on Alberta Venture.

Meet Olimpia Automation*

CEO: Grant Waterfield • Employees: 15 • 2014 Revenues: $3.2 million

Illustration Pete Ryan

Call it the curse of ambition: Olimpia Automation, a robotics manufacturing company, is by all means successful, but it’s not content to stay parked there. Eight years old now, Olimpia has brought in more than $12 million in revenue thanks to a strong back catalogue of industrial robotics products. CEO Grant Waterfield and vice-president Margaret Thorne were early participants in automotive robotics in Canada, and struck out on their own after envisioning a wider range of possibilities for the technologies they were working with. Olimpia has 15 employees, including two engineers and two designers at the company’s Calgary headquarters and nine employees at a manufacturing warehouse in Leduc. But the same impulse that drove the executive team to form Olimpia in the first place has come back with a vengeance after this early success. Robotics, while still on the leading edge of most industries, are descending in price, and competitors are springing up. So Olimpia has invested in a new flagship product – Harlie, an environmental monitoring robot for the oil and gas sector – and has a working prototype that it believes is ready for the market. Olimpia is hoping the bet pays off.

Harlie, Meet World

Olimpia’s first commercial product for the oil sands is a robot named Harlie that collects and analyzes soil samples from tailings deposits. Its goal is to better understand how the properties of tailings change over time and how they impact the environment. Harlie is essentially half robot and half unmanned all-terrain vehicle: It can take on rugged terrain and inclement weather, and features an ice auger that drills into the surface of the sand. Harlie’s sensory instruments track a vast array of parameters in real time.

Soil collection is traditionally a costly undertaking, done by human operators who, despite their best efforts, sometimes make mistakes. (They also require a salary.) The goal is for researchers, environmental monitoring and consulting agencies, and oil and gas companies to use Harlie in their environmental assessments and reclamation efforts. Olimpia believes there is enough of a financial incentive – especially with depressed oil prices – to turn the industry toward their product: It saves money and does the job even more effectively, and ultimately helps improve the company’s environmental record.

Olimpia’s Primary Markets

Buy Robot

Olimpia is pursuing two markets for Harlie: First, it can sell the technology to companies that can then use it for their own data collection purposes. Second, it can sell the data. Olimpia intends to set up a structured-pricing data library, which is a relatively predictable market, though its margins are smaller than for the hardware. North America is Olimpia’s biggest market, though the company exports many of its products around the world.

Finding a strategy for the robot takeover

Getting a new product to market – into a new market, for that matter – is a difficult task for anyone. We asked Jacqueline Drew, CEO of Calgary-based marketing company Tenato Strategy, what she thought Olimpia’s first steps should be.

Drew says Olimpia ought to do competitive research, either in-house or by hiring a consultant, to discover the other companies collecting this kind of information and manufacturing this kind of product. Should Olimpia conduct its own research, it would need to investigate the fundamentals: Who will its competitors be? What demographic should it pursue? It should conduct a web audit, search through its competitors’ public records and plunder research and business databases.

From there, the company can determine a price. What is the cost of manually collecting this data? What added value does Harlie provide? “You need to set pricing based on the structure of how you’re going to deliver the service,” she says. “If you’ve got something innovative with a lot of research and development behind it, you have to allow for the value that provides.”

She advises pricing the products based on potential cost savings, rather than potential profits, which can and will fluctuate without notice. It might seem counterintuitive, for example, to price Harlie higher than the cost of a human employee. But if Harlie gets the job done much faster, then it could still save the company money.

But Drew says the most important part may simply be getting the product in prospective clients’ hands. Management should discuss the financial viability of supplying credible operators like Husky or Shell with prototypes. Nothing boosts your brand’s validity as much as having a reputable client. But Olimpia should be careful about how the product is sold (or, for that matter, given) to the chosen companies. Drew says you need to find the right person at the right company, and hopefully someone high enough up in the operations side of the business to promote the product.

But that alone won’t put Olimpia on the stretch to home base. High on the success of the Harlie prototype as the company is, this is only the beginning. “You might bring in your first prototype and they say, ‘It doesn’t have compatibility with our off-site SCADE system,’” Drew says. Initial efforts to find clients also serves as market research. While no company should change its prototype based on one opinion, the feedback may suggest the data retrieval is clunky, or that it doesn’t jive with the industry standard operating system. In that case, it may benefit Olimpia more in the long run to return to the drawing board.

Follow Olimpia automation throughout Management Intel

This is the first of four instalments following Olimpia through its trials and tribulations. Here’s what you can expect to learn about the company in future issues of Alberta Venture:

1. Getting Harlie to market
2. Financing an expansion of Olimpia’s manufacturing base
3. Developing a second signature commercial product
4. Deciding the fate of Olimpia

* Olimpia is a fictitious company, but we’ve instilled it with real-world problems, and the experts are for real

The post Management Intel: Robotics company looks abroad for untapped markets appeared first on Alberta Venture.

Alberta Venture: What’s the first step in researching prospective markets?

Paul Craig: A decision to enter a new market should be deliberate. That means it should be part of an organization’s corporate strategy and enable the achievement of a goal.  The first step in researching prospective markets is to define a set of criteria that the organization will require a market to have – for example, market size, growth projections, customer requirements, competitive intensity, access to talent, etc.  Based on these requirements, an initial scan of the target markets would be conducted to narrow down the number of potential opportunities

AV: When looking for new markets, there’s obviously the incentive of increasing revenue. But are there lesser-known benefits to focus on?

PC: There are a few other key reasons. One is around brand awareness: you may want to expand into other markets to grow your brand. Secondly, you may want to enter a new market to try to diversify and reduce your risk. And depending on the situation, you may be moving into a new market as a defence or a blocking strategy against your competitors. Finally, new markets can provide you with access to new capabilities such as talent.

AV: How can you know for certain that a new market will be worth your company’s resources?

PC: This comes down to strategy and execution of the strategy. You’re looking to enter a new market for a reason, so whatever you try to do, the new market has to help you achieve your corporate strategy and has to support your organization’s goals and aspirations.

There are a number of factors you can use to help narrow down that focus. Is there an actual fit between your organization and the market you’re trying to get into? Are there language barriers? Does the location have the right access to the talent you require? There may also be favourable financial incentives to support investing in the market, for example.

Once you have a short list, you can compare apples to apples. Does the location have the right infrastructure in place? Do they have the real estate, the power and the roads in place to make it a viable location? If you’ll have resources on the ground, what is the cost of living there? What’s the cost of doing business? Are there regulatory or legal barriers to entry?

AV: Is there a common mistake that companies make, or a roadblock they continually run into?

PC: It really depends on how well prepared they are in advance. But there are a couple that stick out. If you’re moving into a location that has a lot of competition already, you should look at how your competitors will react if you bring a new product to the market. Are they going to react in an aggressive manner? Will they try to squeeze you out? You need to have plans in place to mitigate what they do.

And going back to your overall strategy, a typical mistake is that people enter a market for the wrong reasons; they don’t make a deliberate choice on how that market will help them achieve their goals. You want to make sure that if you’re planning to do this through the long term, you have a clear strategy.

Paul Craig is a senior manager, consulting, at Monitor Deloitte, and senior sector specialist in oil and gas at Deloitte. This interview has been edited for length and clarity.

The post Management Intel: New Frontiers appeared first on Alberta Venture.

The Play

As an investor in energy producers, I am guilty of spending far too much time thinking about what commodity prices are going to do and not nearly enough on making sure I own the lowest-cost producers.

When commodity prices are good, the low-cost producer generates the most cash flow. More importantly, when commodity prices are low, the low-cost producers are the ones that will survive. If you own the low cost producers, you can’t go too far wrong as an investor.

If the Montney in northwest Alberta is not the lowest-cost natural gas play on the continent, it’s close. The beauty of the Montney acreage that I’m writing about today is that there are three distinct productive Montney zones on the same land. That allows for significant cost efficiencies as the same infrastructure can be used for each zone. The Upper Montney is 100 per cent dry natural gas, while the Lower and Middle ­Montney are both liquids rich.

The Upper and Lower Montney are both pretty much de-risked, while the Middle Montney is still being evaluated. It is worth keeping in mind that with its high liquids content, the Middle Montney could be even better than the Upper and Lower parts of the play.

The Pick

Advantage Oil & Gas (TSX: AAV)

With pretty much every company just trying to survive, it is surprising to find one that is set for rapid growth even if there is no improvement in oil and gas prices.

That is Advantage Oil & Gas: a company with a clear sight to 22 per cent annualized production growth from 2015 through 2017. The core asset for Advantage is its Montney play in northwest Alberta. In total, the Glacier property has the potential for 1,400 drilling locations from the Upper, Middle and Lower Montney.

When you consider that Advantage’s three-year plan calls for drilling of 15 wells in 2015, 31 wells in 2016 and 24 wells in 2017, you start to realize how big a 1,400-well drilling inventory is.

The long-term growth potential here is nice, but more important is that these wells are extremely low cost. In the first quarter of 2015, Advantage’s all-in cash cost of production was only $0.84 per thousand cubic feet. There might be one or two companies that can rival that, but 99 per cent of the industry can’t.

Also important to know is that to achieve this 22 per cent annualized rate of growth, Advantage doesn’t believe it will need to either issue any equity or have any improvement in natural gas prices. That means that the growth is being self-funded, which is what a low-cost play allows for. Some of this cost of development will be funded by debt, but since production is rising at the same time, the total leverage of Advantage’s balance sheet shouldn’t increase.

On paper, Advantage doesn’t appear to be cheap by any of the conventional valuation metrics. But throw that out the window, I say. A company with this kind of core asset and long-term growth potential should never be cheaply valued.

You don’t need any valuation multiple expansion to do well with a company growing at 22 per cent per year and years of growth ahead. And most importantly, you can sleep well knowing that as the low-cost producer this will be the last man standing in the worst of commodity price environments.

The Postscript

After months of pain for oil and gas investors there isn’t much optimism left. But let me get optimistic about natural gas for just a second.

Let’s suppose that Canada actually does get its act in order and we get a couple of LNG export plants up and operating. That is going to increase the demand for natural gas which could help prices. At current depressed natural gas prices, Advantage can grow at a high rate without issuing shares or overleveraging its balance sheet. What could it do if natural gas prices were to double?

The answer is that it would generate boatloads of free cash flow that could be used to grow faster, pay dividends or buy back shares.

I have no confidence that natural gas prices will rise significantly, but with Advantage, an investor can do well without that happening and still get big optionality on a commodity price rebound. That is about all we can ask for as investors.

The post On the Money: The Advantage (Oil & Gas) Advantage appeared first on Alberta Venture.

Illustration Pete Ryan

Olimpia Automation* is between a rock and a hard place. The company’s new line of robotics, used to analyze tailings deposits from the oil sands, have attracted a lot of interest; since the launch of Harlie, major oil and gas companies and research consortiums, both at home and abroad, have pledged to sign six-figure contracts after a trial period. Now Olimpia wants to expand its manufacturing base and nearly double its production capacity, and the company is hoping to win over lenders to finance the expansion.

The Catch

There’s just one problem – for a manufacturing company of Olimpia’s size, the market for capital is vicious. David Plante, vice-president of Canadian Manufacturers and Exporters, Alberta division, says, “The type of investments [Olimpia] is looking for would fall squarely into what’s called, for venture capitalists, ‘the valley of death’ – if you’re looking for investment and you’re under $5 million, banks won’t touch it.”

This is for two reasons: The return on a manufacturing investment like Olimpia’s would be small change, relatively speaking, and the risk is higher. “Banks aren’t typically interested in these types of ventures,” Plante says.

He recommends that Olimpia look for capital by approaching venture capitalists and looking for government grants and incentives. The good news is that Olimpia has shown steady growth for eight years. And it has proven there’s a market for its product and that it has a productive workforce. Those are important when looking for help.

And Yet …

Andrea McLane, vice-president of commercial financial services and energy with RBC Royal Bank, thinks a major financial institution could finance the expansion – Olimpia just needs to tailor its process and expectations. “Olimpia should consider a lender with demonstrated knowledge and expertise in the oil and gas industry, who will take the time to understand their new flagship product and the competitive advantage it offers,” she says.

McLane says Olimpia should prove to its prospective lender that its cash flow will be sufficient to pay off new debt. But “[Olimpia] may need to consider injecting equity to support growth with the increase in debt, or curtail management draws to allow retained earnings to increase faster,” she says. It can also align long-term assets with debt options such as operating lines or credit cards, which can leverage its balance sheet to help secure a loan. And now is the time to renegotiate costs with suppliers or payment terms with customers.

Olimpia can pitch its expansion to venture capitalists and traditional financial institutions. Neither will be an easy case. But this is robotics we’re talking about, during a downturn to boot. Who said it’d be easy?

The post Management Intel: Olimpia Automation looks to expand appeared first on Alberta Venture.

Illustration Molly Little

I am on a business trip into the past. No, it’s not a metaphor. I’m in a hotel room, and I’m surrounded by Ghosts of Technologies Past. Except they are not ghosts: They are real, and in the case of the giant flat-screen television on one of the walls of the room, domineering and overwhelming.

And yet, for all intents and purposes … they’re useless.

I won’t turn the television on once in the three days I spend in the room. What for? News is being fed into my phone and laptop as it occurs. Ditto weather. Entertainment? Netflix, Hoopla, iTunes, Google+, et al. provide me with what I want when I want it, and not on some arbitrary schedule (and don’t get me started on commercials). I’m killing cable and satellite every time I click on Netflix. And television manufacturers?

This hotel room’s television set has no connectivity, and so would be useless to me even if my phone and laptop haven’t trained me to be indifferent to the big screen experience.

I unplug the room’s alarm-clock-radio so that I can charge my phone – which is my alarm, clock, radio, weather station, camera, art-creating-device and lifeline to the world. My phone is the single most important device I own, just as your phone is yours. It enables everything. It’s how I conduct interviews, check email and text with clients, colleagues, friends on six continents and mildly neglected children. With the help of a wireless keyboard, I’ve written and filed stories from a canoe in the middle of the Canadian North. I gently caress it as I set it down – perhaps I’m a little too attached – and then I look, quizzically, at the instrument beside it that is also a telephone.

It’s attached to a landline. Cute and quaint, perhaps, but also old and dirty. Nobody will use it to call me. For that matter, nobody will use my cellphone to call me either: they’ll text or email me if they need to change our interview time, want to meet me in the lobby, send me the address of the restaurant where the day’s final meeting is. That landline is there in the hotel room, why? So I can call the front desk to ask for a new pillow, more towels. Order room service.

True story: I end up calling the front desk from my cellphone because I can’t figure out how to make the landline work. “0” does not take me to the operator, and the buttons that might be labelled Front Desk, Room Service, HELP are so old, they’re smudged … I call the front desk, by the way, to tell them that while it’s lovely that there is high-speed Internet in the room, the plug through which it flows fits nothing on my laptop. For the love of God, there is a Wi-Fi network, right? Right. They give me instructions. I follow them. Run my phone off the hotel’s Wi-Fi as well, until it crashes – and then, I connect my laptop to my phone’s hot spot, and none of my technological needs are dependent on the hotel’s obsolete infrastructure.

Expensive obsolete infrastructure, with ongoing maintenance costs. I suppose once they buy 300 alarm-clock-radios, they might as well keep them in the rooms, but how much, do you think, in an age in which every single one of its clients has a cellphone, does the hotel spend maintaining the room-to-room-to-front-desk telephone system hardly anybody uses?

Way more than it needs to, than it ought to. And the same goes for pretty much every business operating today, says Ron McKenzie, senior vice-president of business with Shaw Communications. And they’re recognizing it. In December 2014, Coca Cola eliminated voice mail services at its headquarters; in June 2015, J.P. Morgan followed suit. Eliminate voice mail, and how much longer are you going to maintain that landline when all your people have cellphones? Especially in those professions in which “work” doesn’t really occur in the office but in the field, or with customers – or in airport lounges, train cars, potential clients’ board rooms?

Business is holding onto landlines for – well, it’s a variety of reasons, some of them valid (Conference calls! Long distance costs! I don’t want to risk dropping that call), most of them sentimental. And McKenzie isn’t calling for the end of landlines (although, um… d’you know the personal landline number of anyone anymore? And if you do … do they ever pick up?). He’s calling for the same type of integration of business communication most of us have created for ourselves in our personal lives.

“Voice used to be a phone on your desk,” McKenzie says. We’re both old enough to almost remember that. That phone on the desk was the way for clients, colleagues (ahem, headhunters) to reach you. Then came the cellphone. Do you remember – I do – being protective of that cellphone number? Giving it out only to the most trusted clients, intimate friends? (D’you still do that? You probably don’t – and if you do, there’s a reason your business isn’t growing. But we’ll talk about that another time.) “Now, we carry so many numbers. Home. Cell. Business.” Cottage? And when you look at a person’s business card … what number do you call?

As McKenzie sees it – there should be only one. That’s the philosophy behind the next generation hosted voice platform Shaw is launching this fall for its business customers. The buzz phrase is unified communication; what it means is the functionality of an old school landline (aka PBX – private branch exchange system) on a cloud-based platform with the collaborative capabilities of your computer, tablet and mobile. It means that if you’re a mega-business with an operator-receptionist, he can put calls through to your cellphone–desk phone simultaneously. With that internal four-digit number, that’s a corporate PBX phone system’s equivalent of a hotel’s room-to-room calling. Imagine it. One voice mail to check … Unified communication systems can come with almost limitless flexibility, scalability and customizable features. And it’s not just about voice: McKenzie’s most enthused about the overall integration of voice and data across all your devices – the ability to take a call made to your desk phone on your tablet or iPad if you’re on the data network, for example.

Me, I’m most enthused about this as a step towards businesses eliminating obsolete technologies. There are businesses, of course, that need complex phone systems. Is yours one of them? Or could you eliminate a hefty monthly fee – or, if you’re just starting up, a massive capital investment, not to mention the role of receptionist-operator at your company – by leveraging the reality that we all have cellphones, tablets and computers. And that we prefer to work off them.

There are costs and challenges that come with that approach of course – but as McKenzie points out, there are also innovative, economic solutions.

I get off the phone (cell) with McKenzie. Save the notes of our interview on my laptop, and in the Cloud. Wonder if the next guest will plug in the alarm-clock-radio I’ve unplugged. See a text on my cell from my daughter’s iPad.

“Mom, the landline is ringing. It’s been like, 60 rings. It’s not you calling, is it?”

“It’s not. Um. You could have picked it up, you know. If you thought it was me?”

She gives me a “LOL.” Pick up the landline? Who does that? Why?

The hotel room landline starts to ring. I stare at it, stupefied. What the hell? Pick it up, gingerly, cautiously. “Hello?”

It’s the front desk. Calling to double-check that I’ve gotten my Wi-Fi to work. I say yes. Kinda wish they had just texted the question to me. I’d have sent them a thumbs-up emoji.

The post Why do hotels have landlines, let alone a clock radio? appeared first on Alberta Venture.

Alberta Venture: What are the benefits of seeking financing from an industry-focused venture capital company or the venture capital division of your target companies?

David Sparrow: When you pitch to an industry-focused (like Emergex, Enertech or Chrysalix) or venture capital division of oil and gas companies, for example, they have market context and can give you a quicker and more meaningful response – positive or negative – to your financing request in terms of overall acceptability, structure, valuation and market strategy.

There is naturally a higher possibility of making a more reasonable deal with the informed parties. More general industry-focused venture capital groups are still a potential, albeit with lower probability on a relative basis. Other venture capital groups may price in greater risk premiums in valuing the opportunity compared to an industry-specific group.

AV: How should a company tailor its pitches to these venture capital companies? In what ways will it be different from their pitches to traditional venture capital companies or banks?

DS: You should look to demonstrate a greater “second-level” degree of technical understanding on industry issues and how your product provides the solution. At the same time, fewer efforts are required for general industry fluff.

AV: Should a venture capital company tied to, say, a major oil and gas company decide to become an equity investor, how might the deal be different from one with a traditional bank?

DS: Any venture capital investment will generally come with board positions and depending on the level of investment (majority versus minority) potentially effective control. Traditional banks look for first-position security of the assets they finance and the cash flows those assets generate to repay the loans. Venture capital is true equity, generally participating pari passu with existing and founding shareholders, after any claims by secured lenders. With this perspective, the return expectations of venture capital can be easily greater than 25 per cent as opposed to prime rate plus zero per cent to five per cent for secured lenders and traditional banks.

AV: Say my company is looking for financing to manufacture a fleet of its signature product but also to invest in specialized equipment or fixed assets. How will this impact such companies’ likelihood of investing?

DS: The fleet of products is also a fixed asset if used on customer jobs and returned to the company at the completion, as opposed to sold to customers permanently then considered inventory. Assuming the products are proprietary, and there’s value in controlling how they are used – say, rented to customers with service contracts, and operating personnel, which would capture more overall revenue and create a greater dependence on the products – then it would be strategic to avoid selling the product.

David Sparrow is a partner and senior managing director, corporate finance, at Deloitte.

The post Management Intel: Know Your Market appeared first on Alberta Venture.