Canadian Startup Case Study Underscores Canada’s VC Challenges


UPDATE: It is worth noting that this 2012 case study on a company in British Columbia, Mobile Data International, and its CEO Barclay Isherwood, attracted the ire of followers of Werner Erhard, prominent San Francisco New Age cult leader, with similarities to L. Ron Hubbard, founder of Scientology.  It is a lens into New Age cults at that time.  In the same way that Scientology reacts to attacks on itself. Erhard’s followers attacked this post in a frenzy of irrational hatred. 

I can only hope that this is a serious effort to reverse this national problem of short-term thinking.

I have seen the problems with Canadian investors first hand, and have the following case study to share here.

Many light years ago, I worked for a pioneering wireless data company, Mobile Data International, in Richmond, BC.   I thought this company was so promising, I came from the UK to join it.  Regrettably, the Board of Directors and the Canadian investors were more interested in making a quick profit than in building the company to potentially be the company that established itself as a global leader in wireless data.  The CEO of MDI, Barclay Isherwood, was an avid follower of California new-age guru, Werner Erhard  aka Jack Rosenberg, of erhard seminars training, better known as “est”.  Erhard’s career has been marked by allegations, controversy, and legal disputes.  Leading academics have raised serious questions about Erhard’s qualifications, his businesses, and the highly authoritarian style of his organizations.

Finding that MDI was influenced by Erhard was a supreme irony. Years before, while in university, my housemate was also infatuated with Erhard.  My housemate eventually quit university and joined “est” as one of Erhard’s trusted senior lieutenants. I got to see “est” up close and very personally. I was brow beaten by my friend, who tried to convince me how important it was to take “the training” as they called it, at a price I could not afford. I was disturbed enough from what I saw from outside the cult, that nothing altered my view that est was extremely dangerous. Since that time, Erhard has run from his critics, and reincarnated himself and “est” into a new group called “The Forum” and another group called “Landmark.”

Isherwood was spending company money to have Erhard’s people “hang out”  at MDI, and he kept his girlfriend, Evi Truu on the payroll, supposedly reporting to me, but via “pillow talk” apparently also reporting to Isherwood himself. The Board took no action, employees were asking questions among themselves, and morale was suffering.  I brought Intel’s legendary Marketing VP, Bill Davidow to MDI for a speaking engagement.  I was flabbergasted to be told that no one liked Davidow, as he was too “arrogant.”   The company was floated on the Toronto exchange much too early, and as a consequence, MDI was eventually sold for a relative pittance to Motorola Canada in a hostile takeover. Isherwood has tried to take credit for selling out to Motorola, but the truth is otherwise. The investors made a modest return, but Canadian investors don’t seem to think like Silicon Valley.  In the years since, I have seen offers in California in the hundreds of millions turned down flat, and million dollar cheques thrown back across the table.   The MDI employees were mostly laid off and MDI’s doors were eventually shuttered.  The MDI building, an excessively elegant structure that would have raised eyebrows in California, sat idle in Richmond for 20 years, until it was finally leased again as the security headquarters, ringed in barbed wire, for the 2010 Olympics.

Let’s hope that this new realization of the need to build innovation in Canada strikes a chord, and that Canada doesn’t repeat the mistakes that occurred at Mobile Data International.

http://www.techvibes.com/global/category/start-up

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