We’re here with Gregory Levey, co-founder of Toronto-based Figure 1 Inc., a great startup that has developed a photosharing application for health-care professionals.
Greg, it’s great to sit down with you and hear about your story. In our experience, founders really appreciate hearing from other founders about what it takes to build a growth company. Let’s talk about that – starting from the beginning!
At the outset, it was one of my co-founders, Dr. Joshua Landy, who recognized a problem in his domain. To find a solution that people are interested in, you need domain knowledge and you need to be passionate about solving a real problem. That’s much more important than just looking for a startup to do. Josh had that domain knowledge. As a doctor, Josh could think about the use case and why doctors needed such a product.
Our third co-founder, Richard Penner, heard about the idea at the same time as me. He’s deeply technical, a full stack engineer. He liked the idea as well and so three of us jumped in. I went about thinking how to communicate, market and finance the idea.
Okay, so you have this great idea and a team. Now what? Do you hire developers or go outside? What is the trajectory from idea to product?
No, I think that if you’re just going to outsource development, it will be much harder to succeed. Our technical co-founder built the prototype pretty quickly – in about six weeks or so – and based on that we went forward.
So how do you pick the right people to bring into the house?
Knowing people for a long time is a good way to go. That way you know them in bad times too. These things in incubators or school where they put you together with someone and say “you guys go start a company” – that’s no way to get the right fit.
Startups are so risky that you have to mitigate every risk you can and working with the right people is essential. If you can work with somebody you know it might increase your chances.
What’s the biggest trap startups can fall into that lead to failure?
I think that there’s a danger for every startup to lose focus because there are so many opportunities. Every day there’s some new flashy thing that we could chase. Your resources are so limited that if you chase the wrong thing, you go down the wrong rabbit hole, it could be fatal.
Let’s talk about where you’re at now. Does having raised money take some of the pressure off or does it ratchet the pressure up?
It takes off some, but there is also more pressure because investors don’t fund you to maintain things as they are. They give you money in order for you to grow. It’s throwing fuel on the fire. You shouldn’t take VC money unless you are trying to build something huge. The growth rate has to be crazy and you have to be ready to raise money again when the time comes. Not every company should be doing that or can do that, and not every founder wants to do that.
How did you know how much capital you needed to raise? What’s driving that sort of analysis?
A smart way to do it is to figure out what you need to accomplish to get to the next fundraising round. The typical time period they give you is 18 months. So, you figure out what expenses you’ll need for those 18 months to get to whatever milestones will get you to the next place.
Let’s talk about “smart money” as a concept – is that something you believe in?
Yes. This is clear when you see what smart investors can do. They can help with product, they can help with introductions, or with new hires, or with planning your funding.
For example, we work with Union Square Ventures. They’re investors in Twitter, Tumblr, Foursquare, Etsy. They have done very well. And they’re great and they’re super smart and super supportive. Invaluable really, way beyond the money.
Comparing local capital and American capital, what are your thoughts on the differences between the two landscapes?
Canadian companies who go to U.S. investors will often see more risk tolerance, and bigger thinking. It’s not some kind of patriotic or anti-patriotic thing, it’s just strategic.
Talk to us about the decision to stay in Toronto; did that happen organically or is it a strategic decision?
It just happened that way, and although it might not be sustainable, I’d like to keep our main presence here and probably most, if not all, of our engineers. This is a great place for engineering.
But, for a lot of the other positions as we scale, we may have to eventually have a presence elsewhere
You said this is a great place for engineers, why is that?
Well you’ve got world-class engineering schools right nearby, and the market for engineers is not as competitive as elsewhere.
As you think about your journey over the past year and where you are going, does anything jump out for you in terms of things that you had an inkling to do which were later validated and you’re really glad you did them?
Yes, definitely – one decision we made was about when to go international. The temptation is, I think, to just open up to the world right away, but we stayed focused on North America for a long time first. Now, as we go global, we are doing it slowly and strategically.
And when you go international, is it partnering with locals on the ground or are you keeping everybody under the same tent?
One of the big things we’ve done is create medical student ambassadors and what we call fellows that are typically young health-care practioners. We have 500 ambassadors right now, and they are super active. In each market, we go to the ambassadors first, and we get them working at their schools. They have been really helpful in France, the U.K, and South Africa. And they are all students. They are great at turning to their networks and helping us build traction.
That’s a great tip for startups – engage your supporters and turn them into evangelists!
Greg, thanks so much for your time. It’s great to hear your thoughts on building a growth business in Toronto. There are some great tips for other founders here! All the best with Figure 1!
Daniel Everall is an articling student at Aird & Berlis LLP.