From the Globe and Mail, great to see NB being viewed in such a positive lite!!
There are already rumors of a number of spinoff start ups in Saint John.
Gerry Pond worked 38 years for New Brunswick’s phone company, rising to the president’s office and to paycheques of hundreds of thousands of dollars a year.
But a decade after leaving, he figures that as an investor, he has made more money this year from just one deal than from his entire career with NBTel. It’s because he took a bet on a Fredericton university dropout named Chris Newton.
The windfall is one ripple from the spectacular sale of two tech startups that the 39-year-old Mr. Newton founded – and the 67-year-old Mr. Pond helped fund and nurture. The deals, for Radian6 Technologies and Q1 Labs, are transforming the image of New Brunswick from a have-not province dominated by pulp, petroleum and potato barons to an innovation hotbed populated by smart young techies and risk-embracing investors.
Mr. Pond isn’t the only person in New Brunswick cashing in on Mr. Newton’s fertile mind. It is estimated as many as 50 millionaires will have been created, or further enriched, out of the nearly $1-billion proceeds from the two exit deals with corporate buyers.
It means more Porsches in civil-service-sleepy Fredericton, more mansions in Saint John’s affluent bedroom of Rothesay, more fishing camps on the Miramichi – but the most valuable offshoot is an explosion of potential seed capital with which to write the next big chapter in New Brunswick technology.
Even after the two big wins of 2011, “I can assure you that there will be a third and a fourth of global scale,” predicts Mr. Pond, who has 12 more firms in his stable of startups, where investments of money and guidance have made him the godfather of the burgeoning tech community.
“I’m hoping that some of this passion for startups has rubbed off,” says Mr. Newton, who continues to work at Radian6 in Fredericton – under new owner Salesforce.com of San Francisco – while acknowledging an ambition to become an influential angel investor like Mr. Pond.
For Mr. Pond, chairman of high-tech incubator Mariner Partners Inc., of Saint John, the game has never been just about money, but building innovation in his home province. For decades, New Brunswick, population 750,000, has been striving to shed its image as a hewer of natural resources, embarking on get-rich schemes like the Bricklin sports-car fiasco of the 1970s and evolving, more recently, into a low-cost call-centre hub. Now it has planted the seed of a knowledge economy built on the Silicon Valley and Waterloo, Ont., models.
The idea is to invest a little money in a lot of ventures, in the hope of one big score that would truly change the game. Incredibly, New Brunswick has landed two game-changers in six months.
“This would have a big impact anywhere, but especially in a province that is trying to diversify its economy – which needs more drivers than just natural resources,” Mr. Pond says.
The story starts two decades ago at the University of New Brunswick, where Mr. Newton was enrolled as a bright computer science student, working full-time for the university’s IT department while taking classes.
The university’s networks were under constant attack by outside threats, so Mr. Newton came up with software that helped track the incursions. The university supported his efforts to turn the concept into a company, Q1 Labs. Soon, he had no time for classes and quit to build a team and attract investor-mentors like Saint John’s Brian Flood and, through him, Mr. Pond.
As Q1 grew beyond its entrepreneurial roots, a new management team came in and the company moved its head office to Boston, while retaining an R&D lab in Fredericton. Still a shareholder, Mr. Newton looked around for his next gig, and focused on cloud computing and the booming area of social media.
He started working on technology that would allow clients to monitor what was being said about them in social media. Mr. Pond, along with a raft of venture capitalists, backed the concept that became Radian6. After five years of existence, it was acquired in March by Salesforce.com for $276-million in cash and $50-million in stock. Mr. Pond says that deal alone produced a payday that eclipsed his NBTel career earnings.
And it was just the beginning. This month, IBM announced it is buying Q1 Labs, now 10 years old. IBM did not disclose a price, but the deal is bigger than the one involving Radian6.
Mr. Newton has a talent for collaboration, says Calvin Milbury, chief executive of the New Brunswick Innovation Foundation, a provincially funded agency that backed Radian6 in its early days. “One of the neat things about him is he sees he can’t do it alone. His predisposition is to engage others in the process of creating the company. That’s unlike a lot of other entrepreneurs who strive to do it all on their own.”
Mr. Milbury’s enthusiasm reflects the fact that his organization scored big-time by believing in Mr. Newton. In 2006, it provided $50,000 in seed money to Radian6, and followed up two years later with $277,000. In the Salesforce deal this year, it walked away with a return of $9.25-million, which translates into 28 times its original investment.
With this new generation of young tycoons, New Brunswick’s moneyed class might finally shrug off its historical tendency for understatement. The credo has been to own expensive but not flashy cars, respectable but not magnificent mansions. Indeed, Mr. Newton says he doesn’t care a lot about possessions, much in the tradition of his elders.
But he admits to one weakness – sports cars. He has invested in a Porsche 911 Turbo, fulfilling a dream. “I never presumed I would be in position to own one,” he marvels.
Now, its presence on Fredericton’s quiet streets will give the next wave of entrepreneurs something to shoot for.
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