The government could get involved, but for most people, I would assume (could be wrong assumption) that most of the personal information in Facebook is already available to the public somewhere else on the web, weakening any case the government would have against Facebook. Besides, who doesn’t have pictures of themselves or videos somewhere on the web that are a lot more damaging to their image or privacy than the information in Facebook. With everybody walking around with a GPS device and a camera connected to the Internet, this situation will only get worse.

I do not trust Facebook with my personal information, nor do I trust any other site or online service with my personal information. Call me paranoid. Besides, nothing’s free. The advertising business model implies that the user data will be used for “targeted ads”. I think it’s wishful thinking to believe that the personal information we put in the cloud is private.

That being said, what Facebook is doing is wrong. Using an industry standard and the assumed trust that users have in the TOS process to make sweeping changes to a user’s rights is both unethical and abusive behavior, not unlike how monopolies treat their users/customers. Facebook is behaving like a company that firmly believes it has a strong enough position with its users to shove just about anything down their throat without much consequence. Does Facebook believe it has a monopoly position in the social web?

There’s a silver lining here for those of us concerned about the dangerous amount of power that Facebook wields on the social web. By opening up its data to the world, Facebook is at the same time making it a lot easier for competitors to access its users and migrate them to competing services. The value of Facebook is in its data, the fact that it is extremely difficult for users to port their personal information to a competing service, the amount of time spent and regularity of the visits of its members. By opening up the data to search engines and the web, other social networks will now be able to more easily move users to their services along with their data. I believe it is in Facebook’s best interest to remain as closed as possible and keep control of what comes into its kingdom. They already have over 350M+ active users and are still growing double digit year-to-year. Everybody is on Facebook or will be at some point. By opening up to the Internet, it is at risk of morphing into it. Facebook should follow Apple’s model, not Twitter’s. Facebook is an Internet within the Internet that third parties want access to and it should control who/what gets in and when as much as possible, just like Apple does with the iPhone. Facebook’s semi-openness is its biggest asset. Opening up will cause its demise.

JS Cournoyer is a Principal with Blunt, a Partner with Montreal Startup and an entrepreneur.

js@montrealstartup.com

http://twitter.com/jscournoyer

http://www.socialbuckets.com/jscournoyer/JS_Cournoyer

LEGAL DISCLAIMER: Please note we are not soliciting investments from anyone!

We are submitting a proposal to Investissement Quebec to manage one of the recently announced $41.25M seed-funds.

We have some big plans on how we are going to use this fund to really accelerate Quebec (and Canada’s) web-centric start-up community ! Out of respect for the process we won’t give any details here, but if you want to contribute input and ideas into what you the entrepreneurs are looking for in a VC, now is your chance to let us know !

We would also like to hear your opinions on how you think we have done so far in terms of our investment activity level, the way we have dealt with you as entrepreneurs, whether we seem to “get” the web-centric eco-system, whether you feel confident in presenting us deals and ways in which we could improve things going forward.

Please use the comment box below (en francais or in english) and thanks in advance for your support and input !

It’s also great to have iNovia as an investor alongside us, as well as my friend Oleg Tscheltzoff , co-founder of Fotolia.com.

(Given that Oleg is investing in Canada and that Fotolia has recently appointed Calgary based, Patrick Lor as it’s North American President, perhaps any Canadian’s reading this post could give Fotolia a try instead of iStock Photo next time you need some stock photography !)

Anyway – here is the official press release.

StatusNet Closes $875K Seed Financing Round

Delivers first open-source micro-blogging platform

Montreal, Canada, October 27, 2009 – StatusNet, the company that develops an Open Source micro-blogging platform, has completed an $875,000 financing round. Investors include local venture capital groups Montreal Start Up and iNovia Capital as well as European angel investor Oleg Tscheltzoff of Fotolia.com.

“We’re excited by the opportunity for growth this investment brings,” says Evan Prodromou, CEO of StatusNet Inc. “We plan to use this capital to build the sales, support and marketing power needed to take our software and services to the marketplace.”

Founded in 2008, StatusNet develops the software that runs hundreds of micro-blogging sites across the Web, including the popular Identi.ca community. The StatusNet engine allows companies and communities to set up their own Twitter-like Web site, so that employees, customers or friends can share quick status updates, links, and files. The engine includes APIs and tools to receive and send updates through IM and SMS as well as through Twitter and Facebook.

“StatusNet is ready to take its place in the market as the WordPress of microblogging,” says John Stokes, lead partner at Montreal Start Up. “The growth of the Twitter platform has proven the importance of this medium, and we believe that StatusNet can play an important role in bringing this capability to broader audiences.”

The company has commercialized the Open Source offering with support, customization services, and a hosting platform at status.net. The hosted service, currently in private beta, is scheduled to launch publicly before the year end. Customers can choose between private sites, similar to yammer.com, and public sites for publishing or community engagement.

“iNovia team recognizes the opportunity to bring micro-blogging to corporate users, media outlets and brands among others,” says Joško Bobanović, principal at iNovia Capital. “Evan and his team have demonstrated they can provide a valuable service while being supported by a strong business model. We look forward to helping this dynamic team further its growth in the ever-changing business market.”

For further information see http://status.net or contact Kristine Matulis (kristine@status.net)

About StatusNet

Founded in 2008 by CEO Evan Prodromou, StatusNet Inc. develops the Open Source microblogging tool by the same name. Based in Montreal, the nine-person team provides service and support as well as the hosting platform status.net

About Montreal Start Up:

People, ideas, finance, and luck: these four factors are necessary to create any successful company; Montreal Start Up provides start-up finance to people with ideas. For more information, visit www.montrealstartup.com.

About iNovia Capital

iNovia provides venture capital to entrepreneurs who transform innovations into successful companies.   The team is comprised of sector experts in information technology, life sciences, and clean tech.  In addition, iNovia’s extensive network of industry and academic partners provides portfolio companies with unique access to intellectual property.  iNovia has $165M under management across two seed and early stage funds. For more information, visit www.inoviacapital.com or follow iNovia on Twitter at http://twitter.com/iNovia

About Oleg Tscheltzoff

Oleg Tscheltzoff co-founded fotolia.com, the first global online social marketplace for creative digital stock images in 11 languages, where photographers and designers of all levels can store, share and monetize their photographs and illustrations. As CEO, he led the company from inception to its rapid rise to one of the world’s largest microstock photography site. On May 21, 2009, Fotolia launched photoxpress.com, the world’s largest free stock images web site.

Twttr (as it was called then) was first “launched” in 2006 by a now defunct company called Odeo. A year or so later the IP was spun off/out and the product and the company were both named Twitter. In early 2008, Fortune magazine referred to Twitter as “the hottest Web startup since … gosh, February at least.” – and that was when they didn’t really understand what Twitter was !

Xerox had a great deal of initial success and managed a listing on the NYSE.

If it were another time in history, Twitter too might have listed by now, but the company still has a suggested valuation of between $10B and $300M.

Xerox had incredibly strong brand recognition; so much so that a photocopier from any manufacturer was still referred to as a xerox machine and “xerox” actually became a verb.

Twitter had a head start here – the word was a verb, but pretty much any 140 character message is now days referred to as a tweet.

Xerox initially produced the only photocopiers on the market and then, when other companies launched competitive products, they still had a technology edge that enabled them to keep ahead of the market. When the competitors caught up to (and passed) Xerox in terms of features and technology, the company tried to compete on brand recognition. But their brand was so synonymous with photocopying it actually lost much of its strength – I used to work at Xerox and often had potential customers asking how much of a trade-in they could get on their old xerox machine – only to find out that it was actually made by Canon.

Twitter was the first micro-blogging platform to really capture significant market share, but other micro-blogging solutions, such as Yammer and Present.ly, have subsequently emerged. Federated, open-source solutions, such as those based on StatusNet (formerly called Laconi.ca) are now providing hosted and stand-alone options for those wanting a brandable, scalable and more reliable micro-blogging platform.

Twitter no longer has more features than it’s competitors and to-date it has not been able to provide the sort of service levels that paying customers will expect / demand. Just as Xerox did – Twitter may shortly be left to compete based on its brand recognition.

So how long was Xerox able to compete using brand recognition alone? Well it’s at least 50 years and counting (which I’d guess is about equal to 5-10 web years?) so the outlook isn’t immediately gloomy for Twitter – but by the time Twitter launched its service in 2007, Xerox was down to number 5 in total US photocopier sales and its total market share was only 9%.

These days I don’t need a Xerox to xerox something – and we don’t need Twitter to tweet something. Sure, I do most of my current tweets on Twitter, but I also tweet on Identi.ca and, as soon as Twhirl or Seesmic or TweetDeck support it,  i’ll tweet on msu.status.net too . I always use web, desktop or mobile clients to tweet, so once i’ve set up my account(s) on my client I don’t think much about which platform or protocol i’m using (as long as it is up!) – I just tweet and follow.

Sure, there is still some stuff that needs to be worked out to ensure complete interoperability between the different micro-blogging protocols, but that’s just a matter of time – and it’s much easier to resolve than trying to solve the reliability of any “walled-garden” solution.

All this too say, Twitter may be a player in the micro-blogging world of the future, but brand recognition alone will not be enough to stop it becoming the Xerox of Microblogging.

(Disclosure: MSU is an investor in StatusNet)

LaunchBox Digital is based in Washington DC but held there demo day in a lawyers office near Dulles Airport. This was convenient to get to for out of town visitors and also meant that people could fly in and fly out on the same day, this did however reduce the opportunity for extended networking between the attendees and gave me little sense of the local tech environment in which the companies had been working. My understanding is that LaunchBox was changing location and this somewhat impacted there choice of venue – in addition the teams were flying out to Silicon Valley that night or the next day, so convenience to the airport was a benefit there too.

Techstars on the other hand is based in Boulder, Colorado which is about 1 hr’s drive from the nearest major airport – in Denver. Compared to LaunchBox Digital it was a really trek to get there (if your visiting Boulder rent a car !) and meant that everyone from out of town would have had to stay for a least one night – I had to stay for two – but it ended up being worth the extra night. The TechStars event itself was held at the Boulder Theatre in ‘downtown” Boulder and TechStars was literally “up in lights”.

Techstars Up in Lights

Additionally, the demo day event itself was followed by a BBQ at one of the lawyers houses which ended up being a great atmosphere to network with mentors, other investors and the founders themselves.

The LaunchBox Digital event was attended by approximately 80 people. There were no company details on the name badges so it made it hard to know how many people in the room were investors and how many were service providers.

TechStars was attended by approximately 300 people, plus another 50 or so students and members of the local community who were allowed to sit upstairs and view the presentations. There were investors from a number of “web 2.0” VC firms including First Round Capital, Foundry Group and Union Square Ventures (Fred Wilson) as well as a number of local VC’s. There were also other members of the web 2.0 glitterati such as Robert Scoble.

My initial impressions of both events were that whilst both were well supported, TechStars seemed to be be more heavily involved in the local tech community and was definately on the the “Web 2.0 venture circuit”, whereas LaunchBox Digital seemed to be doing great things but their companies were not as much a part of the local tech scene and the program was not yet established enough to attract some of the more high profile investors.

I would hazard a guess that there were three main reasons for these differences. Firstly, David Cohen was able to get Brad Feld and the Foundry Group team involved. Brad et al. have funded many internet businesses and have formed strong relationships over many years with Founders and co-investors who had come on as mentors. Secondly, the town of Boulder is relatively small and TechStars is a big deal for the community, and thirdly, not only has the program being running longer, but Boulder’s tech community is recognized as being a lot more mature than Washington DC’s.

COMPANY PITCHES

As a presenting location the Boulder Theatre was excellent. The screen was the size of a movie screen and the presenters were elevated and truly were “on a stage”.

Big Screen, big stage!

If I disassociate the pitch from the pitch environment, I would say that in general the quality of the pitch deliveries were on a par for both demo-day events.

LaunchBox Digital Companies:

Bands in Town, Keen Guides, KeepFu, Legal River, SEC Watch, The Social Collective, TapMetrics, Unblab.

Standout companies for me: Bands in Town, SEC Watch.

Worthy mention: The Social Collective, Tap Metrics.

Good summaries of these companies by Sean Green can be found on TechCrunch.

Techstars:

Next Big Sound, Everlater, Vanilla Forums, Send Grid, Take Comics, Rezora, Retel, TimZon, Mailana, Spry

Standout companies for me: Next Big Sound, Take Comics

Worthy mention: Vanilla Forums.

Good summaries of these companies by Don Dodge can be found on TechCrunch.

I was actually interested in more of the businesses from the LaunchBox Digital cohort than the TechStars group, but this is more down to personal interests and experience than a reflection on the quality of the ideas or entrepreneurs.

Boris Mann from BootUp Labs in Vancouver did a nice write up on his take of TechStars and i’d agree with a lot of what he said and in particular his view that most of the TechStars companies were beyond the “idea stage” when they joined the program. I felt that LaunchBox Digital had taken companies a little earlier in their development than TechStars – I don’t know if these are conscious choices made by the two programs or whether it varies from cohort to cohort.

As a point to note, of the 10 founding groups at TechStars, two were from the UK, one were French and one were Canadian. I think all of the companies at LaunchBox Digital were from the US.

FOUNDER’S THOUGHTS

I had much more time to speak with the Founders at TechStars than at LaunchBox. The key messages that came through from the TechStars founders were that the mentors were awesome and the camaraderie between the teams really helped spur them on. They all felt that they had a great deal of access to the mentors and the TechStars team. ( A number of them pointed out that they saw this as a big advantage over Y-Combinator where they had the impression that teams might get access to Paul Graham for 20 mins a week – if they were lucky).

Whilst they could have worked from their apartments, most of the Founders time was spent at the “TechStars Bunker”. They felt that this common location was very important for the spirit of the group.

In choosing whether they were going to stay in Boulder or what might make them move somewhere else one of the key factors that came through was that they wanted to make sure they had an active support community around them and one that they could contribute to – as they felt they had had in Boulder.

STRUCTURING A “FEED CAPITAL” PROGRAM

Some suggestions:

1)   Involve the teams in the local local tech scene (and/or vice versa)

2)   Ensure that teams have plenty of opportunity to interact with each other and ideally have a place they can work in close proximity to each other.

3)   Have the highest quality of mentors possible from the local community but also bring in guest mentors from outside the local community.

4)   Include people in the founding group that have credibility with the investor community you want to attract

5)   Put great effort into ensuring demo day creates a lasting impression on the people who attend – a lasting impression of the actual pitches but also of host city and it’s tech community

6)   Significant activity should be invested in PR (video and text) to raise the profile of the program.

Thanks to Sean and the team at LaunchBox Digital and David and the team at Techstars for a great couple of days – keep up the great work !

I will be mentoring at Seedcamp in the UK next month and it will be interesting to add a European perspective to everything.

We have often had the debate about how much time is needed to raise your first follow-on round. The average time quoted is between 3 and 4 months – we have seen a range of 30 days to 7 months.

30 days was based pretty much on doing an internal round and letting regular co-investors into the deal – this is the only way it’s going to be that quick.

Those raises that have taken 5 months or longer are probably because of one of two reasons:

A) The business had not achieved it’s significant milestones (showed uptake / traction) in the time frame it expected.

B) The market was moving very quickly and the business hadn’t absorbed and reacted to the changes quickly enough.

So how do you pull yourself out of the hole in these situations ?

In the case of A) failing to hit milestones you have two options:

One option requires you to explain the reasoning behind the failure to hit anticipated milestones, explain how you have adjusted things to achieve the milestones and raise a small bridge round to give you the time to hit the (revised) milestone.

The second option requires you to redefine your milestone retrospectively – showing that you had achieved a milestone (but not the original one) with the money you were given and that you are now raising a round to enable you to prove uptake / traction.

My recommendation is to choose the option that is closest to the truth. Sometimes (option 1) your lack of experience / good advice means that you just don’t execute well enough – in this case you need to show investors the extent of learning your experience has provided and hope that they still have faith in you. Sometimes (option 2) the milestone you originally set becomes irrelevant and hitting another milestone is genuinely more important.

In the case of B) not evolving your business quickly enough – this nearly always comes down to either a failure to execute (see above) or more often an unwillingness to listen to the advice of others.

One of the hardest things to do as an entrepreneur is to be able to have your head down focused on execution but at the same time be aware of everything that is happening around you. Really listening to external voices (advisors, mentors, investors) is probably the best way to keep a balanced view of where your offering sits in the overall eco-system. If everyone is telling you that the market is changing, then you need to considering changing too.

In some cases this just means acknowledging the shift in the market as part of your pitch and highlighting how these shifts might affect your business. In other cases it may mean that the product (or product development roadmap) may need to be changed to take account of the market shifts.

In either case you need to show new investors that you have the ability to evolve your business quickly in the future and show to current investors that you are now more open and willing to take input and advice – and hope that they still have faith in you.

Work hard to maintain the faith of your existing investors – because without that, it’s going to be much hard to raise follow-on financing if (when) something (inevitably) doesn’t go to plan.

Hope to see you there!

• Two teams, one composed of investors, the other is composed of tech start-up founders and employees.
• Each team must maintain a minimum of one representative of each sex on the field at all times.
• Absolutely no skill required! It is all about having fun with old friends and making new ones. Anyone taking themselves too seriously will be subjected to disapproving frowns and made the butt of many jokes.

Sign-up here to let us know which times are most convenient for you and we’ll let you know the Where and When of this awesome event!

There were 20 companies and about 80 mentors !

Mentors were split into groups of eight and each group spent about 30 mins each with 8 of the 20 companies. The feedback on the event from the mentors and the entrepreneurs was really positive and I personally can’t wait to do it again.

Seedcamp runs a number of mini-Seedcamps in 6 European cities and then hosts "the full monty" once a year (to date this has been held in London).This is structually different to the other "feed capital" programs and may work well in Canada.

Interestingly the type of mentors invited were very broad. Of course there were investors and experienced entrepreneurs, but there were also a number of people from industry and some recent grads from the Seedcamp program. I think that this only adds support to the feedback that comes from all the feed capital programs, showing that knowledge transfer between smart founders plays as much a role as knowledge gained from mentors / advisors.

I’ve now been to a Seedcamp event, a Y-Combinator event and Alan MacIntosh (one of MSU’s other Partners) has also been involved in Launch Box Digital. I can honestly say that the raw quality of entrepreneurs and ideas that we see in Montreal (and this also applies to the limited number of entrepreneurs I’ve met in other parts of Canada) are as good as anywhere else; but our entrepreneurs must continually compete and co-operate in order to push themselves harder (ie smarter).

Whenever possible MSU tries to get the Founders of its portfolio companies to get together and engage in some co-opetition. We will continue to do more of this and we are now also looking to find ways in which we can get other funded and "to-be-funded" entrepreneurs in Canada involved in these sessions.

Look out for some upcoming MSU out-reach events!