In the previous blog, we talked about letting the market be your guru. Businesses can benefit greatly by allowing the market to guide an idea through the many stages of its development. This principle guides Wesley Clover, an organization built by entrepreneur Terry Matthews to incubate technology start-ups around the world.
A couple years ago, in the halls of the University of Victoria’s School of Business (now renamed the Gustavson School of Business), our Entrepreneurship class was paid a surprise visit from a man whom most of us had never heard of, Terry Matthews. He told us about Mitel, the telecommunications hardware/software company he built from the ground up, and touched on a few other high points in his life. Some of the students were starry-eyed about sitting in the presence of such a big-time entrepreneur, like the MBA student who, when Terry finished his presentation, promptly asked what his net worth is. But others were much more interested in his methodology for building a business, a methodology that he has created at Wesley Clover.
A few weeks after Terry’s lecture, his son Owen, who now runs Wesley Clover, was in giving a small group of students a talk about the organization. The Wesley Clover model is to take a select group of university students, usually three or four from engineering and one from business, and provide them with accommodation, a small base salary and shares in the company. The idea for the company itself is not pre-conceived by one of the team members, but rather derived from a study of a prominent market need in the technology sector. The Matthews open up their Rolodex and get in contact with market leaders in the technology sphere who have a problem to solve, and the process begins.
At the core of Wesley Clover is an ideology that is the exact opposite of a typical University. It is a market-driven philosophy versus a product-driven philosophy. In October, BC Business wrote an article about this dichotomy that highlights the two models and how they differ. Essentially, it’s a push versus pull model; in a university technologies are developed in-house and pushed out into the market; in Wesley Clover’s organizations, they try and pull insights from the market and develop a solution. The article stated, “Universities too often develop ideas in a vacuum, then try to find homes for them in the marketplace.”
In September of this year, Wesley Clover teamed up with entrepreneurial faculty members to create a pilot masters program called Engineering [email protected]. The project includes four hand-picked students from UVic who work with faculty members and Wesley Clover staff to create a technology product and form a business. The program is about more than proving that the Wesley Clover model works — it is part of a larger effort to more effectively commercialize technologies out of Canadian universities. But it does put one model in direct overlap with the other, which will allow this project to be directly compared to those that are spun out of the university technology transfer office.
All this begs the question: Does Wesley Clover have it right?
Of the many companies that Terry Matthews has created over the years that use this model, the success rate in building a profitable technology company has been phenomenal: 80 tech companies have been created and only five have failed. Of those successes, some of them have been absolutely huge and the majority were lucrative for everyone involved.
Wesley Clover incubates five new companies a year and is currently trying to raise between $100-million to $200-million for the Wesley Clover Technology Acceleration Fund. Whether or not previous success will translate into future gains remains to be seen, but it puts the two models in the spotlight and that in itself could be instrumental in defining how technology is commercialized in Canada going forward.
The small group of us that heard Owen talk about applying for Wesley Clover remarked the whole program seemed a bit intense. While I personally wasn’t enthused enough to consider joining the organization, I was keen to learn more about the model. Since that time, we at Lumos have worked with many technology entrepreneurs and seen a lot of this product-focused thinking. But there is a growing consciousness toward more market-focused solutions and that bodes well for the future of innovation in Canada.
Overall, it appears that the folks at Wesley Clover might be on to something. If Wesley Clover, Engineering [email protected] and other similar organizations produce outstanding products and bring innovative Canadian technology into the market, then the debate will definitely intensify. And since the past can often be a good indicator of the future, I wouldn’t bet against them. After all, everyone stands to benefit.
This is the final post in a six-part series on Spurring Innovation in Canada. Check out the conclusion to see an overview of our thoughts, or click any of the links below to see previous posts on the topic.
Part V – Let the Market be your Guru (http://www.lumosforbusiness.com/blog/763/25-01-2011/Part+V+Spurring+Innovation+Let+the+market+be+your+Guru):http://www.lumosforbusiness.com/blog/763/25-01-2011/Part+V+Spurring+Innovation+Let+the+market+be+your+GuruTweet