Paving the Way in Canadian Tech: A Chat with Owen Matthews (Part Two)

Forbes Books presents the Startup Science Podcast with Gregory Shepard, brought to you by startupscience.io. Greg is an entrepreneur who has built and sold 12 businesses. He's a recipient of 4 private equity awards and is a featured TEDx speaker and Forbes author. Here's Gregory Shepard.

I'm back with my friend Owen Matthews, the chairman of Alacrity Canada. Where they equip founders with the skills, knowledge, and network and capital to launch and grow transformational businesses in Canada. Now, Owen, you recently shared with me a relationship that you've established with Fulbright. Can you explain what Fulbright is, what they do, and what the relationship is that you struck as a co-founder of the Fulbright Entrepreneurship Initiative in Canada?

Sure. That's In my mind, very, very exciting. If I go back and describe a little bit about what the organization I founded and I chair, you know, called Alacrity does, you know, we worked with university grads, put them into a program where we helped them create a company. And those companies, you know, were very focused on understanding customer demand, very focused on building products that we knew were gonna lead to early sales in a very tough market. remember, 2009, and grew those companies to be quite successful. When I thought about how to make that much bigger, to me, the obvious conclusion was Fulbright. Fulbright, for those of you who aren't aware, is a really amazing, you know, 70-odd-year-old, you know, scholarship program that was started out of the US and supported by the US government. And to me was just a, you know, Just an amazing organization. They're tied into something like the top 1,000 research universities in the world. We're talking about Oxford and Cambridge and Harvard and Princeton and Stanford and University of Toronto and McGill and UBC, like really, really top-notch, phenomenal organizations. And, you know, when I, when I think about their reach into those organizations, to me, I think about the incredible talent that are in those organizations that haven't made that leap of faith that we talked about earlier. You've got amazingly talented people who have taken the most difficult subjects. They're chemists, they're computer scientists, they're data scientists, they're engineers. And the idea of entrepreneurship maybe hadn't occurred to them because there's no reasonable path to do it. Well, if I can work with Fulbright and bring that, you know, Trying to get around the leap of faith, trying to bring a reasonable path to creating a company. It felt like I could make Alacrity 1,000 times bigger. So if I could understand the market needs, bring the corporate needs, find the challenges that the markets needed, distill that down into challenges that I could put out into a network, and bring it to the Fulbright-connected universities, then Fulbright would be in a position to be engaging scholars, Fulbright scholars, on problems that we know have commercial demand and we know are solving some of our, our, you know, most serious problems in the world. We have a big focus on sustainability and industrial transformation. And if we can, if we can do that work, we can get some of the smartest people in the world to engage in a scholarship to solve commercial problems that lead to some really, really exciting startups. So for me, it was, it was a natural way for me to take the platform that we've had at Alacrity and make it as big as I possibly can make it with some of the best and brightest people in the world.

So this program, it's starting in Canada, right? But then it's going to go elsewhere after the pilot is, is, uh, is conducted and successful out there in Canada. And when you look at this whole situation with regards to what corporates are after and the problems that are out there, and you think about, you know, the corporate normally has to sit there and look at the field of opportunities to try to see if there's anything, any kind of needle in the haystack that fits their needs. Does this program that you're putting together have any ability to help those corporates find deals or somehow get solutions to the problems that they're really trying to solve instead of just sit there and go through whatever people create?

Yeah, absolutely. You can imagine you go to, you know, a corporate and some of the challenges of corporations are, you know, they're highly committed to a large existing business. If you're doing billions of dollars in revenue, you really need to concentrate on continuing keeping that train moving. And there's a whole pile of stuff you'd love to do that you can't get to do because, you know, you've got all these resources that are fully invested into making sure that machine keeps rolling and you keep, keep hitting those, those billions of dollars in, in revenue. There's a lot of stuff that you know that your customers want that you're going to take years and years to get to, that, that you would love to get to more quickly, uh, but you, you just can't get to it. So to turn to an organization that is going to listen to that and deliver on some of those needs in a partnership where you're either creating companies or doing research for them and they're licensing it. Generally, we prefer creating companies. You know, from, from my perspective, you have corporate needs desperate for innovation, and you've got this incredible, you know, group of, of brilliant people who are willing to step up and solve those problems in exchange for the opportunity to sell to that, that market. You know, for me, that's the natural place for corporates to innovate. To go after the best and brightest people in the world who have a commercial connection to your needs and are motivated to help deliver on your needs. And they can bring that next wave of innovation to your corporate. So we have a long history of doing that with any of the large corporations that we've been involved with, whether we founded them and built them up or partnered with them over the years. It was just an obvious, this is what we need to do. This is where the innovation lies. And we've done an excellent job building those kind of innovative organizations over the years. This to me is an obvious step. One other aspect of that is, you know, the scholarships are very prestigious. So when we partner with Fulbright and we're talking about issuing scholarships to academic institutions, to individuals in academic institutions, it's quite prestigious. So we can find a way to encourage them to go down a commercial track with a classic academic encouragement, which is that sort of prestigious scholarship. But not all of the value to the corporate will come from just the scholarships and the people involved in that way in Alacrity. We also want to source all kinds of other people who are applying. They're sharing what they're doing. To get after those scholarship dollars and get after those, those, you know, the support money coming from the corporate. So they're going to be sharing what it is that they're working on. They might get selected, they might get some funding, or they might just get some support. And for us working with those corporates, they're going to get, you know, not just, you know, people like Alacrity solving their problems. And we're happy to partner with lots and lots of people. to do that around the world. They're also going to see on a platform all kinds of interesting, you know, technology and interesting solutions that come from all kinds of places around the world as people vie for those dollars. It's a little bit like when you do a challenge, you know, when you put that challenge out there, you're going to see many, many different ways of addressing that challenge. You might only select 1 or 2 to get funding, but you're going to see 10 or 20 or 30.

So you're taking the interchange, right? So this middle spot where you have these founders coming in, some founders have ideas, some of them don't, but they want to be a founder. And then you're taking the needs that the corporates have and you're putting those needs in front of those founders so they can build things with, you know, knowing that there is a corporate that is interested in buying that. So this is sort of turning things upside down, right? Normally What you do is you're a corporate and you have to hunt from whatever's available. But what you're saying is tell them what you want, put it in front of them, and then have them build it. It seems like this would work for foundations and other, other sides too. But you also mentioned something about the universities. So if the university has somebody who is working on a project, but the project, let's say a research paper or something like that, it's just going to go on a shelf after it gets stamped and somebody gets some of an award. You're actually, if I hear you right, you're actually taking these things and putting them in front of founders. So you're actually giving the founders things to work on, knowing that there is either already research done on it or a corporate that's asking for something in particular, and then you're matching all of this up?

Absolutely. We think that's the best way for early-stage companies to succeed. You've got amazing talented researchers working on things and you're prompting them to come and solve some commercial solutions. You've also got a pile of universities that have intellectual property and great people who continue working on that intellectual property. And again, you're giving them a commercial avenue to make something from it and prompting them with the prestige of scholarships and stuff like that. But that takes understanding of the market and bringing that understanding of the market to universities and the people who work inside universities is critically important. Otherwise, they wouldn't know the demand is there and they wouldn't know that there's commercial opportunities. Taking a huge leap of faith to start a company, to decide to commercialize a piece of research seems pretty daunting. But when you, you know, have an organization like ours telling you that there is demand and, you know, you're quite clear that there's a corporate that requires this thing or a large foundation is looking to solve a complicated climate problem or, or environmental problem, you know, you want to deliver the clear need that might have some dollars behind it, sponsorship dollars or, or customer dollars. Someone wants to buy it from you. That can really prompt someone in research to go and actually solve the problem in a commercial way. And that's the kind of work we're trying to do. A lot of government funding, you know, goes into universities and a lot of that research gets published and goes on the shelf. And I'm sure that's valuable to society, but I find startups and successful companies employing people and doing R&D that ends up solving the problem as opposed to just looking at the problem, you know, what was certainly in my experience much more valuable to society.

So if you walk through this whole process, right, so you're a founder at some sort of startup assistance program and you're, I want to be a founder, and you're hunting for the idea, one of the biggest challenges is that product-market fit, right? So essentially what you're doing is you're drastically reducing the risk associated with product-market fit By coming to the table with product-market fit, right? Coming to the table and saying, this is a problem that this corporate wants to solve, or this is a research paper that this university student or professor already solved, and then exchanging those ideas with, with these founders, knowing that there's some light at the end of the tunnel and it's not a train.

Yeah, dramatically reducing the risk is the goal, right? You, you don't, you don't want founders to to suffer unnecessarily for 2 or 3 years thinking they've got an idea. A huge focus of entrepreneurship, which I think is wrong, is a huge focus on the idea. And, you know, a college student or a young person that doesn't have much market experience, you can't possibly expect them to have an idea which is likely just to magically have product-market fit. Because you personally understand that there's some demand or personally understand that The world would be better if you did this particular thing that you had an idea for. The reality of the market often gets in the way. You know, you're talking lottery ticket odds. You know, I've got this idea in college and it's going to turn into a huge thing. Most of the time you really need to, you know, get in the market for a number of years before you understand and you can wrap your head around where the opportunity really lies. So the advice I typically give when we're talking about ideas is, you know, you want to find a market opportunity where there is a lot of disruption, where a market is under pressure. There's a lot of changes going on. I particularly like industrial transformation right now. Big industries like oil and gas and mining and construction and, you know, agriculture and water treatment, they're under enormous pressure to change their ways. So a lot of pressure and a lot of disruption in that market. Great place, you know, big companies, lots of money, you know, large values, huge potential customers desperate for change as they're under pressure to change their traditional practices. Great place to be. And, you know, they, they want innovation. So, so there's an opportunity for an early-stage company to come in. So you've got a lot of money splashing around and you've got lots of disruption. That's a great place to play. You know, if it's a relatively static market without high values, it's much harder when you come in with your idea and your idea doesn't quite work out, because almost every time the idea doesn't quite work out, you don't get another door open. When you're in a market where there's a lot of disruption and a lot of money splashing around and a lot of need for innovation, then when your initial idea doesn't work out, which is almost always the case, another opportunity opens and it's bigger and better and your market experience leads to a better opportunity. So, you know, when you go get banged around for a couple years trying to make your startup work, you just keep learning and learning and learning and you get better and better at finding a product market fit, which is a really exciting market. If you're in a stagnant market, you just, those doors just don't open for you.

So essentially, 'cause when I looked at the data, the product market fit is a huge failure, right? They go out, they try to do product market fit, and they miss the mark, right? So essentially, this is eliminating, I mean, 90% of the risk because you already know there's product market fit. So now it's just a matter of can you build and execute on a plan? When I spoke to you earlier, you have a fund that you're setting up to help with this transformation. You have the accelerator community that you've built that's out there. You have connections with the government. You have connections with Fulbright. What's the future plan for Alacrity? I mean, this thing is on fire. I'm like sitting here going, Techstars, if you're listening, 500, if you're listening, Plug and Play, if you're listening, somebody's getting ready to take you to school.

Yeah, I don't think they should be threatened by me. I don't, You know, those are well established and, and I love how many love what they do. And certainly they shouldn't be looking over their shoulder at what I'm doing. You know, more successful businesses help everybody and there's no, I don't think they need to worry about what we're up to. But at the same time, you know, you are dramatically reducing the risk of creating success, right? So, You know, a lot of people, certainly investors, will say, you know, we're swinging for the fences. Well, you know, our view is every, you know, unicorn we've ever built started with a practical problem and engaging with customers and getting some traction and then growing and growing. And the market just happened to be really dynamic. There was lots of opportunity in it and it grew and grew and turned into something giant. So, you know, we don't think swinging for the fences out of the gate is necessarily the best idea. you know, listen to your customers and you'll survive long enough to build a unicorn. So, you know, we maybe have a different philosophy, but yeah, certainly, you know, the fund, we haven't talked about that. We've been technology investors. You know, the family office has been investing for something like, you know, 50 years since the early '70s. We, you know, have an amazing track record of investing successfully. And, you know, industrial transformation just seems like the next horizon. You know, they're desperate for innovation. They've got, you know, their big markets and, you know, lots of capital and a huge amount of pressure to change the way they behave, right? I mean, you look at the energy sector and they're going to spend something crazy like $280 trillion over the next 20 years, you know, to transition the energy. You know, the energy industry. Well, tell me there aren't incredible opportunities for innovation inside that. Of course there are. You know, the way the valves work, the way they move molecules around, the way they generate energy, you know, all of that stuff is up for grabs for the first time in 100 years. Yeah, it's an amazing opportunity. Of course we want to invest in that stuff, right?

It's like a cluster of opportunity, right? That's just bouncing off itself.

You know, bigger than, you know, all of B2B SaaS, you know, by a factor of, you know, 100. Like, it's, it's, it's, you know, it's such a huge opportunity that, that it's almost embarrassing to talk about it when you're so— when you're a technology investor and you've been talking about, you know, B2B SaaS and the big returns and how great it is. And then you look at something like the energy sector, which has to completely transition, you know, in the next, you know, whatever, 30 or 40 years. It makes B2B SaaS look tiny. And that's not even counting like water treatment and agriculture and these big industries that are desperate for innovation and are under huge threat to change. Just like amazing opportunities. So you got to get comfortable with hardware again. You've got to get comfortable with SaaS business models that involve hardware and sensors. And you've got to really sort of understand how to deploy with industries. You can't just sort of, you know, do the normal, you know, SaaS go-to-market methodologies. Doesn't change the fact the opportunities are just wild. So it's a good place to play. And that's why we're excited about, you know, doing a new fund in that area.

So you heard it here first. The next big disruption is going to be industrial transformation. So You know, this is from Owen Matthews. If you guys ever get a chance, this guy is amazing. And I can tell you that the track record that I've seen from Alacrity, I have not seen— I'm trying to think of a single startup assistance program that has a track record like yours, but I don't. I can't even come up with one.

We're pretty, pretty focused on a small number of companies and, and take them through, you know, a pretty substantial development period. You know, we have run programs. You know, we saw the importance of digital marketing and digital customer acquisition, put a huge amount of energy into that. You know, going back to when we started 10 years ago, you know, we focus on helping companies succeed and that takes a lot of effort across multiple stages, lots and lots of guidance. It's not easy work and you can't really do it at scale. One of the reasons why we're excited to work with some of the platforms that we're working with is because they can help us scale all of that. So, we're doing what we can, working with partners like Startup Science to try and, you know, try and make that impact as big as possible and as broad as possible.

So, let's talk about the future for Owen Matthews and Alacrity. So, here you are, one of the most successful startup assistance programs. You have done fund after fund. You've done over $1 billion in value into different companies. You have offices all over the world. You know, what's the future for Owen? What's the future for Alacrity?

Well, I'm just lucky I like what I do. So there's, there's no reason for me to stop, right? The, the, the bigger the platform, the more companies I get involved with, the more I get to surround myself with people who are like me. Who just can't wait to roll up their sleeves and get involved in startups and help them out and make them as successful as possible. That's just what I love and the people around me love. So it's easy for me to just keep expanding that platform and keep driving the success. I would know no other life. It's the life I came into. I'm very, very lucky. I get to work with very smart people who took very difficult subjects in school. Who think differently and come from all kinds of different backgrounds. It's such a fortunate place for me to be that it never feels like work. I just, you know, I travel all the time and I'm excited about and, you know, energized by the experiences that I have working with people around the world and, you know, inspired by what entrepreneurs are doing. And, you know, helping them through their challenges, you know, just really getting intimately involved with the companies is so important and it's just so much fun. I couldn't understand being a passive investor, like writing a check and saying good luck and, you know, or showing up once a quarter at a board meeting and saying, well, you know, when are we going to drive to an exit? And have we talked about getting the company ready to sell yet? And I just, That stuff doesn't energize me. I recognize the value in that. So, so I work with other investors who are, who are far better and far more disciplined about the exits, and they work with me because I just love growing companies and we're good at it.

I mean, you're, you're a global thought leader and we haven't heard too much from you, right? So I think that we should look forward to— hopefully we can look forward to you starting to spread some of that wisdom and experience out to the community. Can we look forward to anything You know, are you going to do anything really exciting that you can share with investors and entrepreneurs to spread all of that knowledge that you've acquired?

I would love to and do as much as I can, you know, share with entrepreneurs and with investors and with other startup assistance programs. You know, I'm always happy to share what I do, but, you know, my passion is really in the companies. And when your passion is in the companies, That's your sort of your go-to. That's the default thing that you do. Marketing and telling people what we've done, telling people about our track record is not sort of central to my values. I know it's important. Certainly it can bring resources. There's lots of reasons to do it. So I don't discount the importance of it, but my default is to just listen to a company, listen to the founders and try to help them out. And my time gets consumed and meeting with larger corporates and early-stage companies and trying to broker relationships between them and stuff like that. So, you know, you're quite right. We've been pretty quiet about what we've done. Maybe that's just sort of default Canadian humbleness, but we have done a really, really remarkable job in building technology companies from scratch, in supporting thousands of companies, you know, around the world. And I would love to do more of it. And appreciate the platform, Greg, for allowing me to speak a little bit about what we've done. We are producing kind of an impact report that goes back over this sort of 10-year history of Alacrity, which, you know, which we'll be publishing in the next week or so. And that's the kind of thing that, you know, might attract some more attention. But primarily, I just love helping the companies, and I've got a great platform to do that for a long, long, long time.

I am so happy that you took the time. I know you're super busy and you're traveling everywhere. I really, really appreciate you taking the time to come on the podcast and, you know, lay out some of this advice and some of this experience, this depth of experience that you have for all the people listening. If you're a founder or you're an investor, what you see here is the real deal. I mean, this is, A little different than other guests that are writing books or running big programs. He is a real entrepreneur, literally from birth, a real entrepreneur, a guy that actually runs funds and builds the funds himself and runs accelerators. It's very, very unique. So I hope we get to see more of you and see more of your work. And man, you should write a book or something that there's, there's definitely enough information in there to write a book.

There might be some books in the future, you know, but, but for now, I just really appreciate, you know, you, Greg, being as complimentary as you are coming, coming from somebody as talented and as remarkable as yourself. That's, that's high praise and it's greatly appreciated.

Well, I'm humbled by that. Thank you so much for your time. I really appreciate it.

Yeah, thanks, Greg.

And that's it for another episode of the Startup Science Podcast. If you could please leave a 5-star review on Apple or Spotify, and if you have a moment, write out a review. I read all of them. I'd Really appreciate it, founders. As a thank you for leading the changes in our world, I'm offering free access to the startup science platform Visionaries by Gregory Shepard, a one-stop shop for founders. It has everything from your startup academy education to investors, grants, pitch events, and more. Go to GregoryShepard.com to get to Visionaries. Use the code Founders all. Capital for free access to the platform. Check it out for yourself. I'll see you next time. Namaste, my friends.

The Startup Science Podcast with Gregory Shepard is brought to you by startupscience.io. Founders can log on to startupscience.io and use code Forbes to get free access. To connect and find out more about Greg, go to Gregory Shepard. The Startup Science Podcast is a production of Forbes Books.