 We're here in the Waterloo region, which you may not have heard of before, but if you have, it's because you know that this is the tech hub of Canada. It's home to Blackberry, the University of Waterloo, and scores of startups. We're going to get to know one in particular that's doing something pretty unsexy, but whose technology is vital to the way we'll consume video online. It also doesn't hurt that this is home to the largest Oktoberfest outside of Germany. Three, two, one. I'm Alexis Ohanian, startup founder and Y Combinator partner. Over the last year, I went on a 200-event book tour and met people building small empires all across North America. Now I'm back with a new season, revisiting some of my favorite stops from the tour. It's really hard to start a company in a vacuum. That's why so many entrepreneurs flock to Silicon Valley. It's where all the other people working on startups are. However, there are small cities all over North America where one massively successful company can cause droves of like-minded people and companies to flock there, like Waterloo, Ontario, where Blackberry, formerly RIM's headquarters, are. The problem is, sometimes that huge company's business can go south, causing the local economy to suffer. There's a phrase for this, boom bust. But the bust mostly refers to when natural resources disappear. So what happens when the boom is in technology? Do all the engineers and entrepreneurs leave? Or do they build something new in the shadow of a crumbling colossus? My name is Michael Witt. I'm one of the co-founders of Vidyard. And Vidyard is a video marketing platform. So very high level, what we do is we take people's video assets, we encode them for playback on all devices, and we track how every single person views that content. And we give that data to their salespeople and their marketers so that they can use that information to make better videos, but also to have relevant conversations with people that have interacted with their content on their websites. Now you didn't start out this way. No. What was the original company like? The original company was something called Redwoods Media. And the idea was that we would help companies make videos. And so we'd go in and make these videos, learn the business, and produce an asset or a series of assets for a company to put on their website. And what would happen was they were looking for a technology to easily host those videos, and they also wanted some lightweight analytics to figure out how many views they got. Because their CMO, or the person that kind of drove the business decision, said, okay, if we're spending $10,000 or $20,000 on these videos, how do we ultimately track the ROI? How do we know if these videos did anything to improve performance of our web destination? How did that turn into Vidyard? So we were looking for a way to differentiate ourselves. Again, we were making videos for clients. Does that scale? Yeah, no, it doesn't. It was a lifestyle business, but it was something, you know, to not be working for the man was pretty cool, and that was what we got into it for. And then we were looking to differentiate Redwoods Media a little bit, so we said, how can we offer video content with a guarantee? So we're going to produce a video for your business, and then we're going to guarantee that a certain part of the audience will make it all the way through. And being able to offer that kind of a contract was really attractive to clients, so it helped us close some deals. And then based on that, we obviously had to have a platform to physically track that. And ultimately, I think both Mike and I were probably better engineers than we were creatives in the first place. So we built this tracking platform to track the videos we were producing for clients, and quickly the demand for that product superseded our ability to create videos. How would you guarantee that people would watch all the way to the end of the video? So we couldn't actually guarantee that that would happen, but it was more that if it didn't happen, we would reproduce the video for them. So I guess it was more like a warranty, and that if the first video we produced didn't meet that goal, then we would produce another version. Our producers incidentally guarantee that people watch to the end of every episode of Small Empires. Yeah, I'm sure it'll be true. But wait, so you're now getting some traction, you're realizing your software, the platform, which will scale, is getting some interest. When did you decide to apply to Y Combinator? So we were doing both at the time we applied to YC. We applied to Y Combinator with the Vidyard Vision, obviously. I don't think the Consultancy was a fit for their model, obviously, but we applied with the Vidyard Vision, we got that interview. We were able to show them that the application reviewers didn't watch our application video, and I think that that kind of surprised them a little bit. And we got it. And so from there, from our first meeting with PG, it was stop working on this other thing and let's focus on Vidyard. So this is all happening while you're at university, then it's time to graduate. What was the decision there? Was it a no-brainer? You had co-op jobs. Yeah, that's a very good question. So we had this thing called Project Christmas. And Project Christmas was that we needed to make $50,000 selling videos and platform licenses, which at the time were only $20 a month, prior to Christmas 2010. And if we hit that goal, we would not go out and pursue opportunities with other companies. We hit that revenue goal on Christmas Eve. The goal was by Christmas and we hit it on Christmas Eve, and from there it was, let's go for it. Historically, the best data you could get for things like film or television was pretty awful. It was Nielsen ratings or test screenings, none of which were terribly helpful, but it was the best you could do. Now, thanks to the Internet, thanks to software, we can get real-time analytics about what parts of our videos you loved or hated. Even an episode of Small Empires like this, we could learn at exactly what moment you click stop. Please don't. That means we can try harder the next time and maybe do less of the stuff you don't like and more of the stuff you do. So you can continue to go about watching your videos, and we as video producers can learn how to make them even better. My name is Wes Alkin. I'm the marketing manager here at Athena Software. We've developed a web-based application that's used by social service agencies throughout the world. So for example, groups like United Way would be using a system like ours. Vidyard allows us basically to take somebody who knows nothing about our company, they click on our video, they watch it. They now know who we are, where we're from, where we're at, and where we're going within two minutes. Then the next part of the journey is Vidyard delivers them at our case studies page. Now they can read about clients that are similar to themselves and how they've used our software and system to really transform their organization. If you can go into a bit of detail, how has Vidyard helped you make a video like that more effective? Ah, cool. So with that type of video, for example, normally you'd have a video on your website sitting there and people would view it, and you know people have viewed it by the views, but what happens next? And that's where Vidyard really steps in and it helps deliver the next step, makes them go to the next step of the journey. That side of it is what the other side is the data on the back end of Vidyard allows us to actually improve those types of videos. So we're able to go and see how much of the video is being digested at what point, and when people start dropping off, we can go back, re-edit that video, see where they're dropping off, and make the corrections, and ultimately get a higher completion rate through the video. Surely this is technology that other pure video hosting companies wish they could either emulate or maybe even acquire, and that would have been a very different trajectory for the company. Yep. Why have you chosen this one? During our seed round when we were fundraising, one of the big video platforms said, hey, wouldn't it be cool if all of you guys that are working on this technology came and worked on our technology? And that was a pretty attractive offer because we were right out of school, we had no money, and this was life-changing money potentially in front of us. But the problem was we felt like we were onto something, and why Comet had validated our idea, and we had customers validating our idea. And we were also pretty young, and it felt like an opportunity and an experience that would be stupid to miss out on, and we wanted to build a big company. We wanted to change the world to some effect. And going and being an engineer on an already existing product or existing platform, you have a small change and a small impact on that, but it's not the impact you ultimately want to have, not the experience you ultimately want to have. So it was very experience-driven. Another reason, which is kind of interesting, is we came back to this region for personal reasons as well. Family was here, and taking that offer from this organization would have made us have to live in Silicon Valley. And so it was kind of a myriad of things that drove us to that decision. But because we had customers that were willing to spend money on the technology, there was only a handful at the time. A quick back-of-the-napkin math would indicate that if this is growing, and it is growing, and I can't see any reason why it would stop growing, this is not the right time to sell. So the decision was kind of made out of where we're at, who's using the technology, and what we want to do in our personal lives. And we always kind of put the way we feel about that stuff first. And I'm very happy we made that decision because I've learned so much, and we've had so much fun building this business that I don't think we would have had if we had taken that acquisition offer. There comes a time in every early-stage startup's life when they get an acquisition offer from some large competitor. These are usually referred to as aqua-hires because they're essentially a signing bonus, and the employees and the technology all get gobbled up by that big company. You know, it is a significant amount of money, and plenty of founders do accept it. The fact is, though, as soon as they sign those documents, they go from being the boss of their own startup to just being an employee at a large company. So what was it like watching the rise and then fall of RIM, Blackberry? I remember, so Devin didn't tell the story, but his mom would. Devin wanted to come work with me and wanted to do the Redwoods Media thing, and he mentioned he was at RIM at the time. And his mom didn't want him to go because RIM was such a stable company. And that was the idea, you graduate, you get a job at RIM, all the smart people go work at RIM slash Blackberry, and you'll be set for life. That company is a steamroller. Look how big it is, how many people work there. And Larry Smith told me when I was starting this thing, and I was struggling with that in my own way with my parents, a lot of university-bred startup founders feel this way. They have pressure from their parents to go work for Google. He said, you know, there is no more stability in going to work for a Blackberry or a RIM than there is in going to work for yourself, because at Blackberry or RIM, you are basically a function of someone else's destiny. And when you start your own thing, it is all you. And the only person you can blame for failure is yourself. And if you are not someone who likes failure, you won't fail. You will find a way to ultimately succeed. And that's what I told my mom. And she was like, you're right. This is the time to do this thing. This is cool. And that's what I tried to tell Devin's mom. And, you know, she didn't like me for a little while, but eventually we got to a point where there was revenue and there was stability in our business that had made sense. And he jumped ship and he did it early and he wanted it and he pushed for it. And that's when ultimately the company started. That was the place to work. That was the hot thing for a number of years, back in the early 2000s, late 90s. And that made it, you know, I think as another startup coming up at that time, it would have been awful tough to get talent. But we're fortunate now that that spotlight is a little bit off them and we can start looking at the great companies that are forming here locally. And you have incredible talent coming out of there. Our CMO was a senior guy at Blackberry, was the youngest VP in their history. And he's joined us now. He's just a super intelligent guy that, you know, Blackberry went through and trained him up. And he's, you know, it's incredible to have talent like that. That's very hard to find. Be local. We're here at the University of Waterloo in front of Engineering 5, which is not the most creative name for a building, but it is the hub for all those amazing co-op students we've been hearing about. I'm going to sit down with the Dean of Engineering to talk to her about what it is about this place and about this curriculum that makes it so special. Could you break down for me what the co-op program is? The co-op education, or the cooperative education, is a structured system of combining classroom learning with practical work experience. So how it is structured is when the student comes in on the fall term, they will complete four months of school work, and then half of them will go out to work for another four months. And it alternates school and work, school and work, until they graduate. And students can also use that time to start a start-up as well? Yes. So co-op itself, the structure remains the same. We have evolved over time. The innovation of co-op is to see what students aspire to, what are they interested in doing. And we find that an increasing number of students are interested in starting up their companies. So what we do is we have an enterprise co-op, the e-co-op program, which started about six, seven years ago. And the students, rather than going out to work for industry, they will start up their own companies. So they will register with a Conrad Center and have a mentor to help them make sure that they're spending time starting the company. And they will check in every two weeks to make sure that they're making progress. And they get also a lot of advice and mentoring from venture capitalists in the area, angel investors, and also the professors at the Conrad Center. What did you do for your co-op? I did some management consulting. I did some pure engineering, software development type stuff, and project management stuff as well. So I was at RIM locally, which is obviously a big part of the local community here. And then I spent some time in Toronto and in St. Louis as well. What was that portion of your work experience at RIM like? So you just graduated, you had relationships from the co-op, and then you were just like, hey guys, I'm back. You know, nothing really changed from co-op to full-time, and I think that's the huge benefit of a co-op experience, is that you can come in being a very ready-to-go employee. Like I'd already worked there for a year in basically the same job. And that's why we hire co-ops at Vidyard today too, is the ultimate goal is to recruit them after they graduate. Let's say there's a student here right now, and she's working on brilliant technology. Yes. Who owns that intellectual property? Well, that is one of the interesting and important starting points of the University of Waterloo, and that is create your own intellectual property. So when you have an idea and you create it, you own it. The Dean of Engineering has no... You don't even get a little taste? No, not even a little taste. You know, when you feel and you know that you own the intellectual property, you have freedom. You have the freedom to speak, you have the freedom to talk about it, you have the freedom to build it, and the freedom to know that you can walk away with it. It gives them the confidence that they can walk out of here and start a company. This is great for the nation, it's really good for the country. I do think that there is quite a bit of a talk about the decline of BlackBerry. Well, the founder of BlackBerry was a student at Electrical Engineering here at Waterloo, Mike Lazaridis, and then when you think about the guts he had to start a company, and when he was very young, and to develop the idea of a smartphone, right? And that kind of confidence and guts made a difference for this region. BlackBerry may have contracted in size a little bit, but they are still the largest tech company in Canada. So it grew very quickly, it had to contract a bit, but it's still the largest, and it has provided the sentiment that we have the talent and the guts to move in the area of technology. We are the technological hub, I believe, of Canada. Do you think maybe it even helped motivate founders even more, knowing that this once-Titan had fallen and there was an opportunity? Oh, I don't doubt it, because now there is the whole velocity scene happening of the garage with all sorts of companies in there. It's always handy to have that one trailblazer, that one idol, I guess, to starting something up. So Mike can be that idol to other founders that potentially are considering it. There is an example of it going and succeeding. And so everybody thought that about BlackBerry. There wasn't a day that went by that the front page of the record had something about BlackBerry in it. And so when BlackBerry started to flounder, people started to get very worried. Like, is this community going to be screwed? And the important thing to remember is there are 600,000 people in this community. I think there is actually 750 in Kitchener and Waterloo, and 10,000 of them worked at BlackBerry. So it wasn't like a huge number of people, but it was a huge number of knowledge workers. And BlackBerry cast such a huge shadow on everything that was happening technology-wise in this community for so long that nobody even knew that start-ups existed. And BlackBerry did lay off a ton of people, but they all got displaced. And a ton of those people were commuting in from Toronto and just found jobs at Oracle or other businesses that have big offices there. And so I haven't actually seen the impact of that, other than the fact that we have a number of great people and really smart people that left BlackBerry when that started happening in search of greener pastures. So it hasn't been a bad thing for any reason. And what do you hope Big Yard is doing years from now? It's hard to imagine, but I think we're going to build a really great technology powerhouse. And I think that we do it for the team members, we do it for Kitchener and Waterloo, we do it for Canada, and we do it for just being really passionate about what we're building. And you'll continue to, I presume, poach talent from BlackBerry and from the university here? Oh, absolutely. This is our headquarters, this is our home. And again, there's so much great talent, whether it be coming out of companies like BlackBerry or whether it be straight out of school or folks we have to import. And I think we're at the scale now where we can attract folks from the bigger cities, from Silicon Valley, from Toronto. And Waterloo's got a great brand and it's a very exciting place. So we're going to grow into it. We're here in the anechoic chamber of the University of Waterloo. There is no noise here, just signal. That's what you need when you want to take a longer term perspective on things. It's exactly what the university has done with regard to intellectual property. Instead of obsessing over every idea in the head of their students, they're trying to give them freedom so they can go off and create amazing things that only benefits the university long term. Likewise, when a founder has a decision to take an early acquisition and she decides not to, she's doubling down on herself. She's taking that longer term perspective on what that startup can one day be. It's that same mentality that has allowed the region of Waterloo to not look at the decline of BlackBerry as a decline of their community. Instead, it just means a richer, more diverse ecosystem. Many, many more startups now that, if anything, have just made it a stronger place. Vidyard data and analytics show that more customers than ever are opting for a mobile experience. But mobile apps can do so much more than order food or book massages. Mobile point of sale apps like Vantiv allow small businesses to accept credit and debit as payment. The system also ties in with your inventory system so you always know when you're low on something. Health tracking apps allow patients to monitor their heart rate and send the results directly to their doctors. Companies are even using mobile apps to make it easy for employees to clock in and supervisors to manage their reports. How can a mobile app help your business? For more business advice, visit AT&T's Business Circle. Oh Canada, our home and native land.