On Silicon Valley North: Is Canada Trapped in Its Own Incestuous Bubble of False Positives?

This week I noticed one CEO tweet about how he was honoured to be in the “2013 Hot Shit List”, curated by David Crow, a self-described “trouble maker” at Startup North blog and a mentor with FounderFuel and Joltco.

This particular CEO and his team are doing some great things, but I couldn’t help but wonder how fair it is to create a subjective list of 100 startups that one influential person happens to like (or be on the board of). 

Previous issues of Crow’s “Hot Shit” list include 2011 and 2012 editions, where between 40 and 65 startups are highlighted. This year’s list included a “breaking glass” section to show love to those in the up-and-coming brackets.

Some anonymous commenters have aptly labeled these lists the “Circle Jerk of Toronto Tech” (only to find witty responses from Crow). The fact that David Quail was included in this list strikes a faint chord of irony as the entrepreneur has said on record on Techvibes that one of the reasons he left Silicon Valley was because of the “incestuous bubble off false positives.”

On the other hand, those selected to these lists generally respond with glee and appreciation when they find their hard work being publicly recognized by an influential blogger.

To clarify, I’m writing about the subject and less about the author. Crow keeps things fresh in his blog, telling it like it is and calling people out at times, which is both necessary and appreciated by many. But dare I inquire, is the Canadian startup ecosystem becoming an incestuous bubble of false positives? Probably, but that could be said of all startup ecosystems.

False positivity is a double-edged sword. Positivity consumes people, encouraging them to try things they might have never had the courage to try. Too much positivity could end up creating a false blanket of security. One may be filled with visions of grandeur following hasty seed funding and one too many Techvibes articles on their startup. Speaking of Silicon Valley, Quail believes the killer is premature scaling.

“In the Bay Area, investors, friends, and early adopters are so embracing and supportive of new ideas that startups get funded, apps get downloaded, and ideas get thumbs up, even if they won’t scale,” wrote Quail.

Less than a year ago when I started covering startups I was absolutely consumed by the inclusive and positive nature of the Montreal startup ecosystem. I’ve met several strong friends from these circles and the constant optimism is one of the things that I’ve appreciated.

Toronto is no different. People are eager to meet fellow entrepreneurs, offer warm encouragement and congratulations and occasionally get sloppy-drunk in a dose of self-medication following eight months of coding in their basement.

But we all know the stat: 90-plus percent of startups fail. That’s a lot of potentially jaded people who likely had their hopes shot up through the roof because someone gave them $100,000 to build what would be a failed project.

I’ve witnessed some friends hit the “lows,” possibly even teetering on failure, openly lamenting the fact that they joined an accelerator to the encouragement of those around them only to find themselves right back where they began. That’s not the accelerator’s fault at all. However, it’s never easy watching this when it could have been avoided.

What ever happened to working out of the parents’ basement for three years before the revenue started coming in? Some CEOs I’ve spoken with often tell me there’s too much emphasis on snatching up seed funding as soon as possible, without considering alternative paths to sustainability.

Whether or not the “incestuous bubble of false positives” is actually heading north is up for debate. There’s nothing wrong with positive vibes reverberating through an optimistic startup culture. In fact, it’s necessary.

But let’s judge who’s hot and who’s not on their objective success rather than who got into an accelerator, who received seed funding or by hyping up a list of arbitrarily picked startups.