Michael Babiak: Warming up the Valley for Waterloo Region startups

Michael Babiak is in Waterloo Region during the coldest day of autumn 2014. At last check, the temperature was a frosty -18 C with the windchill. You know, just an average November day.

For Babiak, Communitech’s new Startup Services senior advisor, it’s bone-chilling. He’s been living and working in Silicon Valley since 1999.

The Ontario native with a Russian literature degree from Western found himself working in the Valley with Steven Woods, now a senior engineering director with Google Canada, at Quack, a startup that Babiak helped fund and was sold to AOL in 2000.

Babiak’s long and varied history has seen him run an investment banking firm, conduct sales for IBM and act as COO, CFO and chairman at a variety of startups.

Most recently, with some encouragement from Woods, Babiak has reconnected with his Canadian roots. He has joined Communitech in a brand-new part-time role, focused on making warm connections with investors in Silicon Valley for local tech companies.

I sat down with the Californian to chat about the differences between the Valley and the region during a visit here this week.

Q – You’re six weeks in. How do you describe your role with Communitech?

A – The goal is for VCs to know who we are, and [for me] to figure out which VCs are interested in investing in the companies we have, and ideally to have those companies stay here.


That’s my mission.

Q – What’s your plan?

A – Americans are very insular. I think it’s impossible for us to get treated like equals overnight.


A very compelling factor is that the [University of] Waterloo is the second [largest] source of hires for Google after Stanford. Meaning, higher than MIT and Harvard. They don’t know that. I mean, Google knows that, but I don’t think VCs know that.

That’s a selling point.

We’re creating an ecosystem that is encouraging innovation and harnessing the energy and brilliance of the young minds coming out of Waterloo.

We can say that all we want, but we have to give evidence.

Another thing we need to do is, VCs love to de-risk. So what we need to do is say, “Well, your friend over at VC Firm X, who is higher on the food chain than you are, invested in Canada. You should look too. If it’s good enough for them, it could be good for you.”

So, I think that’s something to sell.

Q – Steve Woods says he’s noticed there is a lot of loyalty among tech workers in Waterloo Region. Is that a selling point to VCs?

A – I was over at Thalmic this morning and they talked about not moving to Mountain View, and that was their answer. That’s [the] number three [selling point]. You know here, [developers] don’t move around and you can count on them to be with you for two, three or five years. And when they leave, they don’t necessarily start a competitor down the street.


If this area does take off, like Israel has, then there will be money and there will be competitors, and that feature will go away. But for now, that is a feature to sell.

Q – Are we hurting the long-term evolution of our ecosystem by working so hard to encourage companies to stay here?

A – There’s competitors everywhere. Who wins is through determination, being at the right place at the right time, getting the money and getting that first customer. You can’t control all those things.


You know, I don’t know enough. I’m a bit Silicon Valley biased. The smartest people in tech from around the world are coming to the valley, not Waterloo.

But, to answer your question, what I think is practical, if the goal is to create Canadian jobs, is to go down there and say, “We need money, and with the money we will do these things.” And don’t talk about where the company is located until they say, “OK, we’ll give you the money.”

The question will come up of “when are you moving the company?” And I think the answer is, “We’ll move the business people; you know, sales, marketing and maybe finance to the Valley or San Francisco, and we want to leave our engineers in Canada because we have a great source for recruiting, they stay longer etc.”

I think maybe that’s a compromise that is easier to sell.

To be practical, at least for a first step, I wouldn’t be flaunting the “we aren’t moving” part. I would try not to raise objections. It’s going to be hard enough.

Q – What do you see being your biggest struggle?

A – There’s a lot of VCs and VC firms there. I don’t know all of them. My challenge is to take a funnel of 1,000 and figure out who’s willing to look at Canadian companies, and figure out what they want. Everyone has their background and expertise.


That’s the goal. It’s probably a lifetime project. The VCs are always changing. That is the goal: To figure out who the targets are.

Whenever you are selling anything, it’s always your reputation on the line. And so, it’s my responsibility, and Communitech’s, to make sure that whomever we put in front of those investors is a fit in term of industry and whatever it is that they are doing.

Equally importantly, they have to show well. They have to be at least as good as the other companies that come to California. They have to be better, ideally, than the average deal they see from Y Combinator.

Q – What can we do to help?

A – What Communitech here can do is make sure that every pitch is great, that the website looks great, the slides look great, [that] the companies know the answers, they’ve anticipated the objections.


It’s important that they are ready in every way.

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While this weather seems to be settling in, local events are not cooling down. I see and hear that… this Thursday, Nov. 20, you can warm up at the Kitchener-Waterloo Art Gallery’s #ColdNightsCoolArt event. This networking event kicks off at 5:30 p.m. and features tours of current exhibits, appetizers provided by Gilt Restaurant and a wine tasting by Chateau des Charmes… Also on Thursday night is a free lecture at Wilfrid Laurier University. Leading in the Application Process is a talk by Mike Gregoire, a WLU alum and now CEO of CA Technologies. He’s talking about business and brand evolution, starting at 7 p.m. in the Maureen Forrester Recital Hall on the WLU campus… This weekend, Waterloo Region celebrates alternative art with the Altekrea, a celebration of comic, fantasy and sci-fi art in the Kitchener City Hall Rotunda. The festival is free and features an art show, lectures and a pitch competition. The fun starts at 11 a.m. on Saturday, Nov. 22…Finally it’s Ignite Waterloo 15 on Wednesday, Nov. 26. Held at 6 p.m. in the Hagey Hall Humanities Theatre at the University of Waterloo, the event features five-minute talks by local community members.