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Dispatches From The Valley: Ian Jeffrey of Password Box
Dispatches from the Valley is a weekly series where we chat with Canadian entrepreneurs that have moved from Canada to create their fortunes elsewhere.

In 2005, as a 27 year old working for one of Canada’s largest advertising agency, Ian Jeffrey tried to convince a room full of advertising executives that social media was the next big thing and that they had to figure it out immediately. Ian was laughed out of the room, and shortly thereafter, while on a serendipitous phone call, he decided to make the move to California to figure it out himself.

We spoke to Ian about building the precursor to Instagram, raising $11 million from some of the most important people in digital media, how to fake an office in New York and why he’d be an engineer if he could do it all over again.

How did you get started out in the tech world?

I went to school for marketing and communications. When I finished school, I started working for an ad agency. I was doing non-traditional work there, never anything like billboards or TV spots. Instead, I was working on pioneering new methods for reaching the consumer on their own turf and on their own terms. This was way before Twitter or Facebook existed, but I was always keeping an eye on new ways to do these things. When Facebook started appearing in the U.S and then Youtube came out, I did this big presentation at my agency, Cossette, in front of 500 people and I told them how I thought social media was going to change the way we reached our consumers. They all laughed at me for trying to convince a room of experienced executives what the world would be like.

Eventually, one of my good friends called me up one day and told me that he was leading a big R&D studio with over 200 engineers and designers. He said they were trying to figure out what to do with the cameras that manufacturers were putting into mobile phones. He told me that I was the perfect guy to figure it out. So I moved down to San Francisco and we built a company called Tiny Pictures. That’s where I started to get into the tech world.

Tiny Pictures was basically Instagram in 2006. We launched the very first mobile social network for picture and video sharing. At the time, the ecosystem was almost non-existent, because, first of all, there was no iPhone and there were very few Blackberry devices out in the wild. Almost every device had different specs and a different operating system. Instagram sold their company for a billion dollars with just their iPhone app. We had to have 250 versions of our app because every device was different. You can imagine how painful it was to launch new features, make changes and iterate. Every time we wanted to do anything, it meant that we had the rebuild app.

The investment into each one must have been massive.

Exactly. We did our angel round with Reid Hoffman (Founder of LinkedIn) and Joi Ito (Director of the MIT Media Lab). We then did a series A round that was around $3.3 million and a series B that was over $8 million. In total we raised something like $11 million, which is a lot of money compared to what you would need now.

We were basically ahead of our time, which was good because a lot of people believed in us, but it also made things difficult to scale. Nonetheless, we got to a million-and-a-half users in less than 12 months. We figured out a way to scale quickly, but, in a lot of ways, we actually scaled too quickly and our infrastructure couldn’t handle the influx of users. My campaigns would actually break the service.

The economy then collapsed in 2008.

So imagine this situation: We had raised $11 million, we had just under 2 million users but no revenue because our board wants us to focus on growing our user base, and we need to grow our user base because our entire business model is built around mobile advertising. Then the world collapses and all the venture capitalists are hiding, leaving us with 6 months of runway.

After letting go of half of the team, we started to look at all the technology we had built and all the APIs we had privileged access to—this was at a time when APIs were licensed under custom deals. We had custom deals with Flickr and Facebook , so we looked at those and decided on what to build out to prove our concept and sell the company. Eventually, we had Facebook, Shutterfly and several other companies interested in acquiring us. We decided to go with Shutterfly and we joined them as their mobile social team. That’s my California story.

What advice do you have for people going down to California for the first?

The biggest mistake that I see from a lot people is the idea that if you just show up in Silicon Valley you will raise money.

There is definitely density in the valley and a lot more activity going on, but that also means that there are a lot more people going down there and fighting for that activity. So there’s more cash, but it’s not easier to get and keeping talent is extremely difficult. Everywhere you go, whether it’s Toronto, Montreal, Vancouver or San Francisco, there’s always a lack of technical talent.

If I could start over, I’d probably be an engineer. Everyone’s looking for engineers, and once you find a good one, whether you like it or not, they’re looking for a big exit. They’re looking for the one that will change their life, and as soon as they have any doubt that you’re not that ticket, then they will leave. It’ll either be one of the big guys or they’ll run off to the next startup. If it doesn’t work out there, they’ll move onto the next one.

The one thing that The Valley has that we don’t have as much—but you can sense that it’s coming here, too—is the desire to help each other out. The “you scratch my back and I’ll scratch yours” mentality where people give before they get. That openness is not as strong in Canada. We’re still in the “I need to crush you to win” mindset, which isn’t good. Helping each other out is much better than being ultra competitive.

Can you give us the elevator pitch for Password Box?

I just started here so I’m still working on it, but basically what we do is securely manage your online identity.

Whether you’re on Android, iPhone or a desktop, we help you manage all your passwords securely. With one click, you log into password box and through that we also handle your notes, documents like credit cards, social security numbers. It’s all stored in one place, so that allows you to be safe. When you’re shopping, for example, you can store your credit card in password box and shop with one click instead of inputting it every time.

What opportunities do you see for Canadian entrepreneurs? Do you think there are any distinct advantages in being a Canadian entrepreneur? 

There are things like SRED that are good. Also, the cost of living is cheaper. There are also really good schools pumping out great engineers. Those are all things that are great for us. I think it’s fine to build your business in Canada, though it will likely be more challenging because there’s less capital.

The biggest piece of advice I would give, though, is that if you are building your business in Canada, you need to connect with whatever market makes the most sense for your business in the U.S. If you’re in the ad space, you need to start spending time in New York and for most other startups, you need to go to San Francisco. You can almost fake having an office anywhere as long as you go down every month for one week or every two months for a couple weeks; that’s plenty of time to build your network and learn from people that have been doing it for a while. Have connections and advisors there, because, long term, that will definitely help the business out.

Do you have any favourite productivity tools?

Dropbox.

Is there anything that you’ve read recently that you really liked?

I don’t know about right now, but I would say that the most influential book I’ve ever read in terms of the way I think about marketing is definitely The Tipping Point. I’ve never read through a book faster than that. I’ve tried reading other ones, but my problem with books is that I start reading them and a third of the way through I think I know everything so I put it down.

What would you be doing if you weren’t doing what you’re doing now?

Well, the thing I learned after being in Founder Fuel is that I’m definitely not meant to be an investor. I’m a builder and I guess what I realized is that, as an investor, you don’t really have control over the product. You can give advice, but, at the end of the day, the team behind the product is making decisions.

Otherwise, I would definitely be looking to launch a new business or join an advanced startup like Password Box.
____
Christian Borys is a contributor to Toronto Standard. Follow him on Twitter.

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