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Comment by peeters | Hacker News Reader

I'm not sure "promising startup" describes North (previously Thalmic Labs) that well. Everything I've heard around the Waterloo tech scene is that it was mostly smoke and mirrors from the founders who were able to maintain their own lifestyles using grants from the Canadian government. Tales from past employees are not flattering. Being bought by Google is likely the best thing that could happen to both the founders and the employees, if Google acquires the latter.

https://www.reddit.com/r/kitchener/comments/hg11tl/a_vision_...

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I lived across the street from their Brooklyn store from when it opened in 2018 to when it closed last winter (in anticipation of "relaunching" for the new glasses they were planning this year).

They rented an expensive glassy corner storefront ($50k/month I heard at the time) and built it out to a very high standard, but there was never anyone inside shopping. The store employees just stood around looking at their phones all day looking super bored.

I also found it bizarre that they didn't seem to be making any effort to use the space as a marketing tool beyond it's mere presence...I anticipated when they opened that there would be VIP/media/influencer events on a regular basis, but they seemingly just opened in the mornings and closed at night. Having been involved in opening some retail stores, "if you build it they will come" was certainly never part of our strategy.

There never seemed to be any attempt to attract customers or make the store more inviting at all...they didn't even have a listing on Google Maps for months after they opened. Seeing this stagnant shop every single day I spent a lot of time thinking about what must be going on inside this outwardly "promising startup" to make such an investment only to let it languish. Seems like my suspicions weren't misplaced!

I walked by it every day and can confirm. They didn't even have an inviting sign, or anything about what they were selling. The glass was a little reflective so you could barely see some mirrors and glasses on walls/pedestals. I'll bet most people walking by thought it was a typical optical store (but with only one boring frame option!).

where was it in BK?

Cobble Hill, corner of Court Street and Congress, https://www.openstreetmap.org/node/6414917575

edit -- I guess I should close it on OSM ;)

There was an article in the Globe and Mail a few days ago saying each store was averaging about 10 sales/week, which certainly meshes with the store always being empty.

> mostly smoke and mirrors from the founders who were able to maintain their own lifestyles using grants from the Canadian government

This describes a surprisingly high number of companies I’ve worked at in Canada. These SRED credits keep afloat so many companies that should have otherwise perished and that won’t ever go anywhere.

You can even hire SRED consultants that will help you milk those credits as much as possible (for a fee of course). You can then apply for more credits to pay off these SRED consultants fees, as I understand it... While producing little to no commercial value, and coast on these for years.

Supposedly SRED accountants are some of the best paid in Canada, next to transfer pricing accountants.

> You can then apply for more credits to pay off these SRED consultants fees

Even better, many SRED consultants work on a contingent basis, i.e. they just get a fraction of your SRED refund!

I’ve noticed the same thing. Have you found any good writing on this topic and how the American approach differs from the Canadian approach? I’ve been fascinated by this dynamic after spending most of my working life in the USA then returning to Canada, and just feeling like something is “off” whenever I talk to Canadian startups, and it feels like a lot of the time it comes down to the way the flow of investment differs here (especially in the R&D space).

imho it's not just the flow of investment. It's the smallness of the community. Many of the founders in the Toronto tech scene all know each other. From private school etc. At least when I was working for one 10 years ago, it all felt very incestuous and small.

Also in the US there's a real sense of having to hunt and compete for talent, but at least then in the Toronto startup scene you were to feel blessed for not having to work for a bank or insurance company, so put up the with the bullshit and dysfunction please...

Moved back two years ago and can echo this sentiment. We raised our most recently round exclusively in the US. Will be interesting to see how COVID-19 impacts all of this given how much more remote work will be available.

Before Google acquihired my team I ended up jumping ship to a NY based company from the Toronto startup I was at. Difference in culture was night and day.

With the increase in remote work availability I'd probably hunt for work from US companies at this point rather than beg for crumbs from Canadian startups.

This was one of the main reasons I left for the Bay area. I had a big network in Toronto but I felt like 5 years here I would be more talk than execution

When I worked in a startup, just feeding the SRED consultant with info ended up eating hours and hours of time. The intent of the credit is for real foundational engineering research but the reality seems to be is that it ends up getting eaten by companies that are just applying existing tech in mostly non-novel ways, and consultants get to try to spin it otherwise.

It needs to be replaced.

Yes. Each company I worked for has spent many man hours and consulting wages on SRED. The claims were 100% BS.

SRED is a cargo cult thing mostly.

The American approach is to finance fundamental research that's just beyond what's currently possible and viable (take a look at the Apollo Program and the semiconductor industry or any modern DARPA challenge) while the Canadian one seems to be a kind of cargo culting of Silicon Valley where some non-technical civil servant looks for keywords in a form to grant money or not.

My experience with the startup scene in another country agrees with your description. When tech is funded by government incubators, it tends to become a fake imitation of the VC funded industry that we know from Silicon Valley. Which often is itself a fake imitation of actual innovation, so (fake imitation)^2.

> When tech is funded by government incubators, it tends to become a fake imitation of the VC funded industry that we know from Silicon Valley.

Seems a little strong?

https://www.iqt.org/portfolio/ (Cockroach Labs, GitLab, DataRobot, databricks, Cloudera, mongoDB (I know), probably more you've heard of)

https://www.energy.gov/lpo/portfolio/portfolio-projects (Tesla)

https://www.sbir.gov/news/success-stories (Qualcomm, iRobot, 23andMe, Orbital ATK, countless others)

https://sbir.nih.gov/statistics/success-stories

https://sbir.nasa.gov/success-stories

https://sbir.<any agency here>.gov/

https://www.darpa.mil/Timeline/index.html (the internet, voice recognition, virtual reality, GPS, onion routing, the computer mouse, touchscreens, etc.)

Also, the many startups that were spun out of public universities and government-funded research.

Sure there have been hits, but there have been a lot of failures too.

The problem with "government VC" is not the low hit rate--private VC has a low hit rate too.

The problem is also not that government funds get gamed--private VC gets gamed too. See WeWork for an absolutely enormous example.

The problem is really with the different cultural expectations for government vs private capital.

If a private VC firm loses 95% of their investments to failure and fraud, but has huge hits with the remaining 5%, well, that's just how VC works. The only thing that really matters is their net. If they end up with a big return, they are geniuses.

But if the government loses 95% of their investments, that's a ton of wasted taxpayer money. That's a lot of fodder for press, politicians, and activists to make hay out of. And if the remaining 5% are hits, well, the government does not exist to turn a profit. So the credit does not work out the same, even if the hit rate is similar.

I agree there is an issue with credit and public anger over "wasted" money, but clearly innovation is still happening, that was my point. The occasional Solyndra media frenzy hasn't stopped the government from investing in startups.

And one point in favor of government VC: it often isn't primarily profit-driven. Look for example at the energy.gov portfolio. While they obviously want their money back, they aren't trying to pick unicorns; they're trying to improving Americans' lives by improving the environment and the economy.

> LPO can provide first-of-a-kind projects and other high-impact energy-related ventures with access to debt capital that private lenders cannot or will not provide.

This is true of a lot of government investment. It's a good thing, on balance, that the people choosing government investments are not paid based on how much profit they generate or how many users they amass.

"able to maintain their own lifestyles using grants from the Canadian government" - that's absolutely false. North/Thalmic was flush with cash for a long time, and though their Myo didn't sell "well" - it still brought in millions.

Not denying the founders had lavish lifestyles, but they were running a company that raised 15M series A, and 120M series B - so that's honestly "expected". The grant I assume you're referencing was a 34M loan, which was to be paid out over time, and was recalled once North announced layoffs last year.

I won't defend their business decisions or argue they were a "promising startup" - I think they deserve the criticism. But I'd rather not throwout some false stories or accusations.

It's "expected" that founders extract millions from a failing company while employees working for years at below market salaries get nothing? I don't disagree but it's just sad.

The startup lottery just doesn't make sense for employees, even early ones. Founder is the only position worth holding. Early employees need to start demanding more from their founders.

My personal experience strongly says so as well. Been a very employee at two different companies - at least one made an “exit” - only the founder made any money at all. I took a deep pay cut for two years.

The startups my dev colleagues worked in Toronto, the ones that got acquired none got any equity. I think it’s common in Toronto for employees at startups to not get equity. Ive also read canadian founders often sell below their companies worth

That's not correct, it sounds like they got rolled.

Is it just common knowledge the founders have lavish lifestyles or was there talk in articles about the company/product?

I know them.

Maybe lavish is a bit of hyperbole. And after their 15M series A, I can assume they had competitive salaries given their life decisions (modest homes and cars).

I'll put it differently, they raised almost as much as what Google was willing to pay for the Intel Vaunt patents.

They got to milk government grants for a few years and managed to sell the company (really the patents) at a premium before it went bankrupt.

Had they been able to sell more units and make a viable product they would probably have been able to raise more.

> mostly smoke and mirrors

In fairness isn't that how this tech works

The smoke bit is only for development, when accidentally plugging things in the wrong way around. ;)

The public announcement really make it sound like an acquihire, but in practice it sounds like an acquihire without the hire. Really what Google is after are the patents that North bought from Intel[0].

From what I've been told the current employees won't even be offered to interview at Google, much less hired. They might keep some of the folks around until the support for their existing products end, but if they do it will be from their offshoring development center in Canada. Only the patents and the tech is really going to Mountain View. That paints a pretty dark picture of the business; it seems they didn't improve a lot on the tech that they got from Intel. Google is paying a premium to make sure the patents don't end up at Apple.

No words on the founders either, that typically means they won't be part of the AR team at Google. Else it would have been announced.

[0] https://techcrunch.com/2018/04/19/intel-abandons-vaunt-smart...

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