Creating Your Own Market
There's wisdom – sometimes – in putting the cart before the horse.
The evolution of most technology companies in B.C. begins in developing a product or service and then finding a market for it. But one successful Vancouver company took an alternate route: it researched potential customers and then created a product to meet their emerging needs. As a result, semiconductor-chip-maker Teradici Corp. was able to create a global market even before it had developed a product.
The Problem
Teradici founder and CEO Dan Cordingley is a Canadian tech entrepreneur who founded a semiconductor company in the U.S. and later worked as an executive at the giant computer-chip-maker Intel Corp. and as a venture capitalist. When Cordingley moved his family to Vancouver in 2003, he began searching for a promising business opportunity, but most ideas he studied were limited in market scope. Thanks to his experience with Intel, he believed that an opportunity had to be big enough to include global-scale customers.
The Solution
Cordingley joined with Dave Hobbs – both men had worked at Spectrum Signal Processing Inc. – to form an idea and hunt for a market sweet spot. Both also recognized that such a business space had several requirements: it had to involve large companies that could provide enough revenue to justify intense capital demands; it had to involve an idea that provided extreme value to those customer companies; and, to nullify the possibility of competition, it had to involve something that was very hard to do.
For a year, Cordingley and Hobbs pursued several business possibilities but found that most were limited in growth potential. Eventually, however, their search focused on how large organizations manage their extensive information technology systems. Conducting research among many Fortune 500 companies to determine what would best meet the needs of IT managers, they hit on the idea of converting the thousands of individual computers into terminals connected to a server system, which would provide the same user experience as an individual computer while creating great efficiencies in power usage, security and repair management, and application use. But a new kind of computer chip was required to make that idea real.
They drew up development plans and formed a management team and, before they even had a product, several customers and distributors such as IBM Corp. agreed to co-develop it with them. The exciting idea drew funding and talent. Teradici quickly received $16 million in startup funding, followed by rounds of $18 million and $17 million from venture capitalists in Canada, the U.S. and the U.K. Experienced engineers joined early, and as the company began developing its new chip other engineers clamoured to join the project. Quickly, a top advisory board also formed.Four years later, Teradici provides chips that power “enterprise remote desktop” products, which are redefining large IT systems using something called PC Over IP (similar to voice over Internet protocol). The chip has been commercialized for a year and already has a stable of distributors and customers including IBM, Dell Inc., Samsung C&T Corp., and several Wall Street financial firms. It is that rare B.C. company: an operation built from day one to be big.
Lessons
• Think Big. If you’re going to compete in world terms, you have to build a company that fits that thinking.• Draw top talent. Big ideas excite people in the tech community. By promising something new and challenging, Teradici could attract the cream of the crop.• Look for the “stretch” product. Simple research will tell you what’s needed today, but deeper and creative research determines what will be needed tomorrow.
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