Notman House was an appropriate venue for the founders of PasswordBox to formally announce their acquisition by Intel Security, seeing as the fabled mansion has become the hotbed of Montreal’s start-up community.
The announcement itself was followed by a series of statements by government officials, a start-up Q&A panel, finishing appropriately with a Champagne-fueled party.
While the celebratory atmosphere succeeded in conveying an unbridled feeling of joy at the success of a local company done good, it felt for a few in the room almost like a going-away party.
The deal has already provoked at least one hand-wringing editorial about whether an exit through acquisition was necessarily the best possible outcome, with at least a couple voices from the start-up community chiming skeptically about the obvious good fortune of a marriage between a relatively small Montreal company and a massive multinational like Intel.
Along with recent editorials provocatively asking whether Frank & Oak is “even a tech company anymore”, one gets the feeling that the real-world successes of companies with origins in start-up culture aren’t an unmitigated joy for absolutely everyone.
The overall feeling at Notman House last night, though, was one of pure joy, with obvious pride beaming off the face of PasswordBox founder and CEO Dan Robichaud as he emotionally thanked his team for their collaboration in what was obviously a major accomplishment not only for his company, but also for the city of Montreal.
Jacques Daoust, Quebec’s Minister of the Economy, Innovation and Exports, used the opportunity to welcome the 100-plus jobs the Intel acquisition will create for the Montreal region, adding a smirk while speculating about the income tax the deal will generate for Quebec.
Our jovial mayor, Denis Coderre, directly addressed Intel Security’s VP and general manager Mark Hocking from the stage, welcoming his company as a new anchor tenant in the city’s burgeoning tech scene, while also instructing him on what most regard as Montreal’s main attractions: French and fun. “That’s the first thing you have to understand in French. ‘Joie de vivre.’ Fun, right?”
“The future is about connectivity,” said Coderre on a more serious note. “The future is about smart cities. And that’s exactly what we’re doing right now. This is about start-ups, but it also means that you can define the world through cities. And we’ll find out through that connectivity how we can make this place a better place to be.”
Coderre finished his remarks in French, saying, “This is just the beginning. It’s a really big deal. You’ve demonstrated, through your audacity and your creativity, that we can really live our passions.”
“This is a big milestone for us, because it’s our first meaningful exit.” – OMERS Ventures Director Damien Steel
VP and general manager of Intel’s Safe Identity Group, Mark Hocking, made clear that the objective of both Intel Security and PasswordBox is to make the password go away once and for all, and then affirmed that the Intel acquisitions is an investment in both the company and the city.
“We’re committed to continue to invest in the success of Montreal’s exciting technology community by expanding the PasswordBox office and hiring more teams and people that can help us to continue to innovate and lead in developing solutions to help protect the digital lives of consumers,” said Hocking.
Dan Robichaud explained his decision to work with Intel straightforwardly. “My dream is to make a product that a billion people will use, and I truly believe that with Intel this will be achievable. This will be possible with the team we have, plus the people we will add to the team because we’re going to hire a lot of people. This will be a dream come true.”
What the deal also makes clear about this type of acquisition is a simple truth about tech as it relates to the ferment of Canada’s start-up community: scale matters.
One of the benefits of start-up culture is the feeling of collegiality and community. But there can also be an insular, clubby feeling of tech geeks making stuff to impress each other. The PasswordBox acquisition is an affirmation of the best qualities of the former and a firm rejection of the latter.
“We want to build a product that will be simple and be more secure than the password and that will be used by people like my mom,” said Robichaud. “We’re building it for the common user. I tell that to my team all the time. ‘You’re not building this product for you. You’re too geeky. You know too much about technology. We need to build a product that everyone can use.'”
With Intel being in 90% of PCs, PasswordBox suddenly has a platform to solve the password problem universally and finally, not merely in the niche way that it and countless other password management apps had been trying to do on their own.
Speaking of Intel, Robichaud said, “When they decide to do something, they have the power to do it. And I want to be part of a company that has the power to change things and that also has an impact on the world.”
“I sometimes feel there’s a lot of people working on a lot of ‘cool stuff’. But cool doesn’t necessarily sell.” – OMERS Ventures Director Damien Steel
Questioned at one point by an almost palpably sulky audience member about whether “an exit” was the only possible way for PasswordBox to achieve its goals (as if the idea of being acquired by a big company was a form of selling out), Robichaud replied, “I wanted to build something big. And I found that the best way was to team up with Intel, because we want to touch a billion people. Why is that? Because even if we had raised $50 million more, or $100 million more, I don’t get the distribution that Intel has.”
It’s a refreshing perspective offered by someone graduating from the start-up world into reality.
“Montreal needs to grow as a city of start-ups, as a city of technology,” said Robichaud. “We already have plenty of good universities. We have plenty of good talent. We just need a success story like this one.”
Indeed, one question often repeated in Montreal’s tech scene is the lack of an anchor tenant, such as Vancouver has with Hootsuite and Ottawa has with Shopify, or one big success story intent on keeping their success local and paying it forward to up-and-comers.
“Our mixed culture in Montreal allows us to easily get off the beaten track. I think it’s one of the strengths of Montreal.” – PasswordBox COO Marc-Antoine Ross
Moderating the Q&A panel, Calgary’s Patrick Lor, speculating about the unique challenges facing start-up culture in Montreal, suggested that, “The elephant in the room has got to be language.”
But the “elephant” of language was impressively brushed aside by each panelist, beginning with International Startup Festival founder Philippe Telio, who responded, “Je vais choisir de repondre en français.”
PasswordBox COO Marc-Antoine Ross added, “Our mixed culture in Montreal allows us to easily get off the beaten track. I think it’s one of the strengths of Montreal,” suggesting that Quebec’s language issue, to borrow a catch phrase, is a feature, not a bug.
While the Start-Up Q&A panel spent most of its time talking over the familiar memes of “disruption”, “passion”, “mentorship” and “angels”, Damien Steel of OMERS Ventures sounded a saner note which echoed Dan Robichaud’s desire earlier in the evening to build a product for his mom, not other tech entrepreneurs.
He began by congratulating Dan and his team on their accomplishment while also acknowledging that this is a significant day for OMERS Ventures, “This is a big milestone for us, because it’s our first meaningful exit.”
But when pressed for the reasons that OMERS Ventures invested $6 million in PasswordBox two years ago (Was it the passion of the team? The quality of the solution? etc.), Steel replied yes to all those things and then added, “There’s a lot of entrepreneurs out there working on really ‘cool’ ideas. ‘Cool’ doesn’t sell, all right? Target a pain point. And if this company doesn’t demonstrate that, then I don’t know which will. Passwords are a pain in the ass. These guys went and attacked and solved that pain. If you’re not attacking a pain, nobody’s going to pay for your product. That’s a really important thing to keep in mind in today’s world because I sometimes feel there’s a lot of people working on a lot of ‘cool stuff’. But cool doesn’t necessarily sell.”