Photo: Raina + Wilson

In March, Gerry Pond was named the  inaugural BDC Entrepreneurship Champion, in recognition of 45 years  of business success. After a lengthy career at NBTel, where he rose to the CEO office, Pond left in 2001. That same year, he co-founded Q1 Labs, an Internet security firm, which was purchased by IBM for roughly $600 million in 2011. He also launched Radian6, a social media monitoring company that Salesforce bought for $340 million.

Pond is currently chairman of technology firm Mariner Partners, and the force behind both Propel ICT, a startup accelerator, and East Valley Ventures, an incubator for Atlantic Canadian tech companies. In this exclusive interview, he talks with James Cowan of Canadian Business about about the one skill no university teaches: sales

James Cowan: In 2001, you helped create Q1 Labs, an Internet security firm IBM purchased in 2011 for something like $600 million. You also co-founded Radian6, which made social media monitoring software. It sold to Salesforce in 2011 for $326 million. What is the fundamental question you use to evaluate a potential company?

Gerry Pond: You look at the idea and ask yourself, Is this a big idea? Can it get to be a big idea? If they’re looking to build a better mousetrap—even if there’s plenty of mice around—I look at it and say, Naw, that’s an idea that’s run its course. But if it’s a software process that will allow parents to adequately monitor the activity of their children on the Internet, that’s a big issue. There are already solutions, but an elegant solution that’s reliable—that sounds like a big idea.

So you need a big idea. What else?

Next, you look at the people and whether they’re determined. Is this a game or a business? And that’s probably where my specialty is—picking the determined people. If it’s a group, you want to make sure it’s a team, not a bunch of drinking buddies from college. How much stress can they take together? These are the human questions.

Do you figure that out just by talking to them?

It’s all I’ve got. It’s not rocket science—your mother probably did it. But I have a lot of experience doing this.

You were the CEO of NBTel the New Brunswick Telephone Company, for years. Do you think corporate life prepared you for becoming an entrepreneur?

Well, NBTel was very entrepreneurial. We were a small company in the big world of telecoms. So we had to get a competitive advantage, and I felt that through innovation we would get that advantage and be able to keep our stock price up and keep our shareholders happy, as opposed to becoming a target for acquisition. So we did internal startups; it’s referred to as intrapreneurship. Nothing spectacular, but we did have one that we did, a joint venture with Terry Matthews, the founder of Newbridge Networks.

That was a television venture, right?

It was called iMagicTV. We made software to allow Internet protocol TV to be distributed by telephone companies. That was our big entry into the public world of a startup, and it went to IPO. Public offerings were relatively easy compared to today—and that’s why we had a dot-com crash. We were the third-last company to go public before the crash. So we got a good number, but we got creamed afterwards.

Let’s talk about that. Did you find a moral to that story?

Oh, yeah—there was definitely a moral. One is pay more attention to what your investment bankers are telling you on the IPO. We were getting a lot of comments from investors that our IPO was grossly overweighted. This was at the start of the crazy price-to-earnings ratios that didn’t make any sense. And the entire sector came down like a house of cards very quickly, as you probably can recall. So we also learned to not drink our own Kool-Aid. Sure, we had an IPO on two exchanges in Canada and the U.S., and everything was quite nice. But we couldn’t assume everything was fine.

We didn’t have enough information on customers yet. It was the dot-com era, and the telecom industry literally stopped buying overnight. The software was still cool, but there was no one to buy it. We learned that getting revenue traction, if you will, is extremely important before you go out and commit to shareholders.

With both Q1 and Radian6, you picked companies that were ahead of a trend. What’s your trick?

Well, I grew up in the ICT [Information and Communication Technology] sector working at NBTel, so I do understand the evolution of technology. With Radian6, it was very clear that social media was becoming the new phone system. This is pre-Twitter, pre-LinkedIn and pre-Facebook becoming legitimate. But it was clear that [social media] was going to change the direction of communications, like 1-800 service did.

Toll-free calling wasn’t invented until the ’70s, and it became a way of doing business: You call me, but I will pay. That allowed us to predict where we thought social media would go: The phone never rings, but I’m talking about you. The co-founder of Radian6—who is also a co-founder of Q1 Labs—had an idea for a social media monitoring platform. Our first application was to use it to catch pedophiles and other bad guys by monitoring the blogosphere for traces of conversations. The product morphed and morphed. But it was only when social media was starting to become mainstream that it became very clear: This was the new phone system.

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