How to light the innovation fire

How to build a culture of innovation in a technology startup? One proven way is bringing together employees from different disciplines, says Kirk Simpson, co-founder and chief executive officer of Wave Accounting Inc. of Toronto.

Kirk Simpson, co-founder and chief
executive officer of Wave Accounting Inc.

The company focuses its software technology on the accounting needs of businesses with nine or fewer employees but does not rely primarily on accountants to create its product. It is designed through a collaborative process. Its technology spares small businesses the necessity of manual entry of purchases and income, and is simpler to use than other software programs. (And it’s free, paid for in part through advertising.) The company was launched in November 2010, and its product already has 100,000 customers around the world, Simpson says. He continues to seek opportunities to collaborate in Silicon Valley and New York, and among his own staff, which is growing quickly.

This is the third startup for Simpson, 37, from Montreal. He and co-founder James Lochrie, who has a background in small-business tax preparation, set up the company together and continue to collaborate.

How do you promote innovation?

You can’t run away from it as a startup. You’re at the point in the life cycle of the product where innovation is everything. You’ve got a really smart developer sitting down with a really solid front-end designer sitting down with somebody who has written specifications sitting down with a marketing person who needs to explain that feature to the end user. You sit down in a room for an hour and those four smart people are pushing the envelope further, faster. What could this mean? What could we do with this? How do we make it easier for the user? How do we explain it to the user?

That sort of culture of collaboration between different skill sets has led to some great things within our company.

So it doesn’t take a team of accountants to develop an accounting system?

Three-quarters of our company have zero accounting background. We kind of laugh that we’re in an accounting company. Most of us have been small business owners ourselves and that is quite literally why we hate everything to do with accounting. It gets in the way of what a small business owner got into business to do. How do you do it in a way that a small business owner can understand and wrap their head around? I think that’s the core driver of how we look at innovation and design and creativity.

We’ve got three guys on the team who have a deep background in accounting or payroll. The majority of the company is sitting around and saying, “How do we do this in a really new way?”

People often talk about the youthful culture of a startup. Could you describe it?

Trust is a core concept within our culture because you have a lot of autonomy, and so the belief in other people is very big. It’s very fast paced, very quick, iterative development. We release new functionality every two weeks within our system. That’s really fast-paced. That’s immediate gratification. It’s very innovative, so there are a lot of breakout conversations happening.

What’s the next big hurdle?

Scaling. Our big focus right now is how do we build the next Intuit here in Toronto? [Intuit is a California-based company serving small- and mid-size businesses that started small in 1983 and now has revenues of US$4 billion.] It’s finding people, growing the team. We started with 10 a year ago. We’re up to 25. We need to be 50. It’s penetrating the business development market of Silicon Valley without having a huge presence there or moving the company down there.

What are you seeking in Silicon Valley?

It’s a feeling you get down there. There’s a different pace to places like the Valley. People are more entrepreneurial by nature, so there are constant conversations going on. What if we did this together? What if we did that? Is there an opportunity to co-market? Is there an opportunity to join forces in a way to go after the same target market? Look at PayPal, a huge tool for small business, located in the Valley, probably already talking to 10 or 15 million small businesses through their platform. Those kinds of synergies could really take our business to the next level. Those are the kinds of conversations we need to be having, and they are happening in places like the Valley or New York, more than in Toronto.

What are you doing to get that foothold?

We’ll spend more time down there and begin to expand our network. We’ll be looking to hire one, maybe two people focused around marketing and business development. We will likely round out our board with someone who has deep connections in that space.

What about New York?

New York is the Mecca of advertising in the U.S. We need to have a strong presence there to be in front of advertisers and agencies, to be generating the revenue out of that market. It will be a small footprint. We’ll start with our vice-president of sales making a priority of being down there, and starting that eco-system, and as soon as we can see value being generated, place one or two reps there on a full-time basis.

What are the lessons of your success?

We’re really at the infancy. Like every startup we’ve got 10 fires to put out on any given day. James and I trust each other in our own domains. James is the CTO [chief technology officer] of the company. He’s the architect of the system. He’s come up with all sorts of innovations that make the product better. My role is raising the money, being the public face of Wave, growing the team and running the day-to-day business operations. We have complementary skill sets.

[For venture capital] we’re really fortunate to have found OMERS Ventures and to have added Charles River Ventures, one of the top-tier U.S. venture capitalists. That has been huge for us in the beginning to understand the opportunities and connections that can be made in the U.S. market.

This article has been edited for length and clarity.