How we do “Innovation” at Diagram

How we do “Innovation” at Diagram

By Amélie Foz-Couture

More often than not, when I walk into a wedding, dinner party or family gathering expecting a slight escape from my work life, I get the complete opposite – in the best way possible! Inevitably, as people ask “so what do you do for a living”, or “how is work going”, the conversations seem to be drawn out to in-depth explanations of the latest ideas we’re working on, testing one of our new concepts, or discussing issues people face that could be improved with technology. I absolutely love dissecting the frictions, unmet needs, and inconveniences in peoples’ personal or professional lives in order to invent new ways to solve these. This is why I consider myself extremely lucky to do the work I do day-to-day. 

My team’s mission is to find or invent, nurture, and “de-risk” new venture ideas that can be put in the hands of amazing entrepreneurs and become the next crop of Diagram portfolio companies. To do this, we have a “company creation recipe” which breaks down into the following steps: 

Step 1: Idea pipeline + one-pagers

We start by spending lots of time talking to our investors, interacting with companies in the financial services and insurance space, following the startup landscape globally, and generally reading and staying informed on big trends. From this ongoing work, we keep a (gargantuan) google-sheet that we call our “Idea Pipeline”, which contains a few hundred one-liners describing potential ideas. We periodically prioritize and pick from this list, and begin working on an idea by drafting what we call the “One-pager”. This is a brief memo that outlines our hypothesis for what the business could be, namely: what problem would it solve, for whom, with what tech-first solution? what makes the timing ripe for this now? how big is the total addressable market? who are the competitors? how would this business create and capture value? what is our unique and unfair advantage? and last but not least – would this have a positive impact on the world? At the one-pager stage, everything is a hypothesis, based on secondary research. So we know we might be wrong, but it’s more about asking ourselves “if this were all true, would this be an exciting business for us”. From there, we make a decision on whether we think the business can be a good fit for Diagram. If yes, we decide to spend more time on a “Research stage”. 

Step 2. Research Stage

At this point, we’re looking to validate all the hypotheses we’ve previously made. To do this, we usually shift a lot more into primary research – interviewing customers, experts, conducting competitor demos, modeling the financials, etc. Of course, sometimes we learn things that make us realize the opportunity is not as exciting as we thought…for example pain points that don’t resonate with customers, the existence of well-funded competitors, or economics that don’t quite work. During this process, we leverage ethnographic research and survey techniques, and we rely heavily on the Power Financial Corporation ecosystem to find the right people to validate or disprove our ideas. This usually takes about a month. If we think the idea is still interesting, we articulate it into a pitch document that outlines our future vision for the business, and we start to share it with potential founders. 

Step 3. Founder “pitch”

Sharing our ideas with potential founders is an interesting step in the process in that traditional roles are totally reversed – it’s an investor pitching a founder! Throughout the year we’re continuously meeting experienced entrepreneurs and building our network of potential founders. So when we have an idea that’s ready, we reach out to those in our network that we think could be a fit for the business in question, and are ready for their next venture. (P.s., if you’re an entrepreneur looking for your next venture, get in touch with us here and we’d love to share what we’re working on!). At this stage, our goal is to secure a potential CEO and onboard them to start working with us on the next stage of the idea: the pre-seed. 

Step 4. Pre-seed

In parallel to the founder outreach, we develop a pre-seed plan which outlines the 2-3 key remaining questions or “risks”, and a plan to “de-risk” them by doing in-market testing. If it’s a B2C idea, we might run some customer acquisition tests to determine the cost to acquire a customer, or their willingness to pay. If it’s a B2B idea, we might build a clickable prototype and try to secure a first pilot client. This can get quite fun and creative – in one notable instance, we even answered customers’ questions ourselves to test a chat-based advice feature! Throughout the pre-seed, we closely involve the potential CEO or founding team. Over time, they shape their Seed plan, product roadmap, hiring plan and budget to ultimately pitch for a Seed investment. For me, this is one of the most rewarding steps, where we see the founding team taking ownership of the idea and shaping the future vision for the business. That is when it all starts to feel very real

Step 5. Seed

Once Diagram and the CEO or founding team feel convinced that there is an exciting opportunity, we move to Seed the company! At this point, the Innovation team steps more into the background. We are always there to support founders in their first few months to transition the work done, but usually, they are off to the races very quickly. 

One more important piece of this process: the team. As part of this work, each member of the Innovation team is given the opportunity to fully own an idea, shape it, advocate for it, and push it through the stage-gates described above. Everyone on the team has to be an entrepreneur. Working in the Innovation teams requires drive and strong ownership, and offers tremendous opportunities for growth and impact, in a highly mentorship-driven, supportive work environment. (p.s. you can learn more about opportunities to join the team here). 

This process helps us get from one line on paper to a funded venture in roughly 3-4 months. Of course, there’s always more to improve, and we’re learning every day, so this recipe will continue to evolve. 

Beyond the stage-gates and the process, I’ve come to find that there are a few key principles that help keep our early-stage innovation on track: 

1. Being inspired by and rooted in the pain point.

The Y Combinator mantra “Make something people want” is absolutely crucial and it’s something we focus on throughout the exploration to ensure we are crystal clear on what problem we are solving, for whom, and why it matters. 

2. Failing fast and killing ideas quickly 

Thomas J. Watson, the early IBM CEO said: “If you want to increase your success rate, double your failure rate.” This rings particularly true for our work in the Innovation team. Not all ideas are good! We need to be prepared for our ideas to fail at any stage, and we need to celebrate the quick failures. In fact, my team has recently started a tradition of creating a tombstone for pre-seed ideas that “died”, so that we have an artifact to remember them by.

3. Taking a leap of faith

Even though we have a network that we leverage to get qualified ideas, and we spend lots of effort “de-risking” them as much as possible, entrepreneurship still fundamentally requires a leap of faith, and our work is no different. At some point, we have to make a decision on whether or not to keep working on an idea, and we always have imperfect information. That’s why I think of my team fundamentally as a group of entrepreneurs trying to create new ventures. We have to personally believe in the ideas, and we have to take a chance. That’s why throughout our efforts to understand the risks, the team and I still find it very helpful to periodically ask ourselves “…what if it does work?!”.

Through all this, my end goal is to launch new companies for Diagram, which is an incredibly motivating mission. I absolutely believe that together with fantastic entrepreneurs we can build successful companies that create economic value, jobs, and financial returns. What specifically gets me out of bed every morning is the feeling (humbly!) that through our work, along with the founders who ultimately bring the ideas to life, we are contributing to progress. We are advancing how technology is used in the financial services, insurance, and health sectors to better serve consumers, to make companies more efficient, to improve the status quo. By doing something new or different, we’re contributing to advancing human knowledge, and our collective understanding of what’s possible even beyond the verticals in which we operate. When I think of our pipeline of ideas, I’m incredibly excited about the problems we are solving and the novel themes we are taking on. Stay tuned…we can’t wait to show you what we do next!

Our Philosophy on Talent

Our Philosophy on Talent

By Marie-Eve Bernard

Great companies can only be built with great people. This is something that Francois Lafortune believed in deeply and he knew Talent needed to be a priority when he was starting Diagram. It’s so important that it’s built into the definition of what Diagram does – we start with big ideas, we turn them into businesses, we rally passionate teams and we catalyze success. Francois knew that if the companies that Diagram would be building didn’t have talent support, they wouldn’t become the world-class businesses that he was determined they become. This is where I came in. I was the second hire at Diagram and share Francois’s philosophy on just how crucial great people are to building businesses. I have seen first hand just how big of an impact bad hires can have and how great ideas mean nothing if there aren’t great people to execute on them. My task was straightforward but very ambitious, build out a Talent and HR team that would be there every step of the way to support our portfolio companies as they’re launched, took their first steps and scaled up. 

Talent and HR are a critical part of early-stage startups but can be quite tricky. For starters, early-stage companies don’t usually have someone responsible for HR and it is typically the CEO or COO who takes on the task. Once early-stage founders have exhausted their immediate networks, they will usually need a more sustainable source of Talent, driven by a challenging hiring process and a keen eye for strategic hiring plans relevant for their industry. 

On top of having to recruit, interview, negotiate and hire, it often falls to the CEO to do all the administrative HR tasks. These include but aren’t limited to setting up payroll, onboarding new hires, building out policies (time off, HR policies, employment agreements etc). While hiring is a key responsibility for a Founder, it can be overwhelming when they are also focused on leading the company, refining product-market fit and bringing on early-stage clients or partners. “While building my team is my responsibility, I couldn’t have done it as quickly and efficiently without the help of Marie-Eve. She is the HR and strategic advisor that we trust to take care of the details.” highlighted Nesto’s CEO, Malik Yacoubi.  

Diagram knew that, in order for its global technology companies to succeed in their bold mission of improving the world, they would need to have a strong in-house Talent and HR team. Diagram’s Talent team works directly with Founders to support them in everything from recruiting to onboarding to performance reviews. We also help deploy benefits and compensation and training. We provide Founders with turnkey HR processes that have been field-tested and that can be tweaked to fit the entrepreneur. We are also able to provide feedback on hiring plans, role definition, and benchmarks for future growth. Diagram’s Talent team even guides CEOs on how to deal with employee departures and challenging situations. Finally, founders really value the network of candidates we’ve built over the last 3 years and our ability to leverage that network to find the right person for key roles. 

It’s important to point out that we aren’t an external support system, we basically form the Talent and HR department within each company at a certain period in their growth. What makes Diagram’s model even more unique is that Diagram’s Talent Team is also a startup best-practices school. This means that every team member we hire is trained with the same tools and processes and, if needed, can become a temporary or permanent member of a portfolio company. In some cases, our team members went on to lead the Talent & HR department of our portfolio companies. It is an extremely unique experience, one that I have never before seen in action. 

We have the opportunity and the challenge of working with different founders, different teams and company cultures. We believe that implementing a challenging and rigorous hiring process is the key. Out of all the candidates that apply and that we contact, only 3% make it through. We ensure that our companies are only hiring the best possible employees in terms of technical skills, soft skills and culture fit. To maximize success, we train founders and CEOs while adapting our process to their own philosophy and business culture.  

Early employees are key to a startup’s success. Only a few hiring mistakes can be devastating to a startup with only a handful of employees.  We make sure that every hire can deliver on short and mid-term objectives, that we help founders define and clarify. We’d rather hire on the ability to deliver results rather than on role requirements. We also hire slowly at first to make sure that startups can integrate new employees while maintaining their culture. We also make sure to start recruiting only when we and the founders are clear and aligned on the role definition, the new employee’s objectives, the budget and the timing.

After having started 6 companies (Including Diagram), our team’s experience and knowledge allow founders to minimize risk when hiring, integrating and growing employees. Although our companies are still young, we’re currently seeing an extremely low turnover rate which shows that our process is working. Since July of 2016, we have hired 450 employees for these 6 different companies.

Stay tuned for more updates as we launch world-class companies, explore the Diagram model and highlight seasoned Founders.  If you are interested in joining our team as a Talent and HR specialist or any other position within our ecosystem please visit our site

The Diagram Way

The Diagram Way

By Dan Robichaud

I’ve always known I wanted to be an entrepreneur.  At 8 years old, when burgers were on sale for $0.29 at Burger King, I was buying them in bulk, freezing them and reselling them to kids at $1.00 each. That was my first lucrative business. In 2006, my first company was acquired by a Global Fortune 500 company. Since then, I’ve started and exited 5 other technology companies. My latest venture, PasswordBox, was acquired by Intel in December 2014. After spending 3 years at Intel as their Chief Innovation Officer for the Identity division, I left and sought to stay involved in the venture landscape as an advisor and investor in technology startups. Today, in addition to being a Limited Partner in 7 Venture Capital funds and investing in more than 50 startups, I’m also a Managing Partner at Diagram Ventures. 

Having spent my entire career working with technology startups, I’ve become very familiar with the myriad of challenges that entrepreneurs face in launching and scaling their businesses. It’s for this reason that I was inspired by Francois Lafortune’s vision for building a more founder-friendly venture model. Unlike traditional VCs, Diagram seeks to pair ideas that we’ve worked to de-risk internally with experienced entrepreneurs and early stage funding. To help founding teams navigate early challenges, Diagram also offers access to best-in-class services to accelerate their path to market. Leveraging this model, Dialogue, our first, portfolio company, was able to go from inception to closing a $40 Million Series B in just 36 months.  Our hope is that by providing entrepreneurs with de-risked ideas, early-stage funding and strategic support, we can help empower our founders to build the next generation of great companies. 

Despite the success of each of our 5 portfolio companies, I often hear from experienced entrepreneurs that they have some apprehensions about the Diagram Model. The most common concerns I’ve heard are:

  1. That as CEO and founder of one of our portfolio companies you won’t have full autonomy and independence to be entrepreneurial;
  2. That the founders of our portfolio companies don’t retain meaningful ownership/equity; and
  3. That we build companies for Power Financial Corp to buy down the road

I’d like to address these misconceptions here.

At Diagram, our focus is on giving entrepreneurs the tools and guidance that they need to successfully launch and scale their businesses. While Francois, Hamnett and myself are always around to offer strategic advice, we make sure that entrepreneurs retain autonomy to make decisions as they see fit. During the initial period, we do weekly check-ins but after the first 6 months we move to bi-monthly sessions with one hour per month dedicated to a financial review. Our goal is to help raise a successful A-round so we work to establish early KPIs and work backwards to help founders reach their targets. As our portfolio companies grow and raise more funding, we become less involved in the day-to-day operations while continuing to make ourselves available when strategic support is required. 

In line with our view towards giving entrepreneurs the autonomy and independence to run their businesses as they see fit, we also seek to ensure that founders retain meaningful ownership in their companies. Unlike many other accelerators, incubators and early-stage venture models, entrepreneurs that work with Diagram own the vast majority of their companies.  As the company matures, it is solely up to the CEO to decide how the equity is split between the co-founders that he or she brings onboard. Our hope is that even after 3-5 rounds of financing, the founding team retains equity well into the double-digits! 

As for concern regarding Diagram’s ties to Power Financial Corp and our willingness to build companies for them, this could not be further from the truth. Diagram’s only ties to Power Financial Corp are through Sagard Holdings which is an independent multi-strategy alternative asset manager. Even then, we are only tied to Sagard Holdings, through Portag3 Ventures, their venture capital arm. Each of these entities has welcomed external investors and hold equal fiduciary duty to all their investors. This means that Sagard Holdings, Portag3 and Diagram all take important steps to ensure that we and our portfolio companies operate independently. 

Now that I’ve covered some of the most common concerns, I’d like to outline exactly what Diagram offers entrepreneurs.  At Diagram, entrepreneurs are given funding, strategic support and access to an expansive network while also maintaining the ability to operate independently with majority equity. Diagram seeks to make the initial investment and supports entrepreneurs in raising funding in subsequent rounds from best-in-class investors.

I was reminiscing with Marc-Antoine Ross from dfuse recently and when we looked back to see how many VC intros Diagram had facilitated, we were surprised to see that it was upwards of 50! We helped his team navigate the funding landscape to find investors that would bring the most value to their team.  This led to Marc-Antoine and the rest of the dfuse team raising a $4.6 Million round with US VCs. 

Diagram is creating the next generation of global technology companies. We work alongside founders to bring life to big ideas in the finance and insurance industries that will create lasting benefits for lives worldwide. We offer entrepreneurs an influential network, de-risked ideas, seed capital, and access to a best-in-class acceleration platform. If you’re an experienced entrepreneur that is seeking to solve, big impactful problems and have a proven track record of attracting talent, raising capital and finding product-market fit, then I want to work alongside you at Diagram. Reach out, let’s build together.

Helping blockchain developers shine

Helping blockchain developers shine

Overview of dfuse – a blockchain company

In this month’s Company Profile Series we bring you dfuse, a blockchain gem in Diagram’s ecosystem. Through their slick APIs, dfuse helps developers build performant applications by organizing the world’s decentralized data. The suite of powerful tools offered by dfuse helps to decrease the barrier of entry, while greatly increasing the usability of the many new applications made possible through blockchain integration. 

The co-founders of dfuse are no strangers to Diagram’s ecosystem. Marc-Antoine Ross, Alexandre Bourget and Mathieu Boulianne were members of Diagram’s Innovation Team prior to co-founding dfuse. All three co-founders were able to deepen their knowledge of the blockchain space, through deep research and risk assessment of the space. Their interest in financial technology and the intersection of blockchain, big data, cybersecurity and developer tooling came from their deeply rooted ties to the Canadian tech scene. Marc-Antoine Ross is a technologist and venture builder; dfuse is his fourth start up. One of his former startups was acquired by Intel in 2014. Alexandre Bourget has extensive experience with Bitcoin, as he built the first Bitcoin payment processor in Canada. Finally, Mathieu Boulianne is a former Vice President in investment banking at National Bank Financial and is passionate about the many exciting applications of blockchain technology to greatly transform existing financial systems. 

dfuse began its journey by seizing an opportunity to support the launch of the most performant blockchain software available to date, EOSIO, and providing open source tooling. This involvement gave them first hand knowledge of both the capabilities and the limitations of the latest blockchain technology. After quickly positioning themselves as the technical leaders of the EOSIO software communities, they were sought out by hundreds of developers exposing their problems building on blockchain. This experience quickly identified the missing piece of the puzzle to put blockchain within reach of every developer out there; powerful read APIs. dfuse quickly rolled out a query layer for EOSIO, bringing searchability to blockchain for the first time ever. In October of 2018, dfuse launched its free public beta to the global community of developers. The response has been extremely positive, with many networks vying to have dfuse deployed on their ecosystem. 

Besides bringing together the co-founders, Diagram has benefited dfuse in many other ways. Diagram supported the co-founders in their research to understand the blockchain opportunities and risks — a technological space that was quite unpaved at the time. The company’s growth was greatly accelerated by the funding that was provided at several milestones of dfuse’s growth as well as introductions to global investors which led to a successful US$3.5M seed round. In addition to financial and accounting support, Diagram helped dfuse kickstart their team and promoted their expansion by recruiting key players and by providing HR support.

While blockchain technology and dfuse’s customer needs are constantly evolving, dfuse prides themselves on their agility to quickly add features and their ability to scale the platform based on their users’ needs. Through multiple communication channels, dfuse had integrated themselves into the EOSIO community, keeping them up-to-date with their users and refined requirements. This has empowered many of their clients to go from development to production much quicker than anticipated. 

Their mission statement is simple: empower the tens of millions of developers around the world to integrate blockchain into their applications easier, faster and cheaper. By abstracting the low-level details of blockchain, they have been lowering the onboarding time for many developers, bringing new possibilities within reach. 

The team has recently announced their support for Ethereum, the world’s most popular blockchain amongst developers globally.  By deploying their slick APIs to the most promising blockchains, dfuse will be at the vanguard of this new technology wave. The four core pillars that they bring with them to each new blockchain ecosystem are: 

  1. dfuse Search – Easily search a constantly expanding decentralized database with lightning fast speeds
  2. dfuse Stream – Listen to incoming events so that your application can take action immediately, provide real-time functionality that users are used to with centralized applications to your decentralized applications.
  3. dfuse Lifecycle – Understand the progress of a transaction as it moves through its many lifecycle stages. Provides new possibilities to the levels of guarantee an application may need before taking action.
  4. dfuse On Demand Networks – Access custom networks spun up for your use for either stealth development, short-lived testing, or full production grade permissioned/public blockchain networks. 

dfuse continues to help developers work more efficiently through its cutting edge platform. If you are looking to build on public or private blockchain, please don’t hesitate to let dfuse guide you along on your journey.