Conference offers inspiration, learnings for tech innovators, including vertical market software companies
Is your company ready for AI, or the next transformative technological disruption that could be lurking just around the corner? How do you prepare your business in an economic downturn? And how do you know when it’s the right time to keep building your business, and when it’s the right time to sell it?
These were just some of the questions on the minds of the many attendees at Collision 2023, a major tech conference that unfolded in Toronto, Canada between June 26 to 29. During the week, startups and small businesses had the chance to mingle with global investors that include venture capital firms, private equity firms, and large corporate investors, including Volaris.
A crowd takes in a session at Collision. (Flickr/Collision)
Attendees engaged with new ideas that promised to transform the global technology industry, product demonstrations, and previewed trends on the horizon. The conference can help business owners with agenda-setting – by gleaning analysis from various sessions to determine whether or not an emerging trend could merit adjusting the sails.
What vertical market software companies can take away from Collision
At a large conference like Collision, absorbing the amount of information being offered can feel like drinking from a firehose. It can be difficult for business owners to find their tribe in the crowd. That’s why Volaris Group was on hand to report on some key themes of the event relevant to vertical market software businesses.
Volaris Group CEO Mark Miller spoke at the conference on the Corporate Innovation Summit stage. Among investors present at the conference, Volaris occupies a unique position in the M&A landscape.
Unlike venture capital and private equity investors, we commit to a very long time horizon as a stable, buy-and-hold investor, meaning that we never sell the businesses we invest in. Our goal is to keep our businesses growing forever, and we are never looking to flip our investments. We also typically prefer to invest in more mature companies with proven staying power in their markets but are still growing.
Three key themes from Collision 2023
Three major themes emerged from the conference that are relevant to the types of companies that tend to be interested in Volaris.
1. Where will generative AI take us next?
Generative AI was by far the hottest topic at this year’s conference. Industry players shared varying perspectives about how the latest advancements could reshape software development and enhance human potential at work.
Many of the discussions captured excitement about the most recent capabilities of AI tools. Several speakers compared the newest developments in generative AI to be as transformative as the release of the first iPhone, or even the invention of the internet. Many leaders expressed optimism that the advantages of adopting AI could vastly outweigh the disadvantages.
GitHub’s CEO, Thomas Dohmke, believes that AI and software development are now inextricably linked. (Flickr/Collision)
In a session that could interest anyone who might spend their day debugging lines of code, GitHub CEO Thomas Dohmke first declared: “AI will not replace developers.” His talk explored how developer jobs could evolve with the help of AI tools, and he shared how a new GitHub tool called Copilot could help developer communities. Copilot is a tool from GitHub which has been trained on billions of lines of code. It turns natural language prompts into coding suggestions across dozens of languages. His talk echoed many other discussions which expressed hope that AI could expedite the pace of detailed coding work and free humans of their most repetitive and mundane tasks.
Other discussions related to AI urged a more long-term, measured view. Some expressed skepticism that AI was being overhyped. Wired Editor-at-Large Steven Levy even reminded audiences in one session that blockchain, cryptocurrency, and NFT topics dominated a previous year’s conference, only for the topics to fade out of prominence in the following year.
One major incumbent tech player cautioned that it could be too soon to tell how the AI race could develop.
Amazon Web Services CEO Adam Selipsky in conversation with Steven Levy, Editor-at-Large of Wired. (Flickr/Collision)
“We’re about three steps into a 10-kilometer race,” said Adam Selipsky, CEO of Amazon Web Services, after being asked if Amazon might already be behind in the global AI arms race compared to Microsoft, who have taken a large stake in artificial intelligence research lab OpenAI.
“Any one company that you or I could point to right now could be a huge winner or not.”
Deep learning pioneer Geoffrey Hinton, who is known to many as the ‘Godfather of AI’, warned about the risks that still need to be addressed. (Flickr/Collision)
One of the biggest newsmakers at the conference was also the most cautious in tone. Geoffrey Hinton, dubbed by many as the “Godfather of artificial intelligence,” spoke on center stage to a packed crowd with standing room only. The neural network pioneer, who stepped away from Google in May 2023, warned about the risks and dangers of developing AI too quickly. He urged the need for innovators to slow down and address six societal and ethical dangers that AI can pose, including:
- Exacerbating bias and discrimination
- Increasing joblessness
- Encouraging echo chambers
- Accelerating fake news
- Enhancing military warfare
- Creating existential risk
Other speakers who expressed caution pointed out that regulators have not yet caught up with the latest AI innovations, nor with issues of consumer privacy and data protection, and that the industry should be aware that regulation could be coming.
The current AI race is a reminder to business leaders that the technology world can change quickly. In a sector that is always in search of the next disruptive innovation, it is important for business leaders to remember that no one is immune from competitive forces, and that customers will always welcome a product that can make their lives better. Even if you are running a business that is currently stable, a new technology or nimble startup could suddenly turn your market on its head.
Volaris supports experimentation with AI for businesses that have the capacity to do it. At our internal marquee conference in 2022, one group of leaders experimented with use cases for their businesses.
2. What should business owners pay attention to during a market downturn?
Navigating current economic conditions was another theme of the conference. Investors, entrepreneurs, and business owners shared how they were recalibrating their market outlook based on the current environment of rising interest rates, high inflation, and fewer opportunities for borrowing.
A key question for many business owners during a market downturn is: Is it time to keep building the business, or is it time to sell?
Rebecca Lynn, co-founder and General Partner at Canvas Ventures spoke with Reuters VC & Startups reporter Krystal Hu about why founders have an opportunity to build in a downturn. (Flickr/Collision)
Rebecca Lynn, co-founder and General Partner at Canvas Ventures made the case for continuing to build a business despite market turbulence and stricter borrowing conditions. She empathized with any founder who now faces increased pressure to cut cash burn early on during the journey of turning a high-growth startup into a cash-flow positive business.
She outlined opportunities for small to medium-sized businesses to build a moat: “You have to have some kind of unique data set, or unique customer insight, or use case that you truly understand,” she shared. She also advised small businesses to consider partnerships with larger companies that have collected a massive amount of data and reliable use cases for customers. (Adding to her thoughts, Volaris believes that we can be an impactful partner to small businesses, since we hold a wealth of data that can help many vertical market software companies.)
She listed examples of many successful companies, including Apple, IBM, and Disney, that started in less-than-ideal economic conditions. WhatsApp, Slack, Uber, and Airbnb also started during slower economic periods and were able to successfully gain market share. Market dislocations can hold opportunities for smaller players. For example, incumbent players typically move to cut R&D budgets during downturns. The void left by incumbents can create opportunities for focused, smaller companies to invest further in their products to meet customer needs. Smaller companies may also have opportunities to hire top-quality talent who are laid off by larger companies.
The void left after the collapse of Silicon Valley Bank has still not been filled, said speakers Wesley Chan and Nigel Morris, in a talk with CBC’s Nisha Patel. (Flickr/Collision)
Another session offered analysis following the collapse of Silicon Valley Bank (SVB) in March 2023. On stage were Wesley Chan, co-founder and Managing Partner at FPV Ventures, and Nigel Morris, co-founder and Managing Partner of QED Investors who also co-founded Capital One.
Both agreed that the bank’s collapse served as a wake-up call to the startup investing ecosystem. The tech industry is still on the lookout for a lender that can fill the large void left by SVB. In the meantime, both investors are seeing a flight to quality among investors in tech companies. More than ever, investors are looking closely at business fundaments when assessing where to deploy capital.
“We care deeply about whether the company makes money, can get profitable or is profitable, and can build something that continues compounding,” said Chan, who is an investor in the popular graphic design app, Canva.
Similarly, Morris is observing how a lack of liquidity is pressuring technology businesses to cut back on “science experiments”, cut back on growth, and get to profitability earlier in order to have control over their own destiny. He advised business leaders to “focus massively on unit economics, and make sure every customer is making money. It’s not about just grabbing market share or getting a great customer base and figuring out how to make money later. The game has changed.”
Both of them argued that surviving a market downturn can help startups form healthy financial habits. Silicon Valley experienced more than a decade of low interest rates, and investors were more willing to write cheques with less stringent due diligence.
“What we’re seeing now is the schism occurring between real businesses and ones that were not terribly sound in the first place,” added Morris.
The discussions on the economy echoed some of the advice given on our webinar earlier this year, called “Can Your Corporate Culture Survive a Recession?”
3. Is now the right time to keep building your business – or is it time to sell?
A third and perennial theme emerging from the conference was the challenge of scaling up and growing a company beyond the startup phase. Questions that founders and business owners may ask themselves during this stage are:
- What is the right way to shift a company from startup to scale-up growth?
- When is it the right time to continue building a company on your own, and when is it the right time to sell your company or seek an investment partner?
In a talk given by Volaris Group CEO Mark Miller, he discussed how companies can continue to grow, and strengthen their talent development and innovation capabilities in an ecosystem built by M&A. He challenged some conventional wisdom that business owners may have about corporate M&A, and how being acquired by Volaris is not like being acquired by a typical large company, despite our large reach and resources.
Volaris Group CEO Mark Miller on stage at the 2023 Collision Conference. (Flickr/Collision)
He explained that when owners sell to Volaris, we believe that the journey of building a business doesn't end. Rather than the “fix and flip” model of M&A, we believe in buying and holding businesses and enabling them to go on forever. Due to our long-term commitment to the businesses we own and invest in, we believe that selling a business to us is just the beginning of a company’s growth journey.
Instead of integrating our acquired companies into one central corporate culture which can potentially stifle new ideas, we encourage a “culture of cultures” where many diverse company cultures can thrive. Through our efforts to avoid a top-down, hierarchical structure, we strive to empower our leaders through a decentralized model of business where leaders who are close to their customers and local markets can make the best decisions for their business.
We also believe in developing our talent from inside the organization, rather than parachuting in talent from the outside. Through M&A, we strive to create an ecosystem for talent development, learning, and innovation for business. leaders by encouraging them to share operational knowledge and best practices. Our goal is for the top talent who join our company to remain at the top of their game.
Companies are often focused on the exit… but we think on an extremely long time horizon. We want to invest in companies forever.
-Mark Miller, CEO, Volaris Group
Volaris Group CEO Mark Miller discussed how the decentralized structure of the company is meant to empower leaders. (Flickr/Collision)
The session ended with a nugget of wisdom for leaders of software businesses – when Volaris acquirers meet leadership teams for the first time, they look for an intimate understanding of customer needs that is not easy for their competitors to replicate.
All in all, we took many lessons from the 2023 Collision Conference, and we hope to meet more vertical market businesses in the future!
Are you a vertical market software company that missed us at Collision?
Reach out to us here.
- Watch Mark Miller’s presentation at Collision
- Watch our webinar: “Can Your Corporate Culture Survive a Recession?”
- TechCrunch article: GitHub CEO: AI and software development are now inextricably linked