Ever had your car towed as an apartment tenant because you didn’t know the building parkade was getting cleaned? For Vertical City’s founders that hassle was enough to build the largest residential advertising network in Canada.
We asked Fouad about the journey. First, how did the business get started?
Fouad El-MasriCEO & Co-Founder, Vertical City | I was going to University of Alberta, in my third year, living right near campus in an apartment tower. I came home one day and saw that my car had been towed from our parkade. When I went to see the property manager, he shared that it was parkade cleanup day and said sorry I wasn’t told. Mad as I was, he wasn’t going to cover towing costs, but he offered me a beer and we got talking about how to get word out to tenants. I calculated that I routinely spent 52 seconds on the elevator getting to my apartment. That time could be valuable. So I pitched the idea of putting a bulletin board in our elevators for the property manager to share information. Then I talked to nearby businesses like Fabutan and Dairy Queen and they wanted their ads there too. |
Arden TseInvestment Manager, Accelerate Fund | How did you get from bulletin boards to a network of Internet-connected digital screens in your ad network? |
Fouad El-Masri | Initially, I had no idea this would be a company. I just got hooked on the concept. But there were hurdles I couldn’t solve alone. Early on advertisers were willing to pay, as long as I could give them exposure to a large target audience. No advertiser wants just 12 screens in Edmonton. But properties weren’t willing to pay for digital screens in their elevators so I wasn’t scaling the network fast enough. I had a chicken and egg problem. Then I got to talking with Nikki. She could envision how to get wiring and Internet connection into moving elevators and do it affordably. I brought her in as co-founder and she developed the core technology. We filed our first patent on that. Nikki, Boaz and I installed about 22 screens in Edmonton. We built a spreadsheet that calculated in a few months we’d earn our money from install costs back. We thought we’d ratchet growth like that. But our spreadsheet was wrong. |
Arden Tse | You didn’t walk away though, what pushed you forward? |
Fouad El-Masri | We were part of Startup Edmonton at the time. Nikki and I were at an event they hosted with The A100 and we sat across from Bruce Johnson. He asked us what we were up to. We explained our business and the hurdle that we needed more money to buy more screens to satisfy more advertisers. We were feeling like we needed to get VC money. Bruce said, “You have a great idea. I don’t think you need to give up ownership stake in the company just yet to grow it further.” He suggested we could lease the digital screens to help us to scale without equity raise for a while. That got us across Edmonton, and started in Vancouver. Four years into the business we had Servus Credit Union, Edmonton Oilers, The Brick, Lasik MD, IBM and Skip the Dishes as customers. Now Bruce is our co-CEO. |
Arden Tse | How are your residential building elevators helping keep residents stay safe right now with COVID-19? |
Fouad El-Masri | As you can imagine, timely communication to tenants has become crucial during the pandemic. I’m very happy to say within hours of COVID-19 alerts beginning, we were able to support our entire network of properties with designed templates loaded to their screens that included specific building notices such as gym and social room closures as well as Public Service Announcements from the Federal Government. We’ve seen more engagement from residents relying on our screens for information in recent weeks, and we’ll continue to do our part to help building managers broadcast accurate information quickly to help residents stay safe and take the necessary precautions as we overcome this pandemic. |
Arden Tse | What’s kept you up at night as you’ve grown? What keeps you up now? |
Fouad El-Masri | Growing our network in Vancouver really got me staying up. Edmonton and Calgary I could get to easily. But we needed to hire quality people to run the show in Vancouver.Investing in key hires have been some of our biggest wins alongside hitting growth milestones. We’ve been able to hire Bioware’s former CFO Kevin Gunderman, and Tom Britton our CTO is from Intuit. We’re at 38 employees now with offices in Edmonton, Vancouver, Toronto, and Calgary. And meeting with our team – I’m thrilled to be the least smart guy in the room. The main thing keeps me up now is how to keep our team and culture amazing. I know that growth challenges a culture. Today our team loves what we do, and we come to work with fire. We have a great VP of People, Ashley Thompson Daly, that’s amazing to work with who’s helping us to stay a market leader and disruptor. We need to continue to be great at serving clients. We can’t get complacent. |
Arden Tse | What did you know about VC when you started thinking about financing? |
Fouad El-Masri | Nothing about convertible notes! We got educated in the Startup Edmonton community. Cam Linke and Ken Bautista were a big help. And Bruce and The A100. There were open, safe places to ask questions and get gentle feedback like, “Yeah your P&L in a spreadsheet is nice, but you need a real accountant to audit your financials.” There’s really good mentorship and support in place in Alberta. |
Arden Tse | Why did you choose Accelerate Fund? |
Fouad El-Masri | The Accelerate Fund name itself had some weight and so did Yaletown. The tech community knows Accelerate Fund does its due diligence meticulously. That gives other investors confidence. The fund’s credibility made it easy for us to go to other investors and get them to join the round. Saying we were backed by Accelerate Fund helped us open doors, it opened networks. |
Arden Tse | Any advice for other Alberta tech entrepreneurs facing fundraising? |
Fouad El-Masri | It’s never too early to introduce yourselves, be part of the technology community. It didn’t happen overnight for us. We took the time to participate in Startup Edmonton, made ourselves available and visible. Even if you just have a concept – start saying hello to potential investors, and accomplished peers, share what you’re excited about. Ask what others are expert in and consider how that could help you. With investors early on – I’d always ask – where do you think we need to be in two years to be able to talk to you? We hustled to grow. Then we did our launch party with Startup Edmonton. Lots of the community was there including Brad Johns and Dave Edmonds of the Accelerate Fund. They’d seen us talk about our milestones before, saw us accomplishing growth. Because we’d done all that, had a good story and traction, asking for funding then was not that hard. And – be aware it’s very rare to bootstrap all the way through to VC. It’s natural to need some angel investment to demonstrate scale potential, know your options pre-VC. |
Arden Tse | Why is it important for your business to be based in AB? |
Fouad El-Masri | We’re headquartered in Edmonton and it’s been a great place to start our business. People here are generous to entrepreneurs in share learning, offering advice and help. Edmonton’s a hotbed for tech right now. The Alberta Machine Intelligence Institute (Amii) is here which is the second best AI lab in the world. As Alberta’s tech hub grows we need to create more and more challenging jobs for that talent to have reason to stay. We see Vertical City as having a role to play. We would love to leave a legacy like Bioware and Intuit have – giving people a sense of possibility not just to help grow Vertical City, but the next startups they start after that. |
Arden Tse | What’s ahead for your industry and Vertical City? |
Fouad El-Masri | In the advertising world, we’re seeing huge players like Google and Alibaba showing appetite to move into our out-of-home advertising space. That’s huge validation for our business and they’re spending a lot to help educate our prospective clients on the opportunity. Advertisers need a way to get past online ad blockers and a way to advertise beyond our personal screens. We’re the largest residential advertising network across Canada today. We’ll keep growing. New York is a huge elevator market – that’s a juicy milestone ahead. |
