Ted Livingston: The Shape of Canadian Tech to Come

By Andrew James , written on July 11, 2012

From The News Desk

Ted Livingston is a somewhat elusive character, generally shunning attention. Earlier this year, he was named one of 13 “Canadian’s Under 25” to watch by Maclean’s magazine – he turned down an interview, responding “I just want everything to be about Kik/Clik, rather than about me.” Even the photo that appears in the magazine is of his team (Ted is hidden in the back row).

Ted is leagues friendlier than the stories preceding him may indicate. When we meet, I'm surprised to see he has a BlackBerry (and two iPhones) in front of him, but he later explains that he loves the physical keyboard. He even claims he'll buy three of the same model if the company shuts down production, a shocking fact considering what RIM has done to his company. But it shows his selfless commitment to good technology.

"Kik is an implant that hasn’t been implanted yet," says Ted, concerning his vision for his app, "[It's based on the] idea of tossing data around between people."

Ted recognized the potential of "limitless data transfers between people" in 2007 during an internship at Research In Motion, where employees are outfitted with BlackBerrys and unlimited data plans.

Two years later, while he still a student at the University of Waterloo, he began work on his idea, first called Unsynced and later renamed Kik Messenger, during an entrepreneurial term at school that he funded off his own savings. The first iteration was aiming to be a speedy platform for sharing music inside a seamless messaging environment.

The app was a finalist in RIM’s Developer Challenge in September 2009. Giving Ted the plan to focus the following year on honing the product, and renamed it Kik, with mentorship assistance from RIM. While waiting on music industry lawyers to sign contracts for sharing rights, Ted centered development on the messaging component. What evolved was a sleek application that allowed users to chat quickly, share media seamlessly, and include direct links to in-app content – irrespective of the OS running on a user’s mobile device.

In September 2010, RIM invited Ted to present Kik at the BlackBerry Developer Conference. Things had been sailing along, and the app was gaining traction after being accepted into BlackBerry's app store in April.

A month later in October, Kik released an update.  It was the culmination of "two years of work with help from RIM," stresses Ted. The update allowed registration through usernames instead of phone numbers. Kik soared. "In 15 days we hit one million users. Seven days later, we hit two million." says Ted. Shortly after, Kik was entertaining visits from RRE's Adam Ludwin in Waterloo as their product grew wildly. The product even managed to hit traffic limits on RIM phones in early November.

“I was shivering with excitement”, says Ted, of his app going viral. Then on the second Friday in November, Ted woke up and everything was declining.

First RIM pulled Kik from BlackBerry’s App World store for reasons they “could not elaborate on at the time.” Then Kik’s push messaging to BlackBerry phones was blocked. “Growth crashed” says Ted, showing his hand dive-bombing into the table, yet still not showing any signs of being upset.

Finally on November 30, a package arrived from RIM, and Ted wrote this post:

I opened up the letter to see a stack of papers with a big gold seal on the first page. Plaintiff: Research in Motion Inc. Defendant: Kik Interactive Inc. RIM, the company I worked for as a co-op student. The company I loved. The company that I thought could benefit from Kik’s vision for a mobile community. The company that placed Kik on Blackberry App World without issue. The company I shared our entire plan with every step of the way, is suing us.

“Not being on BlackBerry was a fundamental problem,” says Ted. The blockage and subsequent lawsuit were poorly timed. Kik had just secured $5 million from RRE on a $10 million term sheet. As Kik declined, Spark and USV wanted to put in $2.5 million each in February, but at a lower valuation.

To avoid dilution, they downgraded the round to $8 million, “meaning RRE had to take back 2 [million], which they didn't want to do but agreed to.” Ted mentions later, “I sold 1 [million] to RRE to keep them whole, as they really supported us in tough times.”

For most, this would be a pretty decent first-time success with Ted pocketing $1 million and closing an $8 million funding round mid-lawsuit. But with the very real possibility that Kik’s team could be out of work in a few months’ time, Ted was uncomfortable holding his first $1 million.

“I didn’t know what to do with it,” says Ted. Not wanting to have the money drive a spike between himself and his team, he gave the entire sum to the University of Waterloo to start a venture fund for startups in his old dorm-slash-startup incubator, VeloCity.

VeloCity was where Ted worked on early iterations of Kik's, and where he used his personal savings of $25 thousand – money left to him in his grandfather’s will – to fund a work term and build out his messaging application.

"If the product succeeds, [the students] can drop out and focus on their business, otherwise they can go back to school and finish." says Ted about his VeloCity fund. Every term the venture fund gives away four prizes of $25K to University of Waterloo tech students, asking nothing in return. The biggest problem now is there is "no one with startup experience that could mentor."

Consider this: RIM’s ex-CEOs Jim Balsillie and Mike Lazaridis (once with net worths of nearly $4B  each) have never provided any angel investment to a tech startup in Waterloo. Even RIM’s Developer Challenge contest only hands out non-monetary prizes – like a featured position in the BlackBerry App World store, a day of mentoring, or tickets to their next event. The smartphone maker does provide funding to the university, but that's also where they harvest interns and future employees. The company steers relatively clear of any involvement in Waterloo’s myriad of green startups. Instead RIM works with developers while in-house, but quickly shuns them if they aim to make an exit into the wild.

"It's been growing exponentially," says Ted of Kik. Over three and a half years have passed since Ted developed Kik, and his team has quietly been toiling away at their latest version. It's something much more complex. "For the next version, everything is built, and we’re already using it internally" as he holds his finger over the new icon on his iPhone. But he won't show it yet.

“I’m not overhyping it. This is legitimately very fucking cool,” says Ted, who showed up in San Francisco on Monday for meetings all week. All he’ll share is his dream of connecting all devices into a seamless and speedy interactive environment.

I’m inclined to believe him. He's proven in the most serious way that he's not out for either money or fame – but strictly just to build better products. He shuns attention, sold personal shares in his company to an investor because they helped out in “tough times” (then gave that money away), and told me all he wants is “the right to an ego, but not to exercise it.”

As for investing more of his personal income in the local startup scene, Ted’s response is an unequivocal “Fuck, yeah!” followed up by a quote from the Bible that his grandmother used to repeat, "To whom much is given, much is expected."

RIM positioned Waterloo’s students on the right track, with a mobile-first mindset, says Ted. But the students and startups are moving well-beyond the stumbling smartphone behemoth, into more agile territory, beyond the vacuum RIM created.

“Today is the result of what happened yesterday,” says Ted. “How is the world going to change, and how can we be at the forefront.”