Happy New Year’s and a Prosperous 2015 !
I hope you will enjoy my little gift to those that want to be an entrepreneur. This post will tell you how simple it is to build a company that will last forever and make you wealthy. Read and see. The best is yet to come for you and your family in 2015, all you have to do is think about starting your own business, AND THEN ACT with passion and focus. The lessons in this document were hard won and I hope worthy of your time and your consideration.
I started my first company, Insta-Call Ltd., in 1979 and lost my entire life savings within six months. Within a blink of an eye, I had lost everything I had built up in 29 years in Ottawa. Insta-Call was an ill-conceived idea that was executed in a sloppy manner and resulted in total and absolute financial, emotional and social failure. This personal disaster left me depressed and without most of my friends and family. It left me with little hope for the future. Eventually, stress and depression took its toll on my body and I had a minor heart attack before I was even 30 years old! It was a very dark and difficult time and the worst time in my life. However, I can also argue that it was the best time in my life. It took a major failure, that knocked me on my ass, to awaken me and get me to visit my core values and my commitment to being a success. I had the chance to change the core of my being and I took it.
Twenty-eight months later, in 1982, I started my second company. Calian Technology Ltd. was started with a total investment of $35 and the experience of failure and all the lessons I learned as a result. Calian began as a one-person consulting company and by the time I retired as CEO, on Feb 2, 2005, Calian was a publicly traded company with sales of $177 million and with profits over $10 million. The company employed over 2,000 people. Calian grew smoothly over 23 years and was never in dire trouble. We moved forward with courage and when we made mistakes we recovered quickly and got on with the job of building a company that would last forever. There were two different company’s run by what ‘seemed’ like two different entrepreneurs. But they were run by the same guy — me. The difference was the two years plus of self reflection and development of decision making strategies, business models and acid tests for ideas, people and opportunities. During this process I had to answer a simple question, “How could someone as smart as I thought I was screw up so badly?” I believe I found the answer to that question and within that answer lies some of the secrets of success for any person trying to start a successful company that will build riches for themselves and their family.
As the old saying goes “I have been down and I have been up and up is definitely better.” My success in business has enabled me to help raise two children, create thousands of jobs, meet fabulous people, shake hands with U.S. Presidents, dine with Prime Ministers, travel as an official state visitor of Canada, play golf at Augusta, be blessed by the Dali Lama and then become the 58th Mayor of Ottawa. It has also enabled me to vacation on a 100 ft. yacht and enjoying the winter in Florida with a wonderful and happy wife. Success has been better then anything I had ever expected and you can have it too.
My first experience in business ended in failure. With failure came less than nothing. You have a choice to make, it boils down to wanting to win or not. If you want to win you must adopt strong values, and that will help you make better choices, and that will lead to success.
Don’t be afraid, it is actually simpler than you might have thought.
Starting a Great Company Is Simple!
I believe starting a company and being successful is very simple. That so many fail at starting a company is sad and it can be avoided. This entire article is dedicated to helping you avoid the mistakes I made starting my first company. It really is quite simple to be successful and I want to give back to the community what I learned about how simple it really is. When you achieve success you also have the responsibility to be generous and to give back. I did not realize the two were connected until the Banff Television Festival in 1992.
The Banff Television Festival is the television counterpart of the Cannes Film Festival in France. Producers, network executives and financiers, all converge on this tiny jewel, in Alberta’s Rocky Mountains, once a year to mingle and search for the next big television opportunity, and Calian was there. At the invitation and persuasion of Spar Aerospace, the leader of the Canadian Space Industry at the time, Calian was sponsoring the Rockie Award for Science and Technology at the Banff Television Festival. Calian had been on a substantial roll after acquiring Miller Communications and SED Systems in 1988 and 1990 respectively and we were now considered part of the Canadian technology scene. Our sales had quadrupled in 1991 to $28 million and the talk on the street was we would be soon going public.
It felt good to enjoy some of the perks of success. My (now former) wife Debbie and my five-year-old son Michael were vacationing with me and my youngest Matthew at one-year-old had stayed home. It was a relaxing and enjoyable time and it was a chance meeting with greatness that crystallized my understanding of what role values had played in the success of Calian. As one of the patrons of the festival I was invited to the sponsors’ luncheon. Although I viewed this luncheon as a chore, it became a special learning opportunity. Most of the other sponsors were no-shows and even my wife Debbie decided she was going to go shopping; leaving only myself, two organizers and one other sponsor at the lunch table. To my delight, the guest of honor at this year’s Rockie Awards—Walter Cronkite along with past honorary guest, Sir Peter Ustinov both attended the lunch. I was in the company of greatness.
Walter was receiving the Award of Excellence for exceptional work over an extended period. Sir Peter had also received this honour back in 1988. Walter Cronkite had been in my home every Sunday afternoon in the late fifties and sixties with his afternoon weekly TV documentary called – ‘The 20th Century.’ The integrity and sincerity sang from both their voices, Sir Peter was nothing short of one of the premier actors of the century and Walter was a living legend. It dawned upon me that my wife was going to miss out on a once in a lifetime opportunity to sit and talk to greatness. The lunch quickly became relaxed and entertaining as these two old warhorses of the entertainment industry exchanged stories and graciously coaxed us into the conversation about our own tales and experiences. The talk and the wine flowed freely and, in what seemed like minutes, three hours of history had been made in my life.
Near the end of the lunch I asked Walter about his success in broadcasting. I asked him about the values he used to build his career and his answer was very simple. “I kept a standard of personal values that people could trust and over the years — they did trust!” That he was also so gracious and warm was an added benefit, I thought to myself as the lunch ended. As we walked away from the lunch table I said to Walter,
“My wife Debbie is going to be very disappointed that she did not come to lunch today. She has said many times how much she admires you Mr. Cronkite.”
“Her name is Debbie?” He asked and I nodded and then we parted ways. I had no idea of how gracious the man really was until later on that evening. Later that afternoon when I caught up to Michael and Debbie, I recounted the stories from lunch and, as I expected, Debbie was very disappointed. But greatness has a way of shing through the mist of disappointment.
As a sponsor I had to go on stage that night and make the presentation of the Rockie on behalf of Calian. I escorted Debbie to our seats at the front of the main ballroom at the Banff Springs International Hotel unaware that we had been spotted.
“You must be Debbie,” Walter Cronkite said to our delight as he walked over with a big smile crossed his face. “Larry told me all about you and I am sorry we could not have lunch today,” he added. Debbie melted in his presence and the trip became a wonderful memory for her.
He was both charming and gentle and he held her hand as they chatted for a few minutes. Walter had that combination of gracious humility and the gentle confidence of his place in history to understand that it might be sad for my wife to miss the sponsors’ lunch and he went out of his way to make her feel special. Both she and I were thrilled and he won two more fans to add to his collection.
It never failed to amaze me how ‘good’ people of greatness were and how they got rewarded inside and out for following the ‘Do as you would be done by’ teachings of many books on social morality.
After dinner, I was to present the Science Rockie immediately following a special presentation to Walter Cronkite by Sir Peter Ustinov. They entertained the crowd, with some gentle banter and then Sir Peter bestowed a lifetime achievement award to Walter Cronkite. Sir Peter and Walter were having fun on stage and the banter went on for over 30 minutes as these two ‘kings’ of the stage joked and kibitzed back and forth. The melodiously and hilarious well-timed jabs and jokes had the entire audience in both awe and stitches. It was the two icons at their best and they received a standing ovation for their efforts. I was as impressed as everyone else in the audience and then reality struck me—I was giving the next Rockie award! As they exited and I walked on the stage, Walter looked at me and smiled in that knowing way as he winked and said, “Good luck.”
I was alone on stage giving out the Science and Technology award and the audience had just been witness to two of the greatest performers of the century and they had been at their best. I knew no matter how relaxed and low toned I kept my voice and no matter what I said I was going to sound like Mickey Mouse. At least I had the presence of mind to say just these thoughts to the around 1,500 professional entertainers, producers and directors. My admission of vulnerability got me a chuckle from the crowd. The award winner and I had a brief chat about business and technology and as quickly as that I was off the stage without serious embarrassment.
One of the writers in the audience was planning a TV documentary on starting a business and had made a note of my name. At an event following she sought me out and wanted to know a little bit about my attitudes towards starting a small business in Canada.
“Mr. O’Brien, what was the biggest surprise you had in building Calian Technology from a one-person consulting company in 1982 until now?” She asked having done enough homework to catch my attention, her long auburn hair and clear blue eyes were all she really needed. Perhaps it was that distraction of her good looks, or maybe it was the glitz of the festival, but I listened to my answer as if I was a spectator and my answer surprised even me.
“How simple it was!” I said in a matter of fact way that I hoped did not cross the line into arrogance or overconfidence. “ I was lucky enough to make all of my big mistakes three years before I started Calian and that made Calian very straightforward,” I added, as she jotted down my words with disbelieving look on her face.
I went on to describe my models for choosing business ideas and then the four values for making rock-solid decisions swiftly. I told her why I thought most startup companies fail and why some prosper. I quickly recounted a critical few acid tests for assessing new business ideas, business models and personality traits to avoid when starting a small company. I buried her in a blizzard of ideas and thoughts about starting and building a business in Canada that could last forever. I gave her a clear idea about just how much bad news a banker needed to feel good and thrive. At the end of my dissertation she smiled and repeated my opening statement “How simple it was?” she asked.
I told her again about making good decisions and working eighteen hours a day to make the company grow for the last eight years, again burying her in details and facts about values, acid tests and culture models. I said “It was all about building a company that would last forever.”
“That sounds like very hard work!” she gasped.
I smiled at her and said, “I said it was simple to succeed; I never said it was easy.”
I am not sure if she ever got funding for her documentary or even if she understood the meaning of my comments but to me they were a huge insight into the core values that I and the many dozen parents of Calian shared. The book is about the lessons I learned from the failure of my first company, Insta-Call Ltd. It is also about learning from failure.
Learning The Lessons from Failure
Someone once told me I had earned a street MBA and thy were right. Through my own foolishness I had been dealt a savage blow to my ego and my life. It would have been easy to simply lie down and give up my dreams of being secure and prosperous. The street MBA only gets awarded after you do get up , learn from your mistakes and become successful.
My street MBA gained me enough experience to a turn $35 investment in 1982 into a multimillion-dollar company that employed over 2,000 employees by 2006. That investment in Calian grew at an average compounded rate of over 24% from 1982 until 2006. Calian reached sales in of $222 Million in million in 2010 as a dividend paying publicly owned Technology Company. I owe all of what I can share with you today from dismal failure of my first company.
I was 29 years old when I started that company and earned my street MBA. I had the cocky confidence and unfortunate pride of youth, a great imagination and as it turned out very little common sense. This turned out to be an unfortunate combination of psychological characteristics. I would learn about mistakes, the pride that prevents you from seeing those mistakes, the consequences of poor judgment, and finally, I would soon learn about humility.
I was a dreamer and my ambitions were very high! I was going to start a nationwide radio paging company and become very, rich. I was sure I had a world beating solution to the lack of roaming service for pagers. In 1979, unlike today, the radio frequencies that cell phones and pagers worked on were different in every city in Canada, and for that matter, almost every city in the U.S. This meant that it was impossible to roam freely with the same cell phone or radio pager.
My solution to this problem seemed, at the time obvious to me; I would establish a nicely designed kiosk at every airport, every train station and every bus station in Canada to handout and collect radio pagers and cell phones to traveling business people. My traveling customers could pick up and hand in pagers and cell phones at their leisure for a single low rate of $4.50 per day. My very first booth, the start of a communications empire, was at the Ottawa International Airport. I was quite confident about the prospects of this new venture and was even thinking about what colour Mercedes I was going to acquire. I went into the venture asking, “How can I lose?” That I had no business experience and I did not have any facts with witch to support my belief did not dampen my enthusiasm is any measurable way.
I stood in that airport booth day in and day out for almost six months to prove I could not lose. After six months, (I was stubborn if not smart) I had not rented a single pager to anyone, not even a friend. I became quite good at identifying travelers from the companies that had committed to using the service from Insta-Call. When they saw my booth they moved over to the other side of the foyer and passed by to pick up their bags, without even glancing over, in any display of curiosity. When I had pitched the pager concept to Corporations I was amazed at the positive response that management had shown to the notion of being able to track down their staff anywhere in the country on a moments notice. Still nobody, and I mean nobody, approached the Insta-Call booth to rent a radio pager or cell phone and I was running out of money.
The ‘How can I lose?’ question slowly changed to ‘What was I thinking?’
The end was mercifully short. A faceless executive walked up to my booth and asked to rent a pager. My dreams were coming true – I was in business. I was going to buy a blue Mercedes and my cottage was going to be big. As he walked away with that $300 pager, I held the $4.50 cash tightly in my hand thinking about the 40% gross margin I was making on that daily pager rental. I had worked the math on this in many different ways and I believed with my first rental the avalanche of success would start. I was in a dreamland of contentment until the next day when I asked. “Where did that pager go?”
My first customer stole the pager! I never saw him or that pager again and Insta-Call was closed within a few days. It was over and I was crushed.
The postmortem questions were chilling. Did I ask the wrong questions to the wrong people? Should I have been asking the travelers, “When you are traveling would you like to be contacted on a minutes notice by your boss?” The answer I suspect would not have been as encouraging. As a smart technologist why did I not think about the long-term solution to the problem of roaming? Instead of investing in building up the wireless network with common frequencies and more antenna towers, I used wood to build booths. Where were all my professionals once I had lost my ability to pay them for their enthusiasm? The questions and unfortunately the answers all pointed back to me. The consequence of my actions had been failure and the evidence was clear—I was not capable of making wise and long-term decisions. I also did not know enough about the paging and cell phone business.
Had I approached an existing pager company and tried to sell them on the idea of opening up booths across the country, I would have received a polite no, as a response. Years later, whenever asked for my advice on a new business venture that was going to rock a specific industry, I would often ask if the promoter had tried to sell the idea to companies in the specific industry they were about to revolutionize. In my case, the answer would have been no and in my case that meant I did not understand enough about the opportunity.
It was a very tough revelation for a young and cocky man. What remained of my self-esteem was in tatters. The reality of my foolishness had been rubbed in my face like a puppy dog that had made a mistake. My car was towed, my condo apartment was foreclosed upon and my wages were garnished. I ended up in ICU at the Queensway Carleton Hospital listening to young Dr. Ron Vexler expressing concern about the punishing lifestyle that had resulted in a ‘ interesting’ heartbeat for a 29-year-old jogger. I was truly humbled by my own foolishness.
So, in the darkness of bankruptcy and shame and with a newfound humility, I went about rebuilding the base of my value system. In many ways I was a very lucky man. I had a deep drive to succeed in business and the obstacle to achieving that goal was my own pride and it had been shamed into nonexistence.
I had suffered a brutal financial and emotional beating. I had lost my money, my health, my courage and had declared bankruptcy. Not the gentle corporate version either, but the messy degrading personal version of insolvency that steals your optimism and craters your hope. I was as low as a person could be. I kept asking myself a single crushing question; “How could someone as smart as I thought I was fail so badly?” It was a time to understand what had gone wrong. I was now ready to reflect upon the events of Insta-Call and finally become whom I wanted to be. The Blue Mercedes would have to wait. I had some work to do.
The Awakening of an Entrepreneur
I spent the next twenty-eight months of my life examining every aspect of my Insta-Call Failure and evaluating ways to ensure success the next time I started a company. Fortunately I was hired as the General Manger of a Company called Reltek and even though I had to go through the humiliation of bankruptcy and wage garnishment I was safe in my new job and I had the chance to truly accept the truth and rebuild myself as a person and as an entrepreneur. I worked very hard and developed the business models, acid tests for reality, and a decision making process that helped me build a company that could last forever. I did it with Calian and you can do it with your company as well.
By responding to the pain and rebuilding myself around my newly adopted values of success I then pressed those lessons learned into practice by starting Calian and proving them correct by being successful in making clear decisions and discerning the differences between fact and fiction. The trauma of personal failure opened the door to change and I walked through the door into another room full of hope. I had truly been altered by the beating I had taken. I was the same person yet somehow quite different in my actions attitudes and business wisdom. The words that follow attempt to describe the tools I believe will help you build a company that could make you wealthy and secure.
The first step in this process is to get a model in your head about the varying points of view you will need to take to win constantly. I will then add some ‘acid tests’ to help ferret out the truth in business situations and provide you a set of values that will help you make the right decisions for your company you.
The Space Cadet and the Street Fighter Model
I believe every entrepreneur needs a select combination of ‘diametrically opposed’ personality traits to be a success. The Entrepreneur needs to call on these different personality traits at different times during the history of the company. At one time they need to be a dreamer and risk taker and have a wonderful devil may care attitude. That is usually when they try something well outside their experience or comfort zone such as even starting a new company. Then at other times they must be the ruthlessly efficient street fighter or warrior who has the eyes of someone who would shoot first and is driven by the need to win. A Street Fighter will execute with chilling efficiency and seldom starts a fight that is not already won before the gloves have come off.
Each trait on its own is not enough. The street fighter would likely not start their own business because they would know the odds were against them. They know they would be up against many obstacles or barriers to success that they could not control or predict. They would understand that forces working against them would include the competition, their family and friends (who might not understand or be jealous) and most importantly they would understand that they would be against themselves because they simply do not have the background to run a business. A street fighter does not like to fight, they like to win and if they do not have all the tools they would likely make the quite legitimate decision choice to work for someone else and not take that risk of failure.
On the other hand a Space Cadet would leap to the challenge almost unaware of the consequences of failure. They would not worry about cash and they would never consider the possibility of failure. Now a Space Cadet on their own will almost certainly always fail spectacularly. A Street Fighter would likely never start a company on their own because of the clear reality that it is risky. After the beating I took at Insta-Call I had to be sure I was able to only use my dreamer when he was needed and could count on the street to be there for me when I needed him.I was lucky in that in the aftermath of Insta-Call I worked for someone I would characterize now as a Street fighter.
After Insta-Call I went to work for an old friend I had worked for earlier in my career at MIL–Merv Sullivan who owned Reltek Inc. Reltek Inc. was a semiconductor test laboratory that he and a partner, Brian Crook, started in 1974. The two partners bought equipment from the defunct MIL and built a respectable IC testing business serving customers like Northern Electric, CAE Electronics and Mitel. By 1980, their partnership had dissolved; Merv needed help, and I needed a job. It was an ideal arrangement for both of us, and Merv offered me 10% of the accounting profits, as a bonus, for helping him build Reltek. I was back in the semiconductor business; my goal was to help Merv grow Reltek. The service Reltek offered, testing semiconductor circuits was the mind numbingly dull, yet extremely complicated task of testing semiconductor circuits. The testing process was considered the most boring part of electronics manufacturing process and Reltek customers, for the most part, were happy, almost delighted, to pay someone else to do this chore. The customers had the technological ability to test the circuits themselves but they chose to direct their capital and intellectual resources into their core business. These observations led me to my first important ‘acid test’ for business.
The first ‘Acid-Test’
Provide a service that; others either can’t do, or don’t want to do; and even better if it is both.
I always liked simple business opportunities that were not exciting and would not attract to much attention. Reltek was exactly that kind of business and it was run by one of the nicest street fighters you would ever care to meet.
Merv Sullivan was a kind and humble man; he had a soft, pleasant way about him, and every conversation started with a sincere question. “How are you doing?” He was truly interested in the condition of those around him. In the years I knew him I never heard him say a cross or mean word about anybody: Merv was a good man; the kind of boss you did not want to disappoint and I worked very hard for him during those 28 months. He also had a very good business and after my experience with Insta-Call I enjoyed everything about the company — even the customer complaints. At least he had customers!
As I studied him it became evident that Merv and his wife Jessica ran a very frugal operation and every penny was counted, sometime twice, and once counted; they were his and he would keep his fist clenched around those pennies as if his very life depended upon it. When he did have to invest or spend it would be a wrestling match to get him to agree; even when he did agree he would throw those pennies around like they were manhole covers and made sure that Reltek always got maximum value in any transaction. He wasn’t greedy, he charged his customers fairly, but he invested, never squandered his money. He was a street fighter and was content not to take chances and decidedly careful with his money.
One time he asked if I wanted to go to the Cherry Hill testing conference in Philadelphia where all the major test equipment manufactures showed their new testing products. I was excited and encouraged by his invitation. I expected that we would fly the 450 miles only to find myself cramped in his six year old Honda Civic for a seven hour ordeal that started only at the end of a long work day. He was delighted at the cost savings but I could not face the return drive and flew home paying the full one way fare. As it turned out that fare was about the same cost as the round trip fare and I am sure he was not happy. True to his gentle character, he did not get visibly upset at my flagrant disregard for his money, but he didn’t talk to me for a week after he got back.
There was another observation that I could make about Merv: he was averse to any risk. This was the hard for me to understand; it ran against the image I had of the ‘risk taking entrepreneur’ staring a business defying the odds to become rich. He was so conservative that he did not want to take any chances — he was a complete street fighter. A good example is his response to the business idea to start Calian. It was a choice he made the enabled me to start Calian.
As one of the ‘side line’ businesses in Reltek into was the quality Assurance consultancy business. I had taken the company into this business without even asking Merv. It was the boring job of making sure all the paper work and manual writing was done correctly to be in compliance with Government contracting needs. It was slightly more profitable then the testing business, but the business came with a number of risks including some hard to define liabilities and the ultimate responsibility for the success of a project. Merv had been unhappy with this business for a while and he argued that the risk was substantial, and that it put in jeopardy his testing business.
We were in disagreement as to the potential of the business. He did not think the potential warranted the risk, and wanted me to stop offering the service. The business of providing quality assurance consulting service met my criteria of a good business—it was something others did not want to do themselves and they would gladly pay for someone to remove the headache. It was quite clear to me that many small technology companies, including Dy-4 Systems, were about to win Government contracts that would require this boring consulting help.
Merv did not want the risk of growing into a business where he saw the flaws and like any true street fighter chose the safer path. One the other benefits of working at Reltek was that I got a keen idea of what kind of Business was worth starting. He was right of course but I still had the drive to start a business and this opportunity seemed better then most and Merv and I parted ways and I started Calian Technology to take advantage of the market opportunity that was in front of me.
Later I would hear a real MBA talk about this phenomenon as ‘asymmetric market motivation’, which, roughly translated, into lay terms, means your customers, and your competition, are happy to let you take the headache. Working for Reltek taught me how to identify a good business opportunity and I was on the prowl looking for an opportunity that would meet that simple criteria.
The Birth of Calian — Putting the Lessons to Work
After these hard lessons of failure and the process of finding out why someone as smart as “I thought I was” could fail so badly, it was time to put the ideas to use and try again. I was still young and 32 and I still felt the drive. The difference between Insta-Call and Calian was both timing and experience. It was time to give entrepreneurship another whirl and so that I did.
At first glance, 1982 did not look like a great time to establish a company. Prime interest rates were at 10%, mortgages were above 17% and the country was in a recession. The economic indicators were all bad and business managers all over Canada were ‘pulling in their horns’ and defensively protecting their cash. It did not seem peculiar that the macroeconomic facts were at odds with the reality of a new clear and quantifiable customer list. This new technology-based economy was obviously different from what Ottawa, Canada, or the world had seen before and the old rules did not seem to apply. The world was changing that summer.
However, macroeconomics made little difference to Calian; we were marching to the sound of a different economic drummer–the drumbeat of massive cultural and technological change. Traditional industries might have been in a politically induced recession, but those of us in electronics and technology were overwhelmed by opportunity. One of those technology companies in Ottawa was going to be my first customer and I had to look no further then Dy-4 Systems and a good friend by the name of Kim Clohessy.
I met Kim at the Greenway Glen squash club, a hang out for technology types in the late seventies, and we became fast friends. As an Aussie he enjoyed a good time, and we got to know each other well over a number of years of playing squash and drinking beer Kim had an enormously capable mind, and a great sense of humor, and was the VP of Engineering, and the driving technology force, behind this Dynamic Company. The scope of his knowledge was very broad, and he could cut through the technical B.S. faster then any young engineer I had ever met. The company was at the forefront of the technology revolution and DY-4 was getting traction in the new age with specialized skills and aggressive management. They too were getting bogged down in the boring stuff like QA regulations and specifications. I wanted ‘Dy-4 systems Ltd.’ to be the first customer my Calian.
We were both in our very early thirties and living life to the fullest. Much of our social life revolved around a cottage we rented on magnificent Lake Calabogie. Many of our friends and guests at the cottage were working in the technology sector and his company Dy-4 was the centre of the party action in the year 1982. During this fun time we agreed on a contractual relationship between my next company and Dy-4 Systems. The cottage brought me more then just my first contract– it brought me a significant mentor.
The cottage was owned by a 60 year retired Government worker, by the name of Norris (Curly) Pettis. Norris was a slow talking, insightful, pipe smoking man with the posture of a drill sergeant. He walked with a slight limp due to ‘rusty pies’ as he used to refer to his arteries and veins but his walk was always the walk of a man with purpose and a man with grace. He was also a very lucky man. He had flown 39 bombing missions in WW2 as a tail gunner in a Lancaster Bomber and as a result he always seemed to be grateful for the little pleasures in life. Norris had a simple way of talking about problems that made the issues clear. In many ways he was my guiding light during the first five years of business.
The name Calian was derived from the name of the lake where my first contract was negotiated. I had a choice between two names and I remember Norris suggesting that Calian Technology was a much better name then Boggy Technology. With my first customer and a company name I jumped into business again. I deposited $35.00 in the bank account of this fledgling company and as part of my deal with Merv I stayed in his office at Reltek for the first few months while I got the company going. Business was brisk and belief that people would be glad to pay me for doing something that was boring like writing QA manuals and helping technology companies meet specifications was proven correct.
Calian quickly found itself outgrowing the small office at Reltek and we rented 1,200 square feet at 1745 Woodward Avenue. The building was owned by a local business man by the name of Don Armstrong. Every month when I hand-delivered my rent cheque I would talk to Don about business and very quickly I realized he had exceptional judgment.
I asked his advice on many issues from people problems to contracts and he never varied from a simple value system which was similar to my four rules. Don Armstrong watched as our annual sales grew from $102,000 to $187,000 in 1985 and we were headed for $787,000 in annual sales doing what other thought was boring.
As we grew, Don and a group of investors became interested in making an investment in Calian. In October of 1985, I had the opportunity to make a presentation to all the members of the investment clubs at the esteemed old Laurentian Club on Kent Street. Accompanying me to the meeting were two early partners, Jack Wilson and Ed Lambert, who both joined Calian in the first year. Unfortunately, as CEO, I had to all the talking.
It was my first financial presentation and I was so nervous that I had to sit down to complete the presentation. The company’s future included a product called the AQOP-1000 that used computer discs to store military standards and specification and a quality management system called Bloodhound that tracked down subcontractors who were not meeting their obligations. I was telling the group how Calian was going to automate the paper intensive record keeping process of quality assurance through a major contract with Saint John Ship yards on the Canadian patrol Frigate Project (CPF). The investors were, for the most part, local Ottawa business people, who like Don, knew something unusual was happening to our economy and they wanted to make sure they had a tiny piece of the action. They embraced the fact that I had tried at business before and had failed.
The next day Don told me that they had agreed to make the investment of $100,000 into Calian. I called Norris Pettis to announce the good news. By that time Norris was spending one day a week in Ottawa helping me with the books and numerous other administrative items.
The investment came just in time because Ed Lambert had just won another federal government contract and that victory was going to stretch our cash reserves. We were going to be out of cash by Christmas and this $100,000 investment would stabilize our situation until the earnings from the new contract started to turn into real cash. Ed was doing an exceptional job of winning long-term lower margin contracts that created a much more predictable business flow than the smaller contracts revolving around quality assurance projects. (If any single individual can be singled out for contributions made during those early years it was Ed Lambert.)
Ed Lambert was a big man who could bench press 300 pounds and was a military police officer who guarded nuclear weapons in Germany earlier in his life. Before he became an employee of Calian, I invited him out to lunch one day to talk about government contracting. He was working for Ian Martin, a competitor at the time, and as a result the lunch was cordial and brief. He had no interest in giving me any hints as to how to approach a business that he determined was his and his alone. I wasn’t happy that he would not help Calian or even consider an offer of employment, but I gained a huge respect for his integrity and business savvy. He too had tried and failed at business and was more than happy to talk about the mistakes he made in life and work. We had a very good meeting and I truly liked this man who I had resigned myself to believe was going to be a more than a worthy competitor. What happened next was an incredible series of events that were good for Calian and were very bad for the company Ed worked for at the time.
Walking out of the restaurant after lunch I shook his hand and laughed, as we both saw his boss from Toronto walking into the very same restaurant. The next day I went to a government bidder’s conference for a contract that was currently held by Ed’s company and I sat directly across from Ed’s boss who glared at me during the entire meeting. His boss had jumped to the erroneous conclusion that Ed was betraying him and had fired him that afternoon.
Two weeks later Ed was working for Calian as the Government Operations Director (GOD as we joked) and he the Government contracts that gave the Calian stability as we started making some critical acquisitions. Although we were both pigheaded and fought over almost every issue, it was a truly good working relationship. Ed had one failed business in his past and had also grown up in a tough family situation. He was honest and could talk about his mistakes and it was him that made me realize the next important acid-test for an entrepreneur.
‘Acid-Test’ number two
Never Hire someone who will not admit a mistake!
I needed to know that I would be surrounding myself with people who believed that mistakes or even failure could lead to greater success in the future as long as you were able to deal with the truth. The first step in this process for detecting humility was to see if a job candidate was capable of admitting that they could make a mistake. A question I often asked during a job interview for a position at Calian was “what is the biggest mistake you have ever made in your life?”
The reaction to this question was always a revelation and often provided a deep insight into the workings of someone’s mind and sometimes even indirectly their soul.
That simple question was an acid-test for discerning many things about a prospective employee. You could find out if they were honest and humble enough to talk freely about their failures. Failure could be a spectacular chance to learn and grow and I needed people around me that were not afraid to admit they could fall short. Making an error of judgment was one thing—blaming it on someone else was another. I was never embarrassed to follow this line of questioning, often with surprising results.
After all, by the time I started to ask that question to myself, I had a list of failures as long as my arm and I was not afraid of talking and in some cases even bragging about my misadventures. I felt that the mistakes I had made along the way had given me permission to use every weapon in my arsenal not to make another mistake in the hiring process. I could learn a great deal about someone with that simple single question about “their biggest mistake.”
This question is harmless enough, if answered directly and quickly, but the odd occasion I would see eyes darting for the exit and an amazing lack of recollection and sometimes even sweat would start to appear under the arms. It was the sweat of false pride and the reaction of a person that did not understand humility. If they knew that the test was not about their skills, but their own self-awareness, I am sure many would have made up some monster fictional mistake to brag about. That admission of being a mere mortal would have been the end of it and I would have quickly moved away from that line of questioning, but some chose to drag it out and I always enjoyed the process.
If they made the unfortunate claim that they had not really ever made an error, my darker cruel side would come out and I would toy with my prey for a while before I ended the interview. A series of torturous questions could eventually tighten the noose around the most defensive of personality types.
If it was an engineer, the line of questioning might focus on the candidate’s amazing ability to design every circuit right “first time!” If it was a salesperson I could explore the candidates 100% customer retention rate and see how fantastic that was for him and his last company. Eventually, they would all understand that I wanted a real answer and they would bring one to the surface and hope it did not spell an end to the interview. If it was a juicy oversight full of lessons then they were still in the game.
The type of event or miscalculation that they chose to reveal was an important insight. Was it a mistake that took them back to their university days and revolved around taking the wrong major? Was the slip that really stuck in their mind 20 years later that they should have taken economics 201 instead of accounting? Those who remained in that time warp could still be very valuable employees, but that certainly was not high in my priority list of mistakes. I wanted to explore and I would have to dig a little deeper to get them talking about bungles they made after university.
A career choice blunder or personal relations blunders were closer to the mark. These kinds of situations would give some perception into the relationship they saw between themselves, the company and their fellow employees. This direction was always useful since it gave a much clearer idea as to where they did not want to go again and did that direction fit with Calian’s needs. Yes, a career gaffe was good enough not to stop the interview but it still wasn’t the perfect type of mistake for my ears to hear. The best mistake to discuss with me was a pure business error. Preferably, it was a blunder that had ended in disaster.
A business mistake was music to my ears. Bingo, I would think if a contender had taken their last company into a market that wasn’t real and they learned the hard way the difference between a good and a bad business idea. I found that a certain contrite look would flash across their face at some point in the discussion and that was a very good sign. If the words and the music were in harmony, I would become the champion of the hiring process. Yes, making a big business mistake was something to be savoured and the lessons learned from every mistake would help an individual succeed.
These humble people, who knew failure, were the building blocks of Calian and without them our company could never have grown. In Christianity, they say hate the sin not the sinner, and in business the forgiveness of an honest mistake is the first step to becoming an ethical businessperson. With this knowledge came a peace.
Ed Lambert was one of those people. Although he left Calian in the early nineties he was one of the early partners that made a long and last impression on the future of Calian.
Making Wise Choices
Executives need to make thousands of choices as they are building a company and any one of those choices could be a land-mine. It is even more important that your company build on good choices over years to build a reputation and a network of like minded individuals who will be with you through the process of building a company that will last forever. I thought of all the mistakes I made at Insta-Call and worked everyone through in detail to see what if I could find the flaw in my decision making process.
As I was doing this I realized that a successful business is not based on a single decision but hundreds if not thousands of choices that needed to be made quickly and efficiently. This was an important insight because I then realized I needed a framework to test solutions I came up with to solve any difficult problem. At Insta-Call I would come up with many solutions to any given problem but I did not have a value framework to compare the various solutions. I never tested them against a framework of values that would enhance the probability of success.
So during the time of rebuilding myself I looked all sorts of criteria that a good decision would need in to contribute to the success of the organization and realized that the ultimate success of any person, company or Country was dependent upon timely and quality choices being made. Here is the four values that I came up with to test every solution that I was offered to solve an important business problem. I have used these values everyday in business and in life and I guarantee they work. They took a dismal failure and twenty-eight months of hard work to come up with. They are the heart of my Street MBA.
ACID-TEST NUMBER THREE
Test Every Major Choice You make against these Four Values
So when you are looking at a solution for a problem that is big enough that you can see yourself remembering it in five years, ask yourself the following four questions.
Value Test Number one; Is it an honest Solution?
Honesty requires you to deal with the truth in every situation. This is not as easy at seems since the truth can hide behind the clutter and noise of life and business. You need the truth, not the ‘hoped for’ truth, not the ‘article of faith’ truth but rather detailed hard indisputable facts that can’t be argued with. This requires a tremendous amount of hard work and it can be tough to make an honest assessment of any situation you are in. Your ability to use critical thinking is fundamental to your future as a business person.
A businessperson must be impeccable with their word to be successful. Impeccability means without sin and that means refraining from speaking ill of others or spreading gossip. An ethically honest person will make choices that are fair to others as well as themselves and over time your business associates and friends will cheer you on to success. Honesty will also let you achieve a greater sense of reality and truth.
Value test number two; Is the Solution long-term?
Always and I mean always choose the long term solution when you have a choice to make. One amazing observation is that the long-term solution always produces the shortest-term results. I know this sounds counter intuitive but it works. I even called it factor ‘X’. When you make the right long term choice it will be clear to others that you want to be in business for a long time and those others will want to business with you. It also puts you on the same technology or business path of others who want to be in business for the long term. There will be opportunities that you could never have foreseen come to out of almost nowhere.
It is seldom easy to make long-term decisions when you have short-term solutions that could patch a problem but it has always worked for me. The shortest way home is often the long way around. In religion you make decisions for eternity, so thinking ahead a few years is probably not an unreasonable rule. I suggest you make choices that you hope will stand the test of time. After all you are trying to build a company that will last forever.
Value Test number Three; Does the solution add value?
Any solution you choose must add value to all participants in the solution. The reason this works is that business is a long term proposition and you want people to enjoy working with you, even be anxious to work with you because they know that they will be rewarded for their efforts.
Business is a verb, not an adjective and you should only make money for what you do and not for only what you know. If you know something that will help another it is usury to charge them for that knowledge unless you are adding value as well. The benefit of this is that others who share your belief will start helping your business as well. It is commonly called net working but the reality is that it is adding value to others without expecting a return.
It can be your choice–earn a reputation as a user or be awarded the reputation as an outstanding fair business person. The first three laws along with hard work and self-awareness enables you to start and build a business. The fourth test lets you keep what you earn.
In the early days of Calian I was always focused on adding value for our clients and our shareholders. Communicating that requirement to the employees in the early days was a tough task. I eventually stated to talk about being a ten percent company. I tried to give my early customers 10% more then what they asked for and charge them 10% less then what they agreed to pay. This had the effect of making sure the employees at least knew the minimum of what the Customer wanted give them the extra 10% service. The unintended consequence of that approach was very positive. The customer was left with an open Purchase Order (PO) with money left on it. That open PO was always enough money to get you going on the next project that was always bigger.
Value Test Number Four; Is the Solution Prudent?
Sometimes I refer to this value in another way. I say never buy your Banker Lunch. The bankers and the professionals have their place in business, but let me make it very clear that they can take more money out the back door with teaspoons then you will ever be able to bring in the front door with a shovel. The folks at Enron bought investment bankers big lunches for many years! The Bankers also include your professional help such as lawyers, accountants and management consultants. When it comes to starting your own business if you need too much outside help, assume you do not know enough about the business to succeed.
As you build the company your customers, employees, investors and friends will see an entrepreneur who is honest, forward looking, value adding and prudent person and after a few years they will trust you.
Sometimes the best choices you can make have a simple answer; the word NO.
Saying No to QUICK Riches — Wait for it to Grow
I could still feel the chill of the cold March morning as I looked around my office. It was 1988 and Calian and I had grown up in these offices over the last five years and it always felt safe there. However, on that particular morning, things were different: there were two accountants from Price Warehouse and a lawyer reviewing papers and corporate records, while my own staff looked on with sad faces. Swallowing hard, I initiated what I had practiced in my mind overnight, as I walked countless times around the block with Ballie, my faithful golden retriever.
“Get out, it’s over!” I yelled. They stared at me with disbelieving eyes. “I am not selling Calian to SAIC! Do not waste your money checking my books and legal papers. Just get out!” I stammered as I stared each of them in the eyes to make sure they knew I was serious; not a bit of joking humour in my look. I must have had a menacing street fighter look gleaming from my eyes, as they started to frantically gather up papers and books. They threw material into their briefcases and various folders flopped to the floor as I walked around them in ever decreasing sized circles. They exchanged nervous glances and within a few minutes they were out of my office.
Ed Lambert, the hulking Government Operations Director walked up to me and said two words, “Thank you.” He and the others then went back to their desks and to another day of building Calian.
The previous night, I had thought deeply about the past five years. Life had changed a lot since a 32-year-old ex-bankrupt technologist decided to try business ‘one more time’ and with a $35 investment founded a consulting company. Building Calian had consumed tens of thousands of hours of hard sweat and time from our core staff of Calian believers. That small group of experienced and dedicated professionals shared my dream of forming a company that would last forever. As I walked around the block at 4:00 in the morning, a feeling of pride and accomplishment swallowed me into the night.
As I slipped into an altered state of wonderful memories and trying moments, it occurred to me it was all about the people. The diverse and caring people of Calian were also competent, honest and enthusiastic. Even when I was in the process of chasing a bad idea, someone like General Bill Casley would come up to me and say, “Keep and even keel in the water boy” and cleverly guide me to another solution. Bill had joined Calian in 1986 as Chair of the Calian Board and I never heard a negative word from the retired general whose pleasant way kept us on course in the stormy times of fast growth. I realized on this walk that in five years Calian had grown from a one-person start-up to being a take-over opportunity because of our people and our culture.
Although Calian had many parents, all early employees of the company were committed to the same core values: honesty, long-term thinking, adding value and prudence. These values had worked well for this small growing company. Realizing on that walk that I should apply these core values to the choice of ‘to sell’ or ‘not to sell’ slowed my pace, to the delight of my golden retriever. When I applied these tests to my options the answer became very clear and the honest, long-term, value added and prudent decision would be to keep on building Calian. The problem I faced was that this fair offer had come from a company that shared many of our values.
When a company like Science Applications International Corp (SAIC) makes a just offer, it is very hard to ignore them. SAIC, an American technology company, had defence and security sales in the US approaching $700 million in 1987. SAIC was founded in 1969 to serve the US Military and other government agencies with advanced technology services. When pressed about the other US government agencies, SAIC’s management would look away and change the topic, but the industry scuttlebutt, or urban legend, was that the company’s name was actually a reverse acronym—CIA Services. Regardless of their heritage, they had made a very tempting offer that would result in me putting over $800,000 in my pocket after tax. I was hearing a very loud and fair financial knock at my door from SAIC.
SAIC wanted into the Canadian defence and security market and they hired retired, golf playing, three-star General Ernie Crebber to help get SAIC established. Ernie was well respected by the Canadian defence establishment and he was an excellent choice as President of SAIC Canada. He introduced the concept of acquiring Calian to me in the summer of 1987 and after a few chats we had a non-binding letter of agreement which was signed that fall. I soon found myself in detailed negotiations with an American by the name of Joseph E. Murray Jr., an ex-navy officer who in fact ran the operations side of SAIC Canada. Joe was a hard-driving manager who wanted to rise in the ranks of SAIC and Calian was definitely a stepping stone to his own future. As we got closer to a binding agreement, I realized that I had absolutely no experience in buying or selling a company and that was going to be a problem.
I was negotiating with a company that had grown by acquisition and they were very good at this process — this meant I was at a serious disadvantage. There is an old saying I remembered which was appropriate to this situation. “When a man with experience, and no money, negotiates with a man with money, and no experience, an exchange occurs: the man with the money ends up with the experience and the man with the experience ends up with the money!” I needed experience and I needed it quickly if I was to survive the process of acquisition. Fortunately, I had experienced people who were startlingly close at hand. I found myself learning at the hands of a few different masters and taking a real-time course in mergers and acquisitions over the next few months.
One of the most important advisors I had at the time was my father-in-law, Don Green. Don Green had sold a few of his companies and understood the value of cash in the bank as opposed to future prospects. He knew how tough this choice was going to be. One question he innocently asked me struck at the heart of the issue. “How was I going to like working for a big company?” I quickly answered that it was not going to be a problem, but that question stuck in my head as I proceeded with the process. Calian’s business was doing very well and it showed much promise.
At the time we had two areas of business: one was quality assurance (QA) consulting and its related products and the second was government contracting. Calian’s QA consulting practice had grown substantially through the hard work of Hal Rivington and his team. Hal had answered a help-wanted add in the Ottawa Citizen at the end of 1982, and has been with Calian ever since. The government contracting business had also steadily grown as a result of contract wins by Ed Lambert.
His perseverance was legendary. He and his assistant Gail would work 24-hour drafting sessions where they would write winning proposals. Many of the long-term consulting contracts, that provided a stable economic base for Calian, were a result of the early work of Ed and Gail. Although Ed left Calian in 1998, his partnership with Gail resulted in their marriage in the early nineties. The department that Ed started is still the largest part of our business and today, 20 years later, we still have some of the original contracts won by Ed and Gail.
Both Don Armstrong and Norris Pettis thought it was premature to sell Calian but they would not stand in the way if that is what I wanted to do. Don Armstrong asked me to have lunch with a friend of his, David Fleck, who was a skilled negotiator. I watched in utter amazement as he acted as a consultant to the company and squeezed at least another $300,000 of value out of the transaction for me and the other shareholders, which included an outside investment group and our employees. I saw and became comfortable with the entire magical process of an acquisition. In fact my second six-month MBA course was from October 1987, when I first started negotiating with SAIC, until March 1988 when the due diligence crew was ejected from my office on that frigid morning.
David Fleck was a master of ‘deals’ and I was extremely lucky to be right behind him as he practiced his trade of buying and selling companies. When he sold his family’s company, Fleck Foundries, in the seventies, David discovered that he enjoyed the process so much that he wanted to handle this type of transactions on behalf of others. He set up a small company called Ener-Genetics with his son Rob, an ex-F18 pilot. His company was both his trade and his hobby and he enjoyed using his extensive experience to outmaneuver larger opponents with quick and completely unexpected moves and strategies. Dave was an extraordinary individual who had many talents.
His son Rob once recounted an anecdote about arranging for his dad to practice flying in an F-18 simulator. David was an active amateur pilot and was quite excited about being given a chance to fly an F-18 in a DND training simulator. He was briefed and given a short lesson on how to fly the plane and then was given a simulated mission to do an in-flight fueling with an airborne tanker. He had taken off, located and approached the simulated tanker in a very proficient manner. Just before fueling, he locked on the tanker with the sidewinder missile and blew it out of the air to the astonishment of everyone in the training centre. “My first kill,” he was said to have uttered as he left the training facility with his smiling son. David looked at every acquisition project as an opportunity to make a kill and he was very good at it. About five months later, as I went from a seller to a buyer, I found myself on the other side of a transaction from David Fleck—student vs. the master.
Shortly after the last minute cancellation of the SAIC acquisition, I received a call from Allan Millar’s wife, Margaret. Calian had been providing Millar Communications Systems with QA consulting services for a number of years. Allan had been diagnosed with dementia that was likely related to Alzheimer’s disease. When I heard that Allan was sick things began to make sense, as I had thought for the last year or two that Allan was acting in a peculiar manner. I would often get calls from him where he would go on talking about things I had little knowledge of or that even made sense. I would listen patiently, thinking if this is my penance for the mistake in 1975, then so be it.
Margaret’s news was a revelation and it also explained the rocky relationship Allan was having with two partners, Peter Rossitor and Bob Lyons. They had just left MCS and started a company called Skywave Communications and were in the middle of a bitter legal dispute with Allan and his company. As much as it was all making sense, it was all very sad, and I offered any help Margaret wanted in this difficult and stressful time.
It was clear the Miller family would have to sell MCS and I put them in touch with David Fleck. Being an expert in selling companies he shopped the company around with little success. None of the large defence and communications companies wanted to buy a small $3 million a year contract research company whose president and chief rainmaker was sick and in a legal battle concerning the company’s major technology contracts. It was a tough assignment for David but the situation was not all black.
MCS had a few major contract opportunities that were on-hold pending the sale of the company. Allan was very well respected and had many friends in the industry and there was the possibility that if the right person bought the company then these contracts would also come along.
As time ticked on it became clear that unless someone bought the company the Miller family was going to be in some financial difficulty. A good portion of the family’s resources were tied up in the land and building owned by the company. One evening David Fleck phoned me with a proposition. He wanted me to buy Miller Communication and do it in a tax- friendly way so that the Miller family could maximize the various legal tax shelters that were available. We went through a two-minute negotiation that centered more on maximizing the benefit for the Millar family than price. Before the call was complete we had agreed on terms and by May of 1988 the Miller family was very happy and I owned MCS. It was a considerable reversal of direction for me and for Calian.
I had gone from a seller of Calian to a buyer of MCS in three months. Calian was about to take a definite turn that would lead to the company offering systems engineering and advanced satellite communications and a future that I could never have dreamed possible.
By the end of the summer of 1988, Calian’s office had relocated to the Kanata MCS building. The Miller family was ecstatic and as an added bonus to the family I kept Allan employed as a consultant and continued to pay his corporate life insurance and medical policy.
Allan passed away in 1991 and it was only after he died that anyone realized that the life insurance policy Calian was paying for was payable, not to his family, but to the company that I now owned. It was not until Calian waved all rights to the $500,000 insurance payout and directed it to Margaret that I accepted my debt to Allan and his family fully paid.
An example of Honesty working out in the long term
One example of values paying off in the long run popped out of the Insurance issue. My Board of Directors at the time were temporarily blinded by he $500,000 payout to Calian. At the time we were tight for cash and we had every legal right to the money. I could not give up our rights to that cash without getting approval from the Board. Quite frankly there was a debate but I silence it by saying the original intent was for that money to go to the estate and so we made that happen. Allan had friends who knew what we had done and we found ourselves getting requests for quotations from sources we never knew existed.
The purchase of MCS also put Calian on the map with members of the technology industry in Canada. Although MCS was small, it had worked on just about every major research project and advanced communications system in Canada and Allan was very well-known. Calls came in from numerous government officials and industry executives like Val O’Donovan, President and CEO of ComDev Electronics in Cambridge, Ontario.
The respect for Allan was transferred to an opportunity for me to prove that I was worthy to be part of this industry and have government partnerships. I worked long hard hours ensuring that MCS’s follow on contracts were not only won but executed in an efficient and timely manner. The acquisition of Miller also enlarged my staff by about 25 engineers and technologists and many of these people were just as good or better than anyone in the communications industry at that time. The doors to the future had just been opened wide and I was committed to crossing the threshold and fully developing the company.
By 1990, Calian had pulled away from the pack and had a considerable lead over the other one-person consultant companies that started in the early eighties. The decade had seen a confluence of positive factors work in the flavor of the company and we rode the wave of technology-generated opportunities. The most impressive opportunity for Calian was the increased reliance on technology by the US Military. Although Calian never built products directly for the Department of National Defence or the Department of Defence we provided QA services to the companies who did. This created a ripple effect in the economy that drove our QA consultancy for most of the eighties.
This ripple effect was an amazing phenomenon. Numerous Ottawa and Canadian companies provided products to the military. Small sub-systems and their components were sold to large American defence contractors for various projects from M-1 tank navigation systems to the Strategic Defence Initiative (SDI). Companies who produced these products needed Calian’s help in order to be compliant with the military contract requirements. Calian had a backlog of projects to work on that were well funded by Canadian and American defence spending. We did not know it at the time but we were part of the so called “Military–Industrial Complex” that eventually brought down the Soviet Union.
President Ronald Reagan had initiated an over trillion dollar increase in US defence spending which ultimately led to the collapse of the Soviet Union in 1991. During those early years, Calian was active in Canadian programs such as Low Level Air Defence (LLAD) and the Canadian Frigate Program (CPF) as well as numerous other small programs that were part of the overall race to bankrupt the Soviets. Canada’s new Prime Minister in 1984, Brian Mulroney, was the right Irishman at the right time in Canada’s history and he became a fast and lasting friend of Ronald Reagan. This relationship certainly boosted Canada’s stature in North America and International circles.
The increase of defence spending was North America’s single major political event of the eighties, followed only by the growing computer technology. The increased spending on weapons was also building raw technical capability as companies pushed the limits of technology to make war faster, harder and bigger. The link between these two and the fall of the iron curtain was clearly evident on a trip I made in the early nineties to Cheyenne Mountain in Colorado. I was invited by a three-star Canadian General named Bob Morton to tour an amazing complex called NORAD.
At this time, Cheyenne Mountain housed the North American Air Defense headquarters (NORAD), the Strategic Air Command of the U.S. Military and the Air Force Space Command. They were all located in one large complex buried 2,000 feet below the mountain on the southwest side of Colorado Springs. General Morton grew up in just outside Ottawa in Almonte and he wanted to return to the region following his retirement. My invitation was part of a public awareness program for technology executives as by this time even the ‘Feds’ had me on a few lists. However, the general had other motives as well. As he planned to retired in Ottawa, he was starting the process of making a few contacts in the private sector and he had heard about me from my chairman, Bill Casley. Regardless of the reasons, I was fully appreciative of the chance to tour the NORAD facility.
The function of NORAD is to alert the President of the United States and the Prime Minister of Canada if North America is under attack. To do that, NORAD sifts through its own data collected from the Northern Warning System and data collected from Space Command and other types of advanced sensors. As the second-in-command, General Robert Morton would be the official from NORAD on the phone with the President of the United States informing him of an incoming nuclear attack, if by chance the top American officer was incapacitated or away.
I joined a tour with other business executives for the first half of the day and then General Morton asked me to join him for a few hours while we toured some other areas including Space Command. We had lunch together and travelled around seeing some interesting, but predictable technologies being used to keep us both safe and informed about the intentions of our enemies. The pressure we felt in the sixties had diminished after the Berlin Wall had come down in 1989. The crumbling Soviet Empire was disintegrating before the worlds’ eyes and North Americans felt safer. We were in a remote location when an executive informed him that he was needed for something and he asked if I would take the shuttle bus, which they had arranged, back to the main facility and he would catch up later.
The shuttle bus driver contained a wealth of unofficial information and he drove me the long way back to the main building telling me a story that, if true, explained the collapse of the Soviet Union in a way I never would have suspected. It seemed that one of his friends was tasked with taking four soviet generals on a tour of the facility and was half way through the special tour when they abruptly cancelled and asked to be taken back to their hotel. The bus driver elaborated on what the ‘rumour mill’ had said about their hasty departure. It was alleged that they had been shown a depiction of a Soviet Ilyushin Il-76 taking off from a military airport just outside of Moscow. They were told the names of the pilot and co-pilot and a description of the cargo along with the destination of the military cargo plane. He had the story well-rehearsed and could tell I was completely captivated by the possibility. He then moved in for the most important part. It was reported that the Russian generals had kept their cool and did not blink at this amazing exposure of intelligence gathering and finally one of the Russians said, “That is very interesting: just when did this take place?”
Without skipping a beat the American in charge said; “It’s happening now!” He preceded to hand him a phone that was connected directly to the Air Traffic Control Station at the airport in question. If indeed this story was anywhere near close to being true, the reason behind the sudden disintegration of the Soviet Union was clear and it was technology-based. The Russians realized that it was impossible to wage war or even prepare for war if the enemy had compromised their communications and information systems to this extent. If your enemy knows everything then how can you even start? I would suspect they would have sent a gloomy report back to their political bosses about their chances of beating an adversary who knew their every move because of a secret view into every command that was given. It was an interesting observation to add to the discussion about the fall of the cold war enemy but if it was true there would be no official confirmation and my conjecture was just that—conjecture.
I asked Bob Morton about the bus driver’s amazing story and he instantly responded that it was fiction and quickly changed the subject to nuclear submarines and their threat to world peace. However, the changes to the world in the eighties were not fiction. Technology stormed ahead and even accelerated as the decade matured. Beginning with the introduction of the personal computer by IBM in 1981, followed by the Dr. Hank Magnuski’s invention of the fax machine in 1985 and ending with the technology boom of early 2000. Bob acknowledged that technology was changing his responsibilities and the tools used to protect our citizens, but that was as far as he would venture regarding the military’s use of technology.
The new technologies were speeding up the way the world communicated and by the end of the decade just about everyone had a PC on their desktop and e-mails were beginning to replace memos as a means for executives to vector information. It was a brave new world and the West was decentralizing their dependence on computer power by giving a tiny slice to everyone in an open and transparent manner. The Soviet Union stayed on course by ensuring their computer technology was centralized and tried to keep the tools of an open democracy from the hands of their citizens. The Russians were a closed and highly centralized government and they wanted their computers to be that way too. By keeping their focus on only a few very large and very sophisticated computer systems, they made a strategic error that cost them their empire. They allowed western technology and intelligence to focus their attacks on a few hundred critical communications and computer facilities. I suspect that American intelligence hackers figured out how to worm their way into the very heart of the Soviet military communications and computer networks. It is possible to imagine that even if the Soviets had become feisty enough and pushed the ‘button,’ they may have been surprised at the results. The eighties had been an interesting decade.
By 1990, Ottawa had 27,534 technology workers at 300 firms creating wealth and changing Ottawa and Canada. Calian employed about 80 people and had even opened a small office in Washington D.C. where we did support work for Canada, Australia and Spain in the defence sector. We had become a real company! As importantly, my second son, Mathew Donald, arrived in the summer of 1990 and life was very enjoyable. In fact the status quo was more than acceptable when another opportunity was presented.
In 1989, Calian was armed with a wealth of knowledge, had sales of $7 million dollars and was capable of making acquisitions when the biggest opportunity in Calian’s history strayed into our target sights. It would be a chance to join the big leagues and it would be a target that would be hard to resist. SED Systems of Saskatoon, a company four times our size, was for sale and even better, the big companies were waiting for it to go out of business rather than take a chance to buy it and build it.
It was just what Calian was waiting for.
Landing the Big One SED Systems.
There is a turning point in any company’s history that defines the success or failure of a legacy. There is always that one moment, that one event, which is to be savoured or scorned when reflected upon. It is the ‘how could I have been that lucky or how could I have been so stupid’ moment? In my case, it was a meeting in July of 1990 with two executives from a much larger company—SED Systems of Saskatoon. That meeting changed the future of Calian. I stared at the two executives realizing that they held the key .
Ray Basler was the junior of the two and had a medium build with black hair and a moustache. Ray had already displayed to me an incredible capacity for financial detail while grasping the substantial business issues and problems of an acquisition. He could refocus his mind from big picture to detail in an instant and could summarize pages and pages of financial data into a few lines with frightening efficiency. His quick wit and sense of humour made me feel comfortable but his capability and professional skills were so immense that I knew I was no match for him on any of these fronts. This realization made me even more comfortable as the three of us talked about a partnership. I liked working with very smart people.
The other executive, Dugald Buchanan, was a gunfighter. His weathered skin and lanky build complemented his quiet habit of never wasting words. He had been late to the meeting because his wife Cindy was having their second child and this gave us some common ground since Matthew had just been born that month. Dugald had both the experience and instincts to negotiate a tough deal with me. He was clearly trying to maximize the benefit for him and his management team, but I still had a warm feeling that he could be trusted. I knew in my heart that if an agreement was reached to benefit all of us, that I would have his 100% support. I was certain he was the leader of the SED management team, both legally, as the President and morally as the man you would want to have behind you in a bar fight.
“Just so we understand it clearly,” he said, sounding like a man who had been lied to before in business. “If we drop our plans for a management buy-out (MBO) our team of nine managers will own 10% of Calian and get 20% of the cash flow profits from SED” he asked, staring down the long bridge of his nose with the intensity of a professional gunfighter waiting for that twitch that would signal danger.
“Yes, that would be right,” I answered. “ And I will need your help and all your support,” I added and went on to describe my thoughts about how the transaction might be able to work.
First, I needed them to drop their own plans and join Calian’s attempt at bidding on SED. Calian could bring an Ottawa and federal government presence to SED, we could also raise cash if needed. These factors would allow them to reduce their risks by joining Calian. Then, of course, we would have to negotiate with three parties; the current owner Fleet, the Government of Saskatchewan, that held all the debt and therefore all the cards and the federal government who through the Space Agency and WED held the key to contracts and regional distribution activities. It was no wonder that so many other companies had looked at SED and then walked away. It was a deal that nobody wanted to do because it was messy and therefore it fit one of my laws for making money—do something others do not want to do. For all of us it was the opportunity of a lifetime.
Value added for all the partners
SED Systems was three times our size. It had annual sales of $22 million and had a dazzling and impressive array of space, defence and government contracts. It was also part of an exclusive club that included MDA of Vancouver B.C., Comdev of Guelph, Ontario and SPAR Aerospace of Toronto and Montreal who together made up most of the Canadian Space Industry. The Canadian government, through the Canadian Space Agency was spending $300-500 million per year on projects like the remote sensing satellite RADARSAT and Canada’s contribution to the shuttle program, the remote manipulator arm or CANADARM. SED was a partner in all of these projects and an integral part of government economic development aerospace incentives for Canada. They also had very strong management who were at that very moment telling me about the background of SED.
SED systems had a very strong economic base as a result of its location in Saskatchewan. The government had a regional economic diversification program and SED was receiving the Prairie provinces’ share of government spending. The government had even set up an organization to make sure the West got their share called Western Economic Diversification or WED. As a result of this program, SED could count on a steady stream of government contracts to keep the business viable. The problem was that SED had not made money since 1965 when it was established as the Space Engineering Division (SED) of the University of Saskatchewan. As Dugald Buchanan would describe it, “By 1990, it had been going out of business for thirty-five years.” SED had been owned by a university, the province and it had been purchased by an eastern-based Aerospace company and that deal had not met the expectations of the buyers or the sellers of SED.
Fleet Aerospace had bought SED in 1986 to buy their way into the space club and increase their prominence in the Canadian aerospace sector. Unfortunately for them, they bought the company just after it won a very large defence contract called the Canadian Patrol Frigate Program (CPF). They would be building the external communications system for six new frigates at a total value of $30 million and the contract was not going well. The project was pushing SED into bankruptcy and it was quickly pulling Fleet along with it. Fleet had put in $13 million in cash to keep the company alive while it struggled with this single massive contract.
In 1987, Fleet hired Dugald Buchanan to help sort out the mess. He was a tough-minded program manager and a knack for making things work smoothly. At around the same time SED had hired Ray Basler from Deloitte Touch to help them with the detailed understanding of the finances of the company. The two managers were kindred spirits in every way and between them they made order out of the chaos. It was a little late for Fleet who was under significant financial stress as a result of the acquisition and a general softening of their core business –air plane frames and components. Something was going to have to change so they put SED up for sale.
By 1990, Dugald and Ray had simplified the management team, cut losing programs and were operating with a positive cash flow before you accounted for payment of all the debt that had been built up. The operations were corrected but the debt of over $30 million was a staggering load for the company to carry. These two executives and their team had done a wonderful job of turning the company but the financial statements were as bad as any I had ever seen in my life. The horrible financial statements had been enough to scare the array of companies that had been stumbling through SED for almost two years before it was clear that, the last in line—Calian — might be the best partner for the company. It was these two executives that were going to be key to making this acquisition work.
First, we had to convince the Government of Saskatchewan that Calian was a worthy trustee of a major provincial asset. It was not all together clear to me if I was even in the running for the purchase of SED. I needed help in Saskatchewan and fortunately, yet again, it was close at hand from an old friend and a trusted advisor. Jim Curran had been my lawyer since the demise of Insta-Call. He was a loyal and concerned lawyer whose wife Lisa, an interior designer, had designed my kiosk at the Ottawa International Airport in 1979. He had also assisted me with the negotiations with SAIC in 1986 and the purchase of Miller Communications in 1989.
Jim Curran had also been born and raised in Saskatchewan and had contacts that would prove to be very helpful. He had attended Notre Dame Private School in Wilcox Saskatchewan, where he met Cy McDonald, a teacher, a former hockey player and a back room strategist for Grant Devine’s governing Conservative Government. Jim came out to Regina with me to help with the provincial government negotiations. Eventually, he arranged a golf game with Cy MacDonald to see if we had the chemistry to work together. Cy was also on a mission to see if I was the man the government could trust to look after SED. It would be trial by golf!
By this time my father-in-law had introduced me to the skills of business golf at the cost of thousands of dollars in lost bets. Don Green was as shrewd on the golf course as he was in business. Don said you could learn more about someone on a golf course in four hours than you could doing business with them for over 10 years.
Golf as a tool to know your partners
There was much information to be gleaned over four hours on the golf course. You could easily find out if the person was honest and determine if they could count! You could also find out if they had a sense of humour when it was appropriate or a sense of compassion when their fellow players made a bad shot. However, most importantly, you could discover how the player dealt with failure and how they dealt with success. That was important with a business partner because business, like golf, would always be full of ups and downs and a partner had to be able to stay calm after a good or a bad shot. I knew that Cy would be looking at me from that perspective and I at him.
The golf game was arranged and all of us truly enjoyed ourselves with good stories and laughter. The golf game was fun and even the abundance of geese on the last hole failed to deter us from a fantastic afternoon and a few good drinks after the game. Cy was a large good-natured man whose sense of grace and integrity was impressive and inspiring. We liked each other and that made a good start to a fun business relationship. It was the next day that Cy agreed to represent Calian with the provincial government and to show us around the legislature building to meet a few friends. It was going to be a tough sell.
The province did not have us as their first choice. However, one by one the other contenders knocked themselves out of the running or decided not to proceed. For two years the management of SED had suffered the indignity of being held personally responsible for the troubles of the company. One chap from an American firm looked at Ray Basler during the interview process and rudely asked him what he would be doing for a living after they bought the company, not so subtlety telling him he would not be working for SED. The province wanted to explore and exhaust all other options before deciding to work with a small technology company that was based, heaven forbid, in Ottawa.
Cy introduced me to a man he called the ‘Minister of Everything’ — Eric Berntson. He was the Deputy Premier and Minister of Industry for Saskatchewan and as it turned out a fair and clear headed executive. We had numerous meetings over several weeks as he assured himself that approving the sale by Fleet would be a good thing for the province. It took a few weeks and plenty of meetings but eventually our perseverance paid off and Eric became a believer. During that time they also introduced me to David Tkachuck who was in the Public and Government Relations Business and was a friend of both Cy MacDonald and Eric Berntson. Between the three of them they made sure I had contact with all the right Bureaucrats to hammer out a ‘reasonable’ transaction. They offered me a deal that met all my requirements and despite learning it was not quite as good as what they had been offering the bigger companies, it was still solid and could work. I was ecstatic and flew home to Ottawa thinking we had a deal in the works that was good for everyone. When I got back to Ottawa I had a rude awakening—there was one more party to deal with.–the Federal Government
Art Silverman was the head of WED and had been quietly watching the proceedings with interest. Fleet had made loan guarantees that were only transferable with the federal government’s approval and they did not want to do that without being invited to the negotiating table. Art was a big ex-football player and a highly competent civil servant who needed to be in the loop on this decision. I believed that he felt that his nose had been put out of place with rumors that SED was going to be sold to Calian without his permission. This concerned him greatly since there was still the issue of the loan guarantee.
He mentioned this unhappiness to his next door neighbor on Remic Street in Ottawa and that message got through to me ASAP. The neighbor was Barry Turner, the vice-president of engineering for Telesat Canada, and a good friend of mine. Barry called me at 10:00 that night to tell me about Art’s comments. I needed to know everything I could about Art Silverman and asked Barry if he minded a late night visitor. I drove over to Barry’s house with both my heart and the motor of my new Nissan 300Z sports car racing. After squealing into Barry’s driveway, I received an summary of the situation from Barry’s perspective. Telesat had looked at SED and determined it was not the right deal for them but as a result he was up to speed on most of the key WED issues. I left Barry’s house at 1:00 that morning and knew what my first call of the next day was going to be.
“Good morning Mr. Silverman, my name is Larry O’Brien of Calian Technology and I want to buy SED Systems,” I said as I started the surprising conversation. “I was talking to Barry Turner last night and he suggested we have a chat and I would very much like to do that,” I continued not expecting what was about to come. “Were you over at Barry’s last night? Did you by any chance drive a small black sports car into Barry’s driveway at around 10:00pm?” He asked with a tone that was a little harsher than I would have expected. “Yes, Sir I was! How did you know that?” I asked. “Well, when you sped around the corner you almost killed me and my dog!” He said to my stunned silence. “Yes, I do really want to see you and I want you in my office this morning,” he said as he hung up the phone and making it clear this was not a casual invitation. Oops!
I had started to head out the door when I ran into a new employee who had been one of the partners at Dy-4 Systems, Terry Black. Terry had played football for the Ottawa Rough Riders along with his brother Rick and he was a big guy who I thought just might come in handy at Art’s office. I do not think I had ever been so nervous going to a meeting. Not only had I potentially screwed up a great business deal but I had to take a bodyguard along—this was not good. I knew I had made another mistake and that made my stomach sick. However, life sometimes has its pleasant surprises.
When we went into Art’s office he stared at me with menacing eyes but when Terry came in after me he broke into a big smile and gave Terry a big bear hug greeting. They had both played football at Ottawa University and had been friends for many years. Art had been unaware that a few weeks before Terry had joined Calian and the meeting went ahead without a single mention of my indiscretion the previous night. WED came onside within the week and I often wondered what would have happened if I had not run into Terry on the way out of my office that day. The balance of the negotiations was very positive and fun as we all worked to get the deal done.
Two months later at Calian’s ‘New Year’s Eve party’ this positive mood would be experienced. Calian’s annual New Year’s Eve gala took place September 28, 1990 and was a fine classy black tie affair complete with ‘auld Lang syne’, ladies rushing around getting their hair done and men making sure their tuxedos still fit since the last time they wore them. Calian had been celebrating our ‘fiscal’ New Year’s Eve in the same wonderful manner since 1983 and this year was going to be very special. This year’s event was held at the Westin Hotel and there were about 250 employees, spouses, friends and guests of the company in attendance. Not only was it was the main annual party for the company, it was also a way of making sure that everyone in the organization including customers, suppliers and professionals knew they were a special part of Calian’s history and growth.
This year’s Gala would be extra special! Tom Coates and I had spent the last two days in Toronto completing the biggest transaction in the company’s history. Tom was a straight-laced, honest quick-witted man whose sense of humour was legendary at Calian. I first met him in the early eighties when he was a production manager for a Liquid Crystal Display (LCD) company by the name of Data Images. He had no end of practical jokes at play at any given time and when Tom entered a room you could count on an insightful remark to be uttered that could ease tensions. As a Certified General Accountant (CGA) he set up Calian’s booking system in 1982 and produced our first interim statements. He joined Calian full-time in 1989 and is now V.P. for the Services Division and running the largest part of our business.
Tom had been my support partner as we tried to reel this big fish into the Calian boat. Out west, Ray and Dugald worked with startling efficiency to provide numbers and documents and in the East, Tom Coates made sure that everything went smoothly. As we counted down the last few days before closing, I became nervous about the success and I could almost taste victory but it wasn’t over yet. There seemed to be a never ending series of problems to be solved and Tom and our corporate lawyer from Smith Lyons, Fred Benn, solved them all –one issue at a time. Calian was working with the best corporate lawyer. He was available, sharp and always had a business insight that added value to the transaction. It would be safe to say he was the quarterback for Team Calian and he was a darn good one at that. It would not have been possible without Fred helping Calian and on the last day he was part lawyer and part psychologist as we entered the final phase of the closing process in Smith Lyons’ downtown Toronto office.
That morning my anxiety had escalated sharply once I pulled up the blinds to see the fog hovering over the city. One of the Royal Banks’ lawyers was only coming in that very morning to hand over the check we needed to close the deal. “Tom we are screwed—it’s foggy! Damn! Damn! Damn! The plane will not get in!! Can I phone him and get him to drive down instead of taking the plane??” I yelled into the phone that morning at Tom Coates. He calmly replied, “Larry it’s only 4:30 in the morning. I think it will clear up by noon!” “Oh, Yeah! Maybe, you’re right. Do you think I am being too anal? ” I asked before going back to bed to wake up at 8:00AM and start the final day of signings and money transfers. The day was a success in every way. At the end of the very long day I chatted to Ray and Dugald on the phone and we congratulated ourselves for bearing down and getting the deal done. They were going to have a party and Tom and had an outrageous cab ride to catch a plane back to Ottawa to talk to our people waiting at the Gala.
The crowd was anxious and as we walked into the room. Everyone in the room knew the importance of the acquisition to Calian and they were nervous to find out what happened. As we walked, the clapping started. Slowly at first and then one by one people stood up and Tom and I got a full standing ovation from the crowd. We were both embarrassed and I went to the main table and shook hands with our guests and then went straight to the microphone. “Ladies and gentlemen, I have some good news and some bad news tonight. The good news is that this is our seventh annual New Year’s Eve Party and it’s our best ever,” I said as the applause grew. “The bad news is that there are 220 new employees at SED Systems in Saskatoon that did not have enough time to fly to Ottawa to celebrate with us!” I added as the house went wild with cheering and applause. This single transaction increased our sales by a factor of four from $7 million for the year ending September 30, 1990 to $ 28.6 million in 1991. It catapulted Calian into international satellite communications markets and into the Canadian aerospace markets in one single blessed transaction.
Brigadier General Bill Casley who had been the Chairperson of the Calian Board in 1985 and 86 had a wonderful expression that he used often and now I fully understood what he meant. When ever we had a contract win or a breakthrough of some sort he would smile and say. “Nothing succeeds like success!” He knew by experience that sustainable success was like a wave that could carry you a long wave once it started to flow. Calian had caught that wave and the time was right for aggressive growth and that growth came from many different angles. It would be easy to say the next three years were a blur of new contracts and fast paced growth as our sales continued to rise from $28 to $33 Million by September of 1993.
More had changed than I initially realized as we began to fully understand the magnitude of the deal we had just completed. Right from day one, the financial results were positive for SED and Calian. Yes, the world had changed for me and Calian and it took a few months to understand how great the change.
I saved this until the end of the book because by now you have determined if you can use these simple tools I have offered. There is another element of building a company that will last forever and that is the drive of the entrepreneur. It is the key ingredient and without the spark you will not have the need to use the tools. I will tell you about the spark and you can determine if you have it.
I saw first hand the best example of” The Spark” as I can imagine.
I had just finished Algonquin College in the spring of 1971 and had applied for a job at Microsystems International Ltd. (MIL). MIL was Canada’s only semiconductor plant and I badly wanted to work there. I new semiconductors were the future of electronics and I had studied hard for through college to become proficient in there use and operation. I had just finished writing the exam MIL used to identify people who had any understanding of this new technology and I was waiting, nervously in an office, for the results.
The door sprang opened and, with a gnome like beard, and twinkling eyes, in walked my future. As, Dr. Richard Foss congratulated me for failing the test on semiconductors “the least”, I knew at once that I had just been hired as a design technologist at MIL. What I didn’t know at the time was that I was about to work for a group of British engineers who were going to change the face of Ottawa forever: the job, I was just offered, was an opportunity to join the technology revolution and that rebellion, was going to change the way the entire world did everything.
It was the fall of 1971 and I was going to work in the semiconductor industry. Learning about the physics and the design of these tiny pieces of glass like material, had been my passion through out college. Now I was being offered the opportunity to work for a small band of experienced designers from Plessey Semiconductor in England. They had been lured to Canada by good salaries and the chance to work for MIL, a startup semiconductor firm owned by Northern Electric Company (NEC), which was in turn, owned by, the safe and financially stable company, Bell Canada.
The number of things that could go wrong in the design and manufacture of a semiconductor circuit was huge; the probability of failure was inversely proportional to the size of the final component. When the circuit you were designing could only be seen through a microscope it meant that any one of a million different factors made this job, just about, impossible for anybody but the brightest, most experienced, thorough, engineers. It also helped if these engineers had a strong dose of audacity and courage added to their character. Those were exactly the traits of the British engineers that came to Canada in the early seventies to build MIL. They were a swash buckling and daring crowd in technology, business and life.
Others from the MIL, me included, went off into business but none were more financially and successful and publicly recognized then Mike Cowpland and Terry Matthews.
The irrepressible pair met at MIL and in 1973 they founded Mitel Corporation. Mitel was soon building components that turned the pulses of a rotary dial system into modern signaling tones used in the new generation of telephone switches. Both Mike and Terry had grown up in the telephone industry, Mike with Bell Northern Research (BNR) and Terry with British Telecom. They both understood the way the telephone companies worked and to them, MIL was a vast playground with technology capability and a great platform from which to launch their own company.
Terry acted every bit the wise cracking hard nosed electric Welch man he was. He was hilariously bold and without any amount of measurable shame for his antics. If your pants happened to sneak up into the crack of your bum, as they did one poor soul walking down the hall at MIL in front of Terry, he would wait until the biggest crowd possible was around and start talking, in a very loud voice, about how he hated seeing pants crawl up the crack of an ass. Then he would move in for the kill,
“There like that, like that” and he would shout and embarrass the victim to the laughs of all around. Around Terry even strong personalities were quiet and reserved. Nobody wanted to get in the spotlight of Terry’s intense curiosity about human nature. I was no exception — I tried to keep my head down when Terry was around but sometimes you just get caught, looking the wrong way on the railway tracks.
My turn came one day, in the R&D lab, as we both working on the same lab bench. He was doing a design for a customer and I was bread boarding one of David Moore’s ceramic microphone replacement chips. Within minutes, I was bombarded with tough questions about the circuit I was building, ranging from technology to market demand analysis I was 23 at the time and knew enough to be humble when it came to this topic, at least with Terry. After about twenty minutes of brutal interrogation, he smiled and said. “You needn’t be so shy, you know your stuff” and I felt a little better about myself from that day on.
Terry Matthews’s presence made you better, even if it made you uncomfortable. What we did not get to see at MIL was the fierce warrior that was pent up inside this Welsh executive. That was a trait that he and Mike Cowpland shared.
Mike was a fierce competitor who could motivate by his mere presence. The athletic build, the quick cadence of his speech and the clear steely eyes made people want to share his company. He was an employee of Bell Northern Research, which paid for him to go back to school and get his PhD. When he graduated he came back to work at MIL and designed telephone circuits. Mike was not your ordinary engineer; he was consummate sports enthusiast and highly competitive tennis player who had numerous city and provincial championships. Mike also could make you laugh, although his humor, as opposed to Terry’s, never had a victim. In the thirty years I have known Mike I can’t remember an instance, save for a disgruntled employee who gave Mike some unfounded grief later at Corel, where he ever had an unkind word for anybody but he was still every bit the warrior that Matthews was and together they would make an unstoppable pair.
In 1973 they both resigned from MIL to start Mitel. MIL was already showing signs of starting to crack and the staff cuts started to come. They called me to join and we met at Mike’s house for an interview that became a party that lasted until the wee hours of the morning.
They were celebrating a successful meeting with investors and I happen to be part of the exuberant moment. That night I agreed to join Mitel as employee number ten. As the week went on I became increasingly uncomfortable with my decision to leave my safe job at MIL. I had worked hard to get into the semiconductor business and regardless of the potential there was in the telephone industry, it was going to be at a lower level of technology then at MIL and besides I was just beginning to enjoy my life at the tender age of 24. This was the first time I was free of some of the difficulties I had earlier in my life. Getting to MIL had not been easy.
So, I decided against joining this upstart company they called Mitel and told them that I had changed my mind about leaving MIL. What happened next was an amazing example of what it would take to make a go of a business. It was also the attitude and determination that started the Ottawa technology boom.
It was 1974 when the telephone operator interrupted the call I was having with my sister, “I have an emergency medical call for you Mr. O’Brien,” she stated. At the time I was telling Shirley about my recent business decision not to join Mitel. I was describing how Terry Matthews and Mike Cowpland were not taking my change of heart without an argument. They had been in business for about a year and they needed more technologists to drive the business engine and they were unhappy with my choice of staying put. They had waged a full frontal assault on my decision to stay put at Microsystems International Ltd. (MIL). They questioned my wisdom to stay with a company that was going to “go out of business” within a year or two. The fragile state of my current company was at the heart of their argument, but for me the issues of whether to leave were far more personal.
I had grown up a great deal from that day when Dick Foss gave me the job in the R&D department in 1971. The arguments Mike and Terry gave were logical and I knew they were likely true, but my life at MIL was good and for the first time in a very long time I felt secure. I was going to stay put and “that was that,” I told my sister as I excused myself from the call to take this “emergency” interruption.
“I can take the call.” I said to the operator, at which point I was given a titanic insight into the tenacity required to be a business leader and a brief view of that elusive ‘spark.’
My sister’s call was disconnected and there was a short pause before the operator said, “OK, you can go ahead now, Dr. Matthews.” It was Terry Matthews.
I was again in a debate about my future at Mitel. Terry had been trying to reach me and had grown impatient. He took things in his own hands and knew enough about how the telephone company worked to interrupt my call. That attitude that nothing would stop him was shared by both Terry Matthews and Mike Cowpland and was the best example I could ever find of the elusive definition of the spark.
Later on, I would be impressed by the audacity of the spark but at the time I got very angry. I told him in ‘impolite’ terms that I would never work at Mitel. If there was any regret, it was the very aggressive and brutal words I had chosen to use to say no. The debate ended that day. In hind site it was the purity of his ambition and creativity that stayed with me. It also stayed with Terry.
By the time I started Calian in 1982, Mitel had 5,000 employees, sales of $250 million and Terry and Mike were both multimillionaires. Their success had ignited the entrepreneurial spirit in Ottawa and for that we shall always owe Mike Cowpland and Terry Matthews an enormous debt of gratitude. Their success at Mitel and later successes were not coincidences. They understood the telephone business and the products they designed were products that had ‘real value’ and were ‘long term’ solutions to problems their customers had today. The telecommunications network evolution was predictable and inevitable: Mike and Terry understood that and acted accordingly. They were also both honest competent engineers and executives who were trying to build a business that would grow strongly and create wealth for them, their investors and their fellow employees.
The question you need to ask is; Am I driven to succeed like Terry or Mike? If the answer to that question is yes then you can and will succeed. If not…then maybe you should consider working for some others who might be driven enough to implement the acid-tests of success.
DO YOU HAVE THE SPARK?