Disruptive Tendencies

Can't see the forest for the weeds (Board governance at start-ups)

Why is it that management teams in start-ups assume their Boards want to get down into the weeds every Board meeting and why do Directors buy into this approach and behave like weed inspectors? Board governance isn’t about inspecting everything that management is doing; it’s about holding management accountable for those things that are material.

Start-ups are high risk, but materiality should be those things that have the potential to impact valuation or derail a liquidity event. Sure, the product roadmap (aka Feature List eye charts) is important, but is it more important than GPL compliance?

What impacts valuation more than revenue? Yet how often do you see a Board congratulating management for “hitting their numbers” rather than asking whether these are the right numbers to be hitting? There’s no point in patting management on the back for a year in which a company grew 10%, if the market and their competitors are growing at >50% year over year.  Underperforming the market equates to declining market share, which will ultimately impact valuation, multiples, and liquidity opportunities, none of which deserve a pat on the back.

Rather than showing slides that show how the company is “performing to plan”, how about a slide showing how the company is “performing to market”?

It’s a fact of life today that companies leverage open-source software. There’s tremendous pressure to hit dates and add features, and many engineers will look to SourceForge, or similar, for code to help meet development timelines. Without a robust open source license tracking process, it’s very likely that, over time, one’s code base may not comply with all of the license obligations associated with the bits.

Non-compliance is material. Just ask Cisco, which had to publish the source code for its Linksys line when found to be in violation of its open source license obligations. Every licensing and M&A deal that I’ve done has required a representation, signed by an Officer, warranting compliance with copyright licenses. Sophisticated acquirers will require a 3^rd-party compliance assessment using a tool like Black Duck, and being “caught” during a due diligence will cripple any deal.

So rather than spending the R&D section discussing feature lists, shouldn’t Boards be focused on mitigating the risks of non-compliance with open-source license requirements? Why shouldn’t R&D be required to provide a slide, every meeting, summarizing the open-source licenses for code being used in shipping product?  Shouldn’t the CFO and CEO be required to sign-off that the company is in compliance, every quarter? Just as Financial Statements are provided and signed off on, so should GPL compliance, and as with annual audited financials, management should prepare and provide an audited 3^rd-party compliance report annually as well.

Non-compliance puts the company and its investors at risk and should be a firing offence, first time, no questions asked. It’s not the engineer that should be fired, unless he/she knowingly violated company policy (that is monitored and real and not “vapor”), rather it is any Officer of the company that was aware of non-compliance or who has oversight and ultimate accountability. This means, in most cases, the CEO.

Many start-ups take a very ad hoc approach to intellectual asset management (IAM), which is odd since it is an asset class that forms the essence of a company’s value. You may see a slide in a Board deck that lists patent applications, but rarely do you see any level of competitive analysis, either in terms of competitors’ patent positions, or potential infringers of one’s own patents. Significant money is spent on patents, without an understanding of the business objectives for so doing. As a result, many patents end up sitting in a filing cabinet or as a plaque on a wall and are never used to the company’s benefit.

So why is this material? Once again, it has the potential to impact valuation. Having been directly involved in a multi-hundred million dollar M&A transaction, where the justification of the 30X revenue multiple was based on IP portfolio strength, I can attest to the power of a coherent, well-documented IAM process. When this is supported by the knowledge of 3^rd-party IP in your space, as with a patent landscape analysis, you have a powerful justification for including IP in any discussion of valuation.

Furthermore, Directors and Officers have a duty of care with respect to the management of corporate assets. Recently, I read an article that suggests a corporate officer or director, who is aware of an infringement of some patents owned by his or her company and who fails to enforce these patents, may be held liable for breach of the duty of care with respect to the management of corporate assets. I’m not sure whether it’s ever happened, but it makes sense for Directors to expect more than a simple list of patents.

Rather than a slide documenting a company’s patents (which I can Google or BING anyways), how about an analysis of your IP and your competitors’? How about a discussion on enforcement of IP with some clear guidelines around it? How about pushing management about disciplines related to invention documentation? Are the engineering notebooks signed and dated? What about an international filing strategy? Which markets? Why?

Board members have visibility into a company’s liabilities; monthly Balance Sheets show this, but what of off Balance Sheet liabilities? Many SmallCo’s are disadvantaged at the negotiating table and as such, sign deals with indemnification clauses that effectively “bet the company”. Any contract that includes clauses for liquidated damages or in which the company provides an uncapped indemnity, should require Board approval. At a minimum, it is the CFO’s responsibility to advise the Board as to the existence of these hidden, potential liabilities, but it is the Board’s responsibility to require this of the CFO.

Lastly, I’d like to point out that Directors and Officers have an obligation to all shareholders, regardless of share class. Most Board members are representatives of investors, and often have preferred rights of some kind. But it is incumbent on Directors to represent all classes of shareholders, including common stock holders, and not simply to represent their own stock class.

So what’s my dream Board meeting?

It’s one in which the company is measured, objectively, against those metrics that matter. It’s one that isn’t comprised of 100 eye charts describing the minutiae of the business, but which is focused on issues of materiality.

CEO/Sales: How fast did the business grow relative to the market and its competitors?

CEO/R&D: Are you monitoring open-source license compliance? Will you stake your job on it?

CEO/CTO:  How are you leveraging IP to limit competition, grow revenues, create value?

CEO/CFO: What “bet the company” contractual indemnifications exist? What contracts currently under review have “bet the company” clauses?

Ultimately, it’s the Board that needs to convey to the CEO that these are issues of paramount importance to the company, its Directors, investors and all shareholders and that he/she will be held accountable. Don’t take us down the garden path every meeting and don’t pull us down into the weeds. Show us that you have your finger on the pulse of those things that matter.

To paraphrase Peter Parker, “With great power comes great responsibility”, but that’s why CEOs make the big bucks.

That’s my .02!

Martin Suter

 

Microsoft: SteveB or Not SteveB

That is the question.

As I saw Apple reporting record numbers yesterday, I was reminded that nearly thirteen years ago, Microsoft invested $150m in Apple to help keep it afloat because it needed to maintain the semblance that it had “competitors”? Be careful what you wish for!

In July 1997, prior to the Microsoft investment, AAPL was trading at $4.375 (split-adjusted). Overnight, it was up to $258.00, a 58X gain in twelve and a half years. Had Microsoft held onto its shares, they would be worth $8.8b in the open market today, or 26% of the cash on its Balance Sheet as at Q3/2010.

When Microsoft made its investment, its shares were trading at $17.50, and today? They closed up overnight to $31.50, up almost 1.8X over the same period as Apple’s 58X gain. Apple’s market cap today is $234b to Microsoft’s $275b. How times have changed!

It’s interesting to look at other things that were going on around the same time as Microsoft was investing in Apple.

1997 was also the year that Microsoft entered the mobile device market, with the release of Windows CE. This gave them a ten-year head start on the iPhone and a twelve-year head-start on Android! It predated RIM’s IPO. And today? Windows Mobile market share is Palm-esque, and Microsoft is betting on Windows Phone Series 7 to rejuvenate its mobile business. But if branding and momentum are any indication, it seems like a real longshot.

I’ve sat through many Microsoft Executive Briefings, dating back to 1997. Over this period, I have heard it said that Microsoft spends “$1m/hour on research”. I have seen presentations from Microsoft Research staff describing and demonstrating technologies like ClearType (also announced in 1997), a sub-pixel rendering technology designed to improve readability of rendered type on screen.  The obvious application (and one described in the early presentations) was eReaders. In 2007, ten years later, Amazon released the Kindle, ostensibly revolutionizing the delivery of content and forever changing the economics of publishing. Where’s Microsoft at this inflection point? Nowhere to be found.

What other market disruptions has Microsoft missed? (In no particular order)

Search is an obvious one. While Microsoft (and others), was focused on search technology, Google was figuring out that “Search” was all about advertising and catalysed a massive disruption in the media space, billions of dollars in revenue for Google, and hundreds of billions of dollars in shareholder value.

Maps and location services is another one. While Microsoft was focused on producing and selling CDs of MapPoint (a model it still clings to today which it “offers” at $245 on-line), Google was out producing high-resolution street-level images and has catalysed another disruption in location-based services. Today, mobile location is front and center on the Droid platform (and on Droid devices), on iPhones, and incorporated into applications across both ecosystems.

Set-Top Boxes and “owning the living room” Also in 1997, Microsoft acquired WebTV for $503m, predating the launch of Tivo. But while Microsoft apparently struggled with the thought of an appliance that wasn’t Windows-based PC (and encumbered by its emphasis on 3^rd-party OEMs to build on its platform), WebTV evolved to MSN TV (anyone remember this?!?) and has completely disappeared today.

SaaS is one to which Microsoft paid lip service throughout the late ‘90’s with its .NET push. But while it was evangelizing .NET (and SOAP, XML, web services), it was acquiring companies like Navision and Axapta (in 2002 for $1.4b) to expand its CRM and ERP offerings. But was it web-based like Saleforce.com which was founded in 1999 and which didn’t go public until mid-2004? Once again, Microsoft didn’t want to jeopardise Windows Server licenses, so it failed to embrace a market disruption despite having ample warning that it was coming.

Media Players created a seismic event and a brand new market that Microsoft completely missed. While it was focused on defending the tight integration of Windows Media Player in anti-trust lawsuits (in a vain attempt to preserve its “Windows” franchise), Apple came out with iTunes on Windows. More importantly, however, was that Apple also created the iPod, the Trojan Horse that enabled the iPhone.

Developers and App Stores: Microsoft has known since the early battles for OS supremacy (against MAC and OS2), that the selection of a platform is driven by application support. Even with a 30-year history of supporting software developers with incredibly rich tools to build 3^rd-party apps, Microsoft never provided a route to market for developers as Apple has done with the App Store. Apple also figured out how to monetise content and through the creation of a distribution system (iTunes Store), got people comfortable with micro-payments. What’s the difference between .99 for a song or an app? Ultimately, not a thing.

Obviously, there are other examples too. Microsoft completely underestimated the impact of open-source software, missing Linux, Apache, MySQL, etc. It evangelised tablets, but from a Windows bias. It would seem that Apple (and soon others) will trump Microsoft here as well.

It is fair to say, that Microsoft is losing on all fronts.

While it was focused on fighting the DOJ battle, it may ultimately have lost the war. Some, including “the late Nobel economist Milton Friedman believed that the antitrust case against Microsoft set a dangerous precedent that foreshadowed increasing government regulation of what was formerly an industry that was relatively free of government intrusion and that future technological progress in the industry will be impeded as a result.”

I have to agree. The government’s action against Microsoft was ill-advised, in that it is irrelevant that Microsoft may have had a monopoly on the desktop OS. The market isn’t stagnant. Some, like Apple with iTunes and Google with a toolbar, found ways to work within the constraints of a “Windows monopoly”, and still thrive. Others, like Salesforce.com just changed the rules.

Microsoft once had mojo but, for the past decade, has behaved like a neutered puppy. Where it was once aggressive and nimble, today it is passive and slow.

When Bill Gates relinquished the CEO reins to Steve Ballmer in January 2000, Microsoft’s stock was at around $56. With Steve B at the helm, the company has delivered a -44% return, despite being a cash flow machine and having a Balance Sheet that is (was) second to none.

 

If a patient’s ECG flatlined like Microsoft’s stock price, someone would call for the crash cart, get out the defibrillator and try to shock the patient back to normal rhythm. Where’s the crash cart in Redmond?

With a record of having missed so many opportunities to create new markets, where does the buck stop?

SteveB or not SteveB? That is the question.

That’s my .02!

Martin Suter

IP Licensing for the Technology Entrepreneur

Intellectual Property licensing is a complex subject with many moving parts. Unfortunately, it is rarely covered in modern business school curricula. The net result is that managers, C-level execs and Board members seldom approach IP licensing strategically, either in terms of monetisation or in the connection between license terms, and their potential impact on valuation and exit opportunities.

This set of slides attempts to simplify many of these issues for the business strategist - Board members, C-level execs, and senior managers. I have used subsets of this presentation to groups of Executive MBA students, corporate counsel and IP professionals and generally use them as a launching pad for a broader discussion. (To discuss speaking opportunities, please contact martin.suter at iplicensing.net).

These slides draw on my experience, as I have been fortunate to have been mentored by some very capable attorneys over the years (such as Cliff Chillemi, in-house counsel at MeshNetworks, and Jill Riola, Co-Chair, IP Group at Carlton Fields), and worked with top IAM strategists (people like John Cronin from ipCapital Group and Paul Germeraad from Intellectual Assets, Inc.). I have also sat across the table from many very capable negotiators representing companies like Dow Chemical, Microsoft and Motorola and had to justify IP licensing recommendations to VC investors across North America.

Feel free to share and comment.

That's my .02!

Martin Suter

(martin.suter at iplicensing.net)

Fight or Flight? Why Big Companies Do Deals

I love the web and am constantly amazed at what one can find or learn from others skilled in the art.

I recently came across a very interesting piece in Marc Andreesen's blog: "The Moby Dick Theory of Big Companies", in which he suggests that "There are times in the life of a startup when you have to deal with big companies." He then builds a very interesting metaphorical case for SmallCo as Captain Ahab and BigCo as Moby Dick. It's an entertaining and enlightening piece, but I will endeavour to go a few steps further and try to delve into the psychology driving the players in this game.

Marc makes some interesting points about a BigCo's behavior being inexplicable when viewed from the outside. He suggests that there are some many moving parts and agendas, that the dynamic of decision making is highly unpredictable. While I tend to agree at a macro level, it's my experience that people (and a company is an aggregation of people) will react most predictably to fear. I think it was Intro to Psych class where we are all introduced to the concept of "Fight or Flight" and that it applies equally to business psychology.

SmallCo's are used to talking about the opportunities created by their disruptive technology: new markets, huge revenue, vast market share, value creation. This is a natural side effect from their creating business plans and pitching investors on how compelling the opportunity is.

Once they've convinced themselves and their investors that the opportunity is huge, they will often go out and try to convince one or several BigCo's of the same thing. Getting funding or landing a whale require different stories, but usually SmallCo re-uses their investor pitch in trying to get BigCo's attention. You may get nodding heads in meetings and even hear that they agree with your assessment of the opportunity, but all too often BigCo inertia takes over and nothing happens.

I first experienced this in a big way shortly after being recruited from a start-up into the Disruptive Technology group at Nortel in Q3/2000. MeshNetworks had just emerged from stealth mode with a classic, highly disruptive story that had the potential to impact many incumbent technologies and R&D programs in the wireless space. Nortel was heavily invested in 3G, having made a major UMTS bet, and I was advised to identify a new market opportunity created by this emerging technology rather than positioning it as a disruptor to 3G. So, I began the exercise of focusing on a net new commercial opportunity that this technology could enable for Nortel. It was a billion dollar opportunity in 3-5 years, yadda, yadda. I got the nods in meetings and the "Atta boy" from my boss at review time, but there was no sense of urgency to act.

Frustrated by this, and deciding to win big or die trying, I spoofed a news story using the San Jose Mercury News banner and inserting quotes from John Chambers and industry analysts. The banner read: "Cisco Leapfrogs 3G and Goes Right to 4G; Acquires MeshNetworks for $400m". I then printed off my mock-up and put it on the fax machine, sending it around internally. Within 5 minutes, my phone began to ring - "Holy shit! What the hell just happened? How could we have let this happen?!?"

Basically I then told them that we have a do-over, that this didn't really happen (yet). But I then asked whether this was a version of the future that we were prepared to accept. If so, not acting was a reasonable course of (in)action. If we couldn't contemplate this version of the future, then we needed to act urgently.

What did I takeaway from this?

BigCo's are largely risk averse. Status quo rules the day and that having a team of singles hitters internally is easier to manage than going to the free agent market and bringing in the guy who will either hit it out of the ballpark or go down swinging. Unless that home run hitter is also talking to another team in your division which could lose you more games. The threat of him landing with a competitor usually changes the way in which you look at his availability as well as what you're willing to pay to get him on your team. It's the competitor pre-emption premium.

Winning vs. not losing. Opportunities or threats. Two different ways of framing the discussion.

After 20 years of dancing with 800lb gorillas, or hunting the great white whale, my experience is that BigCo action is catalysed more often from perceived threats than from potential opportunities. My hunch is that this is an 80:20 relationship, although I have no quantitative data to support this.

What happens inside companies when presented with a perceived threat? The Fight or Flight instinct kicks in. Corporate DNA is pre-disposed to fighting (they don't call it "competition" for nothing), while fleeing is anathema to most BigCo's. Status quo is not an option when under threat of attack.

You've decided, for whatever reason, that you're going to go hunt the big white whale. You've got a disruptive technology, well it's called disruptive for a reason. Change the lens through which you have them view you. Build your story around the threat to their status quo and you are more likely to get them to act with a sense of urgency.

But be careful what you wish for. You might just end up harpooning the whale and you then have to answer the "Now what do I do?!?"

That's my .02!

Martin Suter

(martin.suter@iplicensing.net)

Incubating Licensing Concepts in Business School

Allen Kupetz, Executive-in-Residence, Crummer Graduate School of Business at Rollins College, is the kind of professor that was exceedingly rare when I was in university. Allen wants his MBA students to gain a deeper appreciation for the “real” business world, and is not shy about bringing in local subject matter experts to share their insights with his class. I’m very fortunate to be Allen’s “go-to” guy on the topic of licensing.

Tomorrow, I have the opportunity to speak with his “Technology Entrepreneurship” class about IP Licensing, both as a catalyst to start a company as well as a means of commercializing early-stage technology. If they’re like me, there’s little chance that they’ll be filing patents on their own inventions, so I’m hopeful that introducing them to sources of IP and describing what it takes to get a deal done will be interesting. My goal for the talk is to expose them to the world of licensing, as a means of harnessing their entrepreneurial aspirations…stuff that you’ll never find in a textbook.

The academic world needs more guys like Allen and fewer textbooks.

That’s my .02!

Martin

(martin.suter@iplicensing.net)

In Dealmaking, Patience is a Virtue

The corporate DNA in most large companies is such that getting to signed paper can often be a lengthy business development process. Early stage companies have agility built into their DNA. Reconciling these two extremes can be extremely challenging. The pay-off can be significant, and as I previously blogged, may help to bring in money to the company at key inflection points in a company’s development.

Two deals that I have been involved with highlight both ends of this spectrum. In 2000, I negotiated a deal with Microsoft for Netware to Active Directory migration tools. Notwithstanding the 2+ years building relationships, creating mindshare and credibility internally, once the decision was made to ship “their own” tools, it took a matter of weeks to get to signature. Obviously, this deal didn’t come out of the blue, as the groundwork we had been laying was critical, but the deal itself was virtually frictionless.

The second is probably more representative of what it takes to get a deal done. While at MeshNetworks  I began the dance with Motorola in Feb. 2003. Mesh had done a good job of building visibility and mindshare as a company with an emerging, potentially disruptive technology. Motorola Ventures, its internal VC group, identified Mesh as “interesting” from an investment and potentially from a strategic perspective. What began as a nominal equity investment with an optional second tranche in the mid-seven figure range, slowly began heating up.

In March, we began a technical due diligence and validation process with Motorola’s emerging technology group, which was a great thing, as they floated above the product groups that are nose down trying to get existing products out the door. Supporting this effort consumed hundreds of person hours, in addition to travel costs. Throughout this process, we needed to continually justify to ourselves, to our Board and investors that this was worth doing.

By summer, we had come through most of the technical evaluations and began to push for a commercial discussion. Some posturing around deal terms began, which required a real gut-check to convince ourselves that this remained worth doing. In late September, we got down to more substantive discussions and by late November, had a non-binding MOU. Getting from there to signature took a further 4 ½ months of page turns in rooms full of Motorola Legal and business folks, but finally on April 9, 2004 we had a deal.

This process brought us much closer to Motorola, during which time they had an in-depth look at us. It also gave us the chance to better understand how Motorola was structured, and more importantly, where there was strategic alignment across the portfolio. On December 21, 2004, 750 days after we began to dance and nine months after the licensing deal, we closed an M&A deal with Motorola.

Was it worth it? Absolutely.

That’s my .02!

Martin

(martin.suter@iplicensing.net)

Asymmetrical Licensing as a Go-to-Market Strategy

In my last blog, I described some of the real challenges facing start-ups that need to get a technology to market. Of course, there are categories of companies for which the front-end load of R&D costs to productise is lower (e.g. software vs. hardware), however the challenges of funding the commercialization of a product are relatively common across all categories.

Frequently, a start-up may attract seed funding on the basis of the team, an idea, and a vague view of some massive, future market opportunity. For this, the founders give up a big chunk of the company, and embark on delivering a proof-of-concept. This critical milestone is typically the trigger mechanism for another round of funding designed to get the company closer to product and customer traction. Ideally, this proof-of-concept is leveraged into customer/partner/market interest, with sufficient “buzz” to secure enough money at a reasonable valuation, so the founders and the seed guys aren’t crushed.

The problem, is the disconnect between where the company’s really at in the eyes of new investors (“So you've got no product, no customers, limited market proof points...but we DO like you”), and the eyes of the company and the seed guys (“Hey, this stuff really works. You should be blown away by the technical accomplishment”).

So, therein lays a challenge. Facing massive dilution from new investors, likely alongside liquidation prefs, other onerous terms and a promise to hold additional funds in reserve to ensure later financing is available, the early stage guys and the founders face a difficult decision. Lose control of the company to later stage investors in order to get to revenues or...What other options do they have?

An important option that remains, IMO, largely misunderstood, is the licensing of technology to an 800 lb gorilla as a non-dilutative means of generating revenues and helping you to monetize your technology. Frequently, their strengths are your weaknesses: money, customers, sales coverage (direct and channel), manufacturing/supply chain relationships, global support, brand, etc. Trying to displace an 800 lb gorilla that is intent on maintaining market share on your own, is like me trying to budge a sumo wrestler. It ain’t gonna happen.

However, if you think about what you bring to the table when viewed thru the eyes of the big guys: innovation, agility, de-risking of technology development, competitive advantage and time-to-market, all of which are worth something to the right partner. Their motives may be offensive (moving into a new market with a disruptive technology to displace an incumbent), or defensive (preserving dominant status in beachhead markets with next generation technology). In either case, knowing where the hot buttons are will be key to getting to the negotiating table.

Structured correctly and presented with conviction, technology licensing can be a means to generate early revenues, get market traction and acceptance without requiring a massive shareholder dilution post-proof-of-concept.

What do these deals look like? What are the issues? Stay tuned…I’ll get to that soon.

That’s my .02!

Martin Suter

(martin.suter@iplicensing.net)

Go-to-Market Challenges for Start-ups

A very real dilemma facing the majority of early stage, pre-critical mass companies is how best to commercialise their technology. Most companies grossly underestimate the time and expense to first productise and then again to commercialise their IP. Depending on the physical form factor of the “product” to be commercialized (i.e. software vs. hardware vs. semiconductors), the cost of productisation may be in the tens of millions of dollars.

But this is what engineers do, they build. Damn the torpedos, full speed ahead. But taking an “If we can build it, they will come” view of the opportunity is dangerous and naive. Getting product to market is exceedingly difficult; often more so than building the product in the first place. Companies present rosy market forecasts to their potential investors, but building up a sales force and a channel that is adequate for coverage and sales capacity to get anywhere near most projections is very expensive and time-consuming.

How much quota are the reps going to carry? What’s a reasonable ramp? If it’s an evangelical sale, it’s unlikely that any rep will get anywhere near quota for at least 18 months. What is the per rep revenue number that you expect to bring in? What headcount do you need to support this...Marketing to create programs and demand generation, Finance to manage a growing payroll, along with accounts payable and receivable, Customer Service and Technical Support to scale to the projected number of customers required by the projections, etc.

What is the market window? If it takes 2-4 years to build a highly functioning sales channel, what percentage of the market opportunity has already passed?

Lastly, young companies almost always underestimate the stickiness of vendor/supplier relationships, especially if they’ve got a component that they’re trying to embed in someone else’s device. Imagine how difficult it is to sell into a risk adverse industry like the automotive industry, where their product roadmaps extend beyond 15 years, while yours are lucky to extend 15 months. Security of supply, financial stability, and corporate longevity are just three, of many, considerations that a start-up must contend with in order to close a sale of this type.

Next, I’ll talk about IP licensing as a go-to-market strategy.

That’s my .02!

Martin

(martin.suter@iplicensing.net)

Acadia U: A Cajun's Flashback

For the tens of thousands of students that have walked by or shopped at Cajun’s over the last 20 years, it must certainly seem like it’s just part of the background. Indeed, that it has become a deeply engrained part of the Acadia campus, for so long now, is something in which I, and many others who were involved in its inception, take considerable pride. But perhaps few today know that Cajun’s was conceived by Acadia students, is student owned and operated, has created jobs for hundreds of Acadia students, and has brought in millions of dollars in revenue to help fund the services delivered by the ASU for students.

The Year 3BC (Before Cajun’s)

After having worked fulltime in a sporting goods store in Montreal for 2 years before resuming my education at Acadia, I was determined to figure out an easy way to pay, not only my tuition, books and living costs, but to support a fairly active social life as well. So, in July, I phoned the registrar to find out what the school colours were. After learning they were red and blue, I ordered 72 rugby shirts and 36 lined, nylon jackets with red & white ACADIA across the back, and shipped them down for my arrival. On the first day of Frosh Week, one of the first people I met played on the rugby team and told me that the company they ordered their jerseys from couldn’t deliver. Before I knew it, I had outfitted both the men’s and women’s rugby teams, sold all the jackets and was counting my profits. I quickly ordered more gear, and began promoting myself around to the campus clubs, residences and sports teams. It got so that I was making several runs a week to Nowlan’s Canteen to pick up shipments that had arrived via Acadian Lines. I ended up selling over $40,000 worth of clothing each of my first three years at Acadia (which was real money in those days when tuition was under $4,000), more than covering my social life!

The Year 1BC

During my third year, I lived on Prospect St. with the ASU President, Keith Publicover, who encouraged me to get involved with the ASU. I was still putting myself through school selling clothes out of my room, but began to appreciate the extent to which the ASU was a business with the mandate to provide services to the student body. Outside of the membership dues paid by each student, the only other major source of revenue for the ASU in those days was the AXE. Certainly a lot of my profits ended up there! However, there were rumblings at the time of possibly raising the drinking age in the province, which would have had a huge impact on the ability of the ASU to provide services. And thus began the discussion about how the ASU could diversify its revenue base. I suggested to Keith that if I, as a student working out of an apartment on Prospect, could do tens of thousands of dollars a year in sales, imagine what a store in the SUB could bring in. He agreed, and we took that initial seed to Jeff Redden, then the GM of the ASU.

With a commitment that they would at least consider a business proposal, I began to write the initial Business Plan, with ulterior motives in mind. As I saw it, the ASU would need to have someone work full-time in the summer leading up to the store opening, as well as to manage the store during the year. But as I began to run the numbers, and with no idea what level of revenue was realistic with a storefront, it was difficult to project a profit with a full-time store manager’s salary built-in. So, wanting to get approval for the project, I cut out the manager’s salary during the year, making it an Honorarium position as are the other ASU executive jobs, which cinched it for the ASU. We got the green light in the spring of 1987, I had a summer job, and Cajun’s was about to be born.

Pre-Opening

At this stage, we still lacked a name for the store, but had been given a location, on the upper level of the SUB overlooking its present location. We had about 550 sq ft, not huge, but enough for a real store. We began by laying out the store using masking tape on the floor – the changing rooms here, the counter here, and so on. Then, one night, several of us, including the newly elected ASU President, Heather Sanford, were sitting around (maybe with Keiths in hand)  trying to come up with a name for the store. There was no shortage of ideas, just a shortage of good ideas, when I had a flash and came up with the name “Cajun’s”, which I thought was an excellent tie-in to Acadia and the history of the region. And so, Cajun’s it was.

The lines of clothing were relatively easy to select, as I had relationships with most of the suppliers anyways; Barbarian rugby shirts, Trimark jackets. We selected a local supplier for fleece, Nova Scotia Textiles in Windsor, who made great, high cotton, heavyweight fleece. In fact, they were the main supplier for Roots sweatshirts in the mid-80’s, but were badly hurt by the Free Trade Agreement signed around the same time. We planned to open the doors with about $20,000 worth of inventory on the shelves, with follow-on orders in place for many of the longer lead time articles.

To save money on fixtures, I went to the Zellers store in New Minas where I was able to buy a used cabinet and glass display case in burnt orange for under $100. With a little wood veneer mactac, it looked like a new display case! Added to that were some used, chrome displays, and our big spend was on a slotted wall on which you could hang different kinds of fixtures.

The First Year

We opened the doors on September 1, 1987, with the paint barely dry, but the shelves stocked, having pulled an all-nighter folding clothes, putting them on hangars and getting ready to go.

With only an ad in the Ath, a sign in the SUB, and some posters around campus, we managed to draw a big crowd on opening day. There’s a picture of me in the 1988 yearbook counting all of the cash from our opening day (with a gleam in my eye).

The first year, we had a part-time staff of between 8-10, including Jennifer Bentley, Donna Conrad, Vicki Hermann, Laura Lee MacLean, Rob McColman, Maura Ryan, Stephanie Suter (my sister) and Debbie Tracey (my girlfriend at the time, and my wife for the past 18+ years). It was a great team, and I’d like to think that a job at Cajun’s was fairly coveted as word got out.

While we never set out to be trendsetters, there ended up being an iconic fashion item just before Christmas – the famed “Acadia Crew” sweatshirt. I got the idea for the print after an ASU trip to Boston where I picked up a Harvard Crew sweatshirt. But what we did that was unique at the time, was to print on both sides of the shirt, so people could wear them inside out. Hey, it was the 80’s and people did stuff like that! I order two dozen on a whim, barely getting Craig Kennedy, the new ASU GM, to sign off on the PO. But they flew off the shelves within hours, so we re-stocked again, and again, and again. Who knows? With fashion being a cyclical thing, maybe the Acadia Crew is getting ready for a comeback.

The Business Plan called for a student manager to run the store, and while the first few may have thanked me for the summer jobs, they probably cursed the lack of remuneration during the school year. As my last year wound down at Acadia, I handpicked my successor from amongst my staff, and in April 1988, I officially passed the torch to Laura Lee MacLean. As I walked out of the store that day, I fully appreciated Shakespeare’s line about parting being such sweet sorrow.

Looking Back

It’s ironic to be involved in this celebration this year. One of the fears that I used to be quite open about was that someday; I would walk into Cajun’s anonymously and be asked the dreaded question: “Sir, can I help you find something?” And it happens pretty well every time I return now, but I’ve come to terms with it. And while I will claim to be the original founder of Cajun’s, there is truth in the saying that “Success has many fathers.” Certainly, in the case of Cajun’s, this is the absolutely true.

 So when you walk by the store next time, pause and think about the students who cared passionately about the school, the ASU and its future ability to serve the students. More than that, these students did something. They took that passion and created something of lasting value. Is it a legacy? That may be overstating it, but I know for a fact that there’s a little piece of a lot of great people in that store, and that each of them should be proud of their contributions. I know I am.

Martin Suter, BBA 1988
Original Founder of Cajun’s