Case 7
woniux21
Case7-Haivision1.docxIssue:
Mirko_Wicha_Issue_1: Can you describe an important issue that you had to resolve? Hi my name is Mirko Wicha, CEO of Haivision. Just recently we have a situation where a new potential client wants to buy our equipment, roughly about six to seven hundred thousand dollars worth of our hardware and software in the Middle East that we have never dealt with before. Clearly one of the big concerns that we would have is given that we have no history of payment with this client is do we take the risk of shipping the equipment? What are our payments? Do we get paid? When do we get paid? Do we take the risk of as a company of releasing our equipment? So what should we do?
Cause:
Mirko_Wicha_Cause_1: What caused the issue and why was it important? Being a manufacturer we actually build and pay for our equipment up front. Then of course we have to assemble it. We have all of our people put it together. There is a tremendous amount of costs involve d in putting all of this equipment together. So for example for something that we might sell for $700,000 dollars, it might cost us over $100,000 just our actual costs, not our people costs. Our physical actual costs to our suppliers for components. So the challenge for us is do we want to be releasing this, taking a risk, and sending it to a foreign country with which we have no history. It is total risk and do we want to be taking that risk as a company?
Background:
Mirko_Wicha_Q1: Can you tell us a bit about yourself and your career path to date? Hi my name is Mircho Wicha. I am the President and CEO of Haivision. In terms of my background, I studied computer science and graduated in 1982. I love technology. I spent my whole career in the technology field. Being a computer scientist, I thought I was going to be a systems analyst and a technologist but very quickly I got into sales. I started my career at Hewlett Packard. HP was a great company. I went through a number of hardware software companies. I started off with HP and then I did a couple of startups. I did a couple of company turnarounds. Sold companies. I spent six or seven years in Europe turning companies around. I came back to Canada and again did a company turnaround, a software company. And then I retired, actually I retired twice. I got a little bored. So I wanted to do something. About ten years ago I wanted to do something different, not just hardware software technology aspects. So I picked video, thinking there was a cool technology development starting in video. And started Haivision. I acquired some technology which was pretty state of the art in terms of encoding. In the late nineteen nineties, I started Haivision with 13 people, today with are 170 people and doing well globally. Mirko_Wicha_Q2: Can you describe a typical workday for yourself? It is very difficult and very different from ten years ago. With the wired world, you are accessible anywhere and anytime. At the end of the day there is no such thing as a nine to five day in the office. I am not a morning person, I am a night owl. I travel a lot globally. If I am not travelling I am in Montreal. Then I get to the office and try to fill my first two hours with e-mail catch up, conference calls and internal meetings. Then I try to have my key executive meetings with my key staff then I have more conference calls while I have lunch at my desk. Then I tend to be more open to meetings with clients, customers, my VPs of sales, I have two of them. So that I can be close to my clients. Then there are clients who are visiting. I tend to have meetings with clients who visit Montreal. I am usually one of the last people to leave the office. I am here usually until 8:00 P.M. at night. It is nice and quiet and I get a lot of things done. Then I go home and have dinner with the kids. Then more e-mails, more work in terms of catching up. Then by 11:30 P.M. things calm down. Mirko_Wicha_Q3:Can you describe your role in the organization? Well, being the President and the CEO I am effectively responsible for the overall operations of the company and the health of the company. I would say what do I think are my two most critical roles are? I consider myself not just the CEO but also the CCO, Chief Cultural Officer. As we have grown the company, one of the most important things for me is to maintain the culture that we have created. I am very proud of the people. Not only do I interview most of the employees if not all. I make sure that our employees and management make sure that we know who we should be hiring and who not to hire to maintain the pretty cool culture that we have in this company. That is part of my number one key role. The other one is that I am pretty close to the sales. I am a sales guy in my career and if you are going to run a high technology company you should always stay close to the customer. What is it that you are actually selling and what is your purpose in life? I make sure that I am very close and manage directly the sales of the company. Mirko_Wicha_Q4: Can you describe your leadership style? I have had the pleasure of being working for some great people and being mentored by some successful leaders in the Silicon Valley era. I guess I have absorbed a lot of that. Today I would say that my leadership style is to allow people to make mistakes and allow them to learn from their mistakes. I think it is healthy and good for growth. One of the things is that I tend to do is walk the talk. I do not believe in ego. I do not believe in arrogance. I do not believe in information as power. This is the core to my beliefs. The most important thing is that you have to be humble. That is how I grew up. That is how I have lived my whole life. It terms of my employees, and not just from a professional perspective but from a personal one as well, I want to treat people the way I want to be treated. Every employee, it does not matter what level, everyone is treated equally. That is my style. Be very open. Share information with people. In fact try to share more than you need to share. When people know more and understand what we are doing. They can make better decisions. Mirko_Wicha_Q5: What does good performance mean for you in your position? Besides that the numbers are there and we are profitable, hopefully and we can maintain profitability and stay in business, which I consider to be pretty routine stuff to me what is really cool is when I get a text or an e-mail or a conversation in the hallway from an outside person who says, 'Man I love your company. I love working here or I love working with the people you have. I don't know how you guys do it. I don't know what you guys do but it sounds like you are having a great time. I love working with Haivision. That makes me feel great. That means I am doing a great job. Mirko_Wicha_Q6: What does your organization do and how is it different? We manufacture or build encoding and decoding technology, encoders or decoders for video. What does that mean? You ingest video from any source meaning a camera or the internet. We encode it meaning we allow it to shrink and zip it through whatever medium you would like, internet satellite. As fast as possible, that is our secret sauce. We have built very low latency encoding technology. We manage the data through the process. We distribute the data and let it play out on any medium such as a set top box, an Iphone, a smart device, a screen, digital signage. That is what we do, we provide end to end solutions for video management encoding and decoding. What makes us different is that there are many competitors and many of them do similar stuff. But we actually own the technology. We built and developed it ourselves. That allows us to control the end to end pipeline process the process but also from a business perspective it allows us to give a solution to our clients that we can almost guarantee the performance, quality and reliability because we own everything. We do not have to depend on different OEMs, or different partners to provide what we offer. That differentiates us from the industry. There are not too many people that own all the different pieces of the food chain. Mirko_Wicha_Q7: How is your company organized? I always hated organization charts all of my life. You cannot have a flat structure with one hundred and seventy people. That is not possible. I have six key executives who manage all of the people. Those six people report to me. The six functional groups are logically organized. Product developed which is really project management and product development is the biggest chunk under one executive. Then I have operations which is quality assurance, IT support. Under one group I have production. Then I have finance administration and G&A. Then I have marketing and two senior sales vice presidents. I separate my sales into U.S. Federal because we do a lot of business with the U.S. military and the U.S. federal government and everything else which is the global commercial business which is split roughly 65/35. This our structure. Below that we have may one other layer of management between directors and engineers. I do not want to go through too many layers to make any decisions. I feel we are a pretty flat organization. Mirko_Wicha_Q8: Can you describe any key events that occurred either in your life or that of the organization that were crucial If I search back and look at some of the key decision that I have made in my life and what really started me on my career, if I look back and looked at what prepared me for being an entrepreneur, it Is making decisions on your gut feel. Really going on my gut feel. Nine out of ten times, that is the right decision. I have learned one thing and that is to never second guess my gut feeling and believe in myself, I know if I go back and look at it, there were times I thought that I was absolutely crazy making the decisions to do what I did and I did it against any types of odds. But they were probably some of the best decisions that I made. That really prepared me not only for making stressful decisions. It taught me to believe in myself and believe in others. Mirko_Wicha_Q9: How does your organization make money or sustain itself financially? We sell products, hardware and software. And we also sell services, what we call recurring cloud based services. We sell to high value markets. Our core markets are selling to the military medical and enterprise markets. We sell high value products which are very high quality, high performance which are very reliable which means that they do demand almost a premium price. We own every piece of the technology from hardware embedded systems, software, application software. We own it and manufacture it all. Our costs are much lower than some of our competitors who have to license or resell pieces of technology which means they have to pay royalties and licensing fee. We do not have to that to the same extent. That translates to a much better gross margins as a company. What my cost is and why I sell it for enables me to make more profit. That becomes a very big differentiator in the business environment. When you look at our gross margins they are much higher than a typical competitor in our business. That allows me to be profitable, put the money back into the company and fund ourselves. Mirko_Wicha_Q10: Can you describe the industry within which your company operates and how it is changing? We tend to play in several vertical markets. It is not one typical industry. If you look at the medical market we have many different competitors that are not in our U.S Federal Defense market which are not in our education market. We do not have one, typical competitor we typically have many different competitors. It is challenging in itself but it is also an advantage because we play in all of these areas where we can leverage best of breed put them together and use them throughout our food change. If you look at every market, and I sometimes think of it as a recession proof market because health care is being well funded growing like crazy and we play in the integrated operation room environment which is going through a massive refit globally. All the training facilities for universities and hospitals. There, there is a lot of money being put in. There is a lot of research being done. Customers just want better and better video securely throughout the facilities. In the defense military market it is very similar but with different competitors. But there we tend to focus on our value add which is understanding the market better than everyone else and doing certain compliance security testing. We actually tend to do a lot of research into how we can differentiate ourselves in the market place. Mirko_Wicha_Q11:How do firms compete within this industry? Let us take an example in the education market which we actually started many, many years ago. We were pretty big in the education space. In higher education we are still doing very well. Then there is the K-12 market. We have decided not to be involved in the K to 12 market due to price sensitivity. There are a lot of competitors and smaller companies that come in and compete on price. So at one point you say you need an encoder. People can by cheap encoders from anywhere on the planet. Why am I going to spend extra money for your encoder? It is not a market that makes sense for us. That is a price sensitive per channel market that we decided to get out of. So what we focus on are markets where we can add value. So for example if you go into the ISR market, the Intelligence Surveillance Reconnaisance market. People need to deal with KLV data. They need to take specific 'cursor on target' metadata. And merge it with data, synchronized it perfectly high quality HD very low latency. That is where you can add value. You cannot use a simple encoder for that. You need to be a proven and tested encoder. That is where we spend a lot of our time trying to be the very best. Then you can charge more money. But you still need to be ahead in price performance leadership to command the price that we do. Mirko_Wicha_Q12: What is the role of regulators or government in this industry? There is really not much regulation in our space. It has more to do with standards where there a lot of different bodies. The MPEG standards for video, we have standards for the military, we have Mpeg standards, we have the common criteria which are for super secure net worthiness of video. These are really standards that have been created throughout the different industry whether it is medical, military or enterprise or whether they are compression standards. We are governed by standards which makes it easier for customers looking for technology based on standards. It forces vendors to adhere to the standards. Then you have to differentiate yourselves on the value added. What am I going to do better than someone else? That is something we take seriously. We are ISO 9000. We took the whole company into ISO certification which is not easy to do. We followed the two year process and we are approved. We also took several military compliances. We also have taken the medical compliances very seriously as well because we have some very important medical clients. Mirko_Wicha_Q13:What big issues will companies in your industry be addressing in the next five years? We are in the coolest space in technology which is video. We are trying to solve the enterprise challenge. What that really means is that anyone in an enterprise is also a consumer just like you and me. They want to have the same functionality or capability with their android and Iphone that they have at home in the enterprise. It might seem simple but it is quite a complex monster to deal with. The challenge facing the industry is how do you make it easy to use, how do you make it simple transfer high quality video reliably and securely from an enterprise on premise lockdown secure system to the cloud but having the same security functionality and seamlessly to any device at any time? There is a tremendous amount of work to do. We are a long ways away regardless of what people think. It is going to take a long time to solve this. I think the biggest challenge to overcome is how do you make a point click simplistic way to do this? That is what we are focusing on. How do I get that functionality securely to anybody at any point in time? Mirko_Wicha_Q14:Can you offer some fast facts about your company? We are ten years old. Private, Based in Montreal. Started with thirteen people. Today we have one hundred and seventy people. We are on four continents. We have five R&D offices in Hamburg Germany, Austin Texas, Portland Oregon, Chicago and Montreal. We are a Canadian company and we actually bought three American companies. That is a nice little different in the way this goes. We are profitable, seven years straight. We are Ebitda positive. We fund our own growth. We have never take venture capital money. We have never taken private equity money. Six years in a row we have made the Deloitte fast fifty as one of the fastest growing companies in Canada and North America. Mirko_Wicha_Q15: Can you describe the underlying technology of your company? We are doing the actual video compression. We are actually taking very high resolution 1080p 60, 60 frames going to 2k or 4k across any device or enterprise. We are not talking about wireless only. We are taking the experience of that video to the different types of market. For example, within the operating room, you have Endoscopy the surgeon is digging into your body there is a very high resolution camera at the end of that. That video is coming back into the switch. It has to hit our box to get transmitted with very low latency to the pathology lab or across the campus or maybe across the ocean. It is a very different problem that we are solving. It is more management of the video asset itself and making sure we get it from one place to the next place extremely quickly. That is the problem that we are trying to solve. And there are other companies trying to do the same thing. We just want to make sure we are the best.
