An Interview with Curtis Nikel of Contava

 

I recently met with Curtis Nikel, founder of Contava, to talk about his experience of building a company from $0 revenue to north of twenty million dollars. He shared his insights into what makes a start-up successful, how he got to where he is today, and his next venture.

Why did you start Contava?

Contava was a company created to meet the needs of the security industry during a period when technology was rapidly changing. The security industry back in the early 2000s was largely based on analog technology, and the manufacturers of these products were moving to an IT infrastructure environment. The skill set to design, deploy, and manage IT infrastructure for security was a much different skill set than the old alarm guy who worked on analog systems. Contava was created to bridge security and IT, and the company then provided a skill set that understood security but could also talk and walk the IT walk.

What advantage did the leap to IT give the security provider and the security customer?

The single advantage for a business to invest in an IT type security infrastructure versus hardened boxes was that you could purchase a software platform, much like you do with Microsoft. You could then upgrade the product for the future, giving you the current feature set without having to replace the entire system. It gave you a roadmap going forward, and it also gave you a scalable system. When you have a business, and you occupy four floors of a tower, you may have 16 doors of access, but as your company grows you may quickly find yourself having 33 or 49. You may need six cameras when you open, but because you occupy more space, you may need 55 cameras. It’s about scalability and the ability to stay current by just doing software upgrades rather than continually replacing hardware – a methodology that IT adopted years ago.

With the software upgrade – what kind of advantage would that give you between software generation 1 to software generation 2, beyond the ability to add extra cameras?

Most companies that release upgraded software bring enhancements to their software. For example, they may bring a feature like photo badging; before you had cameras and you could access control information at your security desk, but now when you swipe an id card you can see the image of that person as they walk through the door. You may have asset management or asset tracking features, so these security software companies were not only fixing the bugs as they upgraded their software, but they were also expanding their offerings to meet more needs in the market.

So, can you give me an example of the expanded offerings you’ve mentioned – what were some of the significant iterations where people were like wow I didn’t know we could do this?

We worked with the University of Alberta, a rather large campus that integrated access control and video and key management. They had electronic key cabinets on-premise and contractors could walk into a building, present an authorized credential, open the door to a cabinet, remove a key that they were authorized to use, and go about their business. If that key wasn’t back by a specific time, an alarm would go off, so a facility person would say, “Bob from ABC mechanical took the key to a certain building, and the key has not been returned. Did Bob have an accident or did Bob forget to bring the key back?” Either way, they have to check on Bob and ensure accountability.

Can you give us another example?

There was a large aquarium built which needed to have controlled space with two people mandated to be in this space at any time because of concern over the treatment of the sea life. Here we are now using two-card identification to open the door.

Another example is a major phone company which had many remote buildings, and often they would find that the personnel had not locked the door to their cellular towers. We used wireless technology to enable access control at these remote sites. The same access control you had on your building front door was now on your remote building. The user of the credential understood how to operate it, and the corporate security director could be assured that his building was secure.

What were you doing before Contava?

My first business was in the satellite telecommunication business, and I got into that in 1987 back when large satellite dishes were how you watched television. We reinvented the company to be a provider of voice data satellite communication, as cellular was just starting. We were providing MSAT which was a mobile satellite technology for anybody to travel the world with a handheld device. When diamonds were first found in the North West Territories, we were the communication tool that they used to report in.

Did you have previous experience in the security business?

My first foray into the security business was actually with my company Infosat back in the late 80’s. We had an opportunity because we were doing big satellite dishes which was television, and television is RF (radio frequencies). The LRT in Edmonton was expanding from north of the river to south of the river. They needed to use security camera technology to monitor the trains and the platforms (pre-fibre days), and all of the video signals were sent on RF frequencies. We installed the cabling infrastructure, and we took a video camera and converted that video to a television station frequency. We pushed it along the LRT tunnels, and then we took it from television frequency back to a video signal. We pulled the cable and did all the RF work for that. It was a contract we had years ago, our first exposure to security, and that grew into an agreement that we had to maintain the LRT close-circuit camera system for several years.

We sold InfoSat in 1999, and I left the company in 2003.

What were the circumstances that caused you to say I should start a company called Contava?

I had a friend who was being courted by a software technology manufacturer for the security industry, and he asked me for an opinion. At that time, I was doing nothing, so I did a little research for him and gave him an opinion, and while I was doing that I asked him if he would give me the product line if he took the job. The product was rising star, and sure enough the dots got, connected and I was in the security business, truly overnight.

Did you know what you were getting yourself into?

Yes, I had done enough research to understand that for me to be successful with Contava, we needed to be an IT company in the security vertical, so it was very specific. I had a friend who had just retired from the RCMP in the electronics crime unit who understood technology very well. He came on board for the first year of Contava’s existence and was the technology expert while I was the salesperson.

Was it just the two of you or were there more employees?

In the first year, it was only two of us, we contracted some of the work out to other people and but in our first year, we rang the half a million-dollar bell. We were alive, and we were being accepted because we’d walk through the door and have a different conversation with the opportunity than the other competitors they were talking with.

What was that different conversation?

The theme was that the client had the infrastructure in their building that supports their IT program. Why can’t we share that as well, reducing the cost of ownership, while sharing the responsibility of how video and access control moves around your building. It was pre-VM ware, so you still had to put your own servers in, but the cabling infrastructure was shared, the cost of deployment was less, and the scalability was there.

I gave people a future roadmap; nobody else was doing that. No one else said you could start here and we can go there. Everyone else was saying; you should have to buy this.

What were some of the big milestones that you experienced at Contava?

There was a number of them. First, there were key hires; individuals that were brought on that were much smarter than I am in many areas like technology and business process. I could sell, I could create, and I’m an entrepreneur, but key hires are major milestones in any business.

Another milestone was winning work, and we won some pretty choice pieces of work. Enterprise Square was the first big project I had. I did everything in there, all the access controls used today, all the camera ten years ago, I put it all in there. West Edmonton Mall was a client for 12 years. They have hundreds of cameras to protect their assets.

An example: There was a garbage company that kept bumping the ceiling of the parkade, doing six figures of damage when they dumped their load. The mall would phone the company to say that they owed them for parkade repairs, and they would say they didn’t do the damage, so they weren’t paying the bill. So, we put a camera in so that the mall could record it. The next bill they sent the garbage company was with the video, and they received a cheque for six figures to pay for the damage. That’s business process, that is protecting your assets.

How did you define an ideal prospect?

We defined our client early as a business with a security manager or director. This type of client would understand what a security program was and its importance. You have processes in your business model that emphasizes security, so you think differently. It’s not that you lock the door, it’s that you restrict who comes through the door. There is a big difference. If you were a retailer that wanted to have a corner camera so that might either look like you’re safe or you think you’re safe, I respect that, but you weren’t our target client

What is the secret, if there is one, of landing big clients like that?

You need to be a bit of a visionary with them; they want to be progressive. You need to support their equipment so that it’s always working. There are no excuses for a big corporation that someone got in because something wasn’t working. You need to be alive 24/7 supporting them.

Let me politely challenge you on that. Most of this would be said by your competitors as well; equipment that’s up and running 24 hours, guaranteed uptime, we service what we sell etc. I thought one of the key things you said earlier was about telling a different story. How do you create a story that differentiates you and how do you know that was the story to tell?

We owned a software product that we embedded onto a client’s network that would monitor the state of health of all the devices that we had installed. We knew that something wasn’t working before you knew, and as long as you were committed to us, we were committed to you. I could roll a service truck to your site and repair something, and all you would do is ask why I was there. That’s the level of service and support that we established. Now, if you didn’t want a support contract then you just chose to behave like everybody else, but if did you choose that, we were taking care of you at the next level.

I was intrigued by this idea about the story that you told. One of the things you said was that you painted a roadmap. How did you know what to tell your customer that they would perceive as being different to everyone else in your competition?

The competition would sell for the moment, but we would want you to create a future plan. We’d ask questions like, what is your fibre security master plan, or I know today you’ve got to harden this room because you’re going to store something of value in it, but how are you going to take this safe room and make it a safe building? How are you going to take this safe building and treat the people that are coming to this building, and how when you move across the street going to bring the two buildings together to operate as one? When you hire a guard for the front desk, how are we going to put a command and control center there so he can take care of the people and the assets in the building? I challenged people about how they would live in the building now, but also in the future.

Would you say your competitors were not doing that?

I would tell you that most people who look at security think about locking the door. They don’t think about how they use the space.

Including their chief security officer?

The chief security officer would be trained in this understanding. If I’m selling to the CSO, I’m engaged in meaningful conversation because they already think this way, but we also used to sell to condominiums that didn’t have CSOs that wanted security programs. We quickly saw that they weren’t our principal customer, and from around year two we stopped doing that.

Tell me whether you agree with this statement: Our competitors sold for the moment, but we not only had to understand the moment we also had to sell a future roadmap our clients would inevitably have to follow. We had to serve the future as well. 

Correct. I wanted to have a life cycle with you. Moreover, with the life cycle, whether it be two years or ten years, I wanted to put infrastructure and technology in place and methodology that could exist today and be improved for tomorrow or exist today and continue to exist for tomorrow depending if your environment changes.

You used a term lifecycle marketing, and you employed that in a particular way with your clients when your competitors weren’t doing that. Is that something that you picked up along the way or did you learn it in a program?

I associate lifecycle with keeping a client for a long time, so it goes hand in hand. We’ve all heard service, service, service, but it’s taking service to the next level. The product and the software we develop to monitor the health of your network, and the devices on your network was all about the lifecycle of your system. The reasons you bought a system today would inevitably evolve, and we had to ensure that evolution was as smooth and scalable as possible.

You started your company in 2005, brought on a key partner in that period, hired other key individuals, and it was grow, grow, grow. Were there any near-death moments?

We had some all-hands-on-deck moments. You push so hard that the next year you’re having to pick up the pieces and do a reset. Never death though, there never was a moment the company was in a situation where it wasn’t going to be around tomorrow. Did we have to reinvent ourselves once or twice? Yes, and we probably looked at our spend profile and our people, but that’s normal with businesses. We started as a $0 revenue company, and we were north of twenty million when we sold.

Did you reinvent the business model? Or did you get back to putting some controls in place, so you could stick to the plan that you initially had? As examples, did you have a brand-new market or a new technology open up to you?

The model never really changed. What you needed to do was assess the skills of the people you had and whether you’d met the ceiling with them or not. If you had, where else could they be in the business to make sure they were adding value. We became even more creative in our design effort because technology continued to come to the market so that we could be more creative. We also became better executors of national projects, so were no longer limited to how far a truck could drive within a city. We began working with a workforce that could be in Toronto, in Montreal, in Vancouver, and we became better managers of that long distance work.

Did you find new clients in those cities or did you take an existing client in Edmonton and follow them out to a new market?

We took existing clients in Edmonton, and they gave us opportunities outside the city, but we also had referrals that came to us from new markets.

You started in 2005 and at some point in time, were you approached to sell, or did you actively try and sell the business?

I think when you are a force in any market, there is always someone who would like to own you. Over the years, I had many calls from people who asked if I still wanted to own this business, if I wanted to work for somebody or what I wanted to be. I had opportunities to sell on a few occasions.

What made this last opportunity the right time or the right circumstance?

I think when you have partners in business, it’s a joint discussion and the decision probably doesn’t fit everybody’s needs. However, in the case of Contava, it was a timing issue with the age of partners and the best method of becoming liquid.

I had one partner nearing the retirement age who wanted to be on the other side. I had a young partner who had never been part of the sale of a business. For me, it was probably the right time to step aside. I was 12 years at Infosat, 12 years at Contava, and my next venture will be 12 years.

You’ve been involved with two very successful start-ups from ground zero. If you had three insights into what it takes to grow from zero to north of twenty million dollars, what do you think they would be?

A strong sales force, consistency in what you are delivering, and absolute honesty all the time.

Three things that you would never do again?

I would never partner up in business the way I partnered up previously. Partnerships are interesting; they truly are marriages. My next partnership will be about participation, but they won’t be equity based. I have no trouble making people money, I have no trouble people making themselves money, but I don’t want partners in the future.

Is that because of the decision making structure?

Ultimately yes. It’s at the end of the day when the decisions get made, along the way I share all decisions. I have no trouble sharing profits, but I no longer want to get into who owns what shares. For the reason of, what’s best for the company.

Best for the company from consolidating the decision making in one person’s hands?

I don’t want to share that decision again with what’s going to happen at the end to exit. But along the way, I’ll share in the growth of the company. So that would be one. Second, you need organized sales; it’s the most important thing. If you don’t know how to make money, you’ll never survive out there, so you need to do that.

How do you know how to do that?

You need to know what your goods are, what your services are and how to be profitable delivering them. You need to make sure you are always being profitable delivering them. Also, consider how much infrastructure you need to run your business. In my current company, I don’t have an office. I have eight staff, but I don’t have an office. I invest in online tools and software. More and more businesses today don’t have offices.

Tell us about your new venture?

I talked earlier about the software tool we had in the Contava world. It’s a product, and the purchaser of Contava didn’t want a product, so I said I’ll peel this business out of Contava. I spoke to my partners that one of us needs to continue with it, and I ended up with it. What I did was I got an opportunity to do this one more time, so I took a business with four people. Now, we are eight people, and we’re focused on the US market. This product exists within your network, so we take a software tool, put it on your network and we monitor the health of all of your security devices. We detect failures; we detect when it’s operating out of the normal state, so we can proactively prevent a system failure. We can make it so that your security director can sleep at night because he’s not concerned about that event that happened that has no video. It’s back to dealing with enterprise clients, and I’m having success in the US with the large security directors in large corporations and the small retail doesn’t see the value in it.

This is your third venture. What are the similarities in the start between the three?

An absolute focus on sales and service. You’ve got to talk to people, you’ve got to show people. You’ve got to write quotes, and you’ve got to follow up for business. You need to support them once they’re delivered, and you need to get referrals. It’s that simple. That’s what it is, over and over again.

Curtis Nikel, thank you very much.