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Thursday, March 10, 2005
Ottawa Citizen
Jeff Buckstein
Steve Bruder had seen Ottawa tech companies come and go during the boom years of the late 1990s and subsequent bubble burst of the early 2000s. As an experienced chartered accountant and executive in the tech industry, he knew that failures often had nothing to do with lack of technical prowess. On the contrary, he was well aware some of its casualties were brilliant technicians who didn't have the financial acumen to make their product ideas succeed.
That's one of the things he liked about Lumenera Corporation when its founding partners -- Huw Leahy, the company's president and chief executive officer; Greg Bell, vice-president of business development; and chief technology officer Kevin Mayer -- came recruiting for a chief financial officer. Having done his due diligence, he was convinced this company had set itself on a solid financial footing.
"One of the reasons why I really got a kick out of this team is that it's not a hard sell to convince them about undertaking proper business decisions. They don't just think entrepreneurial. They think, 'How do we keep our costs low?' And, 'How do we grow profitably?'" Mr. Bruder says.
Indeed, Lumenera spent its first couple of years since it was formed in 2002 carefully planting seeds to develop product and work with original equipment manufacturers (OEMs), realizing it might take up to three years to fully integrate the company's multi-purpose digital camera products into the market.
"And we continue to sample and grow our business two or three years out from now (to accommodate) a longer sales cycle," says Mr. Bell, adding that by doing things in such a fashion, "we've managed our finances and been very creative about getting things done efficiently. And now we're starting to reap some of the rewards."
Furthermore, Lumenera has always been self-financed, in large measure because the company was launched in the depths of the tech recession.
But the self-funding strategy was also deliberate, adds Mr. Leahy. "We had to choose whether to spend our time seeking funding, or developing a product and making money. So we chose to expend our efforts on the product."
Mr. Leahy attended the University of Regina, where he graduated with a bachelor of applied science in electronic engineering in 1995. Familiar with Ottawa as a student through co-op terms with Nortel, he moved permanently to the National Capital Region after graduating, taking a position as a software engineer with Vitana Corporation. Mr. Leahy remained with Vitana, where he also held positions in hardware engineering and project management, until 2002.
Mr. Bell, from Brighton, Ont., attended Algonquin College, earning a diploma in electronic technology engineering in 1994. He began his career with Digital Equipment Corporation. The following year Mr. Bell went to CML Technologies.
Mr. Bell worked at CML until 2000, when he accepted a business development position with Vitana Corporation.
Mr. Mayer, an Ottawa native, graduated from Carleton University in 1986 with a physics degree. Between 1987 and 1999, he worked for Telesat Canada, producing software to control Canada's fleet of satellites in space and rising to become the company's senior mission analyst. In 1999, he went to Vitana as that company's software development manager.
The three men all voluntarily quit promising jobs to start Lumenera in May 2002; they were not victims of layoffs as the brutal tech recession began to bite Ottawa hard that year.
"I think it's fair to say that all three of us have a business mind and are entrepreneurs at heart," Mr. Leahy says. Furthermore, with each member having their own specialty area, this provided a nice set of complementary skills with which to run a business he added, noting that Mr. Bell was strong in business development, Mr. Mayer in the technology aspects of the business, and he was experienced in project management and finance.
Two other individuals were also in on the ground floor -- senior software engineer Simon Tardif and Andrew Nelson, Lumenera's director of engineering.
The three men saw myriad market opportunities that could embrace new digital camera applications in areas such as science, industry and security. "We've been following a business plan. A line of industrial camera products was our first phase; then we introduced a scientific camera line a year later, followed by a security camera approximately a year after that," Mr. Bell says.
Lumenera has 39 full-time and five contract employees, a number that has ramped up considerably from the 12 on board at the end of 2003.
Although its senior managers are the majority shareholders, the employees hold about a 10 per cent ownership stake in the privately financed company. In August 2004, Lumenera opened a sales office just outside Boston.
Lumenera faced a few technical challenges in its early days, such as how to use Ethernet on security cameras to allow the company to plug into an IP network, and figuring out how to compress a very large bandwidth of data down to JPEG images.
They also had to learn how to custom-design and modify certain items for customers -- things such as a higher resolution image sensor, faster frame rates, and the shape of the hand-held camera so that it could, for example, fit into small places (for example, when using it for oral examinations in the medical field).
"We have the ability and willingness to customize a camera solution exactly the way a customer wants it. That's really, I think, the key to our success, and how we differentiate ourselves from many other camera companies, who just provide a sort of standard camera," Mr. Mayer says.
Lumenera has followed a carefully crafted marketing strategy, choosing to partner with OEMs in order to avoid having to spend a lot of time, effort and money on direct marketing -- instead relying on the OEMs' distribution channels, brand recognition, and economies of scale. The company has established distribution channels in Canada, the United States and overseas.
"The OEM model allowed us to focus more on things like product development," says Mr. Bell, who adds that the marketing strategy has since been broadened to more trade shows and magazines.
The company, which began shipping product in September 2002, won the Ottawa Business Achievement Silver Award Exporter of the Year award in 2004.
"We've consciously flown below the radar for two years, focusing on the business and building the infrastructure. But in these last few months, we've made a decision to begin marketing and promoting ourselves to let the world know that we are a mainstream player, Mr. Bell says.
Through its partnerships, Lumenera has reached more than 500 customers, including a mix of primarily OEMs, plus integrators and some end users, in about 45 countries around the globe. "We're very community minded, but we're also very much a global company," points out Mr. Bruder, who notes that about 98 per cent of the company's business is outside Canada.
The company, which has been profitable since day one, recorded a 466 per cent revenue increase between its September 2003 and 2004 fiscal year ends. Lumenera's senior management has been conscious about keeping a healthy balance sheet, and ensuring other accounting measurements are kept in tip-top shape, Mr. Bruder notes.
