Part 2: Challenges, "the Force" and sorting technology out

What has been the most difficult challenge you've faced in this business?
Probably it was in 1996, and we were out building systems and some new technologies hit the market, like Java from Sun and a couple years later XML came out. These were technologies we basically had to wholesale teach all our engineers in just short of three months, as we shifted the company over from a C++ programming environment to Java.

We almost killed ourselves and our business went down the tubes. We lost clients that were in the "old world." But we really felt like it was the right thing to do, and it turns out in retrospect it was.

It sounds like you use your intuition...
Yeah, you do. The thing about technology is that it will change. If you don't change, you end up dying. Technology is what actually kills technology companies. New technologies come along and wipe out the old stuff. I've been doing this for twenty years, so I've gone through four or five technology shifts, so for us it was do this or not survive. I think a lot of that is about having good intuition about it.

I worked for this gentleman several years ago who was not an engineer and I ran all the software development teams. I'd been working for him for about three months and he asked me one time, "You have to make like 100 decisions a day, how do you do it?"

I looked at him and said, "You remember Star Wars? I just do like Luke Skywalker and use the force." After you do this for a while your instincts are better than anything else to go by.

Your company is also unusual or one might say in the current state of funding, intuitive, in that you have consistently turned down venture funding. Why?
That's a good story. When we got started we attracted some attention and people would come and want to invest. There were always two problems that we never really got over.

For one thing, we were doing pretty well and we really didn't need any money. It's funny because we got this one reply from a venture capitalist who said that because we had money, we would be the ideal candidate for him to invest in. So he was basically saying, "Well if you really need money, we don't want to have anything to do with you." It was like when you go to a bank and they say you have to have money for us to loan you money. And that doesn't really make sense, so why does it work that way?

The other thing is we believed very strongly about giving our employees a piece of the company. We saw how much we had to give away for someone to come in and just invest a couple million dollars and there wasn't going to be a lot left for the employees.

Even today, when we're a public company, about a third of the company is owned by the employees and that's outside the founders of the company.

We've found that it is really so much more motivating in our company. We had fifty entrepreneurs who all wanted to make their own dreams and were willing to work hard to do it. Instead of having one or two entrepreneurs and the rest of the people just working at the company for a paycheck. That was a big advantage for us over other firms that had gone out and taken venture money.

Your company is sound, but what about the general panic in regard to companies that are failing?
I look at it from two perspectives. One, externally there is definitely a slowdown in the technology sector, and I'm not an economist (although maybe they don't know either really) but it's pretty clear to us in the way our customers are behaving that everybody is like, "We've got to slow down the train and see what we're doing here." People are really apprehensive about what is happening.

The other part is really internal. We've always been blessed with really good luck. And over the past year and half that we took our company public, we just really had good timing. We raised over US$170 million dollars and we're a three hundred person company. We have almost half a million per person in the bank.

Clearly, there are some challenges to face in the economic and technology sector but we don't have a sense of panic because we know we're going to survive.

And what are the most important things to do as a company to be able to get through this time?
The first thing is to hang on to your people. That is so important. We have very low turnover and I think over a seven-year period it has averaged five percent. And as things start growing again, that's one of the key things. Money in the bank doesn't hurt, and keeping good customers.

We have good customers who are kind of frozen right now, but we stick with them and work with them. So when they're ready, we will be there. That's important, a lot of companies hear "we don't want to spend the money right now" and they abandon them. Then two months later when they're ready to spend the money, they hire someone else. We don't abandon our customers and we keep in touch with them and that's vital to your business.

What is out there on the mobile horizon for Cysive?
Well, there's a lot of stuff. We moved very aggressively into the mobile arena. We're one of the firms who can really do stuff. A lot of people really talk about stuff but we really are in the place to do things. There are a lot of talkers, not a lot of doers.

It's funny because we had this client who had this idea to just have our marketing logo be, "We do stuff."

That's great, you could sell t-shirts with that.
(Laughs.) Yeah, but really we moved pretty quickly with the technology and we have really been able to make it work when it's still new. A lot of our guys love the puzzles. Sometimes I will take my pager off and hand it to a client and I'll say, "What do you want to do with that." And they'll say, "Push buttons on it." And I'll say, "People that work for me want to take it apart."

We're actually building out some of the platforms for mobile wireless in logistics and financial services. We'll have more lead in when we arrive at a customer. They'll have something that fits what they need but will be also able to have a tight turnaround time.

Is turnaround the key for the companies in your business?
Our business is so broad; a lot of companies just want people billing someone. What we're able to do for a customer is we can bring the kind of people that normally work at a software company and make technology do things that other companies can't do. We give our customers a competitive advantage over the other companies. We have a good track record on that. And the competitive edge is so important.

Cysive is a leader in establishing the competitive edge in mobile solutions. What are the future challenges for everyone in the mobile arena as you see them?
Well, in the short run, one of the challenges is going to be compatibility. This is something we saw on the Web six years ago when the first browsers came out where nothing was compatible with anything else. And there's a challenging aspect in the mobile solutions that way.

I'm sitting here with a pager, a Palm pilot, a Compaq, a cellphone and not one of them are the same. So in the near term there's going to be a lot of confusion on the technology. I think the things that will get built early are the things that are going to be really valuable to people. They will either save people a lot of money or make them a lot of money, things that will have a really high impact.

But people underestimate how technology gets sorted out rather quickly now. I think in a couple years time there's going to be some pretty dramatic things happening with how devices can be used. We work for a pretty major shipping company and they're looking at a label you put on the actual package and that would all be done by mobile wireless technology. They ship over 40% of packages with a value over US$1000.

We're working with logistics companies in tracking cargo from one place to another. Fed-Ex has really set a high mark for everyone, because basically you can send a letter and watch the truck as it's driving down the street.

So everyone else in the transportation industry is like, "How come you guys can't do this?" I think you'll see a lot of applications like that. But over time I think we're seeing a major technology shift and people will just have to get used to it.

Is that what you tell clients?
Yes, everybody is thinking, "Well now we have the Web stuff and nothing is going to change." It is going to change. I've been through this enough times to know this. Early in my career, technology shifts took four to five years. You had time to get your bearings and figure them out, and now they might take less than twelve months. The key is to just go with the shift and it will ultimately get sorted out.

Thanks for sharing the "force" with us. I really appreciate talking to you, but you've been laughing so much during this interview I don't know how you get any work done!
Well, we try and it was great. I really enjoyed the interview.