BTI Systems may be the fastest-growing tech company flying under the radar of some in Ottawa.
Californian Steve Waszak, who leads a global head count of 270 employees, including 150 locally, is a highly analytical former Deloitte and Ciena guy who is a tough competitor.
He also played high-school football and looks like he could still suit up and play linebacker somewhere. He can’t stay seated during a 50-minute conversation, needing to get up and sketch out his ideas on the conference room whiteboard just to make sure he drives home his point to his audience of one.
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His family lives in Los Angeles (in Laguna Beach), but he’s in Ottawa running the show. Mr. Waszak has travelled more than 650,000 kilometres during the last two years, visiting them and more than 300 BTI customers, not to mention the other three BTI offices in Boston, Belfast and Shanghai. His outlook is international – his nine-year old daughter, with whom he FaceTimes each day, studies Mandarin.
Mr. Waszak himself spent six months in China developing BTI’s supplier relationships, and wants to integrate BTI into the entire China business ecosystem under the belief it’s the only way to compete with Chinese price advantages.
Founded in 2000, BTI pivoted its business model in 2007, going from a subsystems provider to a full systems company, and became much more globalized beginning in 2008.
Mr. Waszak says Canada’s much too small a marketplace, and that tech companies have to look beyond our borders for sales and talent.
He believes in building a bigger pipeline – even during the tough times when BTI was hemorrhaging cash – and then filling the larger pipeline with sales.
When Mr. Waszak talks “pipeline,” he’s referring to people. At every new stage of development, he wants to add more people and replace others. Upgrading human resources is a big priority – Mr. Waszak calls it “hiring up” – and he has personally interviewed 100 people just in the last six months alone.
“Ottawa,” Mr. Waszak says, “has big brains with lots of brain cells, and a lot of them have seen the movie before, which helps.”
“Ottawa” is his codeword for Nortel, from which BTI has inherited a lot of talented optical engineers. Mr. Waszak calls it the Nortel “legacy.” Even though the company has the chops for it, BTI is not an optical play, which Mr. Waszak dismissively calls “a commodity.”
With other shareholders made up of venture funds such as VenGrowth, the Business Development Bank of Canada, Export Development Canada and GrowthWorks, you can be sure there is lots of pressure on Mr. Waszak to not only perform on a day-to-day basis (the firm is finally cash flow positive, so that eases things a bit) but also to provide an exit for everyone. That could be an IPO or a sale of the company, although no one is saying just yet. But what Mr. Waszak does say is that he wants to create at least $1 billion in capital value (from a company with $200 million in sales and a five multiple) for all stakeholders to share.
BTI is seeing demand for its products mushroom. The company plays in the metro network space, where video places an enormous burden on carriers: 30 per cent of their traffic is coming from YouTube and 20 per cent from Netflix. Demand is a two-headed monster with traffic exploding on both sides: user-generated content (mostly YouTube) and broadcast video (Netflix and nearly everyone else in media).
BTI’s proprietary algorithms help these carriers cache video locally, reducing bandwidth demand and data centre router costs by 20 to 40 per cent. Its customers include the usual suspects such as Verizon, Rogers, Bell and Telus, but also a lot of tier-two players such as Frontier. BTI is adding more tier-one clients this year as it steps up its efforts to penetrate mobile web: Vodafone, Telefonica and others.
BTI also provides clients with a lot of analytics, which is what they want – intelligent networks and smart content management.
Mr. Waszak is the first top executive I have interviewed in Ottawa who not only gets that his supply chain is a complex ecosystem, but also understands that he has to worry about the other side of his business model – the demand-side ecosystem as well. He is looking at three dimensions that he calls “win-win-win.” The first is BTI, the second is for BTI clients and the third for clients of BTI clients.
For example, does any Verizon customer really enjoy watching a YouTube video with a latency of, say, 1.25 seconds for every 12 seconds of viewing/listening time? Or how does one feel when they receive a bill from Verizon that says: “Sorry, you exceeded your data cap this month so your bill is now $400 more than the supposed $60 ‘all-you-can-eat’ plan you thought you signed up for?” It doesn’t go over too well and upsets the customer, which upsets Verizon, which then buys more BTI gear to address those types of problems.
It’s all part of BTI’s differentiated value.
Sales this year will be around $75 million. Growth has been 50 per cent per year for the last two years, so the company has some real traction in the marketplace. Mr. Waszak estimates 50 BTI clients will emerge as next-generation carriers and service providers; Frontier and Amazon are likely to be among them. They are driving a lot of video traffic and more is coming – a tidal wave is arriving as the Internet eats up both television and film industries.
“We have extended BTI ownership opportunities to our leadership team and employees through stock options,” Mr. Waszak adds. “We’ve re-established option pricing to provide … value to them through return on these options.”
Which is Mr. Waszak’s way of saying to his team, “stick around for the ride.”
Professor Bruce M. Firestone is entrepreneur-in-residence at the University of Ottawa’s Telfer School of Management; founder of the Ottawa Senators; executive director of Exploriem.org; and a broker at Century 21 Explorer Realty Inc.
