The school of hard knocks is an efficient teacher. It’s an expensive one, too. Just ask Dave Caputo.
The former CEO of Sandvine learned the painful way – the way most CEOs do – just how fraught the process is to stand up an international sales team when the time comes for a company to grow past Canada’s borders.
“Our CFO, our general counsel and myself would debate for months, and sometimes years, about whether it made sense to hire sales staff overseas,” Caputo says. “We’d spend between $25,000 and $40,000 in the process” – and all the while knowing that not taking the plunge was serving as a drag on the company’s growth ambitions.
He knew there had to be a better way. He knew because he’d experienced a better way while running an earlier company called PixStream.
And that knowledge has now been realized in the form of a new Communitech initiative called Outposts.
Outposts, launched Thursday night during Communitech’s annual general meeting, is designed to ease international expansion for Canadian scaling companies, making it less expensive and less risky.
Communitech plans to establish legal entities outside Canada – in effect, “Outposts” – that will permit it to provide back-office services for a subscribing company that is hiring a new employee. The Outpost will take care of payroll, benefits, statutory filings and the like – allowing the new employee and their company to focus on generating revenue.
“I could think of no better place than Communitech to do this,” says Caputo, who is the outgoing Chair of the Communitech board of directors. “Communitech is all about getting companies to start, grow and succeed. I can think of no better idea that will help companies start, grow and succeed than this.”
He knows because of PixStream.
PixStream, which pre-dated Sandvine, was an affiliate of a company called Newbridge Networks. Newbridge had made an investment in PixStream via its venture capital arm.
Newbridge also had offices worldwide.
“Say PixStream wanted to hire a salesperson in Brazil. We could see that Newbridge Networks had an office in Sao Paulo, and we could go ahead and hire a person directly into that office,” says Caputo. “Newbridge would take care of payroll, benefits, statutory filings and office space, for that matter. And they would just bill us back for that.”
The plan is for the process to largely work in just that way.
Initially, Communitech will establish Outposts in the U.S. and the U.K. Scaling companies that are ready to make a hire in either of those places will register for the program, pay a fee, make their hire, and then Communitech will take care of the rest. Office space, at least initially, will be of the virtual kind.
The plan is to eventually expand the program to the entire G20. Client companies will gain a vote on where new Outposts are to be established. They also will gain help accessing any assistance programs that other countries make available, “a one-stop-shop kind of thing,” Caputo says.
The need for the program, he adds, is significant. Canadian companies tend to underperform internationally. Outposts is a way to help address that problem.
“Once you remove energy from the equation, Canada is not as good a trading country as people might think,” Caputo says. “There are very few companies, relatively speaking, that export outside of Canada.”
The program has been in incubation mode for some six months.
For Kitchener-based Shinydocs, the initiative has arrived in the nick of time. Shinydocs, which makes AI-based document management solutions, is in the process of making hires in the U.K. and the U.S., and Outposts will help them do so.
“The moment that [Outposts] was presented to us, we jumped at the opportunity,” said Shinydocs CEO Jason Cassidy.
“This, for me, is about both cost effectiveness and reducing risk associated with the happiness and good treatment and appropriate treatment of staff,” said Cassidy.
“In no way do we fear trying to be compliant with with another country's laws. The laws are well established; you can do the research yourself and figure it out. But just the implementation is something more subtle. It's details that you would only know if you're there, and being able to leverage the scale associated with a program like this is very helpful.
“So this, for me, is about both cost effectiveness and reducing risk associated with the happiness and good treatment and appropriate treatment of staff.”
Caputo says that Sandvine scaled better than PixStream in every regard but one – ”And that was the ease of international expansion.”
That experience drove the Outposts initiative.
“One of the benefits of being on the Communitech board was I could evangelize this,” says Caputo. “Communitech is, in my opinion, perfectly positioned to deliver this kind of assistance, and I have no doubt that the need for it is very real.”