Somebody had to ‘Burn,’ says ousted DIRTT Co-founder
Entrepreneur and former CEO of DIRTT hopes to return to firm at some point
A couple of hours after being fired by the company he cofounded, Mogens Smed is feeling philosophical.
If he’s bitter or angry about being pushed out as executive chairman of DIRTT Environmental Solutions, Smed does a good job hiding it.
He is deeply disappointed by the turn of events, however.
“Of course I don’t like this. I want to be a part of this company. I love the people, I love everything.”
The charismatic 70-year-old Calgary entrepreneur could see the writing on the wall after the board of directors removed him from the CEO’s chair in January, shifting him into the new executive role — a position he lost Monday afternoon.
Not one to mince words, Smed calls his departure what it is. “They fired me.
“Let’s not sugar-coat it,” he said Monday evening, a few hours after getting a phone call that he was being ousted from the company Smed helped create in 2004.
“The one thing I will say is they’ve never been strong on style points. You saw what happened on Jan. 2 and they did exactly the same thing to me today.”
The company announced this week that Smed was leaving DIRTT, the Calgary-based firm that designs and manufactures prefabricated building interiors and products for customers around the world, including the likes of Google and Apple.
It has almost 1,200 employees and operates manufacturing facilities in Calgary, Kelowna, Phoenix and Savannah, Ga.
The company also announced Kevin O’Meara, former CEO of Atrium Corp. — the biggest vinyl and aluminum window manufacturer in North America — will become its new chief executive.
While Smed’s departure wasn’t a surprise, Monday’s statement from the company lacked the normal niceties associated with such moves.
“We acknowledge the enormous contribution Mogens has made since founding DIRTT,” board chairman Steve Parry said in a news release.
“However, Mogens has not adequately performed the agreed assigned duties.”
Darrin Hopkins, co-head of the private client capital markets division of Richardson GMP, whose clients held stock in DIRTT until recently, bristled at the parting remarks directed toward Smed.
“He’s a classic entrepreneur, takes risks, puts his own money up, gets a close circle of friends to grubstake him and starts it,” said Hopkins.
“He has built a tremendous company. Let him ride off into the sunset, but don’t kick him in the backside as he’s going out the door.”
Blunt talk has a habit of following Smed, a lifelong entrepreneur who says exactly what he thinks and a history for building companies from the ground up, including Scandinavian Wood Industries and Smed International.
Following a raucous annual meeting in June that saw DIRTT shareholders criticize the board for the initial management changes, Smed thought investors were being disrespected, calling it “embarrassing for our company.”
In an interview this week, Smed said his departure was ultimately sparked by a difference with the board over the company’s future direction, noting he disagreed with their focus on DIRTT’s share price.
“There is no way I could persuade them that what we were doing was right. And there’s no way they could persuade me what they were doing was right. So we were at an impasse and when that happens, obviously, somebody has to burn — and that’s me,” he said in an interview.
“I wanted to build it on the fundamentals of business ... that’s my focus, not some stock play.”
The departure of Smed from the company he created in 2004 with Barrie Loberg and Geoff Gosling had been brewing for months.
DIRTT, which stands for Doing It Right This Time, went public five years ago and has a market capitalization of almost $550 million, but has been on a bumpy ride on the Toronto Stock Exchange this year.
After Smed was removed as CEO on Jan. 2, the stock dropped almost 18 per cent, although it’s largely recovered through the summer, closing Wednesday at $6.40.
Last year, the company lost $7.4 million on revenues of $293 million, but second-quarter revenues this year jumped 15 per cent to $80.7 million and it turned a $778,000 profit.
Smed stressed he’s proud of DIRTT and its unique corporate culture, vowing to “do anything in my power to help this company.”
He also acknowledged being “irreverent” when it came to dealing with board protocol and was particularly concerned this year with the impact of cutting R&D investment and other growth-related expenses.
“This year has been basically stepping over dollars to save dimes, it’s been squeezing the buffalo sh-- out of a nickel,” he added.
DIRTT chief financial officer Geoff Krause dismissed that assessment, saying a sharp focus on controlling spending and putting corporate processes in place will provide “even better service to our customers, as well as profitability to our shareholders.
“Those are not mutually exclusive.”
As for the decision to part ways with Smed, Krause said the board felt the executive chairman didn’t fulfil his responsibilities, but wouldn’t elaborate.
“That doesn’t take away from what he did for the company,” said Krause. “Mogens has built a very good company here. Our role as management is to build that company to an even bigger company.”
Analysts applauded the appointment of O’Meara as CEO, citing his management background, which includes co-founding and becoming chief executive at Dallas-based Builders FirstSource, a large buildings material manufacturer and distributor.
“The new CEO looks like a very strong candidate,” said Rupert Merer of National Bank Financial.
“The company is growing. It’s going from a smaller organization and to grow from here, it needs to start thinking like a bigger company.”
Outside his house near De Winton, built using the company’s prefabricated materials to showcase its technology, Smed is still preparing to host more customers interested in seeing DIRTT’s products in action.
He has no plans to retire and holds out hope he’ll return to DIRTT at some point, if the company’s new strategy doesn’t pan out.
But Smed stresses he wants it to succeed.
The former CEO sent an email to Calgary staff after his termination, encouraging them to “please don’t give up on this great company, vision and people!”
“We did a lot of things right, but my next company is going to be Doing It Perfect This Time, OK, because we didn’t do it all right this time,” Smed said.
“But the point is … perfection is something none of us can aspire to, because then we’d have no reason to exist.”