Some­body had to ‘Burn,’ says ousted DIRTT Co-founder

En­tre­pre­neur and for­mer CEO of DIRTT hopes to re­turn to firm at some point

Calgary Herald - - FRONT PAGE - CHRIS VARCOE Chris Varcoe is a Cal­gary Her­ald colum­nist. cvar­[email protected]

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.”

PHO­TOS: JIM WELLS

Mo­gens Smed, founder of DIRTT En­vi­ron­men­tal So­lu­tions Ltd., speaks to Postmedia at his cus­tom-de­signed home. Smed was fired from the com­pany on Mon­day.

Mo­gens Smed’s house near De Win­ton was built us­ing the com­pany’s pre­fab­ri­cated ma­te­ri­als to show­case DIRTT En­vi­ron­men­tal So­lu­tions Ltd.’s tech­nol­ogy.

Comments

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.