Renaissance has an irresistible value proposition for original equipment manufacturers such as Alcatel-Lucent, Cisco, Huawei and Ciena, as well as telecom companies such as AT&T, China Unicom, Verizon, Bell, Sprint, T-Mobile, Vodafone, Telefónica, Docomo and Móvil. Roughly 80 per cent of their networks run on legacy equipment, highly complex hardware, software and firmware that almost no one knows how to fix and repair anymore.
These companies all have huge teams of engineers and technicians, but focus almost exclusively on leading-edge technology. Still, these companies can’t afford to rip out tens, perhaps hundreds of billions of dollars of investments every time something goes wrong with their older equipment. And where can one find engineers who understand legacy equipment? In the city that designed it in the first place, of course – Ottawa, home to many former Nortel engineers. As such, Renaissance not only has a vast supply of engineering talent that can solve these technical issues, but an endless worldwide demand for its services.
It sounded like an opportunity and a viable business model to Mr. Anderson when Nortel folded underneath him. He was there for nine years and five months, running Nortel’s used equipment buyback, storage, remanufacturing, remarketing and recycling business. He was responsible for all used gear transactions globally, which meant that when Nortel’s last CEO, Mike Zafirovski, cratered the business, Mr. Anderson was ideally situated to start out on his own.
“I got Renaissance off the ground with $20,000 from my credit card and an understanding wife,” he says, smiling broadly.
(Mr. Anderson has used this line once or twice before, no doubt. His family lives to the east in Rockland, so his trip to and from work each day in Kanata is an hour. He did not want to move them; they are settled in that community and plan to remain there, so he uses his transit time for calls. One can only imagine what his cell phone bill looks like.)
During his first year in business he did what most self-capitalized entrepreneurs do: he hustled. He bought and sold used equipment, which is not much different from what one sees on TV when realtors and renovators try to flip houses at a profit. But in Mr. Anderson’s case, he actually had some expertise – he possessed asymmetric information that allowed him to value other people’s discards accurately. It’s a riff on buy low/sell high.
By the end of year one, he was sitting on $1 million in cash.
His next step was to build a bigger pipeline, and to rent and fit up a larger space. “How hard can that be?” he thought.
Six months later, he had his lease and a few months after that his team was operational in its new location, having spent all their money and more on real estate. “It was ugly,” Mr. Anderson says. “We didn’t know anything about real estate, but our landlord certainly did. We negotiated uphill all the way.
“We didn’t even know how to spell ‘BDC’ when we moved in,” he adds with a laugh.
BDC, of course, is the Business Development Bank of Canada, which came to the budding firm’s rescue with credit support. So did Purple Angel’s Yves Tremblay and Cesar Cesaratto, as well as friend, investor and confidant Larry Poirier from Nitro Microsystems.
This year, staff will double or triple in size to perhaps 60 or maybe even 90 people. Mr. Anderson has found that startups put so much pressure on everyone that some of the employees crumple and leave. Staff turnover has been at 50 per cent, although that is coming down as the team culls the herd. Renaissance has brought in an experienced human resources leader in Kim Waite, who has made meaningful changes in this crucial area.
There is no doubt in Mr. Anderson’s view that the talent his company needs is here – not in China, India or even the U.S., U.K. or Germany. Every time an OEM has declared another product line a “legacy,” you can hear cheering at Renaissance as well as at places like Pythian, another Ottawa-based success story that works with legacy products.
Mr. Anderson practices yoga, trains in kickboxing and goes nighttime cross-country skiing with a headlamp to try to unwind and relax. That’s often necessary with the stress that comes with operating a busy firm like Renaissance.
“I never expected to run my own company and sometimes wonder how I ended up doing this,” he adds, pointing with his arm to millions of dollars worth of equipment sitting on shelving or being worked on and repaired by blue-coated engineers and technicians.
“But I have a good support network and I’m going to see what we can do with all of this.”
Professor Bruce M. Firestone is entrepreneurship ambassador 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. Follow him on Twitter @ProfBruce.