For the past 20 years, Branham has tracked the Canadian ICT Industry and the leading companies that comprise it. As part of Branham’s ongoing efforts, we speak with leading executives from across Canada to gather first-hand insight on current trends and recent developments within the Canadian Technology space. Recently, Branham sat down with Jim Skippen, President & CEO of WiLAN to talk about his career, the company he leads and what the future has in store. The following statements summarize some of the key points that Mr. Skippen would like to pass along to the Branham300 community. Alternatively, listen in on the conversation between Branham and Mr. Skippen in its entirety here.
Combining Law with a Passion for Technology…
My career really started in university. I was a computer science and business student and I decided to combine that with something that was quite unrelated: law. I went into law, and when I graduated from law school, I decided I wanted to combine the law part with computer science.
I joined a firm called Borden Elliott, which is now called Borden Ladner Gervais, in the computer and technology law group. I was doing patent transfers and technology transfers and some general corporate work for technology-based companies. I started as an associate and became a partner there.
I then joined MOSAID as General Counsel. Very soon after I joined MOSAID in 1996, I became interested in patents and in their patent portfolio and worked on developing a patent licensing program. Ten years later, with a short stint at McCarthy Tetrault in between, I began working at WiLAN.
Making the Shift from Law Firms to Corporations…
I think what made me shift from law firms to corporations was that I saw clients that were doing very well financially. They were working smart as opposed to more hours. I wanted the opportunity to have the type of benefits that are only available through stock or stock options – that was a big motivator. I think a second big motivator was that I wanted to be more directly involved in business. As a legal advisor working at a law firm, you are advising but you are not really making the business decisions. As in-house counsel or as CEO, my current position at WiLAN, I am able to impact directly on business decisions.
WiLAN’s Shift from Products to Patent Licensing…
I think the reason WiLAN changed its focus in 2006 was that it adapted to the market conditions it was faced with. It had tried to sell products, and in all fairness, I think it was largely unsuccessful in making a profitable business that way.
What WiLAN did have was the fundamental inventions – in the form of patents – that related to its products. It made the business decision to try to focus instead on licensing its intellectual property and its patents and that’s where I came in.
If you look at what has happened since 2006, there has been dramatic growth in our financial strength and the size of the company and the success of the company. I think it turned out to be a very good decision to focus on intellectual property.
WiLAN’s Recent Achievements…
Over the past five-plus years, there are several key accomplishments that come to mind. One is building our intellectual property business and signing over 250 licenses to our intellectual property. The stock price, when I was first asked to consider joining, was 65 cents. It is well over $5 now. That is almost a ten-fold increase in the stock price.
Our financial strength is another great accomplishment – we went from about $300 thousand in the bank and now we have over $200 million. We are in a different league in terms of financial strength. Revenue growth is another measure of our success. We have grown from zero to over $100 million in revenues in just 5 years.
In addition, we have implemented a dividend for our shareholders and I think we have established a reputation for honesty, fairness and integrity in both the market that we are in but also generally in the community.
The Key Drivers to the Company’s Success in Fiscal 2011…
One of the key drivers to our success has been our financial strength. It has enabled us to grow our patent portfolio; it has enabled us to withstand court challenges that were very expensive, and it has ultimately led us to prevail.
I think another key to our success is that we stuck to our plan. We made sure that when we signed deals or licenses that they were the right deals or licenses at the time.
Another key driver is the continuing strength of our team. We are committed to training and strengthening the capabilities of our existing employees, while at the same time, bringing new strong employees on board as we need to.
Coining Fiscal 2011 as a “Defining Year for WiLAN”…
I think 2011 was a defining year for WiLAN because, after three years of litigation and negotiation, most of the Wi-Fi industry and much of the cell phone industry took licenses to our patent portfolio. This helped us because it reduced our expenses while at the same time increasing our revenues significantly.
This specific year, we were able to achieve revenues in excess of $100 million with very high profitability. We doubled our dividend and then in the beginning of 2012, we increased it by another 20 percent. In addition, the size of our patent portfolio basically tripled.
Milestones on the Horizon…
Some of the milestones that we would like to achieve in the next 24 months are to sign more licenses and to apply some of our significant cash reserves to buy patents and companies, especially companies that will add revenue streams to what we are already doing. I think that the Gladios initiative, which is designed to help other companies license their intellectual property, will gain more traction in the next 24 months and eventually will become a more significant contributor to our revenue.
The Attempted Acquisition of MOSAID Technologies…
I think the MOSAID acquisition proceeded much as we expected. We were somewhat surprised that a private equity player made an offer but that is the name of the game with this type of process: you don’t know who might enter the fray and bid more than you.
In hindsight I believe it was the right thing, for us to launch a bid to acquire MOSAID. The fact that it ultimately sold for a price that was much higher than the market price before we launched our bid indicates that we were offering good value. I think one lesson we took from the whole exercise is that we took the high road. We did not engage or respond to personal attacks. That served us well and I am glad we took that approach.
Increased Awareness Around the IP and Patent Market…
I think that the Nortel transaction and transactions like the recent Microsoft purchase of the AOL patents has made the general public and certainly the financial markets much more aware of the value of intellectual property in patents. Larger operating companies like AOL, Microsoft and Nokia are now much more interested in finding ways to monetize their patents and deploy them. That is a big change from what things were like 10 or 15 years ago.
So I think you are likely to see more of these larger companies staking out their intellectual property to third companies like WiLAN to try to license the intellectual property and generate revenue both for WiLAN but also for the operating company. Increasingly, organizations want to make sure there IP is not an asset that is stagnant on the shelf.
What to Look for From WiLAN in the Near-Term…
In the near term I would expect that we will continue to sign licenses and bolster our core licensing areas, which are wireless access, digital display and cloud computing. We will also continue to engage with new Gladios partners, and sign licenses with some or all of them. At the same time we are going to look for opportunities to work with larger, strategic partners who could benefit from our licensing expertise. We could take on one or two of those types of partners and will be working on that in relative near-term.
I would say that entrepreneurs need to be bold and forge ahead. I think for leaders of small public companies I would caution them that there is nothing like a strong balance sheet and there are a lot of factors that can mitigate against you strengthening the balance sheet or doing financing if the opportunity presents itself.
I would caution that you should still consider trying to raise money when it is available. The irony is that usually the very best time to raise money is when you least need it and when no one will understand why you are doing it. If you try to raise money when you need it, it is probably already too late.
WiLAN has completed many successful financings and I think it has served us very well in being able to execute on all of our strategic goals and initiatives.
Another thing I would say to smaller entrepreneurs is keep your eye on your patents. Many times, patents are a secondary thought because they are expensive to maintain and file. At the end of it all your patents may be the most significant part of the company’s value. Consider the Nortel patents that were sold for more than all of Nortel’s businesses combined. Patents are really where the value is, and that value that is not being protected by many small companies.