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search our site Monday, January 19, 2004 We're not happy, but we're complying. Jacqueline Famulak Apple Canada Computing Canada Computer Dealer News EDGE Technology in Government Communications & Networking Direction Informatique ITBusiness Report Recent News About ITBusiness.ca Web Advertising Print Advertising Find a Job Contact Us Event Calendar Media Kits Meet Our Partners Forums Print Subscriptions e-Subscriptions Change of Address Privacy Policy itBusiness.ca asks Are you engaged in or planning a server consolidation project this year? Yes No It's on the radar, but not for this year It's not on our radar View Results How to hit an elliptic curveball 1/14/2004 5:00:00 PM - Ian McKinnon and the surprising second chance for Certicom by Shane Schick It was at the end of an IT security event hosted by the Canadian Advanced Technology Alliance last October that someone called to Ian McKinnon from the back of the room. His cheeks flushed and eyes beaming, he approached somewhat awkwardly, nervously, as though he was slightly out of breath. "I believe you have some good news," said CATA executive director Norm McKenzie. Boy, did he ever: in what could turn out to be the deal of his life, McKinnon announced that the company he worked for, Certicom, had just signed an agreement with the United States National Security Agency (NSA) whereby it would license 26 of its patents. The CATA event had been all about the untapped promise of Canada's fledgling IT security companies. This was what they all hoped to see at the other end. By any measure, we shouldn't even be talking about Certicom anymore. It was one of those companies that got caught up in the dot-com bubble but did not quite burst. McKinnon, who joined the firm as president two years ago, enjoyed none of the skyrocketing success that briefly sent Certicom into the Nasdaq stratosphere, but he inherited all of the aftereffects. Though the NSA deal is only valued at US$26 million, it helped Certicom manage its first profitable quarter and represents the Canadian IT turnaround story of the year. Now that he's had a few months to revel in his success, McKinnon shared his secrets Wednesday morning at a breakfast meeting of the Toronto Venture Group. A former Digital Equipment Corp. lifer, he spent several years laying the groundwork for the task he would take on at Certicom: assessing what was valuable, eliminating the rest and repositioning for growth. In Certicom's case, he faced a company that had started in the early 1980s as the brainchild of University of Waterloo math instructor Scott Vanstone. Certicom quickly piqued a lot of interest in IT security circles with the development of what it dubbed elliptic curve cryptography -- something it said would be a successor to software provided by the older RSA Security. The problem was, Certicom didn't sell very much of its own software, and was instead a reseller of its competitor RSA's product. It nonetheless rode the roller-coaster of the 1999 tech stock market, reaching a valuation of US$1 billion. Soon everything else followed. It moved headquarters to Silicon Valley, hired a "chief recruiting officer" and grew from 100 to 450 employees. But by 2001, everything had changed, and Certicom's future hung in the balance. McKinnon provided an anatomy of the turnaround. He moved the headquarters back to Mississauga, Ont., where finance and administration staff were much cheaper to employ. The company voluntarily de-listed from Nasdaq. Headcount was reduced back to a more manageable 102, largely consisting of the math PhDs who develop the innovative technology. Once the expenses had been reduced by 65 per cent, McKinnon said he turned back to what had once made Certicom a hot property: Vanstone's reputation in the cryptography industry, and a portfolio that had been quietly growing to more than 130 patents since the mid-'90s. From there, McKinnon approached the NSA, which was contemplating the development of a new algorithm in the wake of the Sept. 11 terrorist attacks. These algorithms which protect all kinds of classified documents, are used by virtually every defence contractor that does business with the United States. Getting chosen means you're basically becoming part of a standard. Although he makes allowances for some extremely good luck, McKinnon acknowledges that leveraging the patents wouldn't have been feasible if the restructuring process hasn't left Certicom in a credible position to licence its technology. The funny thing about the dot-com bubble was that involved a lot of great ideas that entrepreneurs convinced VCs to support without any proven source of revenue. Now that many of them are gone and the industry has shrunk, the survivors are combing through their trove of good ideas to launch their second acts. McKinnon has proven that intellectual property doesn't accomplish much if you don't have the intellect to use it wisely. [e-mail] Print story email to a friend Back Back to Top Data Management Steel firm customizes to hammer out ERP upgrade by Jeff Jedras Bar code scanners tied to system speed materials into sales pipeline More Data Management Storage Copyright Board puts freeze on blank media levy by Fawzia Sheikh update The Canadian Private Copying Collective mulls its options after its proposal around DVDs, removable memory cards and removable micro hard drives is struck down. 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