A visitor to Launchworks in a quaint building in Ramsay is greeted by a vacant reception desk that speaks volumes about the sorry state of the venture-capital market. Workstations are also vacant.

During the tech boom two to three years ago, fledgling entrepreneurs crowded into Launchworks’ bustling office with killer business plans hastily scribbled on napkins and pizza boxes.

Even though it’s clear the band has stopped playing at the tech ball, chief executive officer Byron Osing, one of only two employees remaining from a staff of 20 at the company’s Calgary office, does not utter a single discouraging word.

Larry MacDougal, Business Edge
Byron Osing wasn't prepared to foot the bill for the entire Alberta tech sector.

The 38-year-old Osing, who shares the sprawling open space with chief financial officer Keith Steeves, is upbeat as he explains how Launchworks has revamped its focus from funding and nurturing venture-capital technology companies.

And Osing, who founded Launchworks in 1999 after striking a $202-million deal to sell a tech company named Telebackup Systems to Veritas Software, recently showed he’s still a big player on the tech scene by swinging a $60-million US purchase of Viasource Communications, the largest cable installer in North America.

1. How has the tech market meltdown and dearth of venture capital financing for technology impacted your Launchworks’ strategy?

“We’re adapting to the external environment. In a good market, when capital is available, you want to be investing in young firms, finding the right talent with the right technology and building it out. As the capital market dried up, it became much more difficult to fund very early-stage technology ventures from start to finish and it became much more attractive to acquire existing companies that were running into trouble and had hit the wall, running out of money. So what we’ve done is actually stress the acquisition side of our business model.”

2. What appealed to you about Viasource?

“We funded a company called 180 Connect about 18 months ago and, as a subsidiary of Launchworks, it grew from one employee to over 325 employees in its first year of operation and was profitable in its first year. Because of the space that company was in, which was broadband connectivity, we were watching that industry to buy companies that were in trouble. We started watching Viasource about a year ago. When it hit the wall (going into Chapter 11 bankruptcy in November), we aggressively went after it. There were actually offers that came in higher than ours but, frankly, GE Capital, as the secured debt holder, liked our management team and had confidence in our ability to turn the company around.”br> 3. Is resurrecting Viasource the primary focus now?

“Absolutely. It’s a huge amount of our asset allocation. What it really means is that Launchworks is now primarily an operating company. It’s our hope this year that our consolidated subsidiaries in this space (broadband connectivity) will do upwards of $200 million Canadian in revenue and that we’ll be profitable this year. We could very comfortably become a (Toronto Stock Exchange) 300 company. We’ll probably look to take (Viasource) public on the TSX and we’ll probably roll Launchworks and Viasource up and take it all public at the same time.”

4. How has Launchworks weathered the tech storm?

“We haven’t had too many huge failures. The companies that we put the bulk of our money into are doing quite well. We had a couple of very early-stage investments that didn’t make it. We also started two companies, Tractionworks and Stormworks, that were IT (information technology) service companies. We eventually sold Stormworks to the employees and we just shut down Tractionworks.”

5. What was the key to surviving the carnage of the tech and software industries?

“Frankly, we did not fall into the trap. We did not invest in a bunch of dot-coms and concepts. Everything we invested in for the most part was product-based, software-based or services-based, investments that could generate real revenue. That’s why we had a pretty significant percentage of our investments survive and they are set to prosper. There were five or six (venture-capital) plays like Launchworks set up in this country in 1999 and 2000 and we’re the only one that’s alive. Two of the big ones, Ecom Park and Itemus, are gone. We went through the portfolios of those companies when they went bankrupt, but there was nothing worth a nickel to acquire. These were all just public plays, promotions for the most part. We’ve been prudent, conservative, we’ve survived and we’ll prosper. Being conservative, that’s our mantra.”

6. With that conservative approach, how were you perceived in the industry?

“We’ve taken a lot of criticism about not writing enough deals in Alberta. Everybody looked at us as being the largest player and the biggest fund. So we were looked upon as the catalyst and the stimulus to the technology environment. Many people, including people in the (provincial) government, felt it was our responsibility to invest more aggressively. We’d say: ‘Listen, we’re not here as a social benefit to the tech sector.’ ”

7. What was the root of the problem that led to the crash-and-burn tech plays?

“First, there were a lot of tech companies that shouldn’t have been started or funded in the first place. People would come in over lunch and say: ‘Write me a cheque for $2 million and you get 20 per cent of the company.’ They’d be outraged when you looked at them like they were crazy. A lot of companies that got started didn’t have a solid technology or a solid path to profitability because, at the time, you only needed to be a concept.”

8. Were there too many rookie entrepreneurs?

“Yes. What we don’t have a lot of in Canada is second- and third-generation successful tech entrepreneurs. In the U.S., there are a lot of those. Up here, we’re funding primarily first-time entrepreneurs who had never had to manage through tough times. Some of these tech companies, even if they had a real product, they upped their (cash) burn rate because they had to get so big so fast. Companies were even being valued at how many programmers they had. There was stupid crap like that going again.”

9. What was the key to the survival of Calgary companies such as Control F-1 and Guest Tek Interactive Entertainment under Launchworks’ tutelage?

“The savvy guys tried to match revenue with expenditure, they didn’t get too big too fast and, when the tough times came, they cut every ounce of cost they could to conserve capital. We had our thumb on them, saying: ‘Every nickel is the size of a manhole cover, treat money with respect and you can’t ever (expect) that you’ll get another nickel.’ You pull in the reins.”

10. Who has had the greatest influence on your life?

“My father (Lowell) instilled within me the entrepreneurial drive and taught me the work ethic. He was a farmer and he wanted to be a farmer. He always said: ‘I’d rather make $10 a day working for myself than $100 a day working for someone else.’ His first business venture was the purchase of a coal truck. He would haul coal out of Milk River, but he didn’t have a (box) hoist on the truck, so he had to shovel every load of coal out of the back end of the truck. He did that 12 hours a day. I can’t conceive of having to work that hard to make a living and yet people in that era did it without complaint.”

11. Having played elite-level junior hockey as a goalie, did you aspire to a National Hockey League career?

“I played minor pro, but hurt my back (two ruptured discs) and that was the end of that. I played university hockey at Lethbridge (Pronghorns), but I knew the chances of going anywhere from there were about zilch. So I eventually did my MBA and PhD at the University of Calgary.”

12. What did being a goalie teach you about business?

(Laughing) “That there’s a lot of pain in life. Being a goalie is a lot like being an entrepreneur. You are somewhat the keystone of the team in that success and failure ultimately falls back on you. My entrepreneurial tendencies were obviously reflected in my choice of position in hockey. I wanted to be the go-to guy and have a clear view.”

13. What do you consider your strength as an entrepreneur?

“I know what my weaknesses are and I surround myself with great people who compensate for my weaknesses. I also see things with a panoramic view which makes me a good strategist, because I see everything coming from everywhere. When you play goal, that’s your only asset. A lot of business success is anticipating what’s happening and operating your company proactively opposed to reactively.”

14. Is that what you’ve done at Launchworks?

“Yes. Frankly, that’s what I did in our last move here (downsizing staff) and it wasn’t popular with our employees, obviously. I fundamentally took one aspect of our business model and said: ‘We’re going to focus on this.’ We had to lay off a lot of very talented people (20). Because we’re not going to be doing any investing for the short term, we didn’t need our analysts and investment bankers. We’re running an operating company (180 Connect) now and the management team is in the U.S.”

15. What’s the best advice you can offer a young tech entrepreneur?

“Perseverance and passion are your two key assets. It’s not easy, but if you believe in what you’re doing, you’re smart about it and you’re willing to make the sacrifice, you can make it.”

16. Is that what was required in your success in building Telebackup?

“When I started Telebackup, I worked for 18 months for nothing while everybody else was getting paid. It was tough on my wife (Betty) and I. But I believed in what we were doing and you sacrifice for the end goal. As an entrepreneur, you always have to have your end goal clearly in sight. The critical thing you have to understand is that it’s never a straight line from start to the end goal. It’s always a zigzag as you zigzag around hurdles. That business plan is going to change every three months as your market environment changes.”

17. What was your first business venture?

“As a little kid, I was rototilling people’s gardens and cutting lawns. But the first real business and the one I enjoyed the most was the rose business in Lethbridge while I was an undergraduate in university. At that time, it was an alien concept. No one in Alberta was doing it. I got the idea out of a 500-business-ideas kind of book out of the U.S. I basically bought wholesale flowers and had young ladies and gentlemen sell them at night in restaurants and nightclubs. I had $400 so I bought an old fridge and some old baskets. The next thing you know I was selling 500 roses a week for $2.50-$3 a rose. It was called Overnight Success Rose & Flower Company. Pretty cheesy, eh?”

18. What trait has had the most to do with your success?

“Stubbornness, I guess. And perseverance. At Telebackup, on three occasions, I had to put everything I had into it to bridge finance it to keep it alive until the next round of financing. Do you risk everything you have or walk away? Basically, again, you persevere, you refuse to give up and you wade through it. It’s that broken path where you’re walking through glass and minefields all the way to end goal. Those who persevere through bad times are successful.”

19. How important is money to you?

“I’ve always said that, given the choice between wealth and poverty, I’ll take the wealth anytime. I mean, I’m not stupid. That being said, the funny thing is that once you are wealthy, you do realize that it is the same things that made you happy before you had money that make you happy after you have money. It’s your friends and family. But I have lost very good longtime friends over the fact that they couldn’t live with the fact I’d become successful and they hadn’t. Money does change the way the world looks at you. I don’t think we’ve changed whatsoever. I grew up as a poor farm kid on a southern Alberta dirt farm and so did my wife.”

20. What are your goals beyond business?

“I want to get my golf game in shape, which has been difficult because of my bad back. For many years, I was very serious about physical fitness, body building and weight training, but I’ve let that slide. What I’ve learned from the past 10 years of hard-core, high-pressure business is that you’ve got to look after your health. Stress does take a serious toll. I need to inject some balance in my life and start enjoying life a little more. I’m 38 but, I’ll tell you, I don’t feel 38. I feel a lot older. I wake up thinking about business and I go home thinking about business until I go to sleep, if I go to sleep. I think I’m a little obsessive about business. Still, if I tried to retire for a week, I’d be bored out of my skull.”

IN PROFILE: Byron Osing

* Born/raised/age: Milk River, AB; 38.

* Title: CEO, Launchworks Inc.; chairman, 180 Connect (Launchworks subsidiary).

* Family: Wife Betty.

* Education: Bachelor of arts, psychology, University of Lethbridge; master of business administration, doctorate (PhD) in marketing, University of Calgary.

* Career: Prior to co-founding Launchworks in 1999, Osing co-founded Telebackup Systems and spent four years as president and CEO of the software technology company that was acquired by Veritas Software in 1999 in a deal valued at $202 million.

* Boyhood Idol: Goalie Jacques Plante.

* Favourites: CEO – Bill Gates; Celebrity – Tom Cruise; Movie – Slapshot; Music – hard rock; Pastimes – cocooning at Springbank home, golf; Meal – prime rib; Vacation spot – Thailand. Book – Atlas Shrugged.

THE COMPANY: Launchworks Inc.

* Brass: Byron Osing, chairman/CEO; Keith Steeves, chief financial officer.

* Profile: Launchworks, founded in 1999, is a private company that balances early-stage venture investing, the startup launching of controlled subsidiaries and the outright acquisition of external organizations under its corporate umbrella. The company's focus is on the enterprise software and information technology communications infrastructure sectors. It has helped launch Calgary companies such as Control F-1 and Guest Tek Interactive Entertainment.

* News: Launchworks’ subsidiary, 180 Connect, recently acquired cable installation contractor Viasource Communications for $60 million US.

* Website: www.launchworks.com

* Address: 1902K 11th St. S.E., Calgary, AB T2G 3G2.

* Phone/Fax: 403-269-1119, 269-1141.