The first thing you notice about Mike Rae is that he isn’t ringing or beeping. This is particularly noteworthy because Rae is a dot-com executive.

On this day, the president of Lexicom Internet Services doesn’t have a single fancy gadget strapped to his belt. No cellphone. No Blackberry. No nothing. And he seems quite content without being held hostage by a tech gizmo.

Rae’s business may be high tech, but his lifestyle is low tech.

The affable Rae, whose wife Aileen Rae is among the company’s 10 employees, takes great pride in communicating the old-fashioned way – and just to prove it, real, live people answer the phone at Lexicom. At home, Rae is anything but a prisoner of his TV. He says he only watches the news - in ’60s style, capturing a fuzzy signal with a pair of rabbit ears.

Oh, and there’s one more fascinating thing you ought to know about Mike Rae. His Internet company actually makes money. 1. What do you remember about how Lexicom came into the world?

“My wife and I were on vacation in the Bahamas, and I was reading the Wall Street Journal on the beach. There was an article that talked about how successful catalogue sales were. So we spent a fair amount of time and money researching this. In 1992, I had a friend who had an Internet connection, and he got me a connection. It seemed to us a tremendous way to move this catalogue idea forward, but at that time the technology wasn’t there. So I decided to build an Internet company to build a catalogue sales business. The Internet kind of took over.”

Dave Olecko, Business Edge
Lexicom Internet Services CEO Mike Rae likes to live the simple life – no cellphones, personal digital assistants or even cable TV. Yet this lean, debt-free Calgary-based company is carving out a niche in customer service by answering their own phones and making their business connections personal.

2. What did you see in the Internet’s potential at that time?

“I saw it as an awesome tool, but I wasn’t sure how it would work. Still, I felt that over time it would change the way people used computers and did business. I could see that if you could get it out of the military and the public’s hands, there was an awesome opportunity. It took me a couple of years to convince people around me to either quit their jobs and come work for me or give me money to make it work for them. For two years, we talked this idea up and in ’94 we got it off the ground.”

3. Did some people think you were crazy?

“No, they didn’t say I was crazy. But my future partner (the late Eugene Staker) said: ‘Who the hell’s going to pay to go on the Internet? There’s nothing there but a bunch of text files.’ He said: ‘There’s no sports scores or anything like that so who’s going to pay for the Internet when they already pay enough for their phone lines?’ So, in that sense, maybe I was crazy. Eugene was our technical fella who gave up a secure job and some nice stock options to take a chance on an undercapitalized and sort of amateur management type of company. He was a very skilled and adept guy.”

4. How did Lexicom survive the bursting of the tech bubble?

“We’ve never taken on a lot of debt and we don’t lease equipment. Everything is paid for.We started the company with under $100,000. We never bought into the idea that because you had an idea, a market would appear. For many years, every time I had my eyes examined my optometrist would ask me when we were going to take the company public. But we’ve run it like a regular business, and it has paid off. We never assumed that we’d have a 50-per-cent growth rate and invested on that basis. We’ve missed opportunities, but today we’re sitting debt-free and profitable. We’ve paid attention to cost saving. It’s just good management, I think. I’m blowing my horn in many ways, but I think that’s what it comes down to. It also helped that I have been in other businesses that have failed, so I know that there’s an up and there’s a down.”

5. How have you managed to stay profitable in the last couple of years while many other Internet companies have struggled mightily?

“We have very loyal clients. We emphasize service. We don’t have voice mail . . .”

Dave Olecko, Business Edge
Lexicom CEO Mike Rae still believes in answering phones the old-fashioned way at his Internet service business.

6. You don’t have voicemail?

“No, we don’t have voicemail. We have this concept where somebody in the office picks up the phone. The difference between answering the phone and a company like Telus (that puts people on hold) is that it makes us money every day. That’s how we’ve survived. We couldn’t say that we have technology that Telus or Shaw don’t have, so we saw that we could get an edge by giving them customer service. We don’t put people on hold for 47 minutes. We continue to get customers who are looking for that level of (personal) service. Larger companies have gone to call centres in Bangalore, or wherever they keep them.”

7. Do you have voicemail at home?

“I have no voicemail, no cable TV and I don’t get a newspaper. I’m kind of a Luddite (Luddites were 17th- century English workmen who destroyed labour-saving machinery in protest). I don’t see a lot of value in what comes over the television. I have two high-speed DSL wireless connections in my home and my kids rent movies but, in terms of television, I have rabbit ears on my TV so I can get the news.”

8. Do you think the fact that you’re not as caught up in technology as many people is advantageous to your business?

“Yeah, I think it’s important that we keep the technobabble out of our presentations to our clients. There tends to be a lot more communication in our relationship with our clients because our technical people are discouraged from using their techno lingo. If I don’t understand it, it’s not clear enough. I’m not a technical person. I understand very well what my business is, and I understand how it works in general terms, but I’m not really interested in learning the details. We really try to keep it simple.”

9. What message do you try to convey to potential customers at speaking engagements?

“The message I try to convey to people is that it’s really quite simple what we do, and that there doesn’t need to be a layer of complexity over these things, and that they’re the experts in what they do. It’s not for us to come in and tell them that they have to adjust their business practice or model to fit the Internet. It’s the other way around. It’s not a new model.”

10. What in your mind is the most critical issue facing the Internet?

“I think it’s whether or not we see the large firms like the Teluses and the Shaws completely dominate the business, at which point the service element disappears, I think. And there’s also the question of whether there’s a new technology around the corner that none of us sees right now. Who would have predicted that Canada Post and the fax machine would be impacted so much by e-mail?”

11. Do you see your company eventually being swallowed by a larger company?

“I’m not sure. But we’ve had offers. Mostly in stock! (laughing) And we have a stock response: Put some cash on the table and we could chat. Whether a large company would be interested in the model we’ve built, I’m not sure.

“Someone might want to bring in a superlative customer service unit to handle their high-end contracts, because that’s what we do, really.”

12. What is your projected revenue for 2003?

“Realistically, it’ll be about $1.2 million. That’s our best revenue year. We’ve had continuous growth since 1997 and we’ve been profitable every year since about 1998. We’re expanding internationally. We just signed a memorandum agreement with a group in London (International Policy Network in the U.K.) to manage their family of websites, which is about 50 sites.”

13. Your website is very humorous and you have a foosball game in the office. Is that the type of work atmosphere you try to create?

“Sure, it’s important. You don’t want to walk in the office and see a bunch of glum faces. You’ve got to be happy doing what you’re doing, and people here are pretty free to run their own show. What happens with that kind of loose but structured environment is that you tend to get things that rattle out of the bottom that you never expected. You have to have a structure so that your staff knows what’s expected and then give them the freedom to get it done. Nobody’s afraid to tell me in a meeting that I’m wrong, and I often am because I just throw stuff out.”

14. Describe your management style?

“I guess I’m hands-on in that I want to know what people are up to and how they feel about being here, but I’m not the day-to-day manager. My role here is to be on top of things in the sense that the mood is good and the work is getting done. I look for people who can fit in and participate in the give-and-take of the office. Some days, it can be a pretty hard room. They have to relate and collaborate with the other folks because it’s a team effort.”

15. Were you investing in tech stocks during the good times?

“I bought some Netscape stock, but I sold it a long time ago. I didn’t make a 1,500-per-cent profit. But 300 (per cent) was good. It was crazy the way people were thinking then, that their business would increase 40 to 50 per cent per year. A lot of people got sucked into that euphoria and lost a lot of their smarts.”

16. Who did you burn in effigy this year at the company’s annual bonfire in honour of Guy Fawkes Day?

“(Prime Minister) Jean Chretien, Art Eggleton and Lawrence MacAuley. We thought that was a nice triumvirate. Jean Chretien won the poll. We picked Eggleton and MacAuley because anybody who was that blatant about what we perceived as misuse of funds deserves it.”

17. Have you met Bill Gates and, if not, would you want to?

“No, I haven’t. I don’t particularly want to meet him. We’re not Microsoft fans at all. He has done a wonderful job and Microsoft has done wonderful things and we wouldn’t be where we are today without Microsoft’s dominance in the market. But I think now that dominance is damaging. I think without competition Microsoft would do exactly what it pleased, and we’re already seeing that in the subscription models they have for their software where, instead of buying the software, you’re paying so much a year for it or so much a month for it. So you’re forced up the upgrade path. I think a lot of our industry has been forced to move to new software or new equipment on board because of changes to operating systems and programs, so you’re constantly buying new equipment. We run Windows servers on our web servers, but only one or two and only on the specific request of specific clients. We run everything else on the Linux system. It’s much more secure, much less expensive and much more reliable, so he (Gates) has a lot to answer for.”

18. Who’s the business leader you most admire?

“A person like (Nobel Prize-winning) economist Milton Friedman is a hero to me for his views of free- market economics. He can postulate solutions to what we see around us in terms of how you deal with the Third World. His influence on the political thought in the U.S. has been profound, and I think it has percolated into Canada a little bit.” (Rae will meet Friedman soon for the first time at the Pacific Research Conference in San Francisco.)

19. What’s your most prized material possession?

“I don’t know if I have any, to tell you the truth. There’s nothing I can think of that if I turned around and it was gone, I’d be heartbroken. I drive a 12-year-old car – a Chevy Lumina, with an AM-FM radio. I don’t need a new car. This one starts every morning, and automobiles are a depreciating asset. No, there are no Beemers (BMWs) in our garage.”

20. What’s your greatest escape from work?

“I build stuff. I guess I’m an architect at heart. I just finished single-handedly renovating our house with a new furnace, new water heater, new windows and new doors. We have 40 acres outside of (Calgary) where we have an old log cabin and no phone. When we go there on weekends, nobody can reach us. We’re in a valley so no cellphones can work. We don’t do anything out there. Just chop wood.”


IN PROFILE: Mike Rae
* Born/raised/age: Pokiok, New Brunswick; Pokiok, Calgary; 48.
* Title: President/part owner, Lexicom Internet Services.
* Family: Wife Aileen, two children.
* Education: Architectural Association (London, U.K.), MA, architectural design.
* Career: Rae founded Lexicom in 1994 and has operated the company since then. His entrepreneurial career has also spanned other industries such as land development and architecture.
* Moonlighting: Rae is a member of the host committee for the upcoming Pacific Research Institute’s 10th anniversary celebrations in San Francisco, featuring Nobel Prize-winning economist Milton Friedman. He is also a member of the board of the Calgary Contemporary Arts Society.
* Passions: Art, ranching, renovations.

IN PROFILE: Lexicon Information Services
* Profile: Lexicom is a privately held web-hosting and development company, serving customers in North America and the U.K. with Internet solutions such as e-mail, web design, e-commerce, database development, search engine replacement, streaming media and technical support.
* Projected 2003 Revenue: $1.2 million.
* Web site: www.lexi.net
* Fun site: www.funanduseless.com
* Home office: #200, 305 10th Ave. S.E., Calgary, T2G OW2.
* Phone/Fax: 403-262-6610, 234-0119. Toll free: 877-426-6277.