Last week, Nymi made its second major organizational change of the year, naming former Chief Business Officer at Yubico, John Haggard, its new CEO, with founder Karl Martin moving to CTO. The change comes at a busy time for the company, as it its completing wearable payment processing trials and announcing new partnerships with Entertech for enterprise identity platform product offerings.
BetaKit sat down with Martin for an extended interview on the thought process and logistics behind the decision, what the past year has meant for Nymi, and what comes next.
The first thing to get out of the way is asking whether this was a board decision, your decision, or a combination.
This is primarily my decision with the board’s support. The real thing for me is that as a company we’ve always swung for the fences, and we’ve always had this sort of humble approach to saying, ‘what is it going to take to make this as big as possible’?
And so, I realized coming into this fall, we’re at an inflection point where we’re really going to be doing new things that I’ve never done before, which is really around scaling this product in the market. We’ve been testing the technology in pilot scenarios, we know what works, we know what people want, but scaling this to make it huge is extremely complicated. So it was really clear to me that we could use some extra DNA here.
Really what it came down to was realizing that it wasn’t so much changing what we were doing, or even me changing my role, it’s that we’re going to be doing new things and we need someone experienced in doing those things: expanding the product footprint in the market, and scaling the business.
Then let’s get into your role. Because I’m wondering what your focus will be on going forward.
It’s really going to be product-focused. And I’ve always been a product-focused CEO, so that’s largely going to stay the same. While John, our new CEO, is actually very technical, and has a long history of products in this space, his real task is on the market side. So this frees me to really be hyper-focused on the product vision and strategy, and the execution on that front.
To the company internally it’s interesting, because it’s not actually a significant change as that’s the way I’ve always been as a CEO – it’s just the new things that we’re doing that John is coming in to do. So externally it might look a little different because you have this industry veteran that’s sort of leading this charge, but internally everyone knows that I’m a very technical, product-focused individual. So I can really double-down on that.
Can we follow up on that? Because this is your second significant re-org in the past six months, and it’s one where when it comes down now to making the final call on something, it’s no longer going to be in your purview. I’m wondering how that factored into your decision, because you’re in a position now where you’ve put someone in place who essentially outranks you in the company you helped found.
Absolutely, and let’s be clear: there’s always risk associated with these things. You go in with the best of intentions and it may turn out different from what you think. But doing a startup is inherently risky. Choosing to make the easy moves is, in my mind, the riskier move. Because you can go status quo and stay as you are, but it’s so clear that we’re going into a new phase of the business, and it’s going to look very different than it did in the last four years.
The way that I really looked at it is that ‘we need some new DNA in here’ without really looking at what that title is, but thinking of scaling the business and pushing this into market. And it became really clear that for the right person to come in here, the title would be CEO. But there’s nobody at the executive table that dominates – everyone very much everyone comes to the table and we find a consensus.
John was hired with the knowledge that that’s the way he likes to operate, and will fit in very nicely. The expertise is always great on paper, but operationally, that fit has to be there, and he fits in perfectly with the way we’ve been doing things.
I think it’s been reported that Haggard is based in Seattle, and there’s no plans for him to move to Toronto. How do you plan to manage that?
So John in the past has managed distributed teams. This is a bit new for us, but where he came from, Yubico, he was in Seattle but the headquarters was in Stockholm, and they also had an office in the Valley. And he’s done it in the past, as well, so it’s pretty much par for the course for him.
But it is an opportunity, because we have partners in Seattle and in the Valley. So having a presence there, where over time that presence can expand, is a plus for the company.
Are there opportunities with Yubico there?
There’s absolutely opportunity there. As part of this move, we’re kind of all aligned to the fact that Yubico and us are not direct competitors. We have different core competencies. As a business, they’re certainly ahead of us in the market, so there’s definitely going to be opportunities to partner down the road.
In our last talk, with your previous changes, you called it a “logical extension” of your pivot to enterprise, and I’m wondering if that statement applies here. As a founder, I’m also wondering how you felt making the decision to step aside. What’s the mental math for that?
“It is tough as a founder, because it is your baby. But do you want to squeeze your baby and not let it go out, or do you want to let it grow up and do great things?”
– Karl Martin
To your first part, if you look at John’s history around enterprise identity – when we made the changes earlier this year around that shift – this is clearly the next step in that, because he’s got that super deep experience. So we made that shift and it’s been bearing fruit.
The other part is that John has left Yubico at a real high point, so he certainly wouldn’t leave if we weren’t doing well on this front, if we realized it was a mistake to go enterprise or something. He’s been noticing the waves we’ve been making in enterprise, so it made a lot of sense.
In terms of your follow up question, I think naturally, as I said, there’s risk with everything and every time you make a significant change you’re trying to map out all of those risks. And I think the biggest one, obviously, is if the fit just isn’t right. I’ve always put my number one job as team, finding the right people – I have a direct relationship with everybody in the company.
I’ve spent a ton of time with John, and my commitment to the company was that I was looking for some new talent, but I wasn’t going to make that change unless I felt it was really the one. So I spent a ton of time with John, and really it came down to, all that time gave me comfort that it was the right thing.
It is tough as a founder, because it is your baby. But do you want to squeeze your baby and not let it go out, or do you want to let it grow up and do great things?
I’ll be honest, I met with a lot of people, and they were always good on one parameter or the other, but never really fit on others. And this was one where it really fit on all parameters: the expertise, the way he operates, the core values. There’s always anxiety when you make a major change at your company, but I made sure I had that comfort level before moving forward.
You mentioned talking to a lot of people, so how long had this been in the works?
Actively, it’s been about 4 or 5 months. But in thinking about it, it’s been since about the spring.
Do you know Sean Ramsay? Because Bubl just recently made a similar decision, and I’m wondering if there’s a hardware component to this, where people that build the tech are trying to find other skill sets to build a company around it.
I do know about Sean Ramsay. I should say, I don’t know all the details of their story, so I don’t want to speculate too much, but I can give you the comparison of another hardware company, which is Oculus. Palmer Luckey was the founder who then moved to CTO, and I do think there is a trend here, in that with all of our companies we’re dealing with quite complex technologies. And there’s just a matter of bandwidth here, which is that, as CEO, I wasn’t having as much time as I really felt was needed to focus on the technology.
Let’s be clear: if you’re making an app, versus something we’re making, the focus on the technology is pretty different.
Related to that, you’ve recently been performing biometrically-secured payment trials. Are things still on track or does this move affect that?
That’s actually been really successful. The initial pilot was with MasterCard and TD Bank, and RBC is scheduled for just before the end of the year. The results from that is actually one of the pieces of the puzzle for why John was willing to get onboard, because he saw those proof points.
So we’re on track with those, and we will have some new announcements in that area, which will be coming by the end of the month.
So it has been about a year since you’ve raised your last series of funding. In that year, you’ve gone through a shift in focus to enterprise, doubling down on payments, and made some significant executive changes. How does the board and your investors feel about that, and is this happening at a time where you’re getting your ducks in a row for the next round?
I’ll do that in reverse, and say you’re correct in that we are kind of prepping for the next round. Knowing that I was looking to make a change like this, if you get the right person – because I was only willing to do this if you get the right person – it only helps your fundraising efforts. So I wanted to do that prior to officially kicking off the fundraising.
To the previous part of your question, the board has been very supportive, and I think there’s a recognition on the board that when you’re doing something so new as what we’re doing – this is based upon university research around biometrics – it’s a long road. And when you add hardware to the mix, there’s a lot of learning that goes on. So the board has been very supportive in letting us go through that learning curve.
I always like to compare us to Oculus. They’re doing really foundational technology around VR, and everybody recognizes that it’s really valuable, so they’re able to keep the company going. And they’ve exited to Facebook but they haven’t even released their first product. So when you’re on this long road you have to think of the incremental steps that demonstrate you’re building the value and making it work. I view us the same way; it’s recognizing you’re building foundational technology, and it’s a long road, but if we can demonstrate the use cases and the value, then we’re on track, and the board has been very supportive of that.
Would it be easier for you guys to be acquired then, and have that safety net to focus on getting the product to market under the auspice of another company?
I would say that the challenge with that is, as soon you do that, you’re cutting your path off. You’re saying, ‘we’re deciding this is where we’re going to focus’. Because as soon as you end up being acquired in a bigger company, you immediately have a market focus – it tends not to have that exploratory nature that a startup has. So you’re deciding, ‘this is our exit point’.
There’s no question that it’s great to have the resources that a larger company has, but it would also immediately come with an obligation towards profit. So as long as you can demonstrate value and you can keep funding the business, because you’re building out valuable technology, I think it’s nice to be a startup, because it gives you this optionality of how big you can make it.