Strategy

Live & Learn: Savvas Chamberlain

The founder, chair and former CEO of Dalsa Corp. on growth, the undervaluing of R&D and why he's not ethnic.

Born March 21, 1941, in Nicosia, Cyprus • Founder, chairman and former CEO of Dalsa Corp.

Most of my character was developed in England, working through university. I know what it means to be cold, and not have enough to eat.

I am not ethnic. I was born in Cyprus of Greek parents, and I am proud of my heritage, but I don’t wear it on my sleeve. I am proud to be Canadian.

I’m still interested in Greek literature, classical music, theatre. The themes in opera highlight the good and the bad of humanity.

I feel I was cheated during my teenage years, because it was during the uprisings to gain independence from Britain. Most of the time, the schools were closed. Life was not normal. My parents were from the upper middle-class; we could have had a fantastic life, but they twice lost their properties.

In Cyprus, I was always interested in radios, how they worked. And without realizing it, I was interested in physics and mathematics.

Research is not any different than solving a Sudoku puzzle, except it takes longer and needs more resources. It is nothing more than identifying a problem and trying to solve it. The last research paper I published was in 1997. It was tough to let it go.

When I started Dalsa, I didn’t know much about business, but I knew conservation of money. I had a small piece of paper in my shirt pocket, and I kept track of the money coming in, and the money going out. Later on, I was told that paper was cash flow.

Coming from a physics background, I thought finance was very precise. At Harvard, I learned there is a lot of gray area. What you don’t know, others don’t know, so don’t feel bad about it. I got confidence in interpreting financial statements. It’s not rocket science.

When the company was private, I used a complex formula. I had to limit growth to less than 30% a year, otherwise I would very quickly go bankrupt, or borrow so much money that somebody else would own the company.

You have to be patient integrating acquisitions, take a year or two. You are dealing with human beings. In the end, you want them playing the score of the same symphony.

Going public was a bit painful for me. When we were building the company, we could not afford big salaries, so we gave stock. But when we started making a lot of profit, some guys wanted liquidity. I agreed to go along with a public offering to eliminate this friction. I knew it wasn’t right for the company. It would have been better to wait until revenue was much higher.

I try to make a profit at our own expense, not at the expense of the customer, or somebody else. In other words, I provide a product that adds value. If I add value, I get part of my share, but I leave part of it for the customer to add value, too, so he benefits from my product. The formula is very simple, but it works.

It’s unfortunate the company sells 95% of its products to Europe, the United States and Asia. We don’t have a lot of customers here, but our capitalization depends on Canada. It’s a very big disconnect. Once we take it to $500 million in revenue, we’ll be able to list in other countries, like the United States, and bring our valuation in line.

The Canadian investment markets do not appreciate R&D. Research analysts don’t really value the staying power of a company. Their objectives are completely different.

We don’t have access to reasonably priced capital. Our challenge now is to grow using internal resources. We finance Digital Cinema ourselves.

Digital Cinema isn’t even a bet, it’s just a matter of time. Like any new technology, it takes time for it to be adopted. It will reach the tipping point very soon, and then we’ll get onto the hockey stick in terms of revenue traction.

I ran Dalsa like I play chess. In chess, you show your position all the time, your strengths and your weakness are right there on the board. However, your strategy of moving forward is kept to yourself. When I negotiate, I show my position. The other side is often trying not to show their position, and that is poker. The poker player will not believe what you tell him. I strongly believe the chess player wins relative to the poker player.

In 10 years, I would like this company to look like the old Hewlett-Packard, a company with a high degree of ethical behaviour, respect for employees, respect for customers, and, at the same time, making a profit.