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August 10, 2004 

Tech Elect

 Q&A: Origin Ventures Founder Steven Miller on the Canadian Way 8/10/2004
The mission of Going Global is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.

CHICAGO Ė Steven N. Miller is a principal and co-founder of Chicago-based Origin Ventures. Prior to co-founding Origin, Miller spent 10 years at Quill Corp., which is a direct marketer of office products that was started by his family in 1956.

His experience at Quill included running the Canadian distribution center as well as buying and merchandising a $30 million product line. Millerís final two years at Quill were devoted to starting up its e-commerce operation.

He wrote the business plan for the companyís first Web site at Quill.com and managed the team that executed it to $15 million in annual revenue. In 1998, the Miller family sold Quill to Staples for more than $1 billion.

Miller serves on the boards of two companies: VideoHomeTours.com and iNest. He is a founding member of Prairie Angels, which is an action-oriented private group whose goal is to match funding from seed-stage investors with entrepreneurs in the Midwest.

He is also an active board member of the not-for-profit organization i.c. stars, which provides inner-city young adults with technology training and leadership development.

In 1987, he received his bachelorís in business administration and marketing from the University of Illinois at Urbana-Champaign.

Michael Muth: You ran the Canadian distribution center for your Quill family business. How long were you there?
Steven Miller: About 18 months.

MM: Where?
SM: Mississauga, which is just outside of Toronto.

MM: Is there anything different about distribution in Canada compared to the U.S.?
SM: The biggest challenge for us was the length of the country.

Itís thousands of miles coast to coast. The population is strung out along the U.S. border. There are a number of small towns between Toronto and Vancouver, which presents a problem for a company with one national distribution center.

MM: Did you use mirror distribution from the U.S.?
SM: We stocked the Canadian distribution center from the U.S. Though we thought of shipping to western Canada from our distribution center in California, the product line was different and we ended up not doing that.

Our only solution would have been to put up another distribution center. We didnít have the volume to justify it. In actual physical distribution, we used Purolator (which is similar to UPS) and Canpar (another Canadian firm). We also leveraged our relationship with UPS in the U.S.

All of our customer support was in the U.S. They were hooked into the Canadian computer system. These days, it would have been in India, but thatís another subject for another time.

MM: How were your experiences in Canada different from working in the U.S.?
SM: The attitudes of the people were different. It was a very anti-business and worker-friendly climate. The social safety net was very generous. They didnít have an incentive to work hard.

Also, the laws were slanted toward the worker rather than toward the business. Canadians werenít likely to work hard. We employed many immigrants from Africa and South America who did want to work hard.

We used our management philosophy that was successful in the U.S. We incorporated a team concept with goals each week and month so people could help themselves and serve the heck out of the Canadian market.

We emphasized working like a team rather than being management who dictates how you work. We were successful in building that kind of environment. There wasnít a heck of a lot of turnover. We had a stable group of workers who were loyal.

From living in Canada, my opinion of the Canadian work ethic was elevated by the people who worked for Quill. It was my experience as a customer that I found people who werenít interested in working.

MM commentary: The U.S. is the most highly developed and openly competitive market in the world. You usually have to work hard in the U.S. to be successful. While there are other countries whose markets are as competitive, thatís because theyíre newly emerging in the early stages of open capitalism.

In the U.S., our culture revolves around serving the consumer or the customer. In a lot of the rest of the world, their cultures revolve around the worker.

After living in Europe for three years, I learned that consumers accept lower levels of customer service because they donít want to inconvenience or put out the worker. Quill exemplifies the fact that you can overcome these cultural tendencies.

MM: How difficult was it hiring Canadian managers?
SM: I was the only American. We had a group of 30 with one supervisor and one foreman. The first manager was clearly Canadian. I didnít hire him. I was the second manager.

We were thinly staffed. We didnít have 800 people like we did in Chicago. We hired a payroll service. We hired Canadian customs brokers and clearing houses to bring over goods.

MM: Other differences?
SM: We were a direct marketing company. There were certain things that were different. For example, there were some issues with pricing.

If you look at a catalogue with a price in a burst for $9.99, you had to buy 10 in order to get that price. The Canadians had an issue with ďas low asĒ in small print. To accommodate that, we had to modify it to make sure the quantity was clear for you to get that price.

MM commentary: A number of countries also have similar stipulations, which I donít think are out of line.

MM: Other problems?
SM: We had to source some products from local suppliers instead of leveraging our buying power. Even after NAFTA, there were still restrictions on paper goods.

MM commentary: There is still a lumber issue simmering between the U.S. and Canada.

We used separate computer systems with separate software. In hindsight, we probably shouldnít have done that. We used proprietary software in Chicago and the IT department looked at modifying it to change currencies and units of measurement to accommodate the Canadians.

We decided to use off-the-shelf software. The integration of the two systems was a problem. We had separate reporting systems. I came from this robust mainframe system to a manual system, which was a step back in time.

MM commentary: This is a problem that is often even more troublesome when language and formatting issues kick in.

The French language kept us out of Quebec. We would have had to print our catalogue in French. Though we filled orders there, we werenít proactive there.

MM commentary: Pre-packaged goods must be sold in bilingual English and French packaging. ďCustomĒ products need not be dual language.

Join us next Tuesday for part two of this two-part Q&A
where we delve into investing in Canadian companies.

Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at mike@intlalliances.com.
Click here for Muthís full biography.

Previous Columns:
Q&A: CPCP Founder David Baeckelandt on Multilingual Importance, Mentoring (8/3/2004)
Q&A: CPCP Founder David Baeckelandt on Japanese Disclosure, Due Diligence (7/27/2004)
Q&A: Chicago Pacific Capital Founder David Baeckelandt on Overseas Funding (7/20/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on the Art of Partnering (7/13/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on BP, AstraZeneca Wins (7/6/2004)
Q&A: ADVIZOR Solutions CEO Doug Cogswell on Global Software (6/29/2004)
Q&A: CEO Terry Howerton on Why Chicago, Ukraine Made FastRoot (6/22/2004)
Q&A: FastRoot CEO Terry Howerton on Blended Chicago Approach (6/15/2004)

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