Jody Schnarr believes in risk-taking
and cultural alignment
By Jon Rohr
Jody Schnarr has this thing about his basement. “I don’t organize my basement, my basement is my lab”, he says, with an obvious reference to “Transformers”. “The point is that I know in my mind where everything is, and if you saw it, you just might be scarred.”

Schnarr is CEO of Fibernetics, a company located in Cambridge, Kitchener and Waterloo. Their business serves networks in most parts of Canada and as of late 2017, now also in the US. That’s when they executed their first US customer deployment platform.

“We’ve done some remote office work for our Canadian customers, at their remote countries locations, but we’re now moving our products out, to deploy down in the US.” Which, to Schnarr is “exciting growth.”

Schnarr was on the
200th edition cover when
Exchange did a story
on him and partners
John Stix and Mike Brown.

Schnarr presents as an extremely unique entrepreneur. This well-read technology junkie, who started by selling two-way telephone links between Stratford and Kitchener, is now, some 25 years later an internet provider, data provider, and backbone provider. While most of their customers are Canadian, they also have employees in the Dominican Republic and just opened a new office in Florida.

Schnarr admits, “I like chaos. I used to like it because it was a default mode, it’s the easiest thing to do … [but] to be honest … to be lazy and leave a mess… it’s harder to organize.”

Schnarr was on the 200th edition cover when Exchange did a story on him and partners John Stix and Mike Brown. The three founding partners who, in the mid-1990’s, created a company. They then sold that company in 1999, kept working for the new owners, and eventually left in 2003, to start a new company called Fibernetics.

Perhaps ironically, the three subsequently bought their original company back in 2005. Currently, they turn away business investment opportunities; instead, says Schnarr, they invest in new ideas.

Under Schnarr’s leadership, Fibernetics is a extremely diverse company. On a technological scale, and quickley moving to an Internet of Things scale. They continue to show exciting growth with opportunity projections, they’re increasing revenue at a wondrous rate, and their risk-taking involves investing in the angel ideation stage of a yet-to-be commercialized venture. That could be categorized as high risk.

But that doesn’t phase Schnarr. He sees the opportunities, not just the risks. With the Internet of Things, the Fourth Industrial Revolution, and the real time pursuit of data in motion, all in inter-related, full swing, having an affordable, secure, network to operate on could be a vital feature.

Or to express the opportunity in another way: “IoT services all require a backbone,” says Schnarr.
Schnarr, who is 40-something, has always been introspective. At 40, he started looking into neuroscience, listening to podcasts. “I keep educated and I learn.”

“One of the things I do is embrace that chaos, because it’s exercise. If I just off-load that work to someone else, then I am not working. My brain needs to stay engaged and actively working.”
It’s one of the realities of the digital world: always on, always operating and always at your disposal. It’s a business where, to succeed, you have to be playing the game, while knowing the game can change at any time.

“We addressed our culture
by giving it a name,
observing it, discussing it,
and then acting on it
to improve it.”

“Our hot point, our exact point of passion, is finding an opportunity in the market that needs to be addressed, where something needs to be created to fill a hole, where something needs to be bettered, where there needs to be something that makes or saves a company or person money, makes their life easier and makes what they want to accomplish happen faster,” explains Schnarr. “I like to search the idea database that we built from having discussions with creative minds who state what needs to be built.”

Fibernetics has 100 projects on the table right now; projects “that we believe should be built”.
“The top ones are very exciting and the bottom ones are a little bit shitty, but the bottom ones get knocked off as new ideas form.” These ideas all have relative time lines. An idea that is great today, if not executed, “it’s gone, and that’s Ok” says Schnarr. “It’s about the exercise of creating the idea. And then uniquely matching it with the DNA of an executer.”

As an investor, Schnarr wants to pair those two elements up – the idea and the investor. He believes that if done correctly, it will “create a viable seed”.

“If I can do something, to give you an unfair advantage to me, and I ensure that you have some sort of early runway to success, then it’s basically up to you to take it from there. That is, I believe, pre-incubator. I would be generally happy if we got a idea to the point before the incubator.”
There are a lot of resources out there that Schnarr expects to match, duplicate or make better. “I believe, as a small group, we could battle anybody with our ideas,” he contends.

And he’s craftily whimsical: “If a person and I come up with a business model, and it just makes chemical sense, and I ended up starting a business with that person, with no intention originally going in… so, it just happened, sometimes the conversation goes that way, we’ve launched within a lunch. With neither of us meaning to do that.”

It seems to be working for him. Schnarr reported to Exchange that his company has been able to grow year over year. “So the company has always grown by 30% to 50% per year. That’s revenue growth. We did $50,000 in year one, then we did $1.2 million, then $2.4, $4.8, $9.6, $15, $18, the curve is intense, and then we hit $25 million.”

It hasn’t been a consistent curve. He says, “In 2008, we were in the $10 million range, but at that range I had to retool”. Schnarr confesses he lost his connection to the customer, the connections to a lot of the business. He says he “started to lose tactile touch on everything, and I had it up to that point.” It was bothering him.

“Something that was unique,” he muses, “unique to us – I started to lose connection to my staff, employees, and they started to lose connection with each other, because there are so many of them.” Schnarr believes that, “It’s a function of growing fast, it’s a function not been externally funded. Our capital table for our company is the same as the day we’ve incorporated. We didn’t raise external money to build the company, we did it with, guts, determination and organically.”

They “hit a small taper” on their growth twice, “for just a portion of the year 2008” he’s says, “and then we were able to grow again”. That phenomenon happened again, when they hit $25 million in sales. That was couple of years ago “and the big thing that changed then was culture.”

Fibernetics has grown organically, and with good margins, but growth in the tech businesses service sector is contingent “on your cash flow, and your ability to continue to pay to grow. If you outpace that, it causes stress, in the cash flow,” says Schnarr.

He states that with lower revenues, “if I’m wrong by 2-5%, I can reach outside my company and pull a few bucks in”. But he adds, “if I’m wrong by 5-10% at 25 million, I can’t reach in to a few pockets and cover that gap.” And that’s precisely what happened.

Schnarr highlights the fact that, “that causes stress on an organization”. At first he was dismissive: “We had a defined culture when we started. It created itself based on our own beliefs and understandings, and how we operate and how we live.” A culture is set mostly by the people who start the company, “but there started to be so many people that we didn’t look at the thing called culture, we didn’t know it was a thing.”

After taking a sabbatical for a number of months, his partner John Stix, told Schnarr, “I want to take on culture, I want to learn about it and I want to make a culture change”.

Schnarr recalls that, “I said, OK, carte blanche, no problem. So we had our 12% growth, into June. We addressed our culture by giving it a name, observing it, discussing it, and then acting on it to improve it.”

It sounds a little guru-like, as Schnarr tells Exchange that the methods that were most impactful, involved “looking at it, naming it and recognizing it; as soon as you do that, things start to change.” For the rest of that year, from June to December, the company grew by 50%. And it grew again by 50% the next year, which was 2014, and then again in 2015.

Schnarr attributes the growth to this culture alignment. “It’s very powerful,” he says, commending Stix’s work on culture. “It’s simple and it’s powerful. It was difficult for me to get my head around an intangible thing, something that you can’t necessarily quantify clearly. I couldn’t, and it became very hot.”

He now personally uses meditation to keep things aligned. He does it every morning. He admits it seems funny, because it was something he bought into only reluctantly, but he later discovered it to be a huge benefit. “I would say it’s changed my perspective about everything.”

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ISSN 0824-45
Copyright, 2017.