|  Nymity
was selected as a finalist for the The Star's
2007 Build a Business Challenge. Nymity
is one of 9 entrepreneurs selected from hundreds
of submissions to take part in this interactive
challenge.
For four months, starting Monday, Jan. 8, The
Star will follow Nymity as its matched with experts
including Venture
West, Lifecapture
Interactive,
Baker
and McKenzie and Joseph L. Rotman School of
Management, University of Toronto.
Issue 4- "A
Little Southern Exposure"
Full
article
Mar 12, 2007 04:30 AM
Judy Steed
If you're interested in expanding your business
into the U.S., this story's for you.
Terry McQuay, 45, the founder and president of
Nymity Inc., one of our chosen nine entrepreneurs,
is getting ready for the next big step –
south of the border.
Nymity, as in "anonymity," was founded
by McQuay in 2002. The firm's Web-based management-support
application, PrivaWorks, is available on a subscription
basis to ensure clients comply with new privacy
laws. It's a challenging space that incorporates
risk management – and has enormous potential,
since all companies in Canada are legally required
to have privacy officers to guard the confidentiality
of employees and customers.
Well on his way to conquering the Canadian market
– Nymity's website boasts many of the country's
blue chip customers, big banks and major corporations,
including the Toronto Star – McQuay is looking
ahead.
In search of expert guidance, he was eager to
talk to one of Canada's top technology lawyers,
Theo Ling, a partner at the international law
firm Baker & McKenzie LLP, which specializes
in helping companies coming into Canada to do
business – and companies going into the
U.S. and around the world.
McQuay arrived at Ling's downtown Toronto office
recently with a list of carefully prepared questions.
Ling, 41, graduated from Queen's University law
school in 1992. His focus is primarily on "business
law matters and technology-law-related issues,"
he said. His travels around the world reflect
the scope of his work. He spends a lot of time
where tech companies tend to be headquartered,
which means he's a frequent visitor to California's
Silicon Valley, Helsinki (Finnish home of Nokia),
Europe and Asia, as well as Washington, D.C.,
for U.S. regulatory issues.
"My job is to provide information about the
legal risks you may face," he told McQuay.
"Ultimately a lot of the decisions are business
decisions, for the client to decide.
"You're at the stage of weighing the risks
and benefits of your next steps, figuring out
what to defer now, what actions to take immediately.
I can tell you what you should be doing, but sometimes
clients don't follow my advice – and do
okay."
Ling understands what Nymity does: provide online
solutions to help organizations manage risks that
can lead to data breaches, privacy complaints
and issues related to compliance with privacy
laws.
"This is the Internet age," Ling said.
"Terry is not selling a physical thing, he's
selling knowledge, and he's selling it online
or by phone."
McQuay's "it" is intellectual property,
which Ling defines as "a creative work. It
could be a book, it could be software code. It's
protected by copyright."
Privacy is a huge issue, Ling said, "especially
because of how technology enables us to collect
massive amounts of data and move it around."
As well, with many companies outsourcing their
technology functions, privacy concerns are heightened.
In terms of crossing borders, Ling said, companies
have to understand the territory they're expanding
into.
"Companies coming into Canada can hire an
agent or sales rep to distribute their product,
and if it doesn't work out, they can move on,"
he said. "In Latin America, it can be very
hard to get rid of an agent.
"Corruption is a huge issue in many countries.
In France, it's almost as if the agent has established
a right to part of your business, and it could
be very expensive to get rid of them.
"In developing countries and emerging economies,
laws may not yet be well established."
Where laws exist, complications arise. There was
the famous patent infringement case brought by
a U.S. firm, NTP Inc., against Waterloo-based
Research in Motion, maker of the BlackBerry. Last
March, RIM paid $612.5 million (U.S.) to settle
the long-running suit, despite the fact that,
as the Star's Tyler Hamilton reported, "the
U.S. patent office had already declared NTP's
patents invalid." Hamilton noted that NTP
"has been accused of being `a patent troll,'
because it doesn't create or sell any products."
Said Ling: "There are inventors and professors,
businesses and investors you've never heard of,
who develop things and file patents on things
that may not be part of any commercialized product
– in the hope that someday, a company will
come along and develop a product, enabling an
obscure inventor to claim infringement."
As you'll see from his response to McQuay's questions
(above story), his bottom line is clear: Be careful,
do your homework, and take it step by step.
Check out the Business Challenge blog at thestar.com/challenge,
and send us your comments.
Consulting a legal expert - Baker and McKenzie
LLP
Q: How do I incorporate in the U.S.?
A: Keep your options open. Ask yourself: what
are my objectives? Your corporate presence as
established in Canada may be fine for doing business
in the U.S. Lots of U.S. companies don't have
Canadian subsidiaries. Maybe you just need personnel
in the U.S., reporting to you in Toronto.
Q: The sales model in the U.S. will be phone-based.
Can I run the business in the U.S. out of a telemarketing
centre in Toronto?
A: Yes. If your presence in the U.S. is specific
client visits (by Canadian employees) and conferences,
you probably won't attract immigration issues.
Under NAFTA, can your Canadian employees go down
and conduct business in the U.S.? Yes. You have
to find the right category under NAFTA. Let's
talk about "the illusion of a presence"
in the U.S. If there's no actual business function
served in the U.S., you don't have to file U.S.
tax returns. Do you ever possibly want to be subject
to U.S. tax law? The answer is probably no.
Q: Is it a good idea to hire American employees
for the launch in the U.S.?
A: If you hired Americans, you'd have to think
about all the things that go along with having
U.S. employees. You'd have to register in the
U.S., fill out forms – it creates new problems.
Instead, you can hire an independent U.S. contractor
who is not considered an employee and enter in
an agreement for provision of services
Q: Nymity has developed a methodology for risk
management and privacy compliance that no one
else has. Can I protect it?
A: There are business process patents on physical
processes, such as amazon.com's "one click"
online shopping – which is so pervasive,
most online shopping websites use it – but
it's harder to patent methodologies. There's a
concern that ultimately you may restrict human
and business interaction. In the amazon.com case,
even though they received a patent, the U.S. Patent
Office ordered a review of the "one-click"
method last May.
Q: How do I get copyright protection?
A: What you've created is the equivalent of someone
writing a book. You've gathered and assembled
knowledge. It is protected by copyright. Others
can't reproduce it without your permission. Copyright
is a common law right. You don't have to register
it.
Q: Do I need special customer contracts?
A: You can use standard electronic form contracts
to seal the deal online, with terms and conditions
at the bottom. No physical `signing on the dotted
line' is necessary. You can ask, `Do you accept
the terms of this transaction?' The customer clicks
to accept, to consent.
Q: Will I have U.S. corporate taxes to pay?
A: When you start selling online into the U.S.,
as part of the contract you will state where the
transaction is taking place. This is a grey area,
especially when there's no physical product, no
shoe, no TV. The contract needs to reflect what's
in your best interest from a tax perspective.
You probably want to characterize the transaction
as Canadian, taking place in Canada, so you don't
have to remit U.S. taxes. You don't have a physical
presence in the U.S. You don't want to file taxes
in the U.S.
Q: Do I charge GST in the U.S., and when selling
in the U.S., is it a disadvantage to not have
a U.S. base of operations?
A: No, and nowadays, it's hard to figure out,
from websites, where companies are based. No,
you don't have to be U.S. based.
Q: Should I hire an independent contractor?
A: I recommend staging your entry, stage the legal
issues so you don't do more than you need to.
Don't get locked in. Maybe you'll come across
a U.S. consultant who's in tune with what you're
doing, maybe you'll form a strategic alliance
or a merger. You can't predict what will happen.
Q: How do I deal with potential liability?
A: You need disclaimer language in your contract
– that's worth spending money on.
Mom's take
Terry McQuay says his mother, a retired teacher,
"has never been able to figure out what I
do."
But he figures his "brand" should be
comprehensible to the average, intelligent person.
So he's made his mother "the benchmark for
clarity," and sent me her email response
to his website.
She wrote: "I may have missed the boat and
be up on the carpet over this one, and can hear
you say, `Mom, you just don't get it!' Well, I
have read the home page a few times and this is
what I've come up with: Nymity is a company that
provides support via the Internet for business
concerns about privacy risks. You will also receive
monthly updates, free support and training."
Well done, Mom.
"Not being a business person," she went
on, "it is hard for me to think in those
terms ... although I did hear about (security
breaches at) Winners and HomeSense."
She added an excellent point: "I know it
works on a subscription basis – you told
me – but it's not mentioned here."
McQuay put it on the website. He has also written
a script that will form the basis of a two-minute
flash demonstration, a video presentation or "Nymity
Tour."
Issue 3- "Ensuring
firms respect privacy"
That's the goal of Toronto-based information
tech company Nymity
Full
article
January 15, 2007. Terry McQuay, founder
of Nymity (www.nymity.com), burst
out of the gates with true entrepreneurial zeal,
reaching out to every sort of expert the Star
can help him contact. He's got meetings set up
as far as the eye can see. (He's determined to
provide me with lots of good copy.)
McQuay is in an enviable position. He's got a
great product – with the client list to
prove it – and he's so far managed to finance
growth by plowing profits back into operations.
He's got a staff of six, and big plans for the
future, but a very real problem.
Most people don't understand privacy issues, regulatory
compliance or risk management – and that's
what Nymity does.
"I provide risk management solutions,"
McQuay says. His product, PrivaWorks,
available online on a subscription basis (allowing
for continual updates), addresses new Canadian
laws requiring every company to have a privacy
officer, to ensure the confidentiality of personal
records for employees and customers.
McQuay's clients include the Toronto Star, CIBC,
SaskPower, Soctiabank, American Express, GD, Sears
and Loblaws. Now he's at a turning point:
Ready to launch into the vast U.S. market, he
faces strategic and operational challenges.
Robin Axon of Ventures West Management Inc. was
the first consultant to pay a visit to Nymity.
Axon's presence was itself the result of an entrepreneurial
response to the Star's Build a Business Challenge.
Christine Ramsay at Ventures West saw the announcement
of the Challenge back in November, recognized
an opportunity for her firm, and emailed me. Was
there anything Ventures West could do to assist
our chosen entrepreneurs, she wanted to know.
A respected venture capital firm that has been
in business for more than 30 years, investing
in early stage technology firms across Canada,
Ventures West has eight funds totalling $700 million
and investments in more than 130 companies.
Axon was assigned to assess Nymity's case. An
aerospace engineer who worked at Spar Aerospace
in the late 1990s, Axon jumped to the Canadian
Space Agency in Montreal, where he focused on
mission planning for the space station's robotic
arm. Then he shifted to Queen's University for
a special MBA in science and technology; he thought
about starting his own company but landed at Ventures
West in 2001.
"I'm an investment officer," Axon says.
"My job is to find potential investments
and pick the ones that are best for us. We will
guide them through to success."
At his first session with McQuay, at Nymity's
downtown Toronto office, Axon asked questions
and McQuay explained his company's genesis and
growth as a response to newly implemented privacy
laws.
"Any company with any personal information
– which is any company – is an ideal
client," McQuay said. "The application
of the law comes down to what's `reasonable' for
your business." (He recommends clients remove
personal information, including emails, as soon
as possible. But, "you have to keep `decision
records' for a specific length of time. If you
have no reason to keep information, get rid of
it.")
Axon liked Nymity's "action items,"
telling clients exactly what to do to manage risk.
Because privacy laws are so new and precedents
keep changing, Nymity provides "instant direction
on issues that could take a privacy officer three
weeks to research," McQuay explained.
Axon approved of Nymity's "smart pricing,"
$1,750 for an annual subscription with a special
price of $950 for small businesses. With a cost
under $2,000, Axon said, privacy officers are
more likely to proceed with the purchase without
having to go up the chain of command for approval.
He asked McQuay how many hits Nymity gets every
month on its website.
"Forty thousand," McQuay said.
Axon was impressed. "That's pretty spectacular."
But the Web hits are not converting into sales.
It's when McQuay's team makes direct, personal
contact – usually on the phone, with a one-hour
demonstration-pitch – that Nymity makes
sales 80 per cent of the time.
A more effective website, Axon said, could increase
sales, lower the cost of more expensive person-to-person
marketing and enable Nymity to grow more quickly
in the U.S., where consumers are more likely to
buy online.
Enter Geoff Whitlock, president and CEO of Lifecapture
Interactive Inc., a Web agency that is one of
our nine chosen entrepreneurial ventures. Whitlock
and partner Matthew Tautt met with McQuay last
week, with a view to improving Nymity's website.
As an observer, it was amusing to watch two very
different business cultures connect. McQuay, by
virtue of his profession and product, is conservative
– in the good sense of the word. Solid,
information-based, detailed, exact, with a communication
style in line with his blue-chip customers. He
is over 40.
Age makes a difference. Whitlock is under 30 –
28 to be precise – and speaks a lingo littered
with Web terms that seemed a little alien to McQuay's
more deliberate style.
Whitlock saw his presence in Nymity's boardroom
in a dual capacity: he'd like the job, working
on McQuay's website, but he also wants to know
more about privacy issues, to assist his clients
as Lifecapture expands and works for bigger companies.
Encouraging McQuay to "think outside the
box," to consider more innovative approaches
to Web design,Whitlock showed off websites designed
by Lifecapture for other clients. It was a dazzling
display of pyrotechnics, accompanied by the snazzy,
insider lingo – and there was clearly a
communication gap. Later I asked McQuay about
his response.
"Geoff's got serious passion about what he
does, he used a lot of terms I wasn't familiar
with and didn't give me a chance to understand
the language he was using. I've seen other younger
people do that, they don't educate you ... I've
done it myself. I've had to learn, when I'm talking
about privacy issues to people who aren't experts
in my area, to make sure they understand what
I'm saying. But by the end of our session, Geoff
and I were on the same page."
The central idea that emerged was for Lifecapture
to incorporate a two-minute interactive video
pitching the product on Nymity's website.
The discussion focused on who the spokesperson
should be.
Said McQuay: I do not want to be the brand. Nymity
is not me, it's a team of (six) people.
"It takes a very specific charisma to be
your own best salesman on video," Whitlock
said. "Dave Nichol was right for President's
Choice, John Sleeman for Sleeman's. The CEO who
plans to be with the company til the day he dies,
he can probably do it. The CEO who wants to sell
his company doesn't want to be identified as the
face.
I voted for McQuay. He's the best salesman for
his product, he has the credibility and authority
and should be the video spokesperson for Nymity.
"It's up to Terry," Whitlock said. "If
he doesn't want to do it, it probably wouldn't
work."
McQuay played out other options. "I could
have experts in the industry (on the video), I
could have customers doing testimonials, I could
have a paid professional, I could have members
of the team talking. " One possibility is
Brenda Lint, his most recent hire. She's a former
e-business specialist at Xerox Canada, a customer
of Nymity's.
But who's the best communicator? McQuay acknowledged
that he's worked on his public speaking skills.
"In the early years of Nymity, I attended
Toastmasters, to get more experience doing public
speaking. At Toastmasters, you have to speak every
week. Practice makes a huge difference."
At the end of the meeting, McQuay and Whitlock
agreed on the next steps. McQuay will do his standard
one-hour demonstration on the phone, to introduce
Nymity's product to Lifecapture's team. "They
will have a foundation to help me boil down what's
essential for the two-minute video."
Whitlock and McQuay were in agreement that it
was key for Nymity to not jump in to a huge Web
redesign before figuring out exactly what's needed.
"It was a good meeting, a good start,"
McQuay said. "We're speaking two different
languages, but we're learning how to communicate
better. For sure, I want to implement some of
their ideas."
Next up for McQuay: a meeting with Theo Ling,
a top technology lawyer and partner at Baker &
McKenzie LLP. Ling has agreed to answer McQuay's
questions about planning his launch into the U.S.
market.
In the meantime, Nymity is looking for experts
in web-based application development. Contact
McQuay terry.mcquay@nymity.com.
Full
article
Issue 2- "Winning
Ways"
January 8, 2007. NYMITY (as in anonymity),
was founded by computer scientist Terry McQuay,
45, in 2002. He did the program design that resulted
in Nymity's Web-based management-support application,
PrivaWorks,
made available on a subscription basis (allowing
for constant updates), to ensure clients' compliance
with new privacy laws.
It's a challenging "space" that incorporates
risk management issues and has enormous potential.
By law, all companies in Canada are legally required
to have privacy officers to guard the confidentiality
of all personal records pertaining to staff and
customers; when privacy officers are in place,
they are often overwhelmed by the maze of requirements.
That's where Nymity fits in. It boils down tricky
regulations into easily managed solutions.
Only trouble is, many companies don't understand
the impact of privacy laws, and don't know what's
best to do.
Yet when McQuay demonstrates PrivaWorks
to corporations, he makes sales 80 per cent of
the time.
Robin Axon of Ventures West Management Inc., a
respected venture capital firm that has been in
business for more than 30 years, is advising Nymity.
Ventures West invests in early-stage technology
companies across Canada. It has eight funds totaling
$700 million and investments in more than 130
companies.
Goal: To develop product awareness, double sales,
expand into the U.S., and complete the specifications
for version two of PrivaWorks
. Full
article
Issue 1 - "The
9 Finalists"
December 23, 26. Nymity (as in anonymity)
is a high-tech firm in the high growth "privacy
space." Founded by Terry McQuay in 2002, Nymity's
main product, PrivaWorks, is a Web-based management-support
application, sold through a subscription model
to companies to ensure compliance with complex
new privacy laws. "We call it compliance and risk
management," McQuay says. His biggest problem:
"We've got a huge market opportunity but people
don't understand what we do." He wants to develop
product awareness and expand into the United States.
Full
article |
