FP ENTREPRENEUR: THE INNOVATORS Preparing for your Oscar moment Decision-makers at a crossroads

In the past 18 years, Image Engine has grown from a boutique firm doing sound production and visual effects for television to the largest independent visual effects (VFX) studio in Vancouver's thriving post-production community. Greg Holmes, chief executive of the company, says the secret to its success was in having the vision to see where research and development could take it and making timely investments in talent and technology even before any major projects were on the table. When the call came to take a lead role for District 9, they were ready to lead a project that ultimately garnered an Academy Award nomination, and the attention of big-name studios. Holmes told Denise Deveau how Image Engine has broken through the barriers in an industry where success is always measured by the next big thing. Following is an edited version of their conversation.

Q: How did Image Engine get started?

A: Before starting the company, I was in the wireless paging and cellular industry. Very early on, I realized I was better suited to being on the risk-taking side of the desk versus advising people. Image Engine ended up being one of those entrepreneurial risks that gave me the opportunity to step back and fall into what I enjoy doing most: grassroots development of a very small business. It was all quite accidental. My wife and I were attending an opening for a sound design studio and were introduced to the concept of digital sound editing. We saw this chance to provide some investment and financial experience to an entrepreneur in the field. So Christopher Mossman, Robin Hackl and myself founded Image Engine in 1995. The credit really goes to the vision of these two individuals. My role was simply to consider and support the notion they had, qualify it and put some energy behind it. I didn't know if there was a future in it or not, but once I understood how strongly they believed in it, I was impressed by their desire and passion.

Q: How and when did you make the move to visual effects?

A: From 2000 to 2005, we worked primarily on visual effects for television and had about 20 to 30 employees. Around 2006, we made a strategic decision to expand into feature film. Since Vancouver had no pool of talent with film experience, we had to recruit from abroad to demonstrate credibility in this area. Shawn Walsh and Peter Muyzers were key hires who were instrumental in the creative and technical vision for visual effects in film. They were Vancouverites who had worked internationally and were ready to come back to their Canadian roots. It was a good fit. Shawn provides the inspirational drive behind visual effects and its role in filmmaking. Peter really knows how to deliver on what clients are looking for. Peter felt that the right path was to focus on R&D even though we didn't have the work to support it. At the time, no one really looked for those types of services in Vancouver, so there was a bit of blind faith involved.

Q: What was the tipping point for Image Engine?

A: In 2009, District 9 came to our doorstep. The director, Neill Blomkamp, had Peter Jackson's full support for the project. However, Avatar had completely absorbed Jackson's studio resources. Neill had worked and gone to school in Vancouver so he wanted the VFX work to be done here. He called us, told us he had a certain budget, and asked if we were interested. It was really as simple as that. Since we had already done some technical development ahead of time, we were confident we could take it on. When we were nominated for an Academy Award for our work on the film, we gained credibility with many of the larger studios, which led to several high-profile film projects and stimulated exponential growth.

Q: What were some of your biggest challenges during this change?

A: With District 9, we had to triple in size in the space of a year, which put stress on limited resources. We worked closely with Human Resources and Skills Development to fast-track foreign worker applications so we could bring experienced artists into the company. The work they did for us was significant, since we had to ramp up very, very quickly.

Q: What do you believe are the keys to your success?

A: For us, it was having the right people at the right time and the right opportunities. Shawn and Peter exhibited the qualities, courage and desire to become entrepreneurs and make a difference in the visual-effects industry. Blending that with our demonstrated capability to determine risk and make good business decisions allowed us to achieve our goal. It wasn't always a sure thing for us. When we made the decision to invest in R&D, we didn't know a District 9 was in the offing. But that emphasis on R&D and developing a robust pipeline for challenging projects paid off. We also believe in supporting a work-life balance mindset, knowing how much this industry burns out artists because of the demands.

Q: How will you build on your success in the future?

A: Ultimately in this industry, you have to be adaptable. What you did last year doesn't mean anything compared to what you're working on next. The key is to know what's on your doorstep and how you're going to deal with it. In our world, it's also about learning to work with your competition and not against them. We don't always need to be the lead house on a project. What we do want is to be a part of growing the visual-effects industry in Vancouver.

-- Financial Post

A JOINT VENTURE WITH BDC

Insight:

Prepare to capitalize on opportunities

Entrepreneurs moving to expand a business must be ready to capitalize on opportunities and manage risks, says Danny Lidder, vice-president of financing and consulting for the Business Development Bank of Canada.

"Entrepreneurs must be prepared to manage the expected growth when they take on larger projects. This includes making the required investment and making sure that they can deliver. Lidder says careful planning is essential before moving forward.

Management must be ready to devote financial resources, time and human resources to the task.

The first step is to devise a strategy for expansion. This means defining goals and determining the degree of growth the business can support.

Entrepreneurs need to ask such key questions as whether taking on a larger project means the facility should be expanded; if additional machinery and equipment are required; whether information systems and technology have to be updated; and if new people have to be hired and current processes must be changed.

"Do your due diligence. Make sure you have a good handle on the project and understand all the costs involved," he says. "Understand the potential impact on the overall company and make sure that strategic decisions are based on facts and not on hunches."

At some point in the planning, an entrepreneur might choose not to grow the company, Lidder notes.

"That option always exists, but it may not be feasible. It all comes down to recognizing the full impact of the decision, particularly the pressure it will place on your company if you decide not to grow and your competitor does."

The second stage of a solid growth project is to finance the company's move to the next level.

"Growth can place an enormous strain on a company's cash flow," he says.

"And a common mistake is to attempt to finance larger projects through current cash flow. You have to have proper financing in place to make sure you don't get caught in a squeeze."

He advises identifying and really understanding the company's short-term needs and long-term financial requirements.

Also consider more than one financial partner to ensure your overall financial needs are being met properly.

Equally important to a successful growth strategy is investing in your people. "If you are planning on expanding your business, it is essential that the right people are in the right jobs to allow you to meet increased demands and deliver," Lidder says.

"It's important to create a positive work environment so that you attract and retain skilled resources on a consistent basis and can react when opportunities arise. Be clear that investing in growth is not just about financing. Successful growth is also about investing in time and people."

-- Financial Post

Republished from the Winnipeg Free Press print edition March 19, 2013 B7