Nulogy CEO Jason Tham at a custom-packaging facility: hooking up the cloud and the checkoutJC Pinheiro
If you've ever steered your shopping cart into one of those cardboard displays in supermarket aisles, snapped up a shrink-wrapped three-pack of detergent from Costco or bought a bottle of something because of the enticing freebie satchel dangling from its neck, you've encountered the strange fruits of the customized packaging industry.
And you should get ready for more of the same. According to Nulogy, a Toronto-based firm that develops supply-chain management services in this space, the business of contract packaging has ballooned in the past decade or so, now representing a $25-billion (U.S.) market in North America alone.
Nulogy is the work of Jason Tham, Kevin Wong and Jason Yuen, who popped out of the University of Waterloo in 2002, keen to start a company. The firm's other co-founders are Sean Kirby and Tham's father, K. Donald Tham. Jason Tham, who is now CEO, had a degree in systems design engineering. But the spark behind Nulogy, he admits a bit sheepishly, was a 1996 Wired article in which Steve Jobs said the Internet would usher in an era of mass customization. When he got to Waterloo, Tham studied with legendary business professor Larry Smith, soaking up the theories of Nobel-winning economist Ronald Coase, who studied whether certain tasks on a company's way to market are best kept in-house or farmed out. Tham concluded that the future of consumer product manufacturing lay in curated supply chains.
The opportunity that presented, as Tham explains it, is this: Brands typically produce a range of standardized products. But retailers have increasingly wanted customized merchandising—everything from pop bottles with customer names printed on the label to cardboard displays whose offerings cater to regional tastes. Manufacturers hire so-called co-packagers to take care of such tasks. But the industry, as of a decade ago, still relied heavily on spreadsheets and manual work to get the job done. Nulogy's idea was to take the job into the cloud.
Five years after starting Nulogy, when the co-founders were still hustling up business from Tham's parents' home, they applied for $200,000 in seed capital from the Investment Accelerator Fund (IAF), a MaRS Centre capital pool for early-stage companies. The fund found Tham's concept overly complicated, among other things, and said no.
But Tham, who exudes entrepreneurial bonhomie, persuaded a former colleague with a connection to Cycle Capital partner Shirley Speakman, an IAF evaluator, to take a second look.
"When I started talking to [Tham's] customers," Speakman recalls, "they said, 'My business wouldn't run without this.'" She recommended investing in Nulogy. Another judge, MaRS Innovation managing director Barry Gekiere, was also taken by Tham's cheerfully persuasive manner, but quietly wagered Speakman a bottle of Scotch that Nulogy would never survive.
The world of customized packaging has exploded since Speakman had her hunch, although Nulogy claims that it is still the only firm that provides co-packers with the specialized software systems designed to automate—or "curate," in the company's parlance—what they typically do at painstaking length on spreadsheets.
Other investors have cottoned on. Nulogy secured $7.5 million in an October, 2014, financing round; a year later, the firm had surpassed the $10-million plateau in annual sales. Since 2011, in fact, the company has seen top-line growth in excess of 350%, earning it a spot on this year's Deloitte's Fast 50.
Gekiere, in other words, lost the bet.
Tham says Nulogy's solution has evolved over a decade. The firm now offers product tracking and web-based portals so customers can see how and where their wares are selling. Nulogy works with logistics companies used by more than 100 brands.
Yet Nulogy's growth isn't an uninterrupted good-news story. In the summer of 2014, with the new financing in place, the company was in pedal-to-the-metal mode, hiring dozens of young engineers and adapting its unique software to the rapidly growing market. Tham, a triathlete who competed in 2012 on the Canadian national team, had recently run the Boston Marathon in under three hours. One June day, he awoke feeling unwell and dragged himself into a walk-in clinic. A few days later, Tham was in Toronto General Hospital's intensive care unit, suffering from pneumonia, aggressive sepsis and organ failure. His doctors gave him a 25% chance of surviving.
After a month in a coma, Tham had to relearn how to think, talk and walk. But with the support of his wife, parents and twin sister, he battled back. Last year, Tham decided to run Boston again, even though he'd lost lung capacity. This time, it took him four hours.
Remarkably, many of Nulogy's staff—there are now about a hundred, packed into a clutter-filled, open-concept office where it's not uncommon to see some of them padding around in bare feet—never knew what had befallen their CEO.
Now that Tham has recovered, he and his board are looking to push the firm into a new phase. "We're at a point where we can start thinking about hockey-stick growth," says director of marketing Bally Boodram, an Oracle alumnus.
Nabbing a spot on the Deloitte list—and a parallel North America-wide ranking—will help Nulogy's brand. And while the profile means that investors may come a-knockin', Tham still adheres to the view that every hard-won dollar of customer revenue is 10 times more valuable than a dollar of equity financing. He seems much more determined to hit $100 million than to take the company public.
And Tham's brush with death has only made him more determined. "It's transformative," he declares. "It's given me clarity about what I want to do with the company."
Editor' Note:
Our story did not name all five founders of the company. They are Jason Tham, his father K. Donald Tham, Sean Kirby, Kevin Wong and Jason Yuen. As well, the article mistakenly said that marketing director Bally Boodram formerly worked at JDS Uniphase. The firm we should have named is Oracle.