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Kobo Inc. CEO Mike Serbinis (left) and Indigo Books & Music Inc. CEO Heather Reisman (Raina+Wilson/Raina+Wilson)
Kobo Inc. CEO Mike Serbinis (left) and Indigo Books & Music Inc. CEO Heather Reisman (Raina+Wilson/Raina+Wilson)

ROB Magazine

Inside the Kobo deal that netted Indigo $165-million Add to ...

Ken Nickerson has been carting gadgets and technology finds to Reisman ever since he paid a visit in 2001 to her office on Toronto’s King Street West. At the time, he was a departing director of Chapters’ online unit, which was being merged with Indigo. Since then, his technical savvy has earned him a spot in Reisman’s informal inner circle of advisers. He runs a small venture-capital company that invests in technology start-ups, but he prefers to think of himself as a “gnat buzzing around in the background” that “drags people into the future.”

When Nickerson first spied the Sony Reader on an Internet site in 2005, he was convinced he was looking at the biggest book innovation since Johannes Gutenberg’s movable-type press made mass production of books possible in the 1400s. Reisman was intrigued by the Sony Reader Nickerson gave her, but she didn’t give much credence to his warning that it would turn her bookselling business on its ear. After a few minutes of poking at the Reader’s confusing buttons, she grew frustrated. It didn’t help that the display was only in Japanese. “It is actually hard to get excited about a piece of technology that you can’t communicate with,” Reisman recalls. “I threw it in my drawer.”

Reisman may not have perceived that e-readers would revolutionize her business in 2005, but what she did know was that Indigo needed a skilled technology executive to fix an expensive new inventory management system that was riddled with bugs. She also wanted to upgrade the company’s website and consumer loyalty program. For advice on the new hire, she turned to Nickerson. He had two candidates in mind. One was an “amazing” chief information officer; the other, he said, was a “rocket scientist.”

Reisman requested a meeting with the rocket scientist.

*     *     *

Mike Serbinis was not used to losing. By the time he entered the Ontario Engineering Competition in 1993, the then 19-year-old Queen’s University engineer had already been recognized by U.S. science fairs and none other than NASA for his pioneering work enhancing the performance of rocket boosters used on space shuttles.

At the Ontario fair, the young engineer was showcasing something even more remarkable. It was a frictionless motor operated by a new generation of software code that mimicked genetic coding. Because the software constantly evolved, like DNA, the motor was able to hover effortlessly above a magnetic bearing without crashing. The set-up was so innovative that all but one of the fair’s judges failed to grasp the significance of the display. Serbinis did not win first, second or third prize. “I got totally stiffed,” he recalls.

Not entirely. The judge who did grasp the significance of the student’s advanced work was Nickerson, who was then an executive with Microsoft Canada. After a quick huddle with other judges, Nickerson conjured up a special innovation award for Serbinis—$1,000 worth of Microsoft software and a summer job with the company.

The award was the beginning of an unusually close mentorship and friendship that continues to this day. Serbinis worked at Microsoft for three summers and, after completing a graduate engineering degree, he moved to California in search of the Silicon Valley start-up dream. But he got his big break in Toronto, helping to found a pioneering cloud-based document storage network called DocSpace. Two years after DocSpace was launched, its founders joined the ranks of tech world millionaires when San Francisco-based Critical Path Inc. agreed to acquire it for $530 million in cash and stock. It was 1999. Serbinis was 26. Looking at his portfolio online, he kept hitting the refresh button to convince himself his fortune was real.

A little more than a year later, the refresh button told him much of his fortune was, in fact, fiction. Critical Path, one of the world’s biggest e-mail and messaging companies, in early 2001 became entangled in an accounting scandal that saw five of its executives settle fraud charges with the Securities and Exchange Commission. The scandal triggered a class-action lawsuit by shareholders and virtually wiped out the stock.

Fleeing the wreckage was not an option for Serbinis. A number of his friends, including Nickerson, had become Critical Path shareholders after the DocSpace acquisition. “I wasn’t prepared to walk away from it,” Serbinis says. The company’s new management team appointed him chief technical officer, which for a struggling company meant he wore many other hats. He describes himself as the “nasty guy” who had to cut hundreds of jobs at the company’s far-flung offices, the salesman who helped land big corporate contracts, and the technology geek who explained to new investors such as Cheung Kong (Holdings) Ltd., a company controlled by Hong Kong’s Li Ka-shing, why Critical Path was a good bet in a rapidly evolving online world. “Mike learned a ton there; it steeled him,” says Nickerson.

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