Several times a month, delegations of bankers and their minions—security experts, IT managers, compliance officers—alight in Vancouver for a stay of up to a week. They're audit teams, charged by regulators with ensuring that the corporate records contained within e-mails and social media are secure and unalterable, yet almost instantly available to both the corporation in question and, should it become necessary, the law. Accommodating these visitors requires a multi-department team at Global Relay, but no one is complaining. "We like having them here," says Shannon Rogers, the company's president and one of two majority owners, along with CEO Warren Roy. "They get to see what we're all about."
What Global Relay's about is owning the market in the burgeoning field of hosted message archiving. "We're the Switzerland of the business," Roy says. "We deal with everyone." Or, if not quite everyone, then 22 of the world's top 25 banks, and 20,000 companies altogether. In 2015, Global Relay and its 360 employees, half of them software developers, will generate around $50 million in revenue, making for a typical 25% bump over the previous year. Not bad for a company whose co-founders thought they were going into a different business entirely and who found the person that would help guide them down the right path—that would be Rogers—only after she caught Roy's eye as he passed her on the Grouse Grind, Vancouver's famous mountain hike.
That happened in 2003, when both Roy and Rogers were young and one of them was floundering, the other merely unfulfilled. Roy was the floundering one. About three years earlier, he and Duff Reid, today Global Relay's COO, got the idea that they could capitalize on the construction industry's transformation to computer design by developing a program that kept track of e-mails and design changes. "It would preserve who said what, and when," says Roy. The two were construction guys, though, so Roy started looking for someone who could do the programming. A tech-world acquaintance suggested Eric Parusel. "But he's only 21," Roy objected. "Yeah," said the acquaintance, "but he's been programming since he was 7."
Parusel and the partners made the crucial decision to design their new product as a Web application. Thus Global Relay became one of the first companies to use the cloud. "Salesforce.com claims to have invented cloud-based services," Roy points out. "The same year we did."
Today, being Web-based—offering Software as a Service, or SaaS, as it's known—is key to Global Relay's appeal. It means that a customer's e-mail archives can be searched in, on average, three-tenths of a second, compared to hours or days with an on-premises system.
But in 2001, the construction industry failed to see the advantage, or the need, for e-mail tracking. In fact, Global Relay would have died a quiet death but for the eruption of massive accounting scandals at companies like Enron. Because the malfeasance included the erasure of e-mail records, in 2003 the U.S. Securities and Exchange Commission ordered that e-mail messages in certain sectors be securely archived—which, realized Roy and Reid, was precisely what their system was designed to do.
The founders bought a Google ad for 25 cents a click and got two astonishing bites: one from a division of GE, the other from the Chicago Stock Exchange. "We were at the absolute worst place financially," says Roy. Fortunately, just then an angel appeared: Roy's squash partner, Bill Sauder (of the Sauder School of Business family), chipped in some money and his frequent-flier miles, which enabled Roy and Reid to travel to the United States and secure both accounts. In recent years, the company has been able to meet financing needs through revenue growth, but, back then, friends and family risked $2,000 here, $5,000 there. Venture capitalists declined to invest. "If this is such a great idea," a leading Canadian venture capitalist told Roy, "an American would have come up with it."
This is around when Shannon Rogers comes in. At the top of the Grind that day in 2003, Roy stood waiting for her. On the gondola ride down, he learned that she was a corporate lawyer putting in long hours at a big downtown firm. She learned that his strange new business seemed a lot more exciting than her legal minutiae. Soon she was moonlighting for the company. Later that year, Rogers quit her job and added her credit cards to the rotation that kept the company afloat. "I used to answer the phone as the receptionist," she says. "Then I'd have to change my voice when they asked to speak to the lawyer."
With her legal background and a natural aptitude for sales, Rogers filled a lot of holes in the company, Roy says. She quizzed what is now the Financial Industry Regulatory Authority about what Global Relay needed to do to help its members meet the new SEC regulations. Then she put together a manual for use by customers—a master stroke. Compliance requires the participation of several different departments—finance, legal, security, IT—and typically none of them understands what the other is facing. With the silo-spanning manual in hand, Global Relay was soon picking up 30 to 40 regulated companies a month, mostly hedge funds, investment advisers and small broker dealers—"firms three silos wide and 200 or 300 people deep," says Roy. "We couldn't serve, say, Bank of America. Our technology wouldn't scale. It was [all about] how many companies could we sign up in a given month."
In 2006, Global Relay finally broke even. It was a big moment for Roy and Rogers, who at one point went two years without paying themselves. But there was a bigger moment yet to come in 2007, when the company started providing compliance solutions for information giant Thomson Reuters, effectively providing an entree to all of the information firm's customers, including almost every major bank. "That's the single biggest thing that ever happened to us," says Roy. (Thomson Reuters is controlled by Woodbridge Co. Ltd., which also owns a majority stake in The Globe and Mail.)
This year will see a bigger move into secure messaging, à la BlackBerry; and expansion into spheres such as health care, insurance and government. With its strength in finance, Global Relay is steadily gaining share in a sector that IT research firm Gartner estimates was worth $1.8 billion (U.S.) in 2014, with compounded annual growth of 11.4%. The firm's most direct competitors divide into, on one hand, smaller companies in neighbouring niches, and, on the other, very large companies like HP, IBM and Symantec. Gartner's rankings for archiving put Global Relay in the top six for completeness of vision and behind only HP in execution. The company's user interface functions in nine languages and is preferred over American competitors by banks such as HSBC and Société Générale because data stored in the U.S. would be vulnerable to government snooping under the Patriot Act.
All this would seem to make Global Relay a juicy takeover target. And indeed, hardly a day goes by that someone doesn't offer to buy or invest in Global Relay, the partners say. Then they look at each other and laugh. The idea of selling out, it seems, goes against the grain. /Jim Sutherland