The Path Ahead for Founders: In Conversation with Imad Malhas, Founder of IrisGuard
Imad Malhas has a strong technical background in the field of information technology and has been considered a pioneer in software development in the Middle East for over two-decades. Malhas obtained his B.Sc.Degree in Computer Science from the University of Wisconsin in Milwaukee, USA in 1984. He founded IrisGuard Inc. (www.irisguard.com) in 2001, which is nowadays considered a world-leader in the field of Iris Recognition Technology. It is credited to successfully taking Iris recognition from the uncertainties of labs and theories to the realities of the world.
1. How did IrisGuard respond to the Covid-19 crisis?
We took approaches that are based on the basics; meaning being transparent and as this was a totally unknown situation, we were learning as we went along. Our employees and their families were our main priority. The approach we took as early as February was to “acknowledge”. So the way we approached it is by applying transparency to everything we do, ensured we have a more frequent communication with all employees and sought out medical expertise.
We decided early on that we are going to face this as one unit. We were aware that there will be financial implications. Whilst we focused on the health and safety of everyone, we also focused on the economic effects. In order to preserve longevity of the business and cash-flow, we made the collective decision to face this together and agreed to reductions in wages. Of course, the higher the pay the steeper the cut. However, we are going to return every penny taken from them once the pandemic is over and according to our situation. Our HR team was tasked with calling employees on a daily basis to check on their mental health and soundness. As Churchill in World War II said: “Stay calm and get on with it”, so we stayed calm and got on with it. We handled it on a daily and weekly basis.
2. What are your takeaways?
My personal key takeaway is that indeed the world can come to a standstill. Enjoy every moment…we work too intensely sometimes and there are other things to enjoy and appreciate in life, friends and family and a whole lot of other things.
My business takeaway is this really made us understand what it means to be resilient and have a backup. Businesses need to be able to work from anywhere. We were fortunate because we are a highly remote and technology-oriented team. But we also need to add a perspective. In 1918, the Spanish flu killed more than 50m people, and three years later, it was forgotten about. I think the concept of a post-COVID world can be somewhat over-hyped and at this present time that is understandable as it is far from over. The coronavirus is a very trivial creature, and absolutely no match for humans. I believe the human collective memory will wipe it out within 3 years from now, and it will be like any other virus. I lived through HIV discovery and the panic it had caused in the late 80s, however, we’ve developed methods of managing it and we’ve learned to live with it. This is human nature and forgetting things is a grace of God. There certainly are lessons to be learned, but in my opinion, there is no post-COVID world. I don’t think it has an everlasting impact on humans other than the key issues that we discussed redundantly, being able to work from home and appreciating life. I believe that things will go back to normal but I’d expect that business travel will remain on hold for some time and we will spend less time commuting because technology such as Zoom is a wonderful thing.
3. Do you feel that there was a change in your DNA as IrisGuard?
No, because we were trying to practice everything we’ve done for the last decade. None of this is new, it’s how we affiliate. Humans are very quick to adapt, humans are survivors and it’s in our DNA. The situation was definitely inconvenient, but once the vaccine is out, things will get back to the way it was. I’m not saying there is no impact; I’m saying that the post-COVID world is over-hyped.
4. Is this the case because your business is very well established? Or is it also the case for smaller companies?
The nature of this threat and future threats like this will cause disruption. If we look at wedding planners, they are devastated; they are out of business with nothing to learn. Let’s not burden people too much. Even if companies have good cash flow, how long will it last them for? I personally think that it’s overhyped. From my reading, everyone is philosophizing the world after-COVID. The world after COVID-19 is no different than the world after HIV. This is my view.
5. Many of the entrepreneurs pivoted and started doing other activities that are not core, it opened their eyes to other opportunities that they could do to sustain their companies. What is your take on this?
If the coronavirus life is one year, changing your business model takes longer. COVID-19 is very difficult on multiple aspects; it requires a lot of thinking. It’s fascinating, short term, full of hope and frustration. Shareholders and investors are equally struck with the same vagueness.
“A company is alive when its invoices pay its expenses. And when its invoices pay its previous debts, then they are on a vulnerable trajectory.”
I believe that every angel investor should commit 100% to investing NOW and not when the vaccine is here. The reason for now, everything is pointing to a successful conclusion. Investors who have held back for the first 6 months of Corona need to completely reverse course, and not only fully invest, but double invest into ideas which are not COVID-related. I wouldn’t invest in anything related to COVID as all the new habits and how we travel will all fade away because one day, it will be a thing of the past.
“My message to investors is committing right now, this summer, because it’s the peak of the catastrophe (according to the studies). If we wait, even more investments will be more expensive.”
6. Are you from the notion that there is a “new normal”?
Absolutely not! However, there are side effects that are quite interesting. What we have, and this is basically from now until 3 years is a mindset, a global psyche I call it. This global psyche is a reminiscent one. There is a positive psyche and it will last 2 to 3 years from now. That positive psyche unrelated to the virus. It’s just the fact that we realize that we are mortals and people do die. COVID-19 is not a national disease. It’s a global disease and it affects everyone with no exceptions whatsoever. So globally you have a population that is ready for anything. This is where entrepreneurs need to come in and take advantage of things.
The atmosphere today is most certainly, conducive to entrepreneurs in a non-COVID related development. I wouldn’t want anyone to develop anything related to Covid-19. I want entrepreneurs to jump into the deep right now and do something new that they didn’t dare do before Covid-19. The reason I say is the psyche of customers in the world is so fresh. When you get a brush of death your view on life becomes different, and everyone in the planet got a brush of death, whether we were infected or not, we lived very dangerously.
“COVID-19 touched all our lives. People accepted that forcefully, which means that now the entrepreneurial conducive atoms in the air are at an all-time high concentration.”
7. Many of the entrepreneurs have struggled due to the crisis, cash issues and many sleepless nights, just struggling to stay afloat and keep their heads over the water. You’re talking about coming up with fresh new ideas, does that entail a shake up to their current business mode, or is it just developing new products, how does that relate to current entrepreneurs?
Of course, especially if they are in the early stages and running out of cash. That’s part of being an entrepreneur. Having many sleepless nights is part of being an entrepreneur. My message to real entrepreneurs is “You are in your element now, so if you are sweating, you are an entrepreneur and if you are folded and gone, you really should be somewhere else”.
“You are a born entrepreneur. It’s not a job and it’s not a degree, it’s not a conference you invite me to and push me to be an entrepreneur. You’ve got a DNA that looks like an Endeavor Entrepreneur and it drives you. It’s about the path. And I cannot see a more exciting path than today.”
Entrepreneurship is a DNA, it’s not even a mindset, you are either born with it or you’re not. You can’t develop entrepreneurial skills. Hard line entrepreneurs can be seen and felt, they are in the parties, they are the Elon Musks of the world. It is about soul searching, if you still have interest in what tomorrow is going to bring and excitement, then you are an entrepreneur. Real entrepreneurs will be able to make tomorrow a better day, they never reminisce in the past. For others who are not sure, there’s nothing wrong with having a job and having a reliable source of income, all these are fair and correct. For me this is my life, and I don’t know any other life and I’m happy with it and this is the way it is. If you are able to do that then you are in the right business.
“My message to Endeavor Entrepreneurs is that if you feel the heat, get out of the kitchen. If you can’t hold it, you can’t be a casual entrepreneur…this is the time to decide.”
8. What is your advice for up-and-coming entrepreneurs who know this is the track they want to pursue. What are the core skills to build successful scalable companies?
My advice to them is to surround themselves with people, who are smarter than them in their areas, and to hire their own rebels. The first phase of any entrepreneurial journey is when companies get to a point where their invoices cover their expenses and a lot of entrepreneurs think this is the hardest phase. I can assure you, it’s the easiest. Scaling is the challenge! It’s the development and scaling up stage where an entrepreneur has to learn new things and find others who are trying to look from an outside, with a fresh view and absolutely not intimated by criticism. This is where the mentoring part of Endeavor comes in and I would say for entrepreneurs today, if you are stuck in the early stage, carry on and continue, if you are at that higher stage, then listen more to the right people on how to get out of this.
Talking about core skills, finance is number one, marketing is number two. HR is also very important. It’s important for the entrepreneur to wear the hat of the Chief Executive Servant to serve the board and increase the value of shareholders. Avoid pulling ranks. Pulling ranks is the recipe for failure.
9. A final insight: we see so many entrepreneurs focused on fundraising, what is your take on financing organically through revenues vs. bringing in investors and when is the right time to fundraise?
In my opinion, bank lending is the best form; in Jordan an interest rate of 8.7% is way too high. More affordable lending should be made accessible. The question must be asked, are you funding growth or are you funding operational expenses? Therefore, banking loans in the early stages cannot really be reliable, because companies are borrowing and building assets. We definitely need angel investors. Angels are going to invest. Endeavor is not about buying and selling ideas. You cannot influence the world if you don’t have a product or a service. If you look at Endeavor, we are out to change the world. We cannot change the world by just creating a concept sitting in a lab, and selling it to another one and name it a great innovation.
“An entrepreneur’s value is in how much he/she can change the world; forget about making money, if you are fortunate and you can change the world and make money, then you are the smartest of all of us.”
10. Most entrepreneurs brought investors early on, institutional investors. Many of them don’t want to build sustainable companies for the long-term; they are in it to exit. What’s your opinion?
What is exit? What happens to the entrepreneurs and the investments, since when does exit factor into the policies of the company. I fight this and I’ve been fighting this all my life. Entrepreneurs spend so much time on their own, they don’t know whether they are right or wrong, when a third party comes in and invests their money, it’s vindication. I understand that, but it can’t be a way of business.
“If you have a good idea, hundreds of investors will jump in and invest. If you don’t monetize it, don’t build it. If it’s not monetizable, change the business.”