David Ross: Not many fathers tell you not to go back to school

Interview with David Ross, the Chairman of the board, CEO, and majority owner of Ross Video.

Our first question is about your family. As far as we know, it was your father who established the business. So, were you the only child in your family? And who were your parents?

My father, John Ross, was the founder of Ross Video. I was nine years old when the company started, and I even remember being in the living room with my father when they were discussing the logo for the new company. And I remember my father working in the basement of the house; he quit his job to build the very first switcher. I’m also not the only child, my sister actually helped my family with the company during some of the early years, in 1989. She passed away a few years ago, so I miss her. 

Could you tell us more about your father’s decision to establish the business? How did he make the decision to tie his life with broadcasting and TV technologies?

Sure, that’s a long story. My father started work in broadcasting at the age of 14. He was a transmitter operator, and he lied about his age to get the job, in Manitoba, in Central Canada. His father was actually interested in things like radar in the war. My father read engineering textbooks all by himself as a child and learned how to design things like transmitters. When he was volunteering in the studios at the television station, he saw a production switcher being used, and thought, “that’s really interesting! I bet I could design something like that myself.” So, he designed the production switcher before he graduated from high school using things like analogue tubes. 

After he finished high school and got his engineering degree, he was hired by the CBC (Canadian Broadcasting Corporation) in Montreal. There, he designed TV studios and worked on equipment, and eventually, he became the first engineering employee of Central Dynamics. They pioneered everything from the first production switcher (again, designed by my father), to Green Screen technologies, to editing technology, to character generator technologies. It was quite the place, but it wasn’t managed well, which was not my father’s fault. 

My father also liked to fly airplanes. One day he had an accident — not because he crashed an airplane, but because he fell from the trap door at the clubhouse and broke his leg very badly. I was there when he went to the hospital, and one of the people to visit him was a man named Jim Leach. Leach Video then became Imagine Communications, it was the start of this company. And he said to my father, “you’re a man who knows what’s going on, you’re the brilliant engineer and the person people trust. Why are you working so hard on solving problems created by other people? You could start your own company.” He told him that there is “Leach Video in Canada, there is Image Video in Canada, there should be Ross Video in Canada.” To this, my father replied that he had no money. Jim Leach said, “You must have something. What about the airplane?” My father had spent two years rebuilding that airplane from scratch. “Sell it. Someday you’ll have two.” So, my father sold the airplane. He worked three years, designed the brand-new switcher, and now he owns two airplanes.

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What did your mother do, was she also in the broadcasting industry? 

Only by marriage. My mother actually was born to two Ukrainian immigrants. They left Ukraine and came to Manitoba. They stood in the middle of nowhere and built a farmhouse, their farm, and raised nine daughters, of whom my mother was the youngest. So, she grew up very poor, as did my father, actually. And they got married. My father had always been the person who taught me how to do business and engineering, and he showed me warmth, caring, and kindness. And I think that Ross Video today, the atmosphere of the company, is the combination of those two people.

Can you tell us more about the first years of Ross Company? How was your family living during this time? It seems like they would have had financial issues. What are your impressions of these years? 

My father was a brilliant engineer, and he ran the company as a small business for about fifteen years.  He read a book called Small is Beautiful. When he worked at Central Dynamics before this, he found that when the company went public it was crazy in a lot of ways, whereas he wanted something calmer and smaller. Because he was a great analogue designer in analogue — it’s like an art or a kind of black magic to design good analogue products — he was able to be in a small town. He moved to a little town just south of Ottawa, where I am right now, and started a small business. 

I graduated from computer engineering at the University of Waterloo, where I saw what my classmates could do even as students. I told my dad, “digital is coming. It’s actually here now’. This was 1991. I told him, “they will crush you! They will put twenty people in a room, and no matter how good you are, people will still pass you. We need to grow”. And from that moment my father sort of sadly agreed that the golden age of the small Ross Video had to end. 

So, we just kept reinvesting into the company and growing it, recognizing that this was required in the modern world. And I bought the company from my father out of the profits. In a way, the company, at 100% debt from the early 1990s to the early 2000s, was paying for itself and trying to grow. The only way for me to buy it from him was to grow the company so much that the original cost was a small part of its current value. Once I paid my father off, it started to become possible to buy other companies, and we bought the Dutch company Media Refinery which led to our XPpression graphics platform. And then we bought some robotics companies, and Norpak and so forth – we bought 15 companies. 

And what about your school, did you go to a public or private school? 

I went to public school for elementary school and high school, and I spent quite a few years, seven years, in a four-year degree at the University of Waterloo. I started in computer science, in the mathematics department. But I found it too theoretical – I’m a more practical person. I lost a year, but I switched to the computer engineering department, which I found was more my style. It wasn’t available when I joined, so I was one of the very first computer engineers to come out of Canada. 

Because I was in a co-op program, I also got a lot of work experience. In one of those 7 years, I worked for my father during a ‘work term’ at the university – like a summer job – for 4 months. I ended up designing several products, hardware, and software and redesigning the entire line of production switchers. I was halfway through and it was not as easy to just hand them back. My father actually asked me not to go back to school for another year and finish redesigning all of the products in the company even though I was still in university. Not many fathers tell you not to go back to school.

Were you a good student? Did you pay full tuition, or did you have a scholarship?

In high school, I was always in the top 2 of my class. I also won three engineering competitions, so I have two silvers and one gold in science prizes. I designed computer games, artificial intelligence, and 3D real-time stereoscopic graphics. They were pretty good because I finished all those by the time I was in 11th grade. 

When I went to university because I came from a small town and a small school, I worked really hard, and I almost made the Dean’s List. I worked Fridays, Saturdays, Sundays – every night. When I realized I had almost made the Dean’s List, I felt more confident that my schooling was good enough for Waterloo, which was like the MIT of Canada. So, I decided to let myself have Friday nights off with friends during the second term. And I kept up my grades, they only went down by 1 or 2%. So, the next year I let myself take Friday and Saturday nights off with friends, and my grades only went down by 2%. Eventually, I decided that if I kept doing this, my grades wouldn’t be as high, but I’d have a much better social life. It was good, actually, because in my early years at university I spent a lot of time on mental schooling. At the end of my university career, I spent more time learning about people. I think this became very important later when managing a company and dealing with all the different sorts of people that you need.

Children in families of businessmen see how hard it is to create a business. When did you know that you wanted to join your father’s business? 

I knew I wanted to go to university from eighth grade, very young. I was one of those people that never wondered what career I wanted. I always wanted to work for NASA, I loved the space program. I remember the moon landings, sitting in front of the TV, probably in the 1970s – I was only 3 years old in 1968 and 4 in 1969. But I remember thinking that maybe I wanted to work for Microsoft or something like that. 

My mother said, “why not Ross Video?” My father had told me every year since I was probably in 9th grade that he would never, ever hire me, and it was my responsibility to find my own way in life. My. Mother told me that I had actually hurt my father because I said I wouldn’t work for him. I said, “but he told me that he would never hire me!” She told me that I shouldn’t have believed him and that my father really wanted me to come and join’. 

When I joined, the company had just laid off more than half of the staff, we had gone through a massive recession, and the competition was heating up; the company was down to maybe 25 people. And I talked to my father about this. He was actually thinking about selling the company to Leach Video — which was ironic in a way — and was one signature away from doing it. I sat down with my father that night, and I said, “I’m taking some business courses, I really understand the company. Maybe together we can turn this company around, we can do something with this.” And my father was so down, he said, “Well, there’s a lot of satisfaction in turning nothing into something.” And that’s where my dad felt the company was at the time when I joined, so there was a big job ahead. But I think, today we are almost one hundred times larger than we were when I joined, it’s like one hundred Ross Videos from when I started. So, it turned out to be the right decision.

How did your career in the company develop? We know that you were the son of the owner of the company, but where did you start? What were your first steps?

Of course, before I joined the company full-time, I had redesigned many products, hardware, and software, so I knew the company very well. I had also worked at ElectroHome, and at CBC editing technology. So, I had a lot of experience when I joined. I was only 25, but I knew my stuff. I worked for six months as a senior engineer and was watching up a switcher project. It went very poorly, it was slow, it was stuck, and I finally said, “Dad, you know, I can do more by helping you get that product done, let’s work on it together.” So, I showed up I moved into my father’s office, and we would be working side by side. My father picked up his stuff the very first day and said: “I’m going to start working on something else, you have the switchers.” So, all of a sudden, I was in charge of all switchers in the company on that day. And he started the new gear of Ross Gear which became open a year later. 

Many years later, maybe six years later, I became Executive Vice President, and then President of the company. When I became President, it was interesting because my father ended up working for me for two years. He became manager of manufacturing, which sometimes worked well but sometimes it was challenging to have your father work for you. When he retired after two years, I became CEO of the company. I feel like I’ve worked for twenty companies since I started thirty years ago. The changes in the company, the changes in the people, the changes in the products, and even in the markets we serve, it’s been a fantastic experience learning new things, taking the company in a new direction, and charting the course. It’s been a great career so far, and I don’t think we’re done.

Was it difficult for you to work with your father?

Yes and no. My father taught me a lot about the ethics of the company today and the way we treat people. I think, Ross Video is a very unusual company in how oriented it is towards fairness and people, but with stability and profitable growth. At the same time, my father didn’t plan to have me take over the company, even though he saw that I was doing quite well. But it’s another thing to have your son actually take over, because at the transition he had to give up power and I had to start taking on the power and making the decisions. There were many when moments it got difficult, in terms of decisions and the direction of the company. My father sometimes had a hard time letting them go. The other thing is my father is even more of an entrepreneur than I am, so he liked being able to come up with wild new ideas and he didn’t like bureaucracy. Maybe I’m a little bit more focused on growth. I understand the importance of process and doing things the right way. So, I always put the process in place, and my father tried to break it with a big smile and not follow the rules. I can look back and smile today, but back at the time, it was quite a challenge.

Like in every family business, business questions continued to be discussed not only at work but also at home, is that right?

When I was a student, certainly — I was living at home. After work, it was fantastic because instead of talking about the latest TV shows, my father would talk about human resources problems, questions about strategy, technology, the market… It was a very unusual opportunity for me as a young person to understand the business at that level, it was like getting an MBA every night over suppertime. And I think that was one of the reasons why I was able to jump into the company the way I did, so I have to thank my father for that.

In 2008 you bought your first company. When did you decide that the company was going to adopt the strategy of expanding through big acquisitions?

Well, that’s interesting. That was Media Refinery, which was the XPression graphics product. We were impressed by the product and the company and they set up a meeting after. I was there, Troy English, my CTO, was there, Jeff Moore, my CMO, was there as well. And we got a demonstration of the product. And I really liked XPpression. We talked about someday having graphics in the company, we wanted GPU technology as one of the things that we could do. We always imagined just doing it ourselves, but we didn’t know how we would get there. And I remember talking to Troy and saying to him, “We really need to partner with these people, and maybe we can help them.” And Troy said, “Partner? David, they are small, we should buy them.” And I looked at Troy and said, “We don’t have money in the bank account.” I had never bought a company in my life, I didn’t know the first thing about it. Troy leaned forward and whispered in my ear, “Buy them anyway.” I looked at Troy, shrugged and I went, “Okay.” And I walked over and started negotiations to buy a company, I had no idea how I was going to do it. But nine months later, we figured out the deal with a little bit of cash borrowed from the bank and a huge stock swap in a backing deal for growth that everybody was happy with. It was a win-win, it was the start of something beautiful. I learned a lot about how to buy companies in that very first time around, it was very helpful from then on.

At the end of 2008, there was a financial crisis. Could you have acquired the company the year after almost for free?

First, of course, it’s hard to know when there are a recession and a crisis coming. But, also, XPpression was getting more and more popular. I think they would just be getting more and more expensive, so we bought them at the perfect time. It’s interesting because I gave speeches about how to build a company that is hard to kill and how to survive a recession. And I remember having a journalist who wrote an article about my speech saying, “David has an opinion. We’ll see whether it is true in the next recession.” And a year later we had a recession, and we grew in that recession instead of becoming smaller. Some of that was the acquisition of XPpression.

In 2012 you started making new acquisitions, and you bought a lot of companies in 2014-2016. What was the reason for the peak of this strategy? 

I really never thought about those years as being a peak, so it wasn’t a strategy in that way. I think that it was a combination of us looking for companies and other companies coming to us. We’re strategic in terms of the companies we want to buy, and we’re opportunistic for when and which ones we buy. At any given time, there might be ten different things we would be interested in, but we look for the best time and place for a specific company and we go for it. So, I think it was just statistical randomness — we got lucky and bought that many companies. We’ve bought two companies so far this year, and I’m currently looking at three more. We usually buy one or two companies a year.

Now, because of the crisis, if you have the cash this is the perfect time for new acquisitions. 

Yes, we actually have more cash right now than we’d ever had in our company’s history, with a combination of our growth, profitability and government assistance during COVID. So, yes, it is a perfect opportunity. I know that Warren Buffet is famous for reminding people to buy ‘low and sell high’, and, having confidence in the middle of a crisis can certainly turn out very well as long as you’re a stable company.

You have three main shareholders: John, your father, you, and your CEO. Why did the CEO get a share of the company and when did he get it?

Oh, we have many owners in the company now. Originally, my mother and father owned the company, and then I was brought in. When I was brought in, my sister was also, for 10%. When she passed away, her husband and her family had that share. After, I learned that you can have a stock market inside of a company, without having to go public. I saw this as a fantastic opportunity for our employees to suddenly become owners, and think like owners, but not be stuck, because every year we up the buyers and sellers so that they can trade with each other. Some people want to buy a car, put their children through university, others have extra money and want to buy part of Ross Video. I know that the stock price when we started this in 2000 and 2001 was $3.77, and now, I think, the stock price is about $21. So, it’s been going about 17 percent a year, so it’s been a very good return for many people. 

The way that we value the company actually is 0.8 times sales plus three times the taxable profit, so it’s kind of a perfect growth strategy, you have sales and profit to be worth something. This is actually designed as a calculation. It is the lowest price that we can give our employees to buy into the company, without getting them into trouble, as a gift for taxation purposes. If we ever did go public, then we would get probably much higher value than that, and that was the idea – it was intended to be a good deal for our employees. Anybody in the company can buy stock, so we have many people in manufacturing who have significant shares because they wanted their own stock. We have maybe a third of Ross Video employees as shareholders now, though I still own about 82% of the company.

What is the exchange value of the company now?

I didn’t tell you the top line, did I? We are a private company, but if you were thinking about the value of the company, right now we’re about 900 employees, and next year we expect to be over 1000. The company is profitable and has actually had 28 straight years of growth, and we hope in another week to be able to say that it’s been 29 because our year ends October 31st.

How has your company, which is now conducting operations almost across the whole world, dealt with the crisis? What has been the impact of COVID on Ross Video, its customers and the company itself?

It’s been a roller coaster, for sure. Just a quarter before COVID, we were up 30% on the previous year. We were having one of the biggest growth years in our company’s history, it was very exciting and profitable, too. Then, COVID hit. We didn’t know what was going to happen, so we decided to be very conservative, and very quickly shut down manufacturing for two weeks and reconfigured it to be safe, changed the way that we had our crew shifts organized, changed their work stations were to make it all safe and then reopened. And in the rest of the company, we changed from a five-day week to a four-day week, so that we could preserve cash and see what the sales were going to be. The employees actually all sent me e-mails saying they appreciate this. It was the first time I’ve ever given anyone a 20% pay reduction and they thanked me for it. But they really cared about the company, and they wanted to make sure we are safe. Of course, March and April were very scary.

After a couple of months, we saw that there would be government assistance in Canada — they would pay for salaries if your sales were down, and we could show that ours were. We brought everybody back to five days, and then we found that with government assistance and our sales we were going to have a very good year, which surprised us. It’s a combination of a number of factors, but one thing we found was that our costs dropped faster than our sales – we cut travel costs, and we couldn’t do expensive demos of robots and things like that. So even though our sales were down, our profits went up because our costs went down even faster. At that point, I realized that we were going to actually have a very good year, even though our sales were almost flat compared to the previous year if you look at everything combined. 

So, I made a personal decision about two things. First, we paid everybody back– we brought them back a 100% salary, even though we didn’t ask them to work one hundred percent work. Many of them work 5 days, even 6 days a week, and we paid them for 4, but we gave them a bonus. We paid two and a half million dollars that day back to our employees, as a thank you for what they were doing and to take care of them. 

The other thing we did is… There’s a lot of talk about people who work in taxi services, grocery stores, health services, and so on. These people were paid the lowest amount yet were taking the highest risk in society for COVID. And I thought about all of our people who were working at home. The people in manufacturing have been working side by side even with COVID restrictions, every day with no complaints. So, I looked at the minimum wage in Canada — about $14 an hour. The living wage is around $18 an hour, this is how much people really need. So minimum wage is kind of below the poverty line, really, if you have a small family, but the living wage is not much better. And I thought that’s a really low bar. Nobody was paid minimum wage at Ross — people were paid a living wage — but we raised salaries for everyone that was below $20 an hour, to $20 as a new company-wide minimum wage. That was a really nice moment. I asked Human Recourses how many people were impacted — this was 100 families at Ross Videos whose lives were changed. And surprisingly, it was not that expensive, and I wondered why I hadn’t done it before. But there’s no government telling me to do it, no law, but I thought it was the right thing to do. So, this was another impact of COVID.

On the technology level, we have a production company as part of Ross Video. It used to be called Ross Mobile, but now we’ve renamed it Ross Production Services, and they would normally do 500 events a year, they’re very busy. We had eight OB vans, we have four flypacks and we have a studio. When COIVD hit they lost all of their business in one day — they went from being incredibly busy to having absolutely nothing to do. They lost everything. We decided that we would take care of them and not lay anybody off, we would pay them saying, “Learn new products, do what you need to do, retrofit the OB vans, keep yourselves busy – times will get better.” 

A small group of them got together without telling and created something which became known as the start of Ross Production Cloud. The production cloud is a really unique technology, and, normally, I know that technology comes out of Research & Development, but if you are familiar with the concept of REM, the idea is that you don’t have to have your OB van or your whole crew at a site. You have people working at home at, say, ESPN, in the facility, remotely controlling what’s going on in a stadium. What the production cloud allowed us to do was have everyone working remotely. The person running graphics could be in their house, the person running the production could be at home a control panel, the directors could be in different locations as well, and the camera could be at the facility. It created a capability for video and audio for completely distributed production which is far-far beyond REMI. It has been incredibly popular with their customers so far, and we’ve been selling it as a service under Ross Production Services. But I think, just the other day we announced that later this year it will become a product as well, that customers can use for themselves. I think that it came out of the need for innovation during COVID, and I think, it will have a really good impact on the future of the industry as well as Ross Video.

What about your personal life, let’s talk a little bit about your life away from work.

Well, my family is myself, my wife Susan, my children Annie and Melissa, and two rescue dogs. They don’t believe in buying dogs, you know, there’s a lot of dogs to be saved. Recently, my wife and I rented an RV. I like being outdoors, running, hiking, etc., so in the summer we rented an RV – a trailer to pull behind in a car – and my wife and I drove 3 thousand kilometers to a place at the Atlantic Ocean and back again. That was a really good combination of not staying in hotels or going to restaurants – you can cook your own food and see different things. I’ve never done anything like that before and I held management meeting things from the table of the RV looking over the ocean, it was really memorable. In the meantime, here’s my basement that I’m talking to you from right now, and I’ve been working from here 4 hours a day since March. It’s an interesting experience to see me every day working at home, and I think my children maybe have a better appreciation from the number of people I talk to every day. But it’s amazing to be able to grow a company from your basement with your family around. It’s kind of interesting.

Will there be a third generation of top managers for Ross Video?

It would be nice, but you can never choose the path of your children. I think my father was very lucky, he won the lottery and his son was an engineer who liked business and was willing to work with him. My children have other interests. So, the future of Ross Video someday will be an IPO and becoming a public company. But I intend to be at the company for a very, very long time because Ross Video is my other family and I love what we’ve created.

Thank you so much for the interview. We wish for you to enter the mass market and reach one trillion dollars, just like Apple.

Thank you very much.

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