Descartes CEO Art Mesher: We’re in a Patent Bubble

The turnaround of Waterloo-based logistics company Descartes Systems (TSX:DSG), has become the stuff of legend. When current CEO Art Mesher took over in 2004, he estimates that the company had mere days to live and “mattered to no one”.

If the reception at Tuesday’s M Partners Annual Technology and Communications Investor Conference at Toronto’s Royal York Hotel was any indication, Mesher is now regarded as one of Canada’s best bosses and deserves the lion’s share of the credit for building a company that is now, as he points out, twice as profitable as other companies the same size.

Mesher, who once famously fired every salesperson at Descartes, credits a culture that puts the customer first. While he lists “the best employees in the world” as a primary asset, there’s another potential asset Mesher isn’t counting on: patents. While the frenzy around patents is on the lips of most every tech CEO these days, Mesher isn’t buying the hype. Cantech Letter’s Nick Waddell caught up with Art Mesher to talk patents.

Art, we have been closely following WiLAN’s hostile actions on Mosaid, and the sale of Nortel patents to a group that included Apple, Microsoft and RIM. Many cite patents as the main reason Google payed $12.5 billion for Motorola Mobility. What’s your opinion of this mania?

Well I have strong opinions on it and my ideas are completely contrarian. All you have to do is study history. Look at American and European history and look at the old squatters. You used to be able to go somewhere first, stake a claim, put a fence around what you have and says its yours. Then you could tell everyone else they had to pay a toll to come in. Then one day, after everyone was subject to all these squatter’s rights, people just decided that this simply wasn’t right. Why won’t it be the same thing here?

Do you think we are in a patent bubble?

Absolutely! I think the whole idea that you can protect yourself with patents is ridiculous, personally. I’m running a business that is based on everyone getting together, everyone agreeing to get along and everyone sharing in order to make things as cheap as possible.

And I guess if you own patents it doesn’t necessarily mean you can replicate all the things it takes to be a successful business…

That’s correct. We’re too hung up on the technology and not on the outcomes, on the results. I tell my guys all the time that we’re never going to defend ourselves on our technology, we’re going to defend ourselves based on the size of our community and our command of operations and how innovative we can be with our customers. I don’t want to own that innovation, I want to share it with everyone so they’ll come back and ask me to do it again. That’s just my own view of it.

It’s interesting that your view is so contrary these days…

Well look at my company. I’m twice as profitable as anyone my size, we’re growing twice as fast as anyone else, and I don’t believe anything the other guys are telling me. When you outperform the norm, you have to ask why. Maybe it’s because the norm isn’t right.

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