By Tom Ballard, Chief Alliance Officer, PYA
We caught-up yesterday morning with Bill Malkes, Chief Executive Officer (CEO) of GRIDSMART Technologies Inc., less than a day after the 12-year old Knoxville company’s acquisition by Cubic Corporation was announced.
The transaction was, in our opinion, a major milestone for Knoxville’s technology start-up community. GRIDSMART was launched and grown here, using its East Tennessee base to expand and serve a global marketplace with its video detection that optimizes the flow of people and traffic through intersections. It shows that you can be successful in a region that is blessed with a great quality of life and some amazing technology assets.
For the engaging, down-to-earth but intensely-focused Malkes, it was an important next step for him, the company he co-founded with Vig Sherrill, the team at GRIDSMART, and the community.
“This was a long and thoughtful journey,” he says of the transaction that was announced Wednesday. “There were some non-negotiable items that made the process quite interesting. It was important that we kept our name, kept our culture, and kept our commitment of service.”
Malkes put the service mantra in very clear terms. “GRIDSMART serves. We service customers, we serve each other, and we serve the community. The people of GRIDSMART are the most selfless and caring group I have ever been a part of, and keeping that environment was mandatory.”
In that regard, he called out Jeff Price, Lauren Jochum, Michelle Grossholz, and Natisha Sims while citing “scores of others,” adding that “Cubic recognized this and has created an amazing place for these talented folks to continue to innovate and grow their careers.”
There were other considerations in doing the deal.
“We had to keep manufacturing in Knoxville.,” Malkes said. “These are important jobs to us, and GRIDSMART was not willing to change ownership and see jobs leave Knoxville. We needed to keep the INTERSECT conference alive along with the INTERSECT ‘Day of Community Service.’ We needed to keep our GIVESMART Foundation alive.”
That commitment to this community, not just by Malkes and his team but any acquirer, is a significant indicator of the importance of this transaction.
“Cubic is fully committed to growing GRIDSMART from a research & development and from a brand perspective,” Malkes says. “They are a great partner. Many times, companies in our area have successful exits and jobs go away. With Cubic, things will just get bigger and better. INTERSECT will get bigger, and Cubic will help our economy grow.”
As any start-up knows, you need solid, committed investors. “We are blessed that our investors supported us in these conditions and hugely blessed that we found a partner like Cubic that not only agreed to run things this way, but embraced it,” Malkes said.
On the investor front, he praised Grady Vanderhoofven, President and Chief Executive Officer of Three Roots Capital, whose Meritus Ventures was one of the early investors in GRIDSMART. “Grady was the undisputed leader of the investor group; his role was significant.”
We also had a chance to chat yesterday with Jon Newhard, General Manager of the Cubic division where GRIDSMART will be located. He and Malkes have known each other for several years since Newhard ran Trafficware, a company that Cubic recently acquired.
“Our technologies butt-up against each other in the value chain,” Malkes said. “There will be great synergy there.”
Newhard had praise for GIRDSMART, saying that “Bill and the team have built something special. The region (Knoxville-Oak Ridge) has a pretty good talent base. If you want the right people, particularly technical, you go where they are.”
At a time like this, we’re always interested in reflections on the journey from launch to some form of exit. Malkes shared some important insights.
“Never ever quit,” he says. “We were down as far as you can go. We were betrayed, and we hit the biggest economic downturn in modern history and came out the other side stronger than our team’s grit and the blessings of Jesus Christ. GRIDSMART has always had a bigger purpose than business, but we did something pretty amazing with the business as well. I love this team and feel beyond blessed to have went through this journey with them.”
So, what’s next for Malkes?
“I am signed-on with Cubic with a long-term agreement and a vision of helping Cubic become a dominant player under their NextCity® vision,” he says. “I plan on leading GRIDSMART for a very long time as part of Cubic. I am teacher, and I sincerely want to be part of the growth of all GRIDSMART’s amazing managers in their careers at Cubic.”