Inspiring Founders: Nexalogy’s Claude Théoret dusts his shoulders off


It was New Years Eve three years ago, and Nexalogy CEO Claude Théoret was crossing names off of a sheet, those of his employees he had to lay off.

The company had no money left. Year one was a “massive loss,” and they had already burned through their $600,000 seed round a short time later. Sure, they had built a prototype and found some initial customers, but it wasn’t enough.

Théoret didn’t even know if the company would make out of the next month alive. He actually had to ask his employees more than once not to cash their cheques he had given them, until they made it through the next few weeks.

With seemingly no place to turn, his wife agreed to give him $40,000 of her own money, even as he told her in no uncertain terms that it was going to be a high-risk, bumpy ride. In fact, Nexalogy needed much more. About $350,000.

But it was a start.

Miraculously, a mentor of his came through by financing the money the company would eventually get back from the government as part of the R&D tax credit. Nexalogy was alive, but only by a thread.

To make things worse, Théoret was dealing with a year and a half-long, messy split with a former cofounder who didn’t work out. The split divided the team, and negotiations on the cofounder’s exit was “the most stressful period of my life,” he said.

Between then and now, things have gone much better for Claude Théoret and the Montreal-based startup Nexalogy. Last year it brought in $1.5 million in revenue, and Théoret was able to assemble what he considers “the greatest startup team in Montreal.” That includes VP Business Development Naomi Goldapple, CTO Alexis Smirnov, CFO Nina Silverstone and 12 others.

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Several of the team pose for a photo at Nexalogy’s Mile End office space.

Most importantly, the CEO thinks his team will be able to complete the prototype that he’s always envisioned, six years after founding the company.

Nexalogy is a discovery engine that analyzes massive amounts of social data between words and the people who create them – on blogs, Twitter, Facebook and other sources -and reveals undiscovered risks, opportunities, and hidden intelligence. They make sense of social data to enable companies to make smart decisions. Their customers are agencies, governments and more, who want to know what the population thinks about any given topic.

The thing about Théoret is that six years of running a startup pales in comparison to some of the knocks he’s taken throughout his life as an astrophysicist hailing from a tiny village near Cornwall, Ontario, called Moose Creek. Since he was a kid, he’s continually been, quite literally, knocked down time and time again.

But he keeps getting up and dusting himself off, which could be key in understanding how he’s taken a startup that countless VCs rejected in the beginning, to greater and greater heights.

“I’m a fat, balding white guy. When you’re overweight, people give you shit all the time for no reason. They think you’re stupid, sloppy, lazy. But it doesn’t bother me. The minute I start talking in a room, things start to change.”

Théoret grew up a francophone minority in Ontario. His father was illiterate and his mother never finished high school. Once a week, his dad would pull him out of school and the pair would play the stock market, buying and selling cattle and farm machinery.

It’s not a stretch to say Francophone-Ontarions faced large amounts of prejudice, often for simply speaking french in public. For Théoret it was no different, getting beat up in school for speaking his mother tongue. Some memories include high school teachers saying outright racist comments to him after he scored well on tests, and a lab manager at a summer job at Nortel assuring him that if he spoke french again, he’d be gone.

Even at the University of Waterloo, where he did his undergraduate degree, it was no different. “Kicked out of book stores. Beat up in washrooms. Just for having a french last name.”

He knew that living while in Moose Creek, he’d have to become independent, quickly. “Very early on I knew I couldn’t let these people dictate how I viewed myself, my family or my culture. Or else they would have destroyed me,” Théoret told MTLinTech.

During his time studying physics at Waterloo, Théoret discovered quantum mechanics from an inspiring professor who had worked with Stephen Hawking. Even though half the class was failing, the kid from Moose Creek was grasping it all.

“That guy made me change my entire direction,” he said. He dumped engineering physics and doubled down on quantum mechanics and particle physics.

From there he got a scholarship to the Universite de Montreal to study particle physics, where he got to travel to Geneva, Switzerland to work on the OPAL particle detector at The European Organization for Nuclear Research (CERN). CERN is where the World Wide Web was first created in 1989 by Tim Berners-Lee, who was still there when Théoret arrived. By this time it was 1994, when Berners-Lee said all physicists there had to learn HTML and have their own web page (when just 10,000 existed).

“I already knew Fortran, was learning C, working on Vax’s, and Silicon Graphics clusters.  It’s at places like CERN where the foundations of what we call ‘Big Data’ today where developed,” he said.

While he was giving a talk about the results of a Masters paper, Ken Ragan, a professor from McGill University recruited Théoret to do his doctoral studies there. He took a full scholarship to McGill with the intention of studying particle physics at the Fermilab Tevatron near Chicago, but ended up going in a different direction. Along with David Hanna, another inspiring professor, Théoret cofounded the McGill’s Astronomy Department, writing the first PhD thesis in Astrophysics there.

“I had never taken an astronomy course in my life, and I had just finished my course work for my PhD. This is why starting a startup to me is not alien. At McGill we had zero funding, zero anything, no equipment, and we converted a solar power plant to a telescope on a US Air Force base,” he said.

Eventually, Theoret made his way to Paris, France for post-doctoral research, publishing papers and living the life of a scientist: disproving theories until a better one came along. But a few unlucky events changed the course of his life in Paris, and as unbelievable as it may sound, they were more traumatic for Théoret than any others we’ve described thus far.

As a result, he dropped out of the publishing world for nearly a year and his physics career was essentially done. But he soon found himself working together with a sociologist, in 2005, who needed a big data scientist to make sense of how people network. Technically, it was called mathematical quantitative sociology.

That was the genesis of what Théoret would eventually found in Nexalogy. “We started off on scientific papers (Web of Science) and patents, moved to blogs, and adapted it to every new social network that came out. The underlying engine can take any social data feed.

The events that happened to him in Paris and his subsequent transition in his career was yet another example of Théoret getting knocked down and simply dusting himself off.

“My idea of being a CEO is that I basically get shit all the time. I get massive feedback all the time on how to make things better,” he said.

The best advice he’s received over the years have been all the “no’s” he got from VCs. Through those rejections, he learned the fundamental problems with the company, took the advice and improved.

Théoret’s ability to take outright criticism and turn it into positive is almost striking. During the toughest days bootstrapping Nexalogy, he knew he couldn’t fall in love with his product and pretend things were going well. The cash-flow, he said, was always his most important metric. If it wasn’t there, he needed to improve.

“In hardcore science, failing is much more a part of the game than even entrepreneurship. When someone finds something, 200 other theories die.”

Thankfully, things have changed since those days.

They get acquisition offers once every 18 months, but the CEO won’t sell. By next year, they hope to raise about $3 million “to go all the way.” Théoret believes they could be worth $250 million, with 85 employees, a few years down the road with a good enough runway.

 

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