Jonathan Brun 0:00

Whenever people come to me with a business idea, say like, oh, you, you know, you've been running a company, I always try and just say, okay, well, like make a logo, draw up a plan, go do market research, come back, and then we'll talk. And that eliminates 90% of people because it's just, you know, there's different expressions out there. But yeah, you gotta be willing to handle change all the time.

Angela Robertson 0:18

Welcome back, everyone, to the Stormy Stories show. I'm your host, Angela Robertson, CEO of Ace Tech. We're a nonprofit membership society for technology founders and CEOs all across Canada. And we exist to make sure that no one has to do this messy business of growing a tech company alone. I'm delighted to introduce today's guest, Jonathan Brun, founder and CEO of Mnemonic, a regulatory compliance software company he launched in 2008 that now serves more than 900 organizations worldwide. With a background in engineering and nearly two decades of experience helping companies navigate complex regulations and industry standards, Jonathan is building technology that transforms compliance from a burden to a competitive advantage. Welcome to the Stormy Stories show, Jonathan.

Jonathan Brun 1:12

Great to be here, Angela. Thanks for having me.

Angela Robertson 1:14

So you founded Mnemonic in 2008. Tricky time to found a company by just by anecdote, but you've grown it into a global compliance platform. What problem did you see that others were overlooking?

Jonathan Brun 1:28

So I in 2008, I was 26 years old. At that time, I was working at a very small consulting company that focused on environmental compliance. So they were helping businesses identify the laws and regulations that have to do with environment that affected them. And sort of the problem that we saw was that there's a lot of laws and regulations that apply to every business, every operation, whether it's environment or other areas. And the main challenge is those laws and regulations are always changing. So there's always new laws, changes happening, and companies struggle to stay on top of that. And the main thesis, I guess, is that if businesses just respected existing laws and regulations, we'd have many fewer worker safety issues and environmental spills and quality problems. The main challenge is not necessarily creating new regulations, actually getting companies to respect existing regulations. So we built a tool to try and help them do that. It's not a magic solution, of course, but it just makes it a little bit easier on that on that path to compliance.

Angela Robertson 2:31

I think that's something that continues to be a challenge for folks to navigate, though, if there's this notion that compliance, maybe uh from an underlying perspective, is a requirement, like the cost of doing business rather than an opportunity for growth. Do you think that mindset is outdated? And if so, what what are you doing to change and shift that?

Jonathan Brun 2:54

Yeah, I think it's a little bit outdated. Um, the analogy that we've used is compliance is a bit like brakes. So when you think of brakes on a car, people often think, what's the purpose of brake? Well, it's slowing down the car. But the other way to think about it is brakes allow you to go fast. I mean, imagine if you had no brakes, you'd have to keep your car at a pretty slow pace so you could jump out at the right time or what have you. So brakes, like compliance, when you have them, they allow your organization to move much faster because you're you're ready to slow down and to navigate and to move as as needed. And you know, just to cite one example, I recently gave a talk at uh Joyce and Safety Systems. It's a large automotive parts supplier. They make airbags and various other parts for vehicles. Anyways, long story short, Joyce and Safety is a new company. It was born out of a previous company called Takeda. Takeda had crew was uh made airbags, amongst other things, and their airbags were defective and had issues related to quality and compliance, which led to the largest recall of automobiles in U.S. history. So over 80 million vehicles were recalled to change their airbags because these airbags would go off randomly and would shoot shrapnel out of them. About a few hundred people have died globally. So this thing, this airbag problem related to compliance, cost the company well over a billion dollars, basically bankrupted it. They had to cut up the company and they created this new one. So you know the point is, you know, it would have been a lot cheaper to do compliance right the first time rather than trying to cut some corners and then basically the company went went out of business. So it's a bit of a dramatic story. Not all compliance problems are that big, but uh every month at the company we watch a movie or a documentary about a disaster that happened usually at an industrial facility due to a lack of compliance uh to laws, regulations, and standards. So you know, it really does make a big difference, and then companies sometimes sadly only realize this after they've had a big accident.

Angela Robertson 4:51

Yeah. It becomes reactive as opposed to proactive.

Jonathan Brun 4:55

Right, exactly. Yeah, yeah. Yeah.

Angela Robertson 4:57

So you've spent years helping organizations navigate these regulations, standards, risk management. What do you think are the qualities that separate companies who treat compliance strategically from those that are simply reactive to these audits?

Jonathan Brun 5:12

Aaron Powell, long switch right, it has to come from the top. So it has to come from top management, CEO. They need to put in place the right vice presidents, you know, chief compliance officers. There's different job titles out there, but a lot of it boils down to company culture. And and does the company want to do things right? Do they want to avoid problems? Do they want to be proactive? And so that has to come from the top. And and in some companies, particularly you know, some older family-run businesses that are you know less subject to scrutiny because they're not publicly traded or what have you, they tend to cut corners because they view it as a cost-saving measure. And sometimes it does save money in the short term to like cut corners. You can not buy insurance for your house. And if you don't have a fire, you've saved a bunch of money. So it can work. But then eventually that fire comes, right? And so that's where where being proactive really makes a big difference. Um, but yeah, it's ultimately company culture, it's ultimately company leadership right at the top, and then it has to filter down, of course. But it starts at the top, there's no doubt about it.

Angela Robertson 6:09

And is that something that you find in your business you look for in companies that you'll work with? Do you give that feedback back to companies who maybe you see are cutting corners and choose not to work for them or with them for that reason?

Jonathan Brun 6:24

Yeah, absolutely. When I first started the company, so back in 2008, I was a very young. I didn't know much. I still don't know much, but you know, maybe I know a little bit more now. So at first our idea was, hey, in terms of marketing, why don't we find companies that have received fines and penalties and sanctions from the government agencies and go talk to them and say, hey, we can you know help you avoid these sanctions. We tried that, and what we found was these companies viewed these penalties as a cost of doing business. It's like people who get parking tickets and they're like, well, that's just the cost of you know being in the city. And and so they were not good clients, right? They did not want to invest in a proactive approach. They wanted to just pay the fine, move on, and they'll get another fine in a year or two, but we'll deal with it then. And so we pivoted and instead we started targeting companies that were investing in uh meeting ISO standards, so there's various standards out there, and they were showing publicly through their public reporting, they had a compliance commitment on their website, things of that nature, which were indicators of what their corporate culture was. And when these companies that receive fines and penalties, the only time that we've seen them genuinely change is when upper management changes. So sometimes they get into enough trouble, enough problems that you know investors or or government or someone forces a whole change with the upper management, and usually the new management comes in and recognizes the need to change things. So yeah, and long story short, uh, we were never very successful with these companies that get a lot of fines and penalties.

Angela Robertson 7:51

Like you said, it comes top down, right, from corporate culture. And if that's not shifting until you see a personnel change, then you know right away who is your core customer and who's not.

Jonathan Brun 8:02

Absolutely, yeah, exactly.

Angela Robertson 8:03

And so how is this landscape now changing with the rise of AI? You know, I can imagine that folks might start to try with their various chats or whoever to maybe fact-find their own compliance strategies. But do you see that sort of coming in and muddying the waters in your space?

Jonathan Brun 8:24

Aaron Powell With any new technology, there's opportunity and there's risk. Um I think with AI in the last three, four years and the LLMs, particularly in the chat bots that we're all using every day now, it's a game changer. I mean, there's no doubt about it. So we've pivoted from a human-based approach where the way we used to set up an account with the customers, we would go through a long questionnaire. What kind of business do you have? What are the operations? Do you have forklifts? Do you have trucks? Do you store oil? Um, now we gather that data, but then we run it through AI and we cross-reference it with the database of laws and regulations and standards that we have. So in a certain sense, the AI makes it a lot easier to come into compliance. It kind of takes away the excuse that, oh, it's too difficult, it's too expensive. Like now, yeah, you can go to Google or you know, a chat GPT or what have you and ask it questions. And generally speaking, the answers are very good or very close to true. And no company is ever 100% compliant. It's basically impossible. But with AI now, you really can lower the barrier to moving in the right direction. So we're doing that with our tool. But I have nothing against people going on to Google Gemini and asking compliance questions and getting pretty good answers. Now, of course, at the end of the day, you want a trained, certified professional to sign off on various things, especially when it involves human lives. But the AI, generally speaking, I'd say is an extremely positive development because it takes mountains of information and can condense it down to the stuff that's highly relevant to you. You know, just the U.S. uh federal register of regulations, I think, is like, I forget what it is, like 1.2 million pages long. So try getting through that with humans. I mean, good luck. It's just not going to happen.

Angela Robertson 10:00

Not at all. You recently wrote about Potemkin compliance and the dangers of relying too heavily on AI. Sure. So what are leaders actually getting wrong about AI's role in compliance and decision making? Aaron Ross Powell Yeah.

Jonathan Brun 10:13

So this Potemkin analogy comes from the expression of Potemkin village. And just for those of your listeners who aren't familiar, in Russia during Tsarist Russia before the Soviet Union, the Tsar would go out to visit villages to see if his empire was being run well. And in front of him, there would be a bunch of civil servants, if you will, that would run out and clean up the village, pick up the garbage, make the houses look nice, and just make it look like it was an idyllic sort of Russian village where everybody was happy and healthy and what have you. But it was all fake, right? I mean, as soon as the Tsar left, everything went back to how it was before. So the idea of a Potemkin village when it comes to compliance is a lot of times people think that, well, we have a policy in place, we have a procedure in place, we have these documents. Um, but documents are documents, right? If you're not operationalizing it, if the people that are taking the actions on the machinery, uh taking the decision making with the clients, if they're not actually using these documents and respecting them and understanding them, that's the other thing, it it's all make-believe. Uh you can have all the paper in the world, but if people don't respect it, it's not the real thing. So that's where there's a danger with the AI, because you can go into AI and say, write me a procedure against bribery, an anti-bribery procedure. And oh, write your great policy and procedure about not bribing people uh to get contracts and what have you. But again, it's a piece of paper, right? And so if the company doesn't respect it, if people don't understand that bribery is a illegal and and b you know bad, you have a big problem. So that's where there's a bit of danger, I think, is uh creating a false sense of security through documentation that is AI generated and that people don't use or they don't understand. And that's where the rubber really meets the road. And so we always encourage companies to say, you gotta yes, we can do stuff with AI, it'll help you. But your humans need to like actually know what they're doing, be trained, have resources, have time to do this properly.

Angela Robertson 12:04

And that comes back, I think, to company culture again, right? It's whether you're going to take those practices or take those recommendations potentially that your company is providing too and put them into practice. Do you find that there's certain qualities that you see in leadership or in teams that helps to ensure that those sort of documents or policies come to life? Aaron Powell Yeah.

Jonathan Brun 12:29

So I mean it's that culture, and then it's a it's a it's a culture not just of compliance, but a culture of diligence, of being, of doing your due diligence. And that's something that is built up over time. You know, no company overnight sort of builds out a wonderful compliance program. It it takes years, if not decades, and and a few scars along the way. One company we work with, just as an example, large oil and gas company, they have refineries, they have pipelines, and they have gas stations. And they purchased a gas station as they have been doing for decades. And there's a certain amount of due diligence that's done when you're buying a gas station, but some of these gas stations like mom and pop operations, so they're not big transactions, you know, maybe a couple million dollars or so. So they had a due diligence on these gas stations, but it was purely a financial due diligence. They did not have sort of an operational quality environmental due diligence program when they were buying gas stations. So they bought a gas station, did the financial due diligence, everything checked out, they bought it. Lo and behold, a few months after the transaction had completed, they detected a massive leak of oil into the ground at this gas station. So the gas station that maybe cost them two million, three million dollars, they now have a cleanup bill of you know $75 million. And the reason is they didn't do diligence on was the gas station properly constructed using the standards that are required, you know, were there all the right equipment and pieces in place? And what they discovered during the analysis was that the there were some valves and various components of the gas station that were not to code. They were not respecting what is required by law. And uh these valves broke, led to the leaks. The people weren't trained properly on detecting the leaks, so the leak went on longer than it should have, and they ended up you know paying let's say eighty million dollars for a gas station that should have cost them two million. So yeah, so it's that diligence. It it's really getting down into the weeds of your operations, figuring out what are all those boxes we gotta check. And it's tough. You need to really be organized, basically. Long story short, is is um you know what are the requirements? Are we respecting the requirements? Yes, no. If we're not, let's fix it. I mean, it it kind of boils down to that at the end of the day, honestly.

Angela Robertson 14:39

And it sounds like it's a consistency as well, right? It's being able to, whether you're you know considering buying a two million dollar gas station or you know, a multi-million dollar project, that you're still following the same rigor in order to make sure that you are diligent in your you know, in your homework and in making sure that whatever you are managing is compliant.

Jonathan Brun 15:05

Oh, absolutely. It it's it's diligence, it's consistency, it's doing it day in, day out, considering every organization has staff turnover. You know, companies are being bought, sold, restructured. So there's change always happening within your own organization and trying to have that consistency over all your operations, maybe you're spread out geographically, different language barriers. That's where a lot of the challenge comes from. I've been s I sat in meetings in China at automotive factories that were being run by foreign companies and trying to get the Chinese team to do the same thing as the British team, and the trainers are talking in English, and there's a trans. I mean, it's tough. So the you know, one book that I always recommend on this kind of topic of diligence is the uh it's called the Checklist Manifesto, and it's written by uh a surgeon in Boston, Tulga Wande. Basically, the guy advocates for uh using checklists. And we're talking about, you know, he goes through pilots. Um previously they didn't have checklists, but as the airplanes got more and more complex, there were more and more accidents, and they started implementing checklists before takeoff, uh, you know, during flight, before landing, after landing. Same thing in surgery. You know, you they put in place checklists in major hospitals in Boston. So we're not talking about some hospital like in Rwanda, not to pick on Rwanda here, but you know, we're talking about top-tier hospitals in Boston, and putting in place checklists in the surgery rooms reduced infections by like 75%. It reduced errors by 80%. And these are the most trained people in the world. They've done 20 years of university, they've been to Harvard, yada, yada, yada. So even the most trained people need checklists. I mean, that's that's the lesson I took from this from this book, which I recommend. It's a short book. Everybody should check it out.

Angela Robertson 16:47

Aaron Ross Powell Such a great recommendation and such a great reminder that at the end of the day we're all human, right? So putting in that practice of checklists, making sure that it's consistent and ideally available in whatever language people are using regularly is going to help with that consistency across the board. Now you've also built this company mnemonic over nearly two decades, and that comes with its own challenges. What has been one of the stormiest moments in your entrepreneurial journey?

Jonathan Brun 17:18

I think probably the toughest moment was uh around 2019, just before COVID, um we had grown from 2008 to 2019, and uh the company was doing okay, but we we were reactive to our customers. Our customers would say, we want this feature, we want this thing, we want that. So we added a whole bunch of things to the software and frankly went in too many directions. We were uh thin, you know, we were thin rather than being deep. And in 2019, you know, some changes happened, and basically we we kind of ran out of money. We're s we're bootstrapped, we're self-funded, we don't have any financial backers. So we ran out of money, we had to lay off about 20% of the staff, and we brought in uh a consultant on uh strategic matters, like a strategic consultant, took a look at the business, say, what can we be the best at? You know, what what's the one thing we can do better than anybody else? And we stripped out a whole bunch of things from the product, from the marketing, try to make things simpler, and and that really helped a lot. But it was definitely a tough, a tough moment where we we ran out of money, had to say goodbye to some very good people. It wasn't their fault. And but it it was healthy in the sense that it forced us to focus on our strengths, and since then it it's been way, way better. The company's grown tremendously since then, and we but it's a daily struggle, if you will, because we get requests from all sorts of people, customers, staff, etc. And it's always like, what are we what's our core business? Let's stick to that, let's say no to these things, always be cleaning the barnacles off the ship. It it's a never-ending story. But 2019, yeah, for sure was tough. And then uh but it it it was healthy in the long term.

Angela Robertson 18:46

Tell me a little bit more about that, because I think this is a common challenge that most entrepreneurs will face at some point on their journey where you know they're so used to listening to their market and listening to customer demands. And it's really hard to differentiate where are you going to be the best and and make that commitment draw that hard line. So what what are some of the ways that you have instilled in yourself and in your team that diligence around committing to what you're gonna be the best at?

Jonathan Brun 19:16

Yeah, it it's it's a daily struggle because the customers were giving us money, they say, Oh, we'd like to have this, we'd like to have that. And you know, there's a fear, there's a genuine fear of, well, if I say no, are they gonna renew their contract next year?

Angela Robertson 19:28

Yeah.

Jonathan Brun 19:29

So it's I don't want to pretend it's easy in any way. And the market's changing, AI, startups, competitors. So there's just every day there's so many decisions that have to be made. And what we did, you know, we did things, we used a framework called Scaling Up, which is by a fellow called Vern Harnesh. And you know, it recommends focusing on operations, cash, strategy, and people. And so on the people front, we outlined, you know, who are the people at the company that were uh the best, you know, the people that we would hire, rehire without any hesitation, and what are the things that make them the best? And we sort of define that, and those became our company values. On the product side, we did this deep dive on like what can we be the best at? How can we be different than our competitors in a meaningful way, of course. We don't want to just be different for the sake of being different. So, you know, that's sort of the blue ocean strategy kind of framework is like what kind of differentiating features can we build that will be very difficult to replicate and will allow us to go after a new market. Um so those have been defined in some documents. We update them every year. And with that's sort of our North Star. We say, okay, well, if it doesn't fit into these things, it does if it doesn't help us differentiate against our competitors in a meaningful way to our customers, we're not gonna do it. So about 25% of our time is kind of taking things out of the product. So we're testing things, putting it in. If after a little while we see there's very little use, very little adoption, you don't want to just leave it there. So you put us a box in storage and then you know, you forget about it. No, you gotta like burn it.

Angela Robertson 21:02

Yeah.

Jonathan Brun 21:03

And then and then write a postmortem. So we'll write postmortems on like, hey, we built this feature, we thought it was gonna be awesome, nobody liked it. And so we took it out. And it costs us money, it costs us time, but really trying to learn from from our mistakes. So those are some of the things we're doing. But yeah, I mean I think our journey's been a pretty typical one in the sense that we started, we grew, tried to do too many things, narrowed it down, now we're doing better. But uh, you know, every day there's a bunch of new challenges for sure.

Angela Robertson 21:28

Yeah. And I think that's part of what you sign up for in entrepreneurship, right? Is that there's no dull moments, there's never going to be a day without challenges. Because if there was, that's probably that your business is no longer around.

Jonathan Brun 21:42

Yeah. Whenever people come to me with a business idea, like, oh you, you know, you've been running a company. I always try and just say, okay, well, like, you know, make a logo, draw up a plan, you know, go do market research, come back, and then we'll talk. And that eliminates ninety percent of people because it it's just it's just yeah, you know, there's different expressions. Out there. But yeah, you've got to be willing to handle change all the time. People are changing, HR problems, customer problems, market changes, economic changes. So I yeah, I view it as a game, right? There's another good book called The Great Game of Business, but that's the way I view it. It's like a video game, just you know, it's real life. As far as I know, it's real life. Maybe we are in a video game. Who knows?

Angela Robertson 22:21

It's our real life, that's for sure. Speaking of many hats, you have experience in engineering, public policy, civic technology, and entrepreneurship. And those can seem like very disparate worlds, but how have those different worlds influenced your leadership philosophy?

Jonathan Brun 22:38

Aaron Powell I mean, uh yeah, I've been involved in some nonprofit organizations that I was involved with or started and they've gone on to do other things. Personally enjoy being exposed to a wide range of people and ideas. And I think you can get tremendous benefit from that. Sometimes in the tech community, uh and it's probably true in any community, if you're a doctor or what have you, you just get these sort of blinders on and you you think everything is software. And you know, I'll see software developers who kind of think that they're kind of libertarians because they just work with their hands on the computer and then and then but they don't realize to make society you run, you need people making food, delivering food, grocery stores, infrastructure, et cetera. So just being exposed to a lot of different things in civic tech, um, as well as in the nonprofit sector. And as an engineer, I worked in the mining industry, so producing metals like copper and zinc and steel and gold, it it personally had been enriching and allowed me to say, like, hey, the world's a big place with a lot of different people, different personalities, and they all are contributing something and to just sort of bring that into the fold and and and leverage that uh to make mnemonic what it is today. I I'd say that's a lot of the benefits is just, yeah, don't get stuck in a little silo. I always try to get out and visit the customers as much as I can, go visit their factories. We have customers in every single industry. So it it's truly uh fascinating to go from a medical device company to an airline to an oil and gas operation, and just to see this world is is is is a complex kaleidoscope of of people and and businesses.

Angela Robertson 24:07

And what a tremendous impact you're able to make through mnemonic into all of these different industries. I think that's certainly one of my whys is being able to see the impact that whatever I'm doing is out there in the world. And it sounds like that gives you purpose and uh energy in your what you're building too.

Jonathan Brun 24:27

Oh, yeah, absolutely. I mean, make a small dent in the world. I don't pretend we're gonna change everything here, but if you know we can help a few companies and a few people and and you know create some good jobs, yeah, I think that's a decent contribution to Planet Earth.

Angela Robertson 24:41

Thank you so much, Jonathan. Thank you on behalf of the Stormy Stories show. We really appreciated you sharing the story of mnemonic, what you're growing, what you've built with your team, and all those great book recommendations, too. I hope our listeners actually take you up on them because uh I would plus one to every one of those recommendations. They're great.

Jonathan Brun 25:00

Well, thanks for having me, Angela.

Angela Robertson 25:01

At Ace Tech, we believe one of the most valuable resources a leader can access is another leader's experience. That's why I created the Stormy Stories show to bring you honest conversations about the moments that test us, shape us, and ultimately make us better CEOs and founders. Thanks for listening, and I'll see you next time.