By KRYSTLE CHOW
Published in the Ottawa Business Journal newspaper and website.
May 16, 2011
Click here to view this article on OBJ.ca.
Local firms demonstrate rapid, sustained growth
For many of the firms on this year’s Fastest Growing Companies list, staying power is the name of the game.
These stalwarts have demonstrated sustained growth and are making their second, third, or even fourth appearance. And along with several fresh entrants offering products and services for a wide variety of uses – including the 3D movie industry, construction, and social media – this year’s crop shows an Ottawa that’s starting to build a diverse economy, with success stories from different life stages and markets.
What’s more, not only are these companies growing at a brisk pace, but they’re also all on strong financial footing – they’re either currently profitable, or have achieved profitability in the past and are now taking an aggressive approach to investing in their firms’ further growth.
As well, all share in common a drive to innovate within their respective industries, while working closely with customers’ ideas and needs, whether that means providing customized technologies, or being their own best clients to better understand what people using their products and services require.
All Fastest Growing Companies honourees are headquartered in the National Capital Region and have demonstrated revenue growth and positive cash flow over the past three years. In year one, the companies had a minimum revenue of $100,000 and by year three, a minimum of $1 million.
Tobias Lütke, co-founder and CEO of Shopify.
Photo by ETIENNE RANGER for the
Ottawa Business Journal.
Year founded: 2006
Local head count: 48
Product/service: Online storefront platform
Revenue growth: 385%
Not many companies can boast of being directly responsible for the creation of more than 1,500 new businesses monthly in the past year, as well as boosting their own sales nearly five-fold over the last three years.
But as the purveyor of an electronic storefront platform – used both by behemoths such as General Electric and Pixar, and what co-founder and CEO Tobias Lütke calls the “Fortune Five Million, as opposed to the Fortune 500” – those are exactly the kinds of statistics to which Shopify can lay claim.
In fact, the idea of helping new online ventures get off the ground is what’s driving much of the frantic activity at Shopify, which was last year’s fastest-growing company. The firm recently launched the second edition of its build-a-business contest, inviting budding entrepreneurs to dream up something to sell and get the most revenue within two months, for the chance to win more than $500,000 in prizes.
Last year, the contest was only open to the United States, but this year it’s expanded its reach to Canada, Australia and the United Kingdom.
“The most interesting thing we found out is there’s tremendous pent-up interest to try and build your own online business. And for many, there’s nothing truly in the way – they just need a kick in the butt,” says Mr. Lütke. “(The contest) gives people no chance to say no to that.”
Sure, there’s a little bit of self-interest involved in launching the competition – Mr. Lütke says the attention will help Shopify spread its wings to new international markets – but the goal is to create an environment where the maximum number of people are opening online stores, and succeeding.
As Shopify itself got its start when the founders decided to set up a snowboard shop online and developed the technology to support it, Mr. Lütke is well aware of the challenges for that climate of success. And given the firm’s philosophy of being your own best customer to understand the business better, its focus on fostering independent entrepreneurs fits.
It’s evident it’s working – Shopify is moving to new digs for the second time in a year to accommodate its doubled workforce. Notably, the growth has created logistical problems for the company’s popular video game tournaments, since there are now too many people who want to participate.
“It’s a great challenge to have … we want to show everyone a great time and grow our opportunities at the same time.”
IRIDIAN SPECTRAL TECHNOLOGIES
Year founded: 1998
Local head count: 125
Product/service: Optical filter manufacturer
Revenue growth: 192%
With their multi-coloured arrays resulting from interactions with light, rainbows share many similarities with local company Iridian Spectral Technologies. Not only does Iridian’s name come from the qualities of a rainbow and wavelengths of light, but its products – and even its market strategy – also bear the marks of the phenomenon.
Iridian makes thin-film optical filters, which are comprised of gossamer layers of material assembled to manipulate the entry, transmission or reflection of light. As chairman Peter Dawson explains, the filters work like the colours on a butterfly’s wings or an oil film on water.
Interestingly, the company has also taken on a multi-layered approach with its business model; originally focused on the telecom and fibre-optic market, Iridian is now also selling its products to the spectroscopic instrument market, as well as the 3D movie space, where the filters are used in projectors and the glasses used to watch the movies.
As a result, the firm now counts such major companies as cinematic technology giant Dolby among its clients, and exports more than 99 per cent of what it produces to Asia, Europe, the United States, and beyond.
“We’re among the top two or three in the world for optical filters, in each market,” says Mr. Dawson. “It’s an encouraging thing for us that all three markets have seen significant growth, with some of that growth coming from diversification, and some from a larger market share.”
Selling to diverse geographic markets is also a big part of Iridian’s strategy, with Mr. Dawson crediting the company’s highly automated and low-cost manufacturing operations as a key reason for its ability to stay competitive.
He adds that the firm’s customer focus, whether that means doing semi-custom work or redesigning an existing product to meet a client’s requirements, is another important differentiator.
“Even for small companies, looking at the complete market and working to get a share of it is a route that, in today’s world, companies have to take. There’s competition from anywhere in the world and you have to meet that competition,” he notes.
Year founded: 1989
Local head count: 78
Product/service: Construction project management
Revenue growth: 171.6%
As elevator pitches go, you can’t get much more succinct than the one for MHPM Project Managers Inc. “You know how construction projects always go to hell and are over budget and always late? Ours don’t,” says CEO Franklin Holtforster.
“If you wanted to build something, you’d come to us and say, ‘Can you lead?’ We organize stakeholders and extract the value (of the project).”
Take, for example, MHPM’s involvement with the building of the Richmond Olympic Oval, which was completed under budget and on time, a little bit more than a year before the Vancouver 2010 Winter Olympics.
The locally headquartered company’s performance has led to it garnering projects as diverse as the Canadian Embassy in the Afghan capital of Kabul, the restoration of Nova Scotia’s famed Bluenose II sailing ship, and, closer to home, the Lansdowne Live project.
At any one time, MHPM is involved in “300-plus” projects around Canada worth something like $2 billion combined, Mr. Holtforster says.
While it’s often difficult to provide a truly unique offering in the construction industry, he notes the company has been able to consistently grow its business by anticipating the future requirements of the marketplace, as well as by training and certifying its staff in new standards.
“In training presentations, I always lead with the Will Rogers’ quote: ‘Even if you’re on the right track, you’ll get run over if you just stand there,’” Mr. Holtforster says about the firm’s drive to stay ahead of the game.
He adds: “There’s no pixie dust that can be sprinkled on our offering to proclaim a unique capability, but we do a better job at building talent up and surrounding ourselves with the value of lessons learned (from past projects).”
As such, MHPM has been “hiring non-stop for the past 15 years,” and the company has 18 offices across Canada. Mr. Holtforster says the firm is also looking at the possibility of acquiring related businesses as part of its goal to become the dominant player in each of the country’s markets.
“People regard the construction industry as static, but our industry is competitive, creative and necessarily also destructive,” he says. “We believe we see a forward-looking path.”
Year founded: 2003
Local head count: 39
Product/service: Traditional and social media monitoring and analysis
Revenue growth: 155.3%
If you ask Brett Serjeantson, the thing that sets his media monitoring company, MediaMiser, apart from its competitors is a little bit like the “Six Degrees of Kevin Bacon” party game.
“What we do better is connect the dots between traditional and social media monitoring, and between multiple business units within an organization,” says Mr. Serjeantson. “When we look at the data, we don’t blindly rush it into the system, but we want to see how it all correlates, or else people won’t get the value from it.”
He points out that many media monitoring firms are either only focused on social media analysis, or are traditional outfits that had to backwards-engineer their offerings to include the new social media piece.
At MediaMiser, Mr. Serjeantson says, the focus has always been on what could be derived from the information itself rather than the monitoring process, which meant the company was able to more efficiently fit in the new data points than most.
He adds that scientific approach to information, combined with a company team that’s passionate about knowledge, has led to the firm playing with and exploring its own product’s capabilities.
For example, MediaMiser was able to track all the Twitter activity during the recent election, correlate it with the number of links going to a particular media outlet for certain stories, and find out which publications were seeing the most election-related traffic.
Knowing the company’s technology is capable of extracting that kind of data makes it easier to sell, says Mr. Serjeantson, noting MediaMiser also uses its own product to provide white papers, case studies and high-end research to marketing groups.
“We don’t just say we’re great, we show people we’re great through our product,” he says.
It all speaks to the firm’s history of experimentation and taking chances, going back to its choice to go the then less-mainstream software-as-a-service route right from the very start, which allowed MediaMiser to roll out its business quickly.
And now it’s preparing to take another calculated risk, as it’s growing rapidly with the help of the $1 million in funding it received in February. That’s meant giving up profitability for a short while, but Mr. Serjeantson says the company isn’t afraid to be a little bolder in its quest to innovate and expand.
“We believe we’re catching the wave at the right time … and that’s what the money is for – not ego, or keeping the company afloat – but so we can understand our space more.”
THE KTL GROUP
Year founded: 1997
Local head count: 13
Product/service: IT and management consulting
Revenue growth: 110.3%
For a consulting company like the KTL Group, the key to success is as simple as focusing on what you’re good at and slowly building up a reputation for it, one employee and one customer at a time.
The firm, which is making its third appearance on OBJ’s Fastest Growing Companies list, provides IT services, consulting and training with a focus on keeping clients’ day-to-day operations up and running – often the biggest concern for customers such as the City of Toronto and Citizenship and Immigration Canada.
“A lot comes down to becoming recognized for being experts in the field, by having good skills, putting the training into employees and giving them the tools to succeed in the job,” says Matthew Harding, CEO of the KTL Group.
Being responsive and occasionally going outside the scope of regular services to aid customers helps with that too, he says. “If it means doing extra little things for customers (or) … doing something for free, we’re not afraid of doing that to show customers we’re committed.”
So when it comes to something like taking an after-hours phone call to help someone get a piece of technology working over the weekend, the company’s team doesn’t balk at the challenge.
Consequently, the KTL Group has been able to enjoy strong word-of-mouth success, sustain itself purely on its own revenues and profits, remain debt-free and retain staff while layoffs were happening all around the firm.
Looking ahead, Mr. Harding says he sees that growth continuing as the company innovates, although he adds there’s no hurry to get bigger.
“We used to be a one-trick pony, and now we’re diversified … we sell IBM software, provide training. It used to be just infrastructure and now it’s about project management,” he says. “Our skills are always evolving … we’re listening to what customers are asking for.”
Year founded: 2007
Local head count: 18
Product/service: Enterprise content management systems integration and consulting
Revenue growth: 91.9%
It’s not often that a firm can talk in the same breath about connecting military members and their families with important information, as well as giving Sir John A. Macdonald an interactive online presence.
“Think of it as the 1800s meets Facebook,” quips StoneShare CEO Keith Carter about the latter project, which the company is helping to design as a new way to give Canadians access to content produced by the country’s first prime minister during his time in office.
At the heart of both endeavours is the software upon which StoneShare’s entire business is built, Microsoft’s SharePoint collaboration platform. The local company analyzes, designs and develops SharePoint applications that allow customers to efficiently share and manage their information.
Focusing on SharePoint was a bit of a risky bet when the company was founded in 2007, as the technology hadn’t quite taken off yet. “Looking at the traditional business books, they always say not to premise your company on a single technology as they do change,” says Mr. Carter, who along with a business partner acquired StoneShare from its co-founders in 2009.
By 2010, however, the worldwide market for SharePoint-related services had exploded to $5.6 billion, and it’s estimated to jump to $6.7 billion by 2012. More than 130 million people use SharePoint today, Mr. Carter adds.
StoneShare’s recent activity and mid-term goals mirror that surge in popularity; Mr. Carter opened the company’s first branch in Toronto within a year of joining, and a second office is planned for this fall. The goal is to have a presence in five major markets across the country – Ottawa, Montreal, Toronto, Calgary/Edmonton and Vancouver – by 2013.
“We also have very, very aggressive financial goals; we plan to grow by an average of 100 per cent per year between 2010 and 2014, and we’re on our way to 120 to 140 per cent for this fiscal year,” says Mr. Carter, who notes the firm is profitable. “I’d say we’re a little ahead of schedule.”
Timothy Kimber, founder and CEO of PlaSmart.
Photo by ETIENNE RANGER for the
Ottawa Business Journal.
Year founded: 2003
Local head count: 15
Product/service: Toy distribution
Revenue growth: 89.1%
Timothy Kimber remembers a time when there was nothing in his company that he didn’t do. Today, however, it’s a much different story for the founder and chief executive of the growing PlaSmart Inc. toy distribution firm, whose products include the edible Yummy Dough modelling toy and the popular PlasmaCar.
“I’ve had to pull myself away from the day-to-day to focus on the strategic vision of where the company is headed, and on filling the pipeline with fantastic products. It’s now about travelling the world, looking under a lot of rocks and kissing a lot of frogs,” says Mr. Kimber.
The company’s corporate office once shared a location with its Nepean warehouse, but as Mr. Kimber and his administrative staff have now moved downtown, it’s rare these days that he will see or touch the toys PlaSmart is shipping out from its warehouses in Ottawa, Los Angeles and Pennsylvania.
As part of its expansion, PlaSmart has also outsourced most of its non-core business functions, including order processing and logistics, and it’s moved much of its IT infrastructure to the cloud to enable it to do business globally.
Mr. Kimber says the shift to focusing internal resources on sales and marketing is the company’s way of staying competitive and keeping prices and costs under control.
“Seventy-five per cent of the global business is controlled by five companies, and the other 25 per cent is what’s left for small and medium enterprises – we’re tripping over each other to get business,” he notes.
Despite that, PlaSmart appears to be holding its own: its new Perplexus 3D maze puzzle is being launched at U.S. Walmart stores in the fall, marking the company’s first deal with the retailing giant. Its products are making a splash in Japan, eastern Europe and South America, and are carried by Toys “R” Us and Costco stores in North America and Asia.
As a smaller enterprise, PlaSmart has also been nimble enough to take advantage of the huge shift towards e-commerce.
Ultimately, though, for Mr. Kimber the goal remains the same: “At the end of day, we’re bringing joy to children and families’ lives. The intrinsic value of that to me is important.”
Year founded: 2004
Local head count: 30
Product/service: Custom software solutions
Revenue growth: 80.5%
It’s the fourth year in a row that ThinkWrap Solutions Inc. has been named as one of Ottawa’s fastest-growing companies, but CEO Steve Byrne says it definitely didn’t seem that way at some points during the past few years.
“In 2009 and 2010 it didn’t feel like we grew at all … for us, 2009 was about surviving, while 2010 was about focusing on our business and loading the gun again for another wave of growth,” Mr. Byrne says. “Now we are growing again and building our supply chain to sustain that.”
So how was ThinkWrap – which builds custom software solutions for a variety of industries, from the retail sector, to finance, to health care – able to keep boosting its sales through the tough times?
“For us, the way in which we’re going about achieving sustainability is having a mix of service offerings that provide value over a number of years rather than weeks or months,” he says.
For instance, the company’s growing e-commerce business goes beyond the stage of simply co-developing an online store with its retail customers such as Le Chateau, Cineplex and Black’s Photo; ThinkWrap also stays on to monitor the site’s performance from a technology and business perspective, and helps its clients develop a return-on-investment strategy and improve the rate at which site visits are converted into sales.
It’s also just launched a new location-based service that will be incorporated into a client’s own offering and delivered through the software-as-service model, which means a perpetual revenue stream for the company.
Taken in combination with ThinkWrap’s close relationship with Google – which is both a major customer and a partner that’s driving new projects to the local firm – it all adds up to a brand that’s starting to gain recognition in the marketplace.
“We’ve reached a state of maturity and it’s now often clients calling us to help them, instead of having a business development burden,” notes Mr. Byrne.
Year founded: 2002
Local head count: 93
Product/service: Fibre-optic network and transport systems
Revenue growth: 55.8%
If there’s one factor to which David Weymouth can attribute his company Optelian’s healthy growth over the past few years, it’s the optical networking technology firm’s tight bond with its customers.
“We’re very careful with our spending and rely on our very close customer relationships to help with directing our products so we’re not wasting our energy on products going nowhere,” says Mr. Weymouth, who’s Optelian’s president and CEO.
“We believe very strongly in three core tenets: get the product delivered on time, it’s got to work right away and for many decades, and follow up with customers for the personal touch.”
The focus on that customized client experience is underscored by the company’s “building block” approach to delivering products: basically, it works with its telecommunications customers to design and put together plug-and-play fibre-optic network systems with specific functional blocks of features and capabilities to fit client needs.
Over time, Optelian also provides tools to help customers place its products into their growing networks, adding more blocks to deal with new requirements for signal amplification, different kind of wavelengths and transport distances, and so on.
It’s an idea that’s come of age as telcos rush to build the biggest and fastest optical networks to feed the hunger for data.
As a result, Optelian is comfortably profitable and self-sufficient, with no immediate need for heavy funding or an IPO. It’s grown organically since its founding almost a decade ago, and in fact the company is readying itself for a move to a new facility in Kanata, as it prepares to hire “a dozen to several dozen” new R&D and manufacturing staff.
Adds Mr. Weymouth: “The number-one thing is we had the right products at the right time, and we’ve really established credibility with our core customer base after years of building up.”