Start-ups that really get going

17:00, Jun 12 2013
SUCCESS: Most of the companies that won the Deloitte Fast 50 are still around and going from strength to strength.

A fast-growing company is a bit like a precocious child. It might eventually slow down and mature, or it might crash and burn along the way.

But if luck and good management is on its side, it will become a long-lasting sizeable export earner at a scale which will benefit our economy.

And a likely common feature among many of these companies is that they will have featured in the Deloitte Fast 50, a competition which ranks entrants by their annual revenue growth over the last three years.

Often they're not profitable when they first appear on the list, but over the past 12 years the Fast 50 has been an early point of recognition for some now everyday names, like Trade Me or HRV.

But there have also been some quiet disappearances. The winner in 2001, TelstraSaturn, is no longer, swallowed up in mergers with Clear Communications and later Vodafone.

And the star of 2002, security software firm Marshal Software, has reportedly changed hands twice. It was snapped up the same year by Nasdaq-listed US firm NetIQ, but later bought back by its original managers and founders, with the backing of a UK private equity firm.

Vodka maker 42 Below, 2005's winner, exited with much more fanfare when its founders decided a lucrative offer from Bacardi was too good to pass up.

However, most of the companies that have won the accolade are still around and going from strength to strength. Many of their founders are still in the game, even if they're no longer with their original creation.

''Most of these entrepreneurs are very driven. They may have exited their first successful company but usually become involved in their next venture or helping start-ups that they see potential in,'' says Stephen Nicholas, Deloitte Private partner and national leader of the Fast 50 programme.

Geoff Ross and Grant Baker of 42 Below have gone on to list two more companies, Ecoya and Moa. Many of Trade Me's original backers still toil away behind the scenes in small but promising start-ups.

But what of the others? We take a look at a handful of past winners.

Powershop, 2011

Electricity retailers have been Fast 50 winners for the last two years. Auckland's Pulse took top honours in 2012 and the year before that, it was Wellington-based Powershop.

Known for its quirky advertisements, Powershop has - like Pulse - been a big beneficiary of the What's my number? campaign, which encourages people to switch companies for better deals.

It now covers most of the country and has just announced plans to move into Victoria, Australia, where its parent Meridian already has wind farms.

In the year it won the Deloitte Fast 50, Powershop doubled its customer base to just over 40,000 and recorded a 50-fold revenue growth over three years. Since then growth has slowed a tad. Its customer base now stands at just over 52,000.

But chief executive Ari Sergeant believes Powershop's emphasis on customer satisfaction will work as well on the high-churn, cut-throat Victorian market as it does here.

''It's back to basics stuff really. We absolutely obsess about customer service and customer experience. And because we're not tied to a generator, we live or die on giving our customers good service and value for money.''

Watson & Son, 2008

This Masterton-based exporter is largely a family affair founded by Denis Watson, who has since started a subsidiary offering manuka honey medicinal products.

The company declined to release current revenue details. But acting chief executive, Meryl Watson (Denis's wife), says the fact that honey companies won the Fast 50 two years in a row reflects the huge growth of the manuka honey sector.

''It is a very exciting industry to be in, it's a highly competitive industry to be in. It's showing a lot of promise in terms of what the honey is going to be able to do in a medi范cal space.

''But there's a long way to go to get these things through all the regulatory procedures.''

Exporting pots of honey is still the backbone of the business, and Watson and Son's products are distributed in several Asian and European countries but its future hopes are firmly on the medicinal market.

Even though it's a more mature company now, Meryl says there's little sense of slowing down. 


''It's continuing to expand and one of our major focuses is working with Maori landowners,'' she says. ''Denis is very proud of his Maori heritage and is quite passionate about helping local people realise the potential of their own land.

''A lot of prime manuka land in New Zealand is Maori-owned and it's helping them get a return for it.''

Energy Mad, 2007

Since topping the Fast 50, Christchurch-based Energy Mad has launched itself on the global stage and listed on the Stock Exchange in 2011.

Being recognised as the fastest-growing company of its year certainly lent the company some credibility, says co-founder and director Tom Mackenzie.

''It helped us in getting investors pre-IPO.'' Energy Mad sells in energy-saving Ecobulbs, with a claim that each bulb could save the average consumer about $200 over its lifetime.

These days the company is largely export-driven, primarily in Australia and the United States. In the US, it is being distributed through Walgreens, the world's biggest drug store chain.

Revenue is now up to $12m annually, and Mackenzie says the company buys in US dollars so the current fierce exchange rate is acting as a natural hedge.

Many of the original backers including managing director Chris Mardon are still involved and it co-owns a factory in China which puts out 120 million bulbs a year.

But as maturity catches up with the company, Mackenzie has noticed some changes, particularly in the stricter governance that a listing demands.

''We've got more obligations and we're far better at that now than we used to be.''

He puts the company's success down to persistence. ''There were some deals we have to get across the line and Chris is very good at that. He never gave up.''

Prolificx, 2003

The essence of fleet tracking hardware firm Prolificx still exists under a different name and in a different form, under the direction of tech entrepreneur and CEO Selwyn Pellett.

For a time in the mid-2000s, Prolificx had a manufacturing involvement with another of Pellett's projects, internet security firm Endace.

But while Endace was sold offshore earlier this year, Prolificx remains in New Zealand. In 2007, Pellet led a move to merge it with an Australian software firm and rename it Imarda.

According to a spokesman, revenues have remained strong in the now cloud-based company and staff has grown from 20 in 2003 to more than 50, with a hiring programme throughout Australasia and USA.

The firm remains largely in original hands, with Pellett and co-founder and former Endace chairman Neil Richardson the biggest shareholders.

* This year's Deloitte Fast 50 is marking its 13th year with a few changes. Cocktail evenings will be run in September in Auckland, Hamilton, Wellington, Christchurch and Dunedin to reveal local category winners. Finalists will attend a one-day festival of inspiring speakers and workshops in Auckland on November 6, followed by a wrap party, where the top 50 will be revealed. Entries are open now and close on July 26.