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Fast 50Monday, October 4 by Heather Stewart and Candace LittleUtah Business 2010 Fast 50 Rank
Passion, vision and, above all, adaptability—these are the traits that enabled Skullcandy to rocket from a garage-based startup to become a market-dominating brand and No. 1 on our Fast 50 list this year. In fact, Skullcandy has single-handedly defined the action sports audio market. And really, who knew such a demand for fashionable action sports-related headphones existed? “Our most important success has been bringing headphones into stores that never sold headphones before. Action sports and lifestyle fashion shops had never considered headphones until Skullcandy came along,” says Jeremy Andrus, president of Skullcandy. The company has survived and thrived through several phases of growth. Rick Alden, CEO, mortgaged his home to launch the company and assembled a small team to help build the brand. “We worked hard and fast—and struggled to pay bills and meet payroll,” says Andrus. “After many challenges, some of the first employees [Alden] hired are still with the company today.” Initially, Skullcandy’s primary offering was a technology that connected mobile phones and MP3 players. But a pivotal moment came when the company decided to focus solely on headphones. “And the rest is history,” says Andrus. Leaving behind the mobile phone technology is just one example of how Skullcandy has adapted in order to grow. “Rapid growth brings a lot of challenges,” he says. “A growing company can quickly out-grow their infrastructure. As our employee count grew, we outgrew offices and staff and resources. Our website traffic has crashed countless servers. We have had to completely rebuild our customer service strategy as call and contact volumes grow.” Small companies face unique hurdles, says Andrus. “When you grow quickly, it is hard to find time to plan and strategize. Small companies spend more time putting out fires than setting up long-term plans. It is important to expand wisely and bring the right team members in so the business can scale and adapt.” But now, with its products on the shelves of major retailers, Skullcandy has all the challenges of a larger business. “From design to finance to marketing to supply chain to operations—we have an amazing team that builds and markets great product. But the real growth comes from connecting with the customer and giving them a product they want,” Andrus says. “Our ‘biggest’ success has been taking a brand created by a bunch of snowboarders into mass retail—displacing brands that have been selling headphones for decades.” The company has also found success in Canada and Europe, and its plans for growth include entering additional global markets. It has already added new products to complement the headphones: T-shirts, hats and beanies, and backpacks. Future plans include audio-enabled soft goods and speaker docks, among other fashion accessories. “We still have significant room to grow,” says Andrus. “Stay tuned… Skullcandy isn’t going anywhere but up!”
Matthew Pineda, the company’s president, says Castle & Cooke was able to gain a greater market share because of the company’s commitment to service. Its real-time paperless technology and staff (which is the exact same staff as in 2005—no layoffs or added employees) allows the company to streamline the mortgage lending process and guarantee that once a file comes into underwriting, it will fund within three days—something Pineda says no other company is able to do right now. The company smokes the 45-day industry average. “Guaranteeing three day closings in our industry in this current market is unheard of.” Pineda says. “Our loan officers have taken that commitment to the street and grown their network and books of business with confidence. To have loan officers spreading the word of our guarantee and commitment to service in this challenging economy and handicapped mortgage industry has enabled us to gain market share.” A few things positioned Castle & Cooke Mortgage for growth during times of trouble. It had full Eagle approval from the U.S. Department of Housing and Urban Develeopment in order to close government insured loans, and it was practiced in doing traditional purchase money business and traditional lending. “When the liquidity crisis hit the mortgage industry in August of 2007 and sub-prime, alt-A and niche loan programs evaporated, the industry was forced to turn back to its roots of agency and government eligible loans,“ says Pineda. “We were positioned perfectly because we had our Eagle and had always done those loans. When the market demanded traditional lending we were able to capitalize on the demand and we did not lose pace with the opportunity the market created.” A higher demand from borrowers and fewer lending companies meant a challenge for Castle & Cooke Mortgage, as the company tried to keep up. But, Pineda says his company could not detour from its three day commitment to closings. “We leaned on our investor and banking relationships in order to accommodate our commitment to service. The Federal National Mortgage Association and U.S. Bank National Association were vital to our success and enabled us to overcome the capacity challenges that plagued the mortgage industry in 2009.” As a fourth-year mortgage operation, the company passed $1 billion in 2009, and Pineda says controlled growth is its objective for the next two years. “Our goal is to break the $2 billion mark for funded volume. We are on pace and excited to be in mortgage banking.”
The company’s focus on its employees and their personal achieve-ment is the direct cause of IntegraCore’s sustained growth, says Broman. “While at work, each and every one of our employees is encouraged to associate with others in a way that supports, challenges, energizes and inspires each other to achieve greatness,” he says. “We believe that through our strong culture we have created a competitive advantage. We have very high employee engagement and alignment and are able to deploy that to creating value for our clients.” The company creates value by proving turnkey supply chain management services including procurement, light manufacturing, media and print replication, packaging, kitting and assembly, pick and pack, warehousing and distribution, and fulfillment. That sounds like a lot—and it is. However, the company was originally founded with one purpose: to duplicate floppy disks for Megahertz. Then known as Floppy Copy, the company kept pace with technology changes for a while—and survived industry upheaval as Megahertz went public and merged with US Robotics, which was later acquired by Palm Computing. But when Palm Computing left Utah, Floppy Copy floundered. “It had to change its business model,” says Broman, who joined the company in late 2004 and assumed the role of CEO in 2005. “We very specifically did not want to be entrenched in one particular technology. We wanted to become ‘solution engineers.’” To that end, the company expanded its shipping and logistics offerings and began to focus on outsourced supply chain management. Because IntegraCore now provides such a comprehensive array of services, it expends a great deal of energy on becoming familiar with new clients. IntegraCore’s goal, says Broman, is to understand each client’s operations better than they do. That enables IntegraCore to tailor its services—to create the “right fit” for each client. “Our relationship with our clients results in a true partnership, so when a client needs something extraordinary we make sure it happens, because their business is our business,” he says. “By partnering with IntegraCore, our clients are able to grow at unheard of rates by clarifying and then focusing on their core competencies. IntegraCore then enjoys a shared success as our clients experience explosive growth.” Managing that explosive growth has been the company’s greatest hurdle. “Each new client relationship is like a merger, with all the cultural, process, system and financial integrations that must take place,” says Broman. “Each client’s needs and methods of operating are almost completely unique. To accommodate this, IntegraCore must literally reinvent itself three to four times per month. To survive, the company has become masterful at change.”
“Packsize is the global leader in on-demand packaging solutions for businesses with complex corrugated packaging needs,” says Hanko Kiessner, CEO. “The Packsize system delivers an alternative to the existing corrugated supply chain by eliminating the need for large inventories of pre-ordered cardboard boxes, reducing the carbon footprint of the packaging supply chain, and trimming work content required for packaging and shipping.” Lean manufacturing principles are infused in Packsize’s system, as they give customers the ability to avoid the planning, purchasing, material handling and obsolescence associated with high-mix packaging requirements, and is available to customers without capital investment or risk. This business model has been key to the company’s success. “Packsize retains ownership of the technology giving us a long-term stake in our customers’ packaging performance as well as a revenue annuity,” says Kiessner. “Packsize assumes the projects’ risks; all installation charges can be deferred until the project is proven for the customer so their success is guaranteed. This special relationship creates an unprecedented level of customer loyalty.” The biggest challenge Packsize faced was finding the right people to keep up with the company’s fast growth. “We overcame this by retaining high quality search firms and being exhaustive in our hiring process,” says Kiessner. “We believe in ‘relationships for life’ with customers and supply partners but especially with our own people.” Many of its customers design custom products, and having the flexibility to ship any size product at the drop of a hat is important. “We can change the height, width and depth on every cabinet we produce, but we can’t feasibly stock 400 or 500 SKUs of cardboard boxes and send a worker to get one for every cabinet we are packaging,” says one of Packsize’s customers. “When we visited the Packsize customer’s facility, we realized how well that packaging solution fits into our just-in-time production approach. The packaging system makes the box exactly the size you need every time and allows you to make any size and style of box you want.” Packsize began as a machine-seller but in 2002, Kiessner launched Packsize as a brand and established Right-sized Packaging on Demand as the business model. This solution applies lean manufacturing principles and uses an in-house sales force, creating a large increase in revenue for the company. “Managing the customers’ experience is more important than just making a sale,” says Kiessner. “We now have our own dedicated sales force who focus on system design and deep analysis.” Kiessner says Packsize’s objective for the future is to change the corrugated packaging supply chain. “Packsize will continue to seek opportunities to reduce the cost of the corrugated supply chain through a combination of technology and system design,” says Kiessner. “We also want the most sustainable supply chain possible. We are learning about our customers’ industries at a feverish pace to better understand packaging best practices in their vertical markets.”
“Our customers have become loyal, raving fans, many of them visiting their favorite Kneaders location several times per week,” says Gary Worthington, who co-founded Kneaders with his wife, Colleen, in 1997. The eatery began as a bread shop in Orem, but within a year, the Worthingtons created the bakery/café model that has proven so successful. “We did over three years of studying, training and examining every aspect of the business—food items, equipment, building design and layout—before we opened our first store. We expected to grow slowly at first, but once we had the systems in place, we could grow very rapidly,” he says. Kneaders now has nine locations in Utah and another two in Arizona. Another location will open in North Salt Lake this fall—and Utah will see four more locations in the first quarter of next year. Franchisees are lining up to open additional stores in Arizona as well. Opening a new Kneaders location has boiled down to a science for Worthington. “The friendship and efficient partnerships with great builders and equipment suppliers allow us to bring a building from permit day to open in approximately 90 days,” he says. The company has also developed strong relationships with financial institutions in order to finance its rapid growth. But the key ingredient, for Worthington, is the loyal customer. “In Europe, people visited their neighborhood bakeries often and were treated like guests of the family…we look forward to making all our patrons honored guests of the Kneaders Bakery family.” Any change or innovation to Kneaders is made with an eye to improving the customer experience—particularly getting those long lines moving faster. “The development of better, quicker and more accurate point-of-sale systems has allowed us to help more customers quickly and accurately,” says Worthington. “Better designs of our open kitchen areas help our employees be more efficient and quick at doing their jobs, which makes our customers happier and willing to come back and bring their friends with them.” Aside from refining processes, the greatest challenge to growth has been maintaining product consistency throughout the stores. “We take pride in the fact that everything is made fresh using only natural, healthy ingredients,” Worthington says. “If fresh food was easy, everyone would be doing it.” Each Kneaders Bakery & Café is a stand alone store with all the equipment to produce the foods that are sold each day. Training new franchisees and employees to operate the bakery and maintain product quality is also a constant challenge. Says Worthington, “We are continually looking for franchisees who have a passion for great breads, sandwiches, soups, pastries and all we do, but who particularly love working with people—both the customers (friends) and the great employees who come to Kneaders.” | |
| Chamber News - October 2010 |
